EXHIBIT 10.11







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                                   NUCO2 INC.

                                       and

                              SUBSIDIARY GUARANTORS



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




                   SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT


                          Dated as of October 31, 1997



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






                                   $25,000,000



                     12% SENIOR SUBORDINATED NOTES DUE 2004



          ************************************************************



<PAGE>
                                TABLE OF CONTENTS


                                    ARTICLE I

                       Definitions and Accounting Matters

SECTION 1.1  Certain Defined Terms...........................................6
SECTION 1.2  Terms Generally................................................20
SECTION 1.3  Accounting Terms; GAAP.........................................20


                                   ARTICLE II

                            Amount and Terms of Notes

SECTION 2.1  Commitments....................................................21
SECTION 2.2  Disbursement of Funds..........................................21
SECTION 2.3  Notes..........................................................21
SECTION 2.4  Interest.......................................................21
SECTION 2.5  Several Obligations; Remedies Independent......................22


                                   ARTICLE III

                              Prepayments: Payments

SECTION 3.1  Optional Prepayments...........................................23
SECTION 3.2  Method and Place of Payment....................................24


                                   ARTICLE IV

                        Representations of the Investors

SECTION 4.1  Purchase for Investment........................................25
SECTION 4.2  Accredited and Sophisticated Investor..........................25





                                       -3-
<PAGE>
                                    ARTICLE V

                              Conditions Precedent

SECTION 5.1  Conditions Precedent to Notes..................................25


                                   ARTICLE VI

                         Representations and Warranties

SECTION 6.1  Organization; Powers...........................................27
SECTION 6.2  Authorization: Enforceability..................................28
SECTION 6.3  Governmental Approvals: No Conflicts...........................28
SECTION 6.4  SEC Documents: Financial Condition:
                            No Material Adverse Change......................29
SECTION 6.5  Properties.....................................................29
SECTION 6.6  Litigation and Environmental Matters...........................30
SECTION 6.7  Compliance with Laws and Agreements............................30
SECTION 6.8  Investment and Holding Company Status..........................30
SECTION 6.9  Taxes..........................................................30
SECTION 6.10  ERISA.........................................................31
SECTION 6.11  Disclosure....................................................31
SECTION 6.12  Debt Agreements...............................................31
SECTION 6.13  Capitalization................................................32
SECTION 6.14  Subsidiaries and Investments..................................32
SECTION 6.15  No Burdensome Restrictions....................................33
SECTION 6.16  Private Offering by the Company...............................33


                                   ARTICLE VII

                             Affirmative Covenants

SECTION 7.1  Financial Statements and Other Information.....................32
SECTION 7.2  Notices of Material Events.....................................35
SECTION 7.3  Existence: Conduct of Business.................................36
SECTION 7.4  Payment of Obligations.........................................36
SECTION 7.5  Maintenance of Properties: Insurance...........................36
SECTION 7.6  Books and Records: Inspection Rights...........................36
SECTION 7.7  Compliance with Laws...........................................37
SECTION 7.8  Use of Proceeds................................................37
SECTION 7.9  Certain Obligations Affecting
             Subsidiaries...................................................37


                                       -4-

<PAGE>
                                  ARTICLE VIII

                               Negative Covenants

SECTION 8.1  Indebtedness...................................................37
SECTION 8.2  Liens..........................................................38
SECTION 8.3  Fundamental Changes............................................39
SECTION 8.4  Investments: Hedging Agreements................................40
SECTION 8.5  Restricted Payments............................................41
SECTION 8.6  Sale and Leasebacks............................................42
SECTION 8.7  Transactions with Affiliates...................................42
SECTION 8.8  Restrictive Agreements.........................................42
SECTION 8.9  Financial Covenants............................................43
SECTION 8.10  Modifications of Certain Documents............................44
SECTION 8.11  Nature of Business............................................44
SECTION 8.12  Sale of Subsidiaries..........................................44

                                   ARTICLE IX

                                Events of Default

SECTION 9.1  Events of Default: Remedies....................................45


                                    ARTICLE X

                              Subsidiary Guarantee

SECTION 10.1  The Guarantee.................................................47
SECTION 10.2  Obligations Unconditional.....................................47
SECTION 10.3  Reinstatement.................................................48
SECTION 10.4  Subrogation...................................................49
SECTION 10.5  Remedies......................................................49
SECTION 10.6  Instrument for the Payment of Money...........................49
SECTION 10.7  Continuing Guarantee..........................................49
SECTION 10.8  Rights of Contribution........................................49
SECTION 10.9  General Limitation on Guarantee
              Obligations...................................................50
SECTION 10.10 Subordination of Guarantees...................................51



                                       -5-

<PAGE>
                                   ARTICLE XI

                                  Subordination

SECTION 11.1  Agreement to Subordinate......................................51
SECTION 11.2  Bankruptcy, Liquidation, Dissolution,
              Etc...........................................................51
SECTION 11.3  No Payment in Certain Circumstances...........................53
SECTION 11.4  Payments Otherwise Permitted..................................54
SECTION 11.5  Subrogation...................................................54
SECTION 11.6  Provisions Solely to Define
              Relative Rights...............................................55
SECTION 11.7  No Waiver of Subordination Provisions.........................55
SECTION 11.8  Notice to Investors...........................................56
SECTION 11.9  Reliance......................................................56
SECTION 11.10 Reinstatement.................................................57
SECTION 11.11 Subsidiary Guarantees.........................................57
SECTION 11.12 Limitations on Remedies.......................................57
SECTION 11.13 Notices.......................................................57


                                   ARTICLE XII

                                  Miscellaneous

SECTION 12.1  Notices.......................................................58
SECTION 12.2  Waivers; Amendments...........................................58
SECTION 12.3  Expenses; Indemnity; Damage Waiver............................59
SECTION 12.4  Successors and Assigns........................................61
SECTION 12.5  Survival......................................................62
SECTION 12.6  Counterparts; Integration;
              Effectiveness.................................................63
SECTION 12.7  Severability..................................................63
SECTION 12.8  Governing Law; Jurisdiction;
              Consent to Service of Process.................................63
SECTION 12.9  Waiver of Jury Trial..........................................64
SECTION 12.10 Headings......................................................64
SECTION 12.11 Confidentiality...............................................64


SCHEDULE 6.06(a)           -       Litigation
SCHEDULE 6.06(b)           -       Environmental Matters
SCHEDULE 6.10              -       ERISA
SCHEDULE 6.12              -       Material Agreements
SCHEDULE 6.13              -       Capitalization
SCHEDULE 6.14(a)           -       Subsidiaries
SCHEDULE 6.14(b)           -       Investments


                                       -6-

<PAGE>



SCHEDULE 8.01              -       Indebtedness
SCHEDULE 8.02              -       Liens
SCHEDULE 8.08              -       Restrictive Agreements


EXHIBIT A - Form of Senior Subordinated Note
EXHIBIT B - Form of  Opinion  of Counsel to the Obligors
EXHIBIT C - Form of Opinion of Special New York Counsel to Chase Capital


                                       -7-

<PAGE>
                  SENIOR    SUBORDINATED    NOTE   PURCHASE    AGREEMENT   (this
"AGREEMENT"), dated as of October 31, 1997, between:

                  NUCO2 INC., a corporation  duly organized and validly existing
         under the laws of the State of Florida (the "COMPANY");

                  each of the  Subsidiaries  of the Company  appearing under the
         caption  "SUBSIDIARY  GUARANTORS" on the signature  pages hereto and/or
         which  pursuant to Section  7.09 shall  hereafter  become a  Subsidiary
         Guarantor  (each  a  "SUBSIDIARY  GUARANTOR"  and,  collectively,   the
         "SUBSIDIARY   GUARANTORS";   and,   together  with  the  Company,   the
         "OBLIGORS"); and

                  each  of  the  Investors  of  the  Notes  (as  defined  below)
         appearing  under the caption  "INVESTORS" on the signature pages hereto
         and each assignee of the rights and obligations of an Investor pursuant
         to  Section  12.04  (each,  an  "INVESTOR",   and   collectively,   the
         "INVESTORS").

                  The Company has requested that the Investors acquire the Notes
in an aggregate  principal  amount of $25,000,000 to refinance  certain existing
indebtedness  of the Company,  to finance future  acquisitions,  to make capital
expenditures  and for  working  capital and  general  corporate  purposes of the
Company and its Subsidiaries. To induce the Investors to purchase the Notes, the
Obligors  and the  Investors  propose to enter into this  Agreement  pursuant to
which the  Investors  will  purchase  the Notes  issued by the  Company  and the
Subsidiary  Guarantors  will  guarantee the payment in full of the Notes and all
other amounts payable under this Agreement.

                  Accordingly, the parties hereto agree as follows:


                                    ARTICLE I

                       DEFINITIONS AND ACCOUNTING MATTERS

                  SECTION 1.1 CERTAIN  DEFINED  TERMS.  In addition to the other
terms  defined  herein,  as used  herein,  the  following  terms  shall have the
following meanings:

                  "AFFILIATE" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,


                                       -8-

<PAGE>
Controls  or is  Controlled  by or is  under  common  Control  with  the  Person
specified;  PROVIDED  that  none  of the  initial  Investors  (or  any of  their
Affiliates) shall be deemed to be an Affiliate of the Company.

                  "ANNUALIZED  EBITDA"  means,  as at any date of  determination
thereof, EBITDA for the fiscal quarter ending on or most recently ended prior to
such date, multiplied by four.

                  "ASSET VALUE" means,  with respect to any property or asset of
the Company or any Subsidiary, as of any particular date, an amount equal to the
greater of (i) the then book value of such property or asset as  established  in
accordance  with GAAP and (ii) the then fair  market  value of such  property or
asset as  determined  in good faith by the board of  directors of the Company or
any Subsidiary.

                  "BANKRUPTCY  CODE" means the Federal  Bankruptcy Code of 1978,
as amended from time to time or any successor statute thereto.

                  "BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which  commercial banks in New York City are authorized or required
by law to remain closed.

                  "CAPITAL  EXPENDITURES"  means,  for  any  paid,  expenditures
(including,   without   limitation,   the  aggregate  amount  of  Capital  Lease
Obligations  incurred  during  such  period)  made by the  Company or any of its
Subsidiaries to acquire or construct fixed assets, property, plant and equipment
(including  renewals,  improvements  and  replacements,  but excluding  repairs)
during such paled computed in accordance with GAAP.

                  "CAPITAL   LEASE   OBLIGATIONS"   of  any  Person   means  the
obligations  of such Person to pay rent or other  amounts under any lease of (or
other arrangement  conveying the right to use) real or personal  property,  or a
combination  thereof,  which  obligations  are  required  to be  classified  and
accounted  for as capital  leases on a balance  sheet of such Person under GAAP,
and the  amount of such  obligations  shall be the  capitalized  amount  thereof
determined in accordance with GAAP.

                  "CERCLA"  means  the  Comprehensive   Environmental   Response
Compensation  and  Liability  Act, as amended by the  Superfund  Amendments  and
Reauthorization Act (42 U.S.C. ss.9601 ET SEQ.).

                  "CHANGE IN CONTROL" means:  (i) the acquisition of ownership,
directly or indirectly (in a single transaction or a sales of related


                                       -9-

<PAGE>
transactions),  beneficially  or of record,  by any Person or group  (within the
meaning of Section 13(d) and Section 14(d)(2) of the Securities  Exchange Act as
in effect on the date hereof) of shares representing more than 40% of the issued
and outstanding  common stock of the Company entitled to vote for the members of
the board of  directors  of the Company;  (ii)  occupation  of a majority of the
seats  (other than  vacant  seats) on the board of  directors  of the Company by
Persons who were neither (x)  nominated by the board of directors of the Company
nor (y) appointed by directors so nominated; or (iii) any Person or group (other
than the group in control of the  Company on the date  hereof)  shall  otherwise
directly or indirectly Control the Company.

                  "CHASE CAPITAL" means Chase Equity Associates L.P.

                  "CLOSING DATE" means October 31, 1997.

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

                  "CONSOLIDATED  EBIT" means, for any period, an amount equal to
the sum of (a) Consolidated Net Income (or loss) plus (b) to the extent deducted
in determining Consolidated Net Income (or loss), (i) provisions for taxes based
on income of the Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP,  (ii) Interest  Expense and (iii)  extraordinary  items
determined in accordance with GAAP.

                  "CONSOLIDATED  NET INCOME" means,  for any period,  net income
(or loss) of the Company and its  Subsidiaries on a consolidated  basis for such
period (taken as a single accounting period), in accordance with GAAP.

                  "CONSOLIDATED   NET   WORTH"   means,   as  of  the   date  of
determination, total shareholders' equity of the Company and its Subsidiaries on
a consolidated basis, determined in accordance with GAAP.

                  "CONTROL" means the possession, directly or indirectly, of the
power to  direct or cause the  direction  of the  management  or  policies  of a
Person,  whether  through the ability to exercise  voting power,  by contract or
otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.


                                      -10-

<PAGE>
                  "DEFAULT"  means any event or condition  which  constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.

                  "DOLLARS" or "$" refers to lawful  money of the United  States
of America.

                  "EBITDA"  means,  for any period,  the sum for the Company and
its  Subsidiaries  (determined  on a consolidated  basis without  duplication in
accordance with GAAP) of Consolidated  EBIT (i)  depreciation  and  amortization
expenses  (to the extent  deducted in  determining  Consolidated  EBIT) for such
period;  and (ii) the  historical  consolidated  EBITDA  for any Person for such
period which  accrued  prior to the date such Person  became a Subsidiary or was
merged into or consolidated  with the Company or any of its Subsidiaries or such
Person's assets ware acquired by the Company or any of its Subsidiaries (and the
underlying  records of such Person shall be audited to the extent the Company is
required  pursuant to  Regulation  S-X of the SEC to present  audited  financial
information  for such Person in documents  filed by it with the SEC). If audited
financial  records are not available for acquired  companies,  pro-forma  income
statements  (subject to review and acceptance by the Required Investors) will be
substituted.

                  "ENVIRONMENTAL  LAWS"  means  all  Federal,  state,  local and
foreign  statutes  and  codes  or  regulations,   rules  or  ordinances  issued,
promulgated,  or approved  thereunder,  now or hereafter  in effect  (including,
without  limitation,  those with  respect to  asbestos  or  asbestos  containing
material),  relating to pollution or protection of the  environment and relating
to public health and safety, relating to (i) emissions,  discharges, releases or
threatened  releases of Hazardous  Materials,  into the environment  (including,
without  limitation,  ambient air, surface water,  ground water, land surface or
subsurface  strata),  or (ii) the  manufacture,  processing,  distribution,  use
generation, treatment, storage, disposal, transport or handling of any Hazardous
Materials,   and  (iii)  underground  storage  tanks  and  related  piping,  and
emissions,  discharges  and  releases or  threatened  releases  therefrom,  such
Environmental  Laws to include,  without  limitation,  (i) the Clean Air Act (42
U.S.C.  ss.7401 ET SEQ.), (ii) the Clean Water Act (33 U.S.C.  ss.1251 ET SEQ.),
(iii) the Resource Conservation and Recovery Act (42 U.S.C. ss.6901 ET SEQ. (iv)
the Toxic Substances Control Act (15 U.S.C.
ss.2601 ET SEQ.) and (v) CERCLA, each as amended.



                                      -11-

<PAGE>
                  "ENVIRONMENTAL  LIABILITY" means any liability,  contingent or
otherwise   (including  any  liability  for  damages,   costs  of  environmental
remediation,  fines, penalties or indemnities), of the Company or any Subsidiary
directly  or  indirectly  resulting  from or  based  upon (i)  violation  of any
Environmental Law, (ii) the generation, use, handling, transportation,  storage,
treatment  or  disposal  of  any  Hazardous  Materials,  (iii)  exposure  to any
Hazardous  Materials,  (iv) the release or  threatened  release of any Hazardous
Materials  into  the  environment  or  (v)  any  contract,  agreement  or  other
consensual  arrangement  pursuant to which  liability is assumed or imposed with
respect to any of the foregoing.

                  "EQUITY  RIGHTS"  means,  with  respect  to  any  Person,  any
subscriptions,  options, warrants, commitments,  preemptive rights or agreements
of any kind (including,  without  limitation,  any stockholders' or voting trust
agreements)  for the issuance,  sale,  registration  or voting of, or securities
convertible  into,  any  additional  shams of  capital  stock of any  class,  or
partnership or other ownership interests of any type in, such Person.

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

                  "ERISA  AFFILIATE" means any trade or business (whether or not
incorporated)  that,  together with the Company, is treated as a single employer
under  Section  414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and  Section  412 of the Code,  is treated as a single  employer  under
Section 414 of the Code.

                  "ERISA EVENT means: (i) any "reportable  event", as defined in
Section 4043 of ERISA or the  regulations  issued  thereunder  with respect to a
Plan (other than an event for which the 30-day  notice  period is waived);  (ii)
the existence with respect to any Plan of an  "accumulated  funding  deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA),  whether or not
waived;  (iii) the  filing  pursuant  to  Section  412(d) of the Code or Section
303(d) of ERISA of an application  for a waiver of the minimum  funding-standard
with respect to any Plan; (iv) the incurrence by the Company or any of its ERISA
Affiliates  of any  liability  under  Title  IV of  ERISA  with  respect  to the
termination of any Plan;  (v) the receipt by the Company or any ERISA  Affiliate
from the PBGC or a plan  administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee


                                      -12-
<PAGE>
to administer  any Plan;  (vi) the incurrence by the Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer  Plan; or (vii) the receipt by the Company or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Company or any ERISA  Affiliate  of any notice,  concerning  the  imposition  of
Withdrawal  Liability or a  determination  that a  Multiemployer  Plan is, or is
expected to be, insolvent or in  reorganization,  within the meaning of Title IV
of ERISA.

                  "ERISA  PLAN" means any employee  pension  benefit plan (other
than a  Multiemployer  Plan)  subject to the  provisions of Title IV of ERISA or
Section  412 of the Code or  Section  302 of ERISA,  and in respect of which the
Company or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an  "employer" as defined in Section 3(5)
of ERISA.

                  "EVENT OF  DEFAULT"  shall have the  meaning  assigned to such
term in Section 9.01.

                  "GAAP" means generally accepted  accounting  principles in the
United States of America.

                  "GOVERNMENTAL  AUTHORITY"  means the  government of the United
States of  America,  any  other  nation or any  political  subdivision  thereof,
whether state or local, and any agency, authority,  instrumentality,  regulatory
body,  court,  central bank or other entity exercising  executive,  legislative,
judicial,   taxing,   regulatory,   monetary  or  administrative   powers  of  a
governmental nature or functions of or pertaining to government.

                  "GUARANTEE"  of or by any Person (the  "GUARANTOR")  means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of  guaranteeing  any  Indebtedness  or other  obligation of any
other  Person  (the  "PRIMARY  OBLIGOR")  in any  manner,  whether  directly  or
indirectly,  and including any obligation of the guarantor,  direct or indirect,
(i) to purchase or pay (or advance or supply  funds for the  purchase or payment
of) such  Indebtedness  or other  obligation  or to  purchase  (or to advance or
supply funds for the purchase of) any security for the payment thereof,  (ii) to
purchase or lease  property,  securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (iii)
to maintain working capital, equity capital or any other financial


                                      -13-
<PAGE>
statement  condition  or  liquidity  of the primary  obliger so as to enable the
primary  obligor  to pay such  Indebtedness  or other  obligation  or (iv) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation;  PROVIDED that the term Guarantee shall
not include  endorsements  for  collection or deposit in the ordinary  course of
business.

                  "HAZARDOUS  MATERIALS"  means  all  explosive  or  radioactive
substances  or wastes and all  hazardous  or toxic  substances,  wastes or other
pollutants,  including petroleum or petroleum distillates,  asbestos or asbestos
containing  materials,  polychlorinated  biphenyls,  radon  gas,  infectious  or
medical  wastes  and all other  substances  or wastes  of any  nature  regulated
pursuant to any Environmental Law.

                  "HEDGING  AGREEMENT" means, for any Person,  any interest rate
protection  agreement,  foreign  currency  exchange  agreement,  commodity price
protection  agreement or other  interest or currency  exchange rate or commodity
price hedging arrangement.

                  "INDEBTEDNESS" of any Person means, without  duplication:  (i)
all obligations of such Person for borrowed money;  (ii) all obligations of such
Person  evidenced  by bonds,  debentures,  notes or similar  instruments;  (iii)
financial  obligations as the issuer of capital stock  redeemable in whole or in
part at the  option  of any  Person  other  than  such  issuer,  at a fixed  and
determinable  date or upon the  occurrence  of an event or condition  not solely
within the control of such  issuer;  (iv) all  obligations  of such Person under
conditional  sale or other  title  retention  agreements  relating  to  property
acquired by such Person; (v) all financial obligations of such Person in respect
of the deferred purchase price of property or services  (excluding current trade
accounts  payable on  customary  tams and  incurred  in the  ordinary  course of
business); (vi) financial obligations under purchase money mortgages;  (vii) all
Capital Lease Obligations of such Person; (viii) all reimbursement  obligations,
contingent  or  otherwise,  of such  Person as an  account  party in  respect of
letters of credit and letters of guaranty;  (ix) all obligations,  contingent or
otherwise,  of such Person in respect of  bankers'  acceptances;  (x)  financial
obligations  under asset  securitization  vehicles;  and (xi) obligations  under
direct or indirect  Guarantees  in respect of, and  obligations  (contingent  or
otherwise) to purchase or otherwise  acquire,  or otherwise to assure a creditor
against loss in respect of,  indebtedness or financial  obligations of others of
the kinds  referred to in clauses  (i)  through (x) above,  except to the extent
such Guarantees are limited to a lesser


                                      -14-

<PAGE>
amount. The Indebtedness of any Person shall include,  without duplication,  the
Indebtedness of any other entity (including any partnership in which such Person
is a general  partner) to the extent such Person is liable  therefor as a result
of such Person's  ownership  interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness  provide that such Person is
not liable therefor.

                  "INTEREST  COVERAGE RATIO" means, as at any date, the ratio of
(i) EBITDA for the period of four consecutive  fiscal quarters ending on or most
recently ended prior to such date to (ii) Interest Expense for such period.

                  "INTEREST EXPENSE" means, without duplication, for any period,
for the Company and its  Subsidiaries  (determined  on a  consolidated  basis in
accordance with GAAP) all interest  expense in respect of Indebtedness  for such
period  (whether or not actually paid during such period and including,  without
limitation, interest expense attributable to Capital Lease Obligations).

                  "INVESTOR'S REPRESENTATIVE" means (i) Chase Capital so long as
it  shall  be a  holder  of any of the  Notes  or (ii)  otherwise,  an  Investor
designated  by the Required  Investors to act as the  Investor's  Representative
hereunder.

                  "INVESTMENT"  means,  for  any  Person:  (i)  the  acquisition
(whether for cash,  property,  services or  securities  or otherwise) of capital
stock,  bonds,  notes,  debentures,  partnership or other ownership interests or
other  securities  of any  other  Person  or any  agreement  to  make  any  such
acquisition (including,  without limitation, any "short sale" or any sale of any
securities at a time when such  securities are not owned by the Person  entering
into such sale);  (ii) the making of any deposit with,  or any advance,  loan or
other  extension  of credit to, any other  Person  (including  the  purchase  of
property  from  another  Person  subject  to  an   understanding  or  agreement,
contingent or otherwise,  to resell such property to such Person), but excluding
any such  advance,  loan or extension of credit  having a term not  exceeding 90
days arising in connection with the sale of inventory or supplies by such Person
in the ordinary course of business;  or (iii) the entering into of any Guarantee
of, or other  contingent  obligation  with  respect  to,  Indebtedness  or other
liability of any other Person and (without  duplication) any amount committed to
be advanced, lent or extended to such Person.


                                      -15-
<PAGE>
                  "LIEN"  means,  with respect to any asset,  (i) any  mortgage,
deed of trust, lien, pledge, hypothecation,  encumbrance,  assignment, charge or
security  interest in, on or of such asset,  including  without  limitation  any
agreement  to give any of the  foregoing,  (ii) the  interest  of a vendor  or a
lessor under any conditional  sale  agreement,  capital lease or title retention
agreement (or any financing lease having  substantially the same economic effect
as any of the foregoing) relating to such asset,  including any lease or similar
arrangement with a public authority  executed in connection with the issuance of
industrial  development  revenue  bonds or pollution  control  revenue bonds and
(iii) the filing of or the agreement to give any financing  statement  under the
Uniform Commercial Code (or comparable law) of any jurisdiction naming the owner
of the asset to which such lien  applies as a debtor  (other than a filing which
does not evidence an  outstanding  secured  obligation,  or a commitment to make
advances or to incur any other obligation of any kind).

                  "MARGIN  STOCK"  means  "margin  stock"  within the meaning of
Regulations G, T, U and X.

                  "MATERIAL  ADVERSE EFFECT" means a material  adverse effect on
(i) the  business,  assets,  property,  operations  or  condition,  financial or
otherwise,  of the  Company  and its  Subsidiaries  taken as a whole or (ii) the
ability  of any  Obligor  to  perform  any of its  obligations  under  the  Note
Documents.

                  "MINIMUM  NET  WORTH"  has the  meaning  set forth in  Section
8.09(c).

                  "MOODY'S" means Moody's Investors Service, Inc.

                  "MULTIEMPLOYER  PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA as to which the Company, any Subsidiary or any ERISA
Affiliate  is  obligated  to  make,  has  made,  or  will be  obligated  to make
contributions on behalf of participants who are or were employed by any of them.

                  "NET WORTH" means,  at any date,  the net worth of the Company
and its  Subsidiaries  on a consolidated  basis,  determined in accordance  with
GAAP.

                  "NOTE  DOCUMENTS"  means,  collectively,  this Agreement,  the
Notes, the Warrant Agreement and the Warrants.


                                      -16-
<PAGE>
                  "NOTES" has the meaning assigned to such term in Section 2.01,
including  any Notes issued in  substitution  for any Notes  theretofore  issued
pursuant to this Agreement.

                  "OBLIGORS"  has  the  meaning  assigned  to  such  term in the
preamble of this

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.

                  "PERMITTED ENCUMBRANCES" means:

                  (i) Liens imposed by law for taxes that are not yet due or are
         being contested in compliance with Section 7.04;

                  (ii)   carriers',   warehousemen's,   mechanics',   workmen's,
         materialmen's,  repairmen's,  statutory landlord's and other like Liens
         imposed by law, arising in the ordinary course of business and securing
         obligations  that are not  overdue  by more  than 60 days or are  being
         contested in compliance with Section 7.04;

                  (iii)  pledges and  deposits  made in the  ordinary  course of
         business  in  compliance  with  workers'   compensation,   unemployment
         insurance  and other  social  security  laws or  regulations  and Liens
         thereon;

                  (iv)  deposits  to  secure  the  performance  of  bids,  trade
         contracts,  leases,  statutory  obligations,  surety and appeal  bonds,
         performance  bonds and other obligations of a like nature, in each case
         in the ordinary course of business;

                  (v) easements, zoning restrictions,  rights-of-way and similar
         encumbrances on real property imposed by law or arising in the ordinary
         course of business that do not secure any monetary  obligations  and do
         not  materially  detract  from the value of the  affected  property  or
         interfere  with the ordinary  conduct of business of the Company or any
         Subsidiary;

                  (vi) deposits in connection with the prosecution or defense of
         any claim in any  court or  before  any  administrative  commission  or
         agency; and



                                      -17-
<PAGE>
                  (vii) Liens arising out of judgments or awards with respect to
         which the  Company  or any  Subsidiary  the time shall in good faith be
         diligently  prosecuting  an appeal or  proceedings  for review and with
         respect  to which the  Company  or any of its  Subsidiaries  shall have
         secured a stay of  execution  pending  such appeal or  proceedings  for
         review.

                  "PERMITTED INVESTMENTS" means:

                  (i) direct obligations of, or obligations the principal of and
         interest on which are unconditionally  guaranteed by, the United States
         of America (or by any agency thereof to the extent such obligations are
         backed by the full faith and credit of the United  States of  America),
         in each case  maturing  within  one year  from the date of  acquisition
         thereof;

                  (ii)  investments in commercial paper maturing within one year
         from  the date of  acquisition  thereof  and  having,  at such  date of
         acquisition,  the highest  credit  rating  obtainable  from S&P or from
         Moody's; and

                  (iii)   investments  in  certificates  of  deposit,   banker's
         acceptances and time deposits maturing within one year from the date of
         acquisition  thereof  issued or guaranteed by or placed with, and money
         market deposit accounts issued or offered by, any office located in the
         United States of any commercial  bank or trust company  organized under
         the laws of the United States of America or any State thereof which has
         a combined  capital and surplus and undivided  profits of not less than
         $500,000,000,  including  without  limitation,  any  such  deposits  in
         Eurodollars  issued by a foreign branch of any such  commercial bank or
         trust company.

                  "PERSON" means any natural person,  corporation,  partnership,
limited liability company, trust, joint venture,  association,  company or other
organization, whether or not legal entity, and any Governmental Authority.

                  "PLAN" means any employee benefit plan, program,  arrangement,
practice  or  contract,  maintained  by or on behalf of the  Company or an ERISA
Affiliate,  which provides benefits or compensation to or on behalf of employees
or  former  employees,  whether  formal or  informal,  whether  or not  written,
including, but not limited to, the following types of plans:


                                      -18-
<PAGE>
                  (i) EXECUTIVE ARRANGEMENTS. Any bonus, incentive compensation,
         stock option,  deferred compensation,  commission,  severance,  "golden
         parachute",  "rabbi  trust",  or  other  executive  compensation  plan,
         program, contract arrangement or practice;

                  (ii) ERISA PLANS.  Any  "employee  benefit plan" as defined in
         ERISA, including, but not limited to, any defined benefit pension plan,
         profit  sharing plan,  money purchase  pension plan,  savings or thrift
         plan,  stock bonus plan,  employee stock ownership plan,  Multiemployer
         Plan, or any plan, fund, program, arrangement or practice providing for
         medical (including post-retirement medical), hospitalization, accident,
         sickness, disability, or life insurance benefits;

                  (iii) OTHER  EMPLOYEE  FRINGE  BENEFITS.  Any stock  purchase,
         vacation,  scholarship, day care, prepaid legal services, severance pay
         or fringe benefit plan, program, arrangement, contract or practice.

                  "QUALIFIED  INVESTOR"  means (i) any  initial  Investor of the
Notes and (ii) any bank, trust company,  savings and loan  association,  pension
plan,  investment  company,  insurance  company,  broker,  dealer  or any  other
financial institution or entity, regardless of legal form.

                  "REGULATIONS G, T, U AND X" means,  respectively,  Regulations
G. T. U and X of the Board of  Governors of the Federal  Reserve  System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.

                  "RELATED PARTIES" means, with respect to any specified Person,
such Person's  Affiliates  and the  respective  directors,  officers,  partners,
employees, agents and advisors of such Person and such Person's Affiliates.

                  "RELEASE"  means  any  release,   spill,  emission,   leaking,
pumping,  injection,  deposit,  disposal,  discharge,   dispersal,  leaching  or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous  Materials  through ambient air, soil,  surface water,
ground water, wetlands, land or subsurface strata.

                  "REQUIRED INVESTORS" means, at any time, Investors holding at
least 51% in aggregate principal amount of the Notes at the time


                                      -19-
<PAGE>
outstanding  (exclusive  of  Notes  then  owned  by  the  Company  or any of its
Affiliates).

                  "RESTRICTED   PAVEMENT"  means:  (i)  any  dividend  or  other
distribution (whether in cash, securities or other property) with respect to any
shares of any class of capital  stock of the Company or any of its  Subsidiaries
other than  dividends  paid by a  Subsidiary  to the  Company;  (ii) any payment
(whether in cash,  securities or other property),  including any sinking fund or
similar   deposit,   on  account  of  the  purchase,   redemption,   retirement,
acquisition,  cancellation or termination of any such shares of capital stock of
the Company or any of its Subsidiaries or any option,  warrant or other right to
acquire  any  such  shares;  (iii)  any  payment  on  account  of the  purchase,
redemption, conversion, exchange, retirement, acquisition, defeasance or sinking
fund payment with respect to any  Indebtedness  that is junior or subordinate to
the Notes;  and (iv) any payment made to retire,  or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of capital stock of the Company or any of its Subsidiaries.

                  "S&P" means Standard ~ Poor's Ratings Services,  a division of
The McGraw-Hill Companies, Inc.

                  "SEC" means the  Securities  and  Exchange  Commission  or any
successor

                  "SECURITIES  ACT" means the Securities Act of 1933, as amended
and in effect

                  "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended and in effect from time to time.

                  "SENIOR CREDIT AGREEMENT" means the Revolving Credit Agreement
dated as of October 31, 1997 between the Company, the lenders party thereto from
time to time and Suntrust Bank, South Florida,  National Association,  agent for
such  lenders,   as  executed  and  delivered  on  the  Closing  Date,  and  any
refinancing, refunding, extension or renewal thereof (whether or not with any of
the  lenders  or the agent for such  lenders  then  party to the  Senior  Credit
Agreement),  in each case,  at any time amended or modified in  accordance  with
Section 8.1 0(a).

                  "SENIOR CREDIT  DOCUMENTS"  means the Senior Credit  Agreement
and all other documents and agreements originally executed and delivered


                                      -20-
<PAGE>
thereunder,  in each case,  as the same shall,  subject to Section  8.10(a),  be
modified and supplemented and in effect from time to time.

                  "SENIOR DEBT" means the following  obligations  of the Company
and its

                  (i) with  respect to the Company,  all  principal of the loans
         outstanding  under the Senior Credit  Agreement,  all interest  thereon
         (including  any interest  accruing  after the date of any filing by the
         Company  of  any  petition  in  bankruptcy  or  the  commencing  of any
         bankruptcy,  insolvency  or  similar  proceedings  with  respect to the
         Company  whether  or not the  same is  allowed  as a claim  in any such
         proceeding) and all other amounts outstanding thereunder, including all
         expenses (including, without limitation,  attorneys' fees), indemnities
         and penalties and all commitment,  facility and administrative,  agency
         or other  similar  fees  payable by the Company from time to time under
         the Senior  Credit  Documents,  and including  any  obligations  of the
         Company in respect  of Hedging  Agreements  owing to one or more of the
         lenders under Senior Credit Agreement that are required by the terms of
         the Senior Credit Agreement;

                  (ii) with respect to the Company,  additional  Indebtedness in
         an aggregate principal amount up to but not exceeding $10,000,000 under
         or in respect  of (x) the  Senior  Credit  Agreement  and (y)any  other
         instrument evidencing such Indebtedness;  PROVIDED that, in the case of
         clause (y) only, such  Indebtedness is specifically  designated in such
         other instrument as "Senior Debt" for purposes of this Agreement;

                  (iii) with  respect to the  Company,  additional  Indebtedness
         under or in  respect  of (x) the Senior  Credit  Agreement  and (y) any
         other instrument evidencing such Indebtedness; PROVIDED that (i) in the
         case of clause (y) only, such  Indebtedness is specifically  designated
         in  such  other  instrument  as  "Senior  Debt"  for  purposes  of this
         Agreement  and (ii)  after  giving  effect  to the  Incurrence  of such
         Indebtedness (and the application of the proceeds thereof),  the Senior
         Debt Incurrence Ratio is less than or equal to 4.00 to 1.00;

                  (iv) with respect to any Subsidiary  Guarantor,  the Guarantee
         of such  Subsidiary  Guarantor  in respect  of any  Senior  Debt of the
         Company; and



                                      -21-
<PAGE>
                  (v) with  respect to the  Company,  any and all  refinancings,
         replacements or refundings of any of the amounts referred to in clauses
         (i), (ii) and (iii) above;  PROVIDED that the refinancing,  replacement
         or  refunding  of Senior Debt  incurred  under said clause  (iii) shall
         constitute  Senior Debt only to the extent that, after giving effect to
         such refinancing,  replacement or refunding (and the application of the
         proceeds  hereof),  the Senior  Debt  Incurrence  Ratio is less than or
         equal to 4.00 to 1.00;

PROVIDED  that the aggregate  principal  amount of Senior Debt  permitted  under
clauses (i) and (ii) above  (together  with the amount of obligations in respect
of Hedging  Agreements  referred to in said clause  (i)),  and any  refinancing,
replacement or refunding thereof permitted under clause (v) above (including the
maximum  amount of the  aggregate  commitments  of the  lenders  to  extend  any
revolving credit facility  thereunder)  shall not exceed at any time $60,000,000
MINUS the  aggregate  amount of (x)  permanent  reductions  in revolving  credit
commitments  thereunder and (y)  prepayments of any term loans made from time to
time in respect of the Senior Debt.

                  "SENIOR DEBT  INCURRENCE  RATIO"  means,  for any period,  the
ratio of (i) Senior Funded Debt to (ii) Annualized EBITDA.

                  "SENIOR DEBT  REPRESENTATIVE"  means (i)  initially,  Suntrust
Bank, South Florida, National Association and (ii) thereafter, such other holder
of Senior Debt notified in writing to each Investor pursuant to Section 11.13.

                  "SENIOR   FUNDED  DEBT"   means,   for  the  Company  and  its
Subsidiaries, on a consolidated basis, indebtedness for borrowed money, purchase
money mortgages,  capitalized  leases,  outstandings under asset  securitization
vehicles,   conditional   sales  contracts  and  similar  title  retention  debt
instruments,  including any current maturities of such indebtedness,  MINUS cash
and cash equivalents and excluding Indebtedness hereunder and under the Notes.

                  "SUBSIDIARY"  means, with respect to any Person (the "parent")
at  any  date,  any  corporation,   limited  liability   company,   partnership,
association  or other  entity the accounts of which would be  consolidated  with
those of the parent in the parent's  consolidated  financial  statements if such
financial  statements  were prepared in accordance with GAAP as of such date, as
well  as  any  other  corporation,   limited  liability  company,   partnership,
association or other entity of which


                                      -22-
<PAGE>
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary  voting power or, in the case of a partnership,
more than 50% of the general partnership  interests are, as of such date, owned,
controlled or held. Unless otherwise specified,  "Subsidiary" and "Subsidiaries"
shall mean a Subsidiary and Subsidiaries, respectively, of the Company.

                  "TAX" means, with respect to any Person, any Federal, state or
foreign tax,  assessment,  customs duties or other governmental  charge, levy or
assessment  (including  any  withholding  tax)  upon  such  Person  or upon such
Person's assets, revenues, income or profits.

                  "TOTAL  NET  FUNDED  DEBT"  means,  for  the  Company  and its
Subsidiaries on a consolidated basis,  indebtedness for borrowed money, purchase
money mortgages,  capitalized  leases,  outstandings under asset  securitization
vehicles,   conditional   sales  contracts  and  similar  title  retention  debt
instruments, including any current maturities of such indebtedness, which by its
terms matures more than one year from the date of any calculation thereof and/or
which is renewable or  extendable at the option of the  obligor(s)  thereof to a
date beyond one year from such date, MINUS cash and cash equivalents.

                  "TOTAL NET FUNDED DEBT COVERAGE RATIO" means,  for any period,
the ratio of (i) Total Net Funded. Debt to (ii) Annualized EBITDA.

                  "TRANSACTIONS"  means the execution,  delivery and performance
by the  Obligors of this  Agreement,  the issuance of the Notes and the w of the
proceeds  thereof in  accordance  with the preamble of this  Agreement,  and the
execution,  delivery and performance by the Company of the Warrant Agreement and
the issuance of the Warrants thereunder.

                  "WARRANT  AGREEMENT"  means the Warrant  Agreement dated as of
the date  hereof  between the  Company  and the  holders of the  Warrants  party
thereto pursuant to which the Warrants are issued, as amended and in effect from
time to time.

                  "WARRANTS" means each of the warrants issued to the holders of
the Warrants on the Closing Date  pursuant to the Warrant  Agreement,  including
any warrants issued in replacement or substitution thereof.

                  "WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer


                                      -23-
<PAGE>
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

                  SECTION 1.2 TERMS  GENERALLY.  The definitions of terms herein
shall  apply  equally to the  singular  and plural  forms of the terms  defined.
Whenever the context may require,  any pronoun shall  include the  corresponding
masculine,  feminine  and neuter  forms.  The words  "include",  "includes"  and
"including"  shall be deemed to be followed by the phrase "without  limitation".
The word "will"  shall be  construed  to have the same meaning and effect as the
word "shall".  Unless the context  requires  otherwise (a) any  definition of or
reference  to any  agreement,  instrument  or  other  document  herein  shall be
construed as referring to such  agreement,  instrument or other document as from
time to  time  amended,  supplemented  or  otherwise  modified  (subject  to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any  reference  herein to any Person  shall be  construed  to  include  such
Person's  successors  and  assigns,   (c)  the  words  "herein",   "hereof"  and
"hereunder",  and words of similar  import,  shall be construed to refer to this
Agreement in its entirety and not to any particular  provision  hereof,  (d) all
references  herein  to  Articles,  Sections,  Exhibits  and  Schedules  shall be
construed to refer to Articles and Sections of, and Exhibits and  Schedules  to,
this  Agreement and (e) the words "asset" and  "property"  shall be construed to
have the same  meaning  and  effect  and to  refer to any and all  tangible  and
intangible  assets and  properties,  including  cash,  securities,  accounts and
contract rights.

                  SECTION  1.3  ACCOUNTING  TERMS;  GAAP.  Except  as  otherwise
expressly  provided herein, all terms of an accounting or financial nature shall
be construed in accordance  with GAAP, as in effect from time to time;  PROVIDED
that,  if the  Company  notifies  the  Investors  that (be  Company  requests an
amendment  to any  provision  hereof  to  eliminate  the  effect  of any  change
occurring  after the date  hereof in GAAP or in the  application  thereof on the
operation of such  provision  (or if the Required  Investors  notify the Company
that they  request an  amendment  to any  provision  hereof  for such  purpose),
regardless  of whether any such  notice is given  before or after such change in
G^AP or in the application thereof,  then such provision shall be interpreted on
the basis of GAAP as in effect and applied  immediately before such change shall
have  become  effective  until such  notice  shall have been  withdrawn  or such
provision  amended in accordance  herewith.  To enable the ready and  consistent
determination  of compliance  with the covenants set forth in Article VIII,  the
Company  will not change  the last day of its  fiscal  year from June 30 of each
year, or the last days of the first three


                                      -24-
<PAGE>
fiscal  quarters in each of its fiscal years from September 30, December 31, and
March 31 of each year, respectively.


                                   ARTICLE II

                            AMOUNT AND TERMS OF NOTES

                  SECTION  2.1  COMMITMENTS.  Subject  to and upon the terms and
conditions set forth herein, each Investor severally agrees to purchase from the
Company,  and the  Company  agrees  to issue to such  Investor,  its 12%  Senior
Subordinated Note (each a "Not_" and, collectively, the "Notes"), which Note (i)
shall be issued on the Closing  Date and (ii) shall be  purchased at par by such
Investor in an amount equal to the principal  amount sod forth opposite its name
on the signature pages hereto.

                  SECTION 2.2  DISBURSEMENT  OF FUNDS.  Each Investor shall make
available all amounts to be funded by such Investor  under this Agreement on the
Closing  Date in  immediately  available  funds to the account  specified by the
Company.

                  SECTION 2.3 NOTES.

                  (a)  The  Company's  obligation  to pay the  principal  of and
interest  on  all  the  Notes  issued  by  it  shall  be  evidenced  by a  Note,
substantially  in the form of  Exhibit A, duly  executed  and  delivered  by the
Company with blanks appropriately completed in conformity herewith.

                  (b) Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of any Note, and (in case of loss,
theft or destruction) of indemnity  satisfactory to it (the relevant  Investor's
undertaking  shall  be  satisfactory   indemnity  in  case  of  loss,  theft  or
destruction of any Note owned by such Investor),  and upon  reimbursement to the
Company of all reasonable expenses  incidental  thereto,  and upon surrender and
cancellation  of such  Note,  if  mutilated,  the  Company  will pay any  unpaid
principal, interest and prepayment charge then or theretofore due and payable on
such  Note and will  deliver  in lieu of such  Note a new Note in the  remaining
unpaid principal amount thereof and carrying the same rights to interest (unpaid
and to accrue).

                  (c)  Except to the  extent  otherwise  provided  herein,  each
payment of principal of Notes by the Company shall be made for account


                                      -25-
<PAGE>
of the Investors pro rata in accordance  with the  respective  unpaid  principal
amounts of the Notes held by them and each  payment of  interest on Notes by the
Company shall be made for account of the  Investors pro rata in accordance  with
the amounts of  interest  on such Notes then due and  payable to the  respective
Investors.

                  SECTION 2.4  INTEREST.

                  (a) The  unpaid  principal  amount  of each  Note  shall  bear
interest  from the  Closing  Date until  maturity  (whether by  acceleration  or
otherwise) at the rate of 12% PER ANNUM.

                  (b) Any amount  that is not paid when due  hereunder  (without
giving effect to grace  periods,  if any) shall bear interest from the date such
amount  was due  through  the date of  payment at a rate equal to 14% PER ANNUM.
Without  limiting the foregoing (but without  duplication),  upon the occurrence
and during the continuance of any Event of Default,  the principal amount of the
Notes, and all other amounts then owing hereunder,  shall bear interest for each
day during the period from and including the occurrence of such Event of Default
to but  excluding the date such Event of Default shall have been cured or waived
at a rate equal to 14% PER ANNUM.

                  (c) Interest  shall accrue from and including the Closing Date
to but  excluding  the date of any  payment  thereof  and shall be  payable,  in
immediately  available  funds,  semiannually  in arrears on the 30th day of each
April and 31st day of each  October,  commencing  on April 30, 1998,  and on any
prepayment (on the amount  prepaid),  at maturity  (whether by  acceleration  or
otherwise) and, after such maturity, on demand.

                  (d) All computations of interest hereunder and under the Notes
shall be made on the basis of a 360-day year  consisting of twelve 30-day months
and shall be payable for the actual number of days elapsed  (including the first
day but excluding the date of payment thereof).

                  SECTION 2.5 SEVERAL  OBLIGATIONS;  REMEDIES  INDEPENDENT.  The
failure  of any  Investor  to  purchase  the Note to be  purchased  by it on the
Closing Date shall not relieve any other  Investor of its obligation to purchase
its Note on such date, but no Investor  shall be responsible  for the failure of
the  other  Investor  to  purchase  its Note,  and no  Investor  shall  have any
obligation  to any other  Investor for the failure by such  Investor to purchase
any Note required to be purchased by such


                                      -26-

<PAGE>
Investor. The amounts payable by the Company at any time hereunder and under the
Notes  to each  Investor  shall  be a  separate  and  independent  debt and each
Investor shall be entitled to protect and enforce its rights arising out of this
Agreement  and the Notes held by it, and it shall not be necessary for any other
Investor to consent to, or be joined as an additional  party in, any proceedings
for such purposes.

                                   ARTICLE III

                              PREPAYMENTS: PAYMENTS

                  SECTION 3.1 OPTIONAL PREPAYMENTS.

                  (a) The Company  may,  at its option,  upon notice as provided
below,  prepay all or,  from time to time,  part of the Notes at any time at the
following prices  (expressed in percentages of principal  amount) in each of the
years listed below, in each case,  together with interest  accrued and unpaid on
the Notes (or part thereof, as the case may be) to the prepayment date:


            YEAR                                      PRICE

From the Closing Date through                         106%
October 31, 1998
From November 1, 1998 through                         104%
October 31, 1999
From November 1, 1999 through                         102%
October 31, 2000
From November 1, 2000 and                             100%
thereafter

                  (b) The Company  will give each holder of the Notes  notice of
each optional  prepayment under paragraph (a) of this Section 3.01 not less than
20 days prior to the date fixed for such  prepayment,  specifying such date, the
aggregate  principal  amount  of the  Notes  to be  prepaid  on such  date,  the
principal  amount of each Note held by such holder to be prepaid the interest to
be prepaid to the prepayment  date with respect to such  principal  amount being
prepaid and the premium (if any) due in connection with such prepayment.



                                      -27-
<PAGE>
                  (c) In the case of each partial  prepayment of the Notes,  the
principal  amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time  outstanding in proportion,  as nearly as practicable,  to the
respective  unpaid  principal   amounts  thereof  not  theretofore   called  for
prepayment.  At the request of the Company, any Note which is to prepaid only in
part shall be surrendered to the Company by the holder thereof,  and the Company
shall  issue to such holder a new Note equal in  principal  amount to the unpaid
portion of the surrendered  Note (after giving effect to such prepayment) and in
the form of Exhibit A.

                  (d) In the event of a Change in Control,  any  Investor  shall
have the option to require  the  Company  to  repurchase  the Notes held by such
Investor at a price equal to 101% of the principal  amount of such Notes if such
Change in Control  occurs prior to the third  anniversary of the date hereof and
thereafter  at a price equal to 100% of the principal  amount of such Notes,  in
each  case,  together  with  interest  accrued  and unpaid on the Notes (or part
thereof, as the case may be) to the payment date. Not less than 20 days prior to
the anticipated  date of consummation of any transaction  that would result in a
Change in Control,  the Company will give each Investor  written  notice of such
pending transaction (with a copy to the Senior Debt Representative in the manner
set forth in Section 11.13).  Any Investor may exercise its right to require the
Company to  repurchase  the Note(s) held by it in  accordance  with this Section
3.01(d)  by  delivering  written  notice of such  exercise  within 20 days after
receipt of the written  notice from the Company of the pending  transaction  and
the Company  shall  repurchase  all of the Notes of the  Investors so exercising
such rights not later than the date of consummation of such Change in Control.

                  (e) In the case of each  prepayment of Notes  pursuant to this
Section 3.01,  the principal  amount of each Note to be prepaid shall mature and
become  due and  payable on the date fixed for such  prepayment,  together  with
interest  and premium (if any) on such  principal  amount  accrued to such date.
From and after such date,  unless the Company  shall fail to pay such  principal
amount when so due and payable,  together with the interest thereon, interest on
such  principal  amount shall cease to accrue.  Any Note paid or prepaid in full
shall be surrendered to the Company and canceled and shall not be reissued,  and
no Note shall be issued in lieu of any prepaid principal amount of any Note.

                  (f) The  Company  will  not and  will  not  permit  any of its
Affiliates to purchase, redeem, prepay or otherwise acquire, directly or


                                      -28-
<PAGE>
indirectly,  any of the outstanding  Notes except upon the payment or prepayment
of the Notes in  accordance  with the terms of this  Agreement  or  otherwise on
terms identical to those offered to all the other Investors (whether or not such
terms have  actually  been  accepted by all the  Investors).  The  Company  will
promptly  cancel  all Notes  acquired  by it or any  Affiliate  pursuant  to any
payment,  prepayment  or purchase of Notes  pursuant  to any  provision  of this
Agreement  and no Notes may be issued in  substitution  or exchange for any such
Notes.

                  SECTION 3.2 METHOD AND PLACE OF PAYMENT.  Except as  otherwise
specifically provided herein, all payments under this Agreement shall be made to
any Investor, not later than 1:00 p.m. (New York time) on the date when due, and
shall be made in immediately available funds in dollars to the account specified
therefor by such Investor. Any payments under this Agreement and the Notes which
are made by the Company  later than 1:00 p.m. (New York time) shall be deemed to
have been made on the next succeeding  Business Day.  Anything in this Agreement
or the Notes to the contrary  notwithstanding,  any payment of principal  of, or
premium or interest on any Note that is due on a date other than a Business  Day
shall  be made  on the  next  succeeding  Business  Day  without  including  the
additional days elapsed in the computation of the interest  payable on such next
succeeding Business Day.


                                   ARTICLE IV

                        REPRESENTATIONS OF THE INVESTORS

         Each Investor severally represents to the Company as follows:

         SECTION 4.1 PURCHASE FOR  INVESTMENT.  Such Investor is purchasing  the
Notes to be  purchased  by it on the Closing  Date for its own  general  account
and/or for one or more separate accounts maintained by it and not with a view to
any  distribution of the Notes that would be in violation of the securities laws
of the  United  States of  America  or any  State  thereof,  without  prejudice,
however,  to such Investor's right at all times to sell or otherwise  dispose of
all or any part of the Notes under an exemption from such registration available
under the  Securities Act  (including,  without  limitation,  Rules 144 and 144A
promulgated thereunder),  and subject,  nevertheless,  to the disposition of its
property  being at all times  within  its  control  and  subject to the terms of
Section 12.04.



                                      -29-
<PAGE>
                  SECTION  4.2  ACCREDITED  AND  SOPHISTICATED   INVESTOR.  Such
Investor  (a) is an  "accredited  investor"  as  defined  in Rule  501(a) of the
Securities Act, and (b) by reason of its business and financial experience,  has
such knowledge,  sophistication and experience in business and financial matters
so as to be  capable  of  evaluating  the  merits  and risks of the  prospective
investment in the Notes,  is able to bear the economic  risk of such  investment
and is able to  afford  a  complete  loss of such  investment,  and (c) has been
afforded the  opportunity to make inquiries of management of the Company and has
made its own  investigation  whether or not to purchase  Notes and in making its
decision has not relied in any way on the fact that any other Person has decided
to purchase Notes under this Agreement.


                                    ARTICLE V

                              CONDITIONS PRECEDENT

                  SECTION 5.1 CONDITIONS  PRECEDENT TO NOTES. The obligations of
the Investors to purchase the Notes issued by the Company hereunder are subject,
at the time of the purchase of the Notes,  to the  satisfaction of the following
conditions:

                  (a) CORPORATE  DOCUMENTS.  Certified copies of the charter and
by-laws (or equivalent documents) of each Obligor and of all corporate authority
for each Obligor (including,  without limitation,  board of director resolutions
and evidence of the incumbency, including specimen signatures, of officers) with
respect to the execution, delivery and performance of such of the Note Documents
to which such  Obligor is intended  to be a party and each other  document to be
delivered by such Obligor from time to time in connection herewith and the Notes
hereunder  (each Investor may  conclusively  rely on such  certificate  until it
receives notice in writing from such Obligor to the contrary).

                  (b) OFFICER'S  CERTIFICATE.  A certificate of a senior officer
of the Company,  dated the Closing  Date, to the effect set forth in clauses (a)
and (b) of Section 5.02.

                  (c) OPINION OF COUNSEL TO THE OBLIGORS. An opinion,  dated the
Closing  Date,  of  Olshan  Grundman  Frome &  Rosenzweig  LLP,  counsel  to the
Obligors,   and/or  other   counsel   satisfactory   to  the  Required   Lenders
substantially  in the form of Exhibit B (and each Obligor hereby  instructs such
counsel to deliver such opinion to the Investors).


                                      -30-
<PAGE>
                  (d) OPINION OF SPECIAL NEW YORK COUNSEL TO THE  INVESTORS.  An
opinion, dated the Closing Date, of Milbank, Tweed, Hadley & McCloy, special New
York counsel to Chase Capital, substantially in the forth of Exhibit C.

                  (e) NOTES. One or more Notes,  duly completed and executed for
each Investor.

                  (f) WARRANT AGREEMENT.  The Warrant  Agreement,  duly executed
and delivered by each of the parties  thereto,  and the Warrants  required to be
issued under  Section 2.02 of the Warrant  Agreement as of the Closing Date duly
issued and delivered to each of the initial  holders of the Warrants as provided
in the  Warrant  Agreement,  and each of the other  agreements  and  instruments
contemplated  to be  executed  and/or  delivered  thereunder,  in each case duly
executed and/or delivered.

                  (g) SENIOR CREDIT  AGREEMENT.  Evidence that the Senior Credit
Agreement  providing  for  commitments  to extend  credit to the  Company  in an
aggregate  principal  amount of at least  $50,000,000  and otherwise in form and
substance  satisfactory  to the Investors shall have been executed and delivered
by each of the  parties  thereto  and shall be in effect,  and that the  initial
loans thereunder shall have been made to the Company (or contemporaneously  with
the purchase of the Notes hereunder shall be made), and the Investors shall have
received  copies of the Senior  Credit  Agreement  and,  upon the request of the
Investors,  each of the other Senior Credit  Documents  delivered  thereunder in
connection with the initial  borrowing  thereunder,  in each case certified by a
senior officer of the Company.

                  (h)  REPAYMENT  OF EXISTING  INDEBTEDNESS.  Evidence  that the
principal  of and interest  on, and all other  amounts  owing in respect of, the
Indebtedness  (including,  without  limitation,  any contingent or other amounts
payable in respect of letters of credit),  if any,  indicated  on Schedule  8.01
that  is to be  repaid  on the  Closing  Date  shall  have  been  (or  shall  be
simultaneously)  paid in full,  that any  commitments to extend credit under the
agreements or instruments relating to such Indebtedness shall have been canceled
or terminated and that all Guarantees in respect of, and all Liens securing, any
such Indebtedness shall have been released (or arrangements  satisfactory to the
Required Lenders for such release shall have been made).

                  (i) FINANCIAL STATEMENTS.  The Investors shall have received
the financial statements referred to in Section 6.04.


                                      -31-
<PAGE>
                  (j) OTHER  DOCUMENTS.  Such other documents as any Investor or
special New York counsel to the Investors may reasonably request.

The obligation of any Investor to purchase its Note hereunder is also subject to
the payment or delivery by the Company of such fees and other  consideration  as
the Company  shall have agreed to pay or deliver to any Investor or an Affiliate
thereof in connection herewith,  including,  without limitation,  the reasonable
fees and expenses of Milbank,  Tweed, Hadley & McCloy,  special New York counsel
to Chase Capital, in connection with the negotiation, preparation, execution and
delivery of the Note  Documents  and the issuance of the Notes  hereunder and of
the Warrants under the Warrant Agreement (to the extent that statements for such
fees and expenses have been delivered to the Company).

                  SECTION 5.2 OTHER CONDITIONS PRECEDENT.  The obligation of any
Investor to purchase  its Note  hereunder  is subject to the further  conditions
precedent  that,  both  immediately  prior to the purchase of such Note and also
after giving effect thereto and to the intended use thereof:

                  (a) no Default shall have occurred and be continuing; and

                  (b) the  representations and warranties made by the Company in
Article VI shall be true and correct on and as of the Closing Date with the same
force  and  effect  as if  made  on  and  as of  such  date  (or,  if  any  such
representation  or  warranty  is  expressly  stated  to have  been  made as of a
specific date, as of such specific date).


                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to the Investors that:

         SECTION  6.1  ORGANIZATION;   POWERS.  Each  of  the  Company  and  its
Subsidiaries is duly organized,  validly existing and in good standing under the
laws of the jurisdiction of its respective organization, has all requisite power
and  authority to carry on its business as now conducted  and,  except where the
failure to do so,  individually  or in the  aggregate,  could not  reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good  standing  in, every  jurisdiction  where such  qualification  is
required. The Company


                                      -32-
<PAGE>
and its Subsidiaries  are adequately  capitalized for the purposes of conducting
their  respective  businesses,  and the  Company  was not formed  solely for the
purpose of acting as agent for, or as an instrumentality of, any Subsidiary.

                  SECTION 6.2  AUTHORIZATION:  ENFORCEABILITY.  The Transactions
are within each Obligor's  corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of this Agreement
and the  Notes  have  been duly  executed  and  delivered  by each  Obligor  and
constitutes a legal, valid and binding  obligation of each Obligor,  enforceable
in accordance  with its  respective  terms,  subject to  applicable  bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally  and subject to general  principles  of equity,  regardless of whether
considered in a proceeding in equity or at law.

                  SECTION  6.3  GOVERNMENTAL   APPROVALS:   NO  CONFLICTS.   The
Transactions  (a) do not require any consent or  approval  of,  registration  or
filing with, or any other action by, any  Governmental  Authority by the Company
and its Subsidiaries,  except such as have been obtained or made and are in full
force and effect,  (b) will not violate any  applicable law or regulation or the
charta,  by-laws or other  organizational  documents of the Company or of any of
its  Subsidiaries  or any  order  of any  Governmental  Authority,  (c) will not
violate or result in a default under any indenture,  agreement or other material
instrument binding upon the Company or of any of its Subsidiaries or its assets,
or give rise to a right  thereunder  to  require  any  payment to be made by the
Company or of any of its  Subsidiaries,  and (d) will not result in the creation
or  imposition  of  any  Lien  on any  asset  of  the  Company  or of any of its
Subsidiaries.  Neither the Company nor any of its  Subsidiaries is a party to or
otherwise  subject to any  provision  contained  in, any  instrument  evidencing
Indebtedness of the Company and its Subsidiaries, any agreement relating thereto
or any other  contract  or  agreement,  other than the Senior  Credit  Agreement
(including the charter, by-laws or other organizational documents of the Company
and  its  Subsidiaries)  which  limits  the  amount  of,  or  otherwise  imposes
restrictions on the incurring of Indebtedness of the type to be evidenced by the
Notes.

                  SECTION 6.4 SEC DOCUMENTS:  FINANCIAL  CONDITION:  NO MATERIAL
ADVERSE CHANGE.

                  (a) The  Company  has filed in a timely  manner all  documents
that the Company was required to file with the Commission under Sections


                                      -33-
<PAGE>
13, 14(a) and 15(d) of the  Securities  Exchange Act,  since its initial  public
offering.  As of their  respective  filing  dates,  all  documents  filed by the
Company with the SEC ("SEC  Documents")  complied in all material  respects with
the  requirements  of the  Securities  Exchange  Act or the  Securities  Act, as
applicable. None of the SEC Documents as of their respective dates contained any
untrue  statement of a material fact or omitted to state  material fact required
to be stated therein or necessary to make the statements made therein,  in light
of the  circumstances  under which they were made, not misleading.  The fiducial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto.

                  (b) The Company has heretofore  furnished to the Investors its
audited consolidated balance sheet,  statements of income (including  supporting
footnote  disclosures)  and cash flows as of and for the fiscal  year ended June
30,  1997,  with the opinion of Cooper,  Selvin &  Strassberg  LLP,  independent
public accountants.

                  (c) The financial statements included in the SEC Documents and
the referred to in paragraph (b) above present fairly, in all material respects,
the financial  position and results of operations  and cash flows of the Company
and  its  consolidated  Subsidiaries  as of the  respective  dates  and  for the
respective  periods  in  accordance  with  GAAP  (subject,  in the  case  of any
unaudited financial statements, to customary year-end adjustments).

                  (d) Since June 30,  1997,  there has been no material  adverse
change in the business,  property or assets, operations or condition,  financial
or otherwise, of the Company and its Subsidiaries, taken as a whole.

                  SECTION  6.5  PROPERTIES.  (a)  Each  of the  Company  and its
Subsidiaries  has good title to, or valid  leasehold  interests in, all its real
and  personal  property  material  to its  business,  except  for (i)  Permitted
Encumbrances  and (ii) minor  defects in title  that do not  interfere  with its
ability to conduct  its  business  as  currently  conducted  or to utilize  such
properties for their intended purposes.

                  (b)  Each of the  Company  and its  Subsidiaries  owns,  or is
licensed  to use,  all  trademarks,  tradenames,  copyrights,  patents and other
intellectual property material to its business, and the use


                                      -34-
<PAGE>
thereof  by the  Company  and its  Subsidiaries,  to the  best of the  Company's
knowledge, does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate,  could not reasonably
be expected to result in a Material Adverse Effect.

                  SECTION 6.6 LITIGATION AND  ENVIRONMENTAL  MATTERS.  (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority now pending  against or, to the  knowledge of any Obliger,  threatened
against or  affecting  the  Company or any of its  Subsidiaries  (i) as to which
there is a  reasonable  possibility  of an adverse  determination  and that,  if
adversely  determined,  could  reasonably  be expected,  individually  or in the
aggregate,  to result in a  Material  Adverse  Effect,  except as  disclosed  in
Schedule 6.06(a), or (ii) that involve this Agreement or the Transactions.

                  (b) Except as  disclosed  in Schedule  6.06(b) and except with
respect to any other matters that,  individually or in the aggregate,  could not
reasonably  be  expected  to result in a Material  Adverse  Effect,  neither the
Company  nor  any  of its  Subsidiaries  (i)  has  failed  to  comply  with  any
Environmental Law or to obtain,  maintain or comply with any permit,  license or
other approval required under any Environmental  Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental  Liability or (iv) knows of any basis for any Environmental
Liability.

                  SECTION 6.7 COMPLIANCE WITH LAWS AND  AGREEMENTS.  Each of the
Company and its  Subsidiaries  is in compliance  with all laws,  regulations and
orders of any  Governmental  Authority  applicable to it or its property and all
indentures,  agreements and other  instruments  binding upon it or its property,
except where the failure to do so,  individually or in the aggregate,  could not
reasonably be expected to result in a Material  Adverse  Effect.  No Default has
occurred and is continuing.

                  SECTION 6.8 INVESTMENT AND HOLDING COMPANY STATUS. Neither the
Company nor any of its  Subsidiaries  is (a) an "investment  company" as defined
in, or subject to regulation under, the Investment  Company Act of 1940 or (b) a
"holding  company" as defined  in, or subject to  regulation  under,  the Public
Utility Holding Company Act of 1935.

                  SECTION 6.9 TAXES.  Each of the  Company and its  Subsidiaries
has timely  filed or caused to be filed all tax returns and reports  required to
have been filed and has paid or caused to be paid all Taxes


                                      -35-
<PAGE>
required to have been paid by it,  except (a) Taxes that are being  contested in
good  faith  by  appropriate  proceedings  and for  which  the  Company  or such
Subsidiary,  as applicable,  has set aside on its books adequate reserves or (b)
to the extent  that the  failure to do so could not  reasonably  be  expected to
result in a Material Adverse Effect.

                  SECTION 6.10  ERISA.  Except as disclosed in Schedule 6.10:

                  (a)  IDENTIFICATION  OF PLANS. (i) Neither the Company nor any
ERISA  Affiliate  maintains or contributes  to, or has maintained or contributed
to, any Plan that is an ERISA Plan and (ii)  neither  the Company nor any of its
Subsidiaries  maintains or contributes  to, or has maintained or contributed to,
any  Plan  that  is an  "Executive  Arrangement"  (as  that  term is used in the
definition of "Plane);

                  (b) COMPLIANCE. Each Plan has at all times been maintained, by
its terms and in operation, in accordance with all applicable laws, except where
such  noncompliance  (when taken as a whole)  would not have a Material  Adverse
Effect;

                  (c)   LIABILITIES.   Neither   the  Company  nor  any  of  its
Subsidiaries is currently making,  nor has in the last 6 years been obligated to
make,  contributions (directly or indirectly) to a Multiemployer Plan, nor is it
currently  nor will it become  subject to any  liability  (including  withdrawal
liability),  tax or penalty  whatsoever to any Person whomsoever with respect to
any Plan including,  but not limited to, any tax,  penalty or liability  arising
under Title I or Title IV or ERISA or Chapter 43 of the Code,  except where such
liabilities  (when taken as a whole) would not have a Material  Adverse  Effect;
and

                  (d)  FUNDING.  The Company and each ERISA  Affiliate  has made
full and timely payment of all amounts (i) required to be contributed  under the
terms of each Plan and  applicable  law and (ii) required to be paid as expenses
of each Plan.  No Plan has an  "amount  of  unfunded  benefit  liabilities"  (as
defined in Section 4001(a)(18) of ERISA).

                  SECTION 6.11  DISCLOSURE.  Neither this Agreement or any other
Note Document  (including the Private  Placement  Memorandum,  dated August 1997
delivered  to  the   Investors  by  Montgomery   Securities,   relating  to  the
transactions  contemplated  hereby)  nor  any  other  document,  certificate  or
statement  furnished  to the  Investors  by or on behalf of the  Company  or any
Subsidiary in connection herewith or therewith


                                      -36-
<PAGE>
contains any untrue  statement  of a fact or omits to state a fact  necessary to
make the statements  contained herein and therein not misleading,  if, in either
case,  such fact is material to an  understanding  of the  financial  condition,
business, prospects or property of the Company or any Subsidiary, or the ability
of any Obligor to fulfill its obligations under any Note Document to which it is
a party.

                  SECTION 6.12 DEBT AGREEMENTS.

                  (a)  Schedule  6.12 is a  complete  and  correct  list of each
credit agreement,  loan agreement,  indenture,  purchase  agreement,  Guarantee,
letter of credit or other arrangement providing for or otherwise relating to any
Indebtedness  or any  extension of credit (or  commitment  for any  extension of
credit) to, or Guarantee by, the Company or any of its Subsidiaries, outstanding
on the date hereof,  and the aggregate  principal or face amount  outstanding or
that may become  outstanding under each such arrangement is correctly  described
in Schedule 6.12. There exists no default under the provisions of any instrument
evidencing or securing any  Indebtedness of the Company and its  Subsidiaries or
of any agreement otherwise relating thereto which has had or would reasonably be
expected to have a Material Adverse Effect.

                  (b) Schedule  8.02 is a complete and correct list of each Lien
securing  Indebtedness of any Person outstanding on the date hereof and covering
any  property  of the  Company  or any of its  Subsidiaries,  and the  aggregate
Indebtedness secured (or that may be secured) by each such Lien and the property
covered by each such Lien is correctly described in Schedule 8.02.

                  SECTION 6.13  CAPITALIZATION.  The authorized capital stock of
the Company  consists,  on the date hereof, of an aggregate of 35,000,000 shares
consisting of (i) 30,000,000 shares of common stock, par value $0.001 per share,
of which 7,197,718 shares are duly and validly issued and  outstanding,  each of
which shares is fully paid and  nonassessable and (ii) 5,000,000 shares of blank
check  preferred  stock,  of which no shares  are duly and  validly  issued  and
outstanding. As of the date hereof, (x) except as disclosed in Schedule 6.13 and
except as provided in the Warrant  Agreement,  there are no  outstanding  Equity
Rights with respect to the Company and (y) there are no outstanding  obligations
of the Company or any of its  Subsidiaries to repurchase,  redeem,  or otherwise
acquire any shares of capital stock of the Company nor are


                                      -37-
<PAGE>
there any outstanding  obligations of the Company or any of its  Subsidiaries to
make payments to any Person, such as "phantom stock" payments,  where the amount
thereof is calculated with reference to the fair market value or equity value of
the Company or any of its Subsidiaries.

                  SECTION 6.14 SUBSIDIARIES AND INVESTMENTS.

                  (a) Set forth in  Schedule  6.14(a) is a complete  and correct
list of all of the  Subsidiaries  of the Company as of the date hereof  together
with, for each such  Subsidiary,  (i) the  jurisdiction  of organization of such
Subsidiary,  (ii) each Person holding ownership interests in such Subsidiary and
(iii) the nature of the  ownership  interests  held by each such  Person and the
percentage  of  ownership  of such  Subsidiary  represented  by  such  ownership
interests.  Except as disclosed in Schedule 6.14(a), (x) each of the Company and
its Subsidiaries  owns, free and clear of Liens, and has the unencumbered  right
to vote, all outstanding  ownership interests in each Person shown to be held by
it in Schedule 6.14(a),  (y) all of the issued and outstanding  capital stock of
each such Person  organized as a corporation is validly  issued,  fully paid and
nonassessable  and (z) there are no  outstanding  Equity  Rights with respect to
such Person.

                  (b) Set forth in  Schedule  6.14(b) is a complete  and correct
list of all Investments  (other than Permitted  Investments) held by the Company
in any Person on the date hereof and, for each such Investment, (x) the identity
of the  Person or Persons  holding  such  Investment  and (y) the nature of such
Investment.  Except as disclosed in Schedule 6.14(b), the Company owns, free and
clear of all Liens, all such Investments.

                  SECTION 6.15 NO BURDENSOME  RESTRICTIONS.  Neither the Company
nor any of its  Subsidiaries  is party to any contract or  agreement  that would
result in any burdensome  restrictions  that might reasonably be expected have a
Material  Adverse  Effect,   including,  but  not  limited  to,  any  collective
bargaining agreements.

                  SECTION  6.16  PRIVATE  OFFERING BY THE  COMPANY.  Neither the
Company  nor anyone  acting on its behalf has  offered  the Notes or any similar
securities  for sale to, or solicited  any offer to buy any of the same from, or
otherwise  approached or negotiated  in respect  thereof with,  any person other
than the Investors and certain other institutional investors,  each of which has
been offered the Notes at a


                                      -38-
<PAGE>
private sale for investment,  which offer or sale would not require registration
under the  Securities  Act.  Neither the Company nor anyone acting on its behalf
has taken,  or will take,  any action that would subject the issuance or sale of
the Notes to the registration requirements of Section 5 of the Securities Act.


                                   ARTICLE VII

                              AFFIRMATIVE COVENANTS

                  The Company  covenants and agrees with the Investors  that, so
long as any Note is outstanding and until payment in full of all amounts payable
by the Company  hereunder and  thereunder,  unless the Required  Investors shall
otherwise consent pursuant to Section 12.02:

                  SECTION 7.1 FINANCIAL  STATEMENTS AND OTHER  INFORMATION.  The
Company will furnish to each Investor:

                  (a)  within 90 days after the end of each  fiscal  year of the
Company, its audited consolidated balance sheet and related statements of income
and cash flows as of the end of and for such year, setting forth in each case in
comparative  form the figures for the  previous  fiscal  year,  with the opinion
thereon by Cooper,  Selvin ~  Strassberg  LLP or such other  independent  public
accountants of recognized  national  standing (without a "going concern" or like
qualification or exception and without any  qualification or exception as to the
scope of such audit) to the effect that such consolidated  financial  statements
present fairly in all material  respects the financial  condition and results of
operations of the Company and its  consolidated  Subsidiaries  on a consolidated
basis in accordance with GAAP consistently applied;

                  (b)  within 45 days  after the end of each of the first  three
fiscal  quarters of each fiscal year of the Company,  its  consolidated  balance
sheet and related  statements  of income and cash flows as of the end of and for
such fiscal  quarter and the then elapsed  portion of the fiscal  year,  setting
forth in each case in comparative form the figures for the corresponding  period
or  periods  of (or,  in the case of the  balance  sheet,  as of the end of) the
previous  fiscal year,  together  with a  certificate  from the chief  financial
officer of the Company certifying that such financial  statements present fairly
in all material  respects the  financial  condition and results of operations of
the  Company  and its  consolidated  Subsidiaries  on a  consolidated  basis  in
accordance with


                                      -39-
<PAGE>
GAAP consistently  applied,  subject to customary year-end audit adjustments and
the absence of footnotes;

                  (c) as soon as available and in any event within 45 days after
the end of each month, the consolidated  balance sheet and related  statement of
income of the Company for such month;

                  (d)  concurrently  with any delivery of  financial  statements
under clause (a) or (b)above,  a certificate of the chief  financial  officer of
the  Company  (i)  certifying  as to whether a Default  has  occurred  and, if a
Default has  occurred,  specifying  the details  thereof and any action taken or
proposed  to be taken  with  respect  thereto,  (ii)  setting  forth  reasonably
detailed  calculations  demonstrating  compliance  with  Section  8.09 and (iii)
stating whether any material change in GAAP or in the application  thereof which
would effect the financial statements in any material respect has occurred since
the date of the audited financial statements referred to in Section 6.04 and, if
any such  change  has  occurred,  specifying  the  effect of such  change on the
financial statements accompanying such certificate;

                  (e)  concurrently  with any delivery of  financial  statements
under clause (a) above, a certificate  of the  accounting  firm that reported on
such  financial  statements  stating  whether any Default  has  occurred  and is
continuing  (which  certificate  may  be  limited  to  the  extent  required  by
accounting rules or guidelines);

                  (f) promptly after the same become publicly available,  copies
of all periodic and other reports, proxy statements and other materials filed by
the  Company  or any  Subsidiary  with the SEC or with any  national  securities
exchange,  or distributed by the Company to its shareholders  generally,  as the
case may be;

                  (g) promptly upon receipt  thereof,  copies of all significant
reports submitted to the Company by independent public accountants in connection
with each annual,  interim or special audit of the  financial  statements of the
Company made by such accountants, including the comment letter submitted by such
accountants to management in connection with their annual audit;

                  (h) promptly upon receipt thereof, copies of all notices given
or  received  by the  Company  with  respect to  noncompliance  with any term or
condition related to any Senior Debt;



                                      -40-
<PAGE>
                  (i) at least 15 days prior to the  closing of any  acquisition
permitted under Section  8.03(b),  the adjusted pro forma  consolidated  balance
sheet and statement of income of the Company, reflecting the financial condition
of the Company and its Subsidiaries after giving effect to such acquisition, all
in accordance with GAAP;

                  (j)  promptly  following  any  request  therefor,  such  other
information  regarding the operations,  business affairs and financial condition
of the Company or any  Subsidiary  that is in the Company's or its  Subsidiary's
possession, as any Investor may reasonably request.

                  SECTION  7.2  NOTICES OF MATERIAL  EVENTS.  The  Company  will
furnish to each Investor prompt written notice of the following:

                  (a) the occurrence of any Default;

                  (b)  the  filing  or  commencement  of  any  action,  suit  or
proceeding by or before any  arbitrator  or  Governmental  Authority  against or
affecting  the  Company  or  any  Affiliate  thereof  in  which  the  amount  in
controversy  is  $1,000,000  or more or that,  if  adversely  determined,  could
reasonably be expected to result in a Material Adverse Effect;

                  (c) the occurrence of any ERISA Event that,  alone or together
with any other ERISA Events that have occurred,  could reasonably be expected to
result in liability of the Company and its  Subsidiaries in an aggregate  amount
exceeding $500,000;

                  (d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect; and

                  (e) a copy of any notice of default  furnished  by the Company
under the Senior Credit Agreement (or any agreement  replacing the Senior Credit
Agreement in effect from time to time)  simultaneously with the delivery thereof
to the lenders party thereto (or their agent).

Each  notice  delivered  under  this  Section  7.02  shall be  accompanied  by a
statement  of the chief  financial  officer  or other  executive  officer of the
Company  setting forth the details of the event or  development  requiring  such
notice and any action taken or proposed to be taken with respect thereto.

                  SECTION 7.3 EXISTENCE:  CONDUCT OF BUSINESS. The Company will,
and will cause each of its Subsidiaries to, do or cause to be done


                                      -41-
<PAGE>
all things  necessary to  preserve,  renew and keep in full force and effect its
legal  existence and the rights,  licenses,  permits,  privileges and franchises
material to the conduct of its business;  PROVIDED that the foregoing  shall not
prohibit (i) any merger,  consolidation,  liquidation or  dissolution  permitted
under Section 8.03 or (ii) any other action permitted under Section 8.11.

                  SECTION 7.4 PAYMENT OF OBLIGATIONS. The Company will, and will
cause  each  of  its  Subsidiaries  to,  pay  its  obligations,   including  Tax
liabilities,  that,  if not paid,  could  reasonably  be expected to result in a
Material  Adverse Effect before the same shall become  delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings,  (b) the Company or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and (c)
the  failure to make  payment  pending  such  contest  could not  reasonably  be
expected to result in a Material Adverse Effect.

                  SECTION 7.5 MAINTENANCE OF PROPERTIES:  INSURANCE. The Company
will,  and will cause each of its  Subsidiaries  to, (a) keep and  maintain  all
property  which is material to the conduct of its business in good working order
and condition,  ordinary wear and tear excepted, except where such failure could
not reasonably be expected to result in a Material Adverse Effect, PROVIDED that
the Company and each  Subsidiary  shall not be under any obligation to repair or
replace any such property which has become obsolete or has become  unsuitable or
inadequate  for the  purpose  for which they are used,  and (b)  maintain,  with
financially sound and reputable insurance  companies,  insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar locations.

                  SECTION 7.6 BOOKS AND RECORDS:  INSPECTION RIGHTS. The Company
will,  and will cause each of its  Subsidiaries  to, keep proper books of record
and account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and  activities.  The Company will, and
will cause each of its Subsidiaries to, permit any representatives designated by
any Investor, upon reasonable prior notice, to visit and inspect its properties,
to examine  and make  extracts  from its books and  records,  and to discuss its
affairs,  finances and condition with its officers and independent  accountants,
all at such  reasonable  times and during normal  business hours and as often as
reasonably requested.


                                      -42-
<PAGE>
                  SECTION 7.7  COMPLIANCE  WITH LAWS. The Company will, and will
cause each of its Subsidiaries to, comply with all laws, rules,  regulations and
orders of any Governmental  Authority  applicable to it or its property,  except
where  the  failure  to do so,  individually  or in  the  aggregate,  could  not
reasonably be expected to result in a Material Adverse Effect.

                  SECTION 7.8 USE OF PROCEEDS. The proceeds of the Notes will be
used only for the purposes  specified in the second paragraph of this Agreement.
Neither the Company nor any of its  Subsidiaries is engaged  principally,  or as
one of its  important  activities,  in the business of extending  credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
Stock, and no part of the proceeds of the Notes hereunder will be used to buy or
carry any Margin Stock.

                  SECTION 7.9  CERTAIN OBLIGATIONS AFFECTING SUBSIDIARIES.

                  (a) In the event that the  Company or any of its  Subsidiaries
shall form or acquire any new Subsidiary after the date hereof, the Company will
cause  such  Subsidiary  to become a  "Subsidiary  Guarantor"  (and,  thereby an
"Obligor")  hereunder  pursuant to a written  instrument  in form and  substance
satisfactory  to the Required  Investors  and to deliver such proof of corporate
action,  incumbency of officers,  opinions of counsel and other  documents as is
consistent  with those  delivered by each Obligor  pursuant to Section 5.01 upon
the Closing Date as any Investor shall have requested.

                  (b) The Company will, and will cause each of its  Subsidiaries
to, take such action from time to time as shall be necessary to ensure that each
of its Subsidiaries is a wholly-owned Subsidiary.


                                  ARTICLE VIII

                               NEGATIVE COVENANTS

                  The Company  covenants and agrees with the Investors  that, so
long as any Note is outstanding and until payment in full of all amounts payable
by the Company hereunder or thereunder:



                                      -43-
<PAGE>
                  SECTION 8.1  INDEBTEDNESS.  The Company will not, and will not
permit any of its Subsidiaries to, create,  incur, assume or permit to exist any
Indebtedness, except:

                  (a) Indebtedness created hereunder and under the Notes;

                  (b) Indebtedness (including,  without limitation Capital Lease
Obligations)  constituting Senior Debt,  including,  without limitation,  Senior
Debt  incurred  pursuant  to the Senior  Debt  Incurrence  Ratio  referred to in
clauses (iii) and (v) of the definition of "Senior Debt";

                  (c) Indebtedness  existing on the date hereof and set forth in
Schedule  8.01, but not any  extensions,  renewals or  replacements  of any such
Indebtedness;

                  (d)  Indebtedness  of the Company to any Subsidiary and of any
Subsidiary to the Company or any other Subsidiary;

                  (e)  Guarantees  by  the  Company  of   Indebtedness   of  any
Subsidiary  and by any  Subsidiary of  Indebtedness  of the Company or any other
Subsidiary; and

                  (f)  additional  Indebtedness  of  the  Company  or any of its
Subsidiaries  incurred after the Closing Date in an aggregate  principal  amount
not exceeding $2,000,000.

                  SECTION 8.2 LIENS.  The Company  will not, and will not permit
any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or  hereafter  acquired by it, or assign or sell
any income or revenues (including  accounts  receivable) or rights in respect of
any thereof, except:

                  (a) Permitted Encumbrances;

                  (b) any Lien on any  property  or asset of the  Company or any
Subsidiary  existing on the date hereof and set forth in Schedule 8.02; PROVIDED
that (i) such Lien shall not apply to any other property or asset of the Company
or any Subsidiary and (ii) such Lien shall secure only those  obligations  which
it secures on the date hereof;

                  (c) any Lien  existing  on any  property or asset prior to the
acquisition thereof by the Company or any Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the date


                                      -44-
<PAGE>
hereof prior to the time such Person  becomes a  Subsidiary;  PROVIDED  that (i)
such  Lien  is not  created  in  contemplation  of or in  connection  with  such
acquisition or such Person becoming a Subsidiary,  as the case may be, (ii) such
Lien  shall not  apply to any other  property  or assets of the  Company  or any
Subsidiary  and (iii) such Lien shall  secure  only those  obligations  which it
secures  on the date of such  acquisition  or the date  such  Person  becomes  a
Subsidiary, as the case may be;

                  (d) Liens on fixed or capital assets acquired,  constructed or
improved  by the  Company or any  Subsidiary;  PROVIDED  that (i) such  security
interests secure Indebtedness  permitted by Section 8.01(b),  (ii) such security
interests and the  Indebtedness  secured thereby are incurred prior to or within
180 days  after such  acquisition  or the  completion  of such  construction  or
improvement,  (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring,  constructing or improving such fixed or capital assets and (iv) such
security  interests  shall  not  apply to any  other  property  or assets of the
Company or any Subsidiary;

                  (e) Liens securing Senior Debt; and

                  (f)   additional   Liens   securing   Indebtedness   or  other
obligations of the Company and its Subsidiaries  incurred after the Closing Date
in an aggregate amount not exceeding $2,000,000.

                  SECTION 8.3  FUNDAMENTAL  CHANGES.  The Company  will not, and
will not permit any of its Subsidiaries to:

                  (a) merge or consolidate with any other entity, except that:

                  (i) any Subsidiary may merge into the Company in a transaction
         in which the Company is the surviving corporation;

                  (ii) any Subsidiary  may merge into any Subsidiary  Guarantor;
         PROVIDED  that if any such  transaction  shall be between a  Subsidiary
         Guarantor  and  a  Subsidiary  not a  Subsidiary  Guarantor,  and  such
         Subsidiary  Guarantor is not the  continuing or surviving  corporation,
         then the continuing or surviving  corporation shall have assumed all of
         the obligations of such Subsidiary Guarantor hereunder; and

                  (iii) any Person that is engaged in the  business in which the
         Company is engaged as of the Closing Date or substantially related


                                      -45-
<PAGE>
         thereto may merge into the Company or any  Subsidiary  in a transaction
         in which the  Company or a  wholly-owned  Subsidiary  is the  surviving
         corporation;  PROVIDED that, at the time thereof and immediately  after
         giving effect  thereto no Default shall have occurred and be continuing
         and shall comply with Section 7.09;

                  (b) purchase,  lease or otherwise  acquire for cash,  stock or
other  consideration,  the stock of any Person or all or any substantial portion
of the assets of any Person where such stock, assets or other consideration have
an aggregate fair market value of more than $15,000,000,  PROVIDED that, so long
as no Event of Default has occurred (or will be caused by such acquisition), the
Company or any Subsidiary may request Mat the Required Investors consent to such
acquisition for  consideration  greater than  $15,000,000 in any one transaction
(PROVIDED that,  notwithstanding  anything herein to the contrary,  the decision
whether  or not to so  consent  shall  remain  solely at the  discretion  of the
Investors).  Consistent  with  such  request,  the  Company  shall  provide  the
Investors  with an  information  package to  include,  but not  limited  to, the
following:

                  (i) historical  financial statements showing the impact of the
         acquisition  on the  Company's  historical  operating  performance  and
         existing balance sheet;

                  (ii)  projections  detailing the expected  performance  of the
         combined company going forward; and

                  (iii)  a  detailed  listing  of  the  assets  proposed  to  be
         purchased  and  liabilities,  if any,  proposed  to be  assumed  in the
         transaction;

                  (c) enter into a  partnership  or joint venture with any other
Person;  PROVIDED that, so long as no Event of Default has occurred, the Company
or any  Subsidiary  may  request  that the  Required  Investors  consent  to its
entering into a partnership or joint venture for the purposes of carrying on its
business;

                  (d) sell,  lease,  transfer  or other  dispose of any  assets,
except that (except as otherwise  prohibited  under  Section  8.12) this Section
8.03(d) shall not prohibit any  disposition of (i) any asset if on the date such
asset is sold, the Asset Value of all assets sales  occurring  after the Closing
Date,  taking into account the Asset Value of the proposed asset sale, would not
exceed on an aggregate basis 10% of


                                      -46-

<PAGE>
the  Consolidated  Net Worth of the Company on the Closing Date and such sale is
in the ordinary course of business, (ii) any obsolete or retired assets not used
or useful in its business (such assets to include high-pressure tanks, motorized
vehicles,  including  cars and trucks,  and lines of business  other than carbon
dioxide  that may be  obtained  by the Company as part of the group of assets of
any  corporation  or other  business  entity  which the Company may acquire) and
(iii) other sales of assets approved by the Required Investors.

                  SECTION 8.4 INVESTMENTS:  HEDGING AGREEMENTS.  (a) The Company
will not,  and will not permit any of its  Subsidiaries  to,  purchase,  hold or
acquire  (including  pursuant  to any  merger  with  any  Person  that was not a
wholly-owned  Subsidiary  prior to such merger) any capital stock,  evidences of
indebtedness or other securities  (including any option,  warrant or other right
to  acquire  any of the  foregoing)  of,  make or  permit  to exist any loans or
advances to (not including accounts  receivable),  Guarantee any obligations of,
or make or permit to exist any  Investment  or any other  interest in, any other
Person,  or purchase or  otherwise  acquire (in one  transaction  or a series of
transactions) any assets of any other Person, except:

                  (i) Permitted Investments;

                  (ii) Investments by the Company existing on the date hereof in
         the capital stock of its Subsidiaries;

                  (iii) loans or advances made by the Company to any  Subsidiary
         and made by any Subsidiary to the Company or any other Subsidiary;

                  (iv) Guarantees constituting Indebtedness permitted by Section
         8.01;

                  (v) Investments in Plans;

                  (vi) advances  made by the Company or any of its  Subsidiaries
         to its employees in the ordinary course of business,  and loans made by
         the Company to its employees to allow such  employees to purchase stock
         of the Company;  PROVIDED  that the sum of (i) the  aggregate  total of
         such advances  made by the Company to its  employees  under this clause
         (vi) Bad (ii) the aggregate  amount paid by the Company with respect to
         the repurchase or redemption of its capital stock under Section 8.05(c)
         shall not exceed $2,000,000 at any one time outstanding;


                                      -47-
<PAGE>
                  (vii)  deposits  made  by  the  Company  in  connection   with
         acquisitions permitted under Section 8.03(b); and

                  (viii)  Investments by the Company from the net proceeds of an
         equity  issuance  after  the  Closing  Date that are not used to prepay
         Senior  Debt (to the extent  required  by the terms  thereof) or to pay
         dividends or other distributions under Section 8.05(d).

                  (b) The  Company  will  not,  and will not  permit  any of its
Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements
entered  into in the ordinary  course of business to hedge or mitigate  risks to
which the Company or any Subsidiary is exposed in the conduct of its business or
the management of its liabilities or as required by the Senior Credit Agreement.

                  SECTION 8.5  RESTRICTED  PAYMENTS.  The Company  will not, and
will not permit any of its  Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) the Company may
declare and pay dividends  with respect to its capital  stock payable  solely in
additional  shares of its common  stock,  (b) the  Company  may make  Restricted
Payments  pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Company and its  Subsidiaries,  (c) the
Company may  repurchase  or redeem  shares of any class of capital  stock of the
Company  issued  pursuant to and in accordance  with stock option plans or other
benefit  plans for  management  or  employees or under other option plans of the
Company  not  exceeding  $1,000,000  in the  aggregate  and (d) the  Company may
declare and pay  dividends  with  respect to its capital  stock in an  aggregate
amount not  exceeding  the net  proceeds  of any equity  issuance by the Company
after the Closing Date (MINUS the aggregate  amount of any Investments made from
such proceeds under Section 8.04(a)(viii)).

                  SECTION 8.6 SALE AND  LEASEBACKS.  The Company  will not,  and
will not permit any of its  Subsidiaries to, enter into any transaction with any
other Person whereby such Person leases assets sold or otherwise  transferred to
it by the Company or such  Subsidiary if the aggregate  value of the assets sold
or transferred pursuant to such a transaction shall exceed $1,000,000.

                  SECTION 8.7  TRANSACTIONS  WITH  AFFILIATES.  The Company will
not, and will not permit any of its  Subsidiaries to (a) enter into any material
transaction or series of transactions  which in the aggregate would be material,
whether or not in the ordinary course of business,


                                      -48-
<PAGE>
with any Affiliate of the Company or any  Subsidiary  except (i) in the ordinary
course of business at prices and on tams and  conditions  not less  favorable to
the Company or such Subsidiary  than could be obtained on an arm's-length  basis
from unrelated third parties,  (ii) transactions between or among Me Company and
its  wholly-owned  Subsidiaries  not involving any other Affiliate and (iii) any
Restricted  Payment  permitted by Section 8.05, or (b) convey or transfer to any
other  Person  (including  the  Company or any  Subsidiary)  any real  property,
buildings, or fixtures used in the manufacturing or production operations of the
Company  or  any  Subsidiary,  or  convey  or  transfer  to the  Company  or any
Subsidiary any other assets  (excluding  conveyances or transfer in the ordinary
course of business) if at the time of such conveyance or transfer any Default or
Event of  Default  exists  or would  exist as a  result  of such  conveyance  or
transfer.

                  SECTION 8.8 RESTRICTIVE AGREEMENTS.  The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly,  enter into,
incur or permit to exist any  agreement  or other  arrangement  that  prohibits,
restricts or imposes any condition upon (a) the ability of the Company or any of
its  Subsidiaries  to create,  incur or permit to exist any Lien upon any of its
property or assets,  or (b) the ability of any  Subsidiary  to pay  dividends or
other  distributions  with respect to any shares of its capital stock or to make
or repay  loans  or  advances  to the  Company  or any  other  Subsidiary  or to
Guarantee Indebtedness of the Company or any other Subsidiary; PROVIDED that (i)
the foregoing shall not apply to restrictions  and conditions  imposed by law or
by this  Agreement,  (ii) the  foregoing  shall  not apply to  restrictions  and
conditions  existing on the date hereof under the Senior Credit  Agreement as in
effect on the date hereof or otherwise  identified  on Schedule  8.08 (but shall
apply to any extension, renewal, amendment or modification thereof which expands
the scope of, any such restriction or condition),  (iii) the foregoing shall not
apply to customary  restrictions and conditions contained in agreements relating
to the sale of a Subsidiary  pending such sale,  provided such  restrictions and
conditions  apply  only to the  Subsidiary  that is to be sold and such  sale is
permitted  hereunder,  (iv)  clause  (a) of the  foregoing  shall  not  apply to
restrictions  or  conditions  imposed  by  any  agreement  relating  to  secured
Indebtedness  permitted by this  Agreement if such  restrictions  or  conditions
apply only to the property or assets securing such  Indebtedness  and (v) clause
(a) of the foregoing shall not apply to customary provisions in leases and other
contracts  entered  into in the  ordinary  course of  business  restricting  the
assignment thereof.



                                      -49-
<PAGE>
                  SECTION 8.9 FINANCIAL COVENANTS.

                  (a) INTEREST  COVERAGE RATIO.  The Company will not permit the
Interest  Coverage Ratio to be less than the following  respective  ratios as at
the last day of each fiscal quarter during the following respective periods:

             PERIOD                                  RATIO
From the Closing Date through
October 31, 1998                                 2.00 to 1.00
From November 1, 1998 through
October 31, 2000                                 2.50 to 1.00
From November 1, 2000 and at                     3.00 to 1.00
all times thereafter

                                    (b) TOTAL NET FUNDED  DEBT  COVERAGE  RATIO.
                  The Company will not permit the Total Net Funded Debt Coverage
                  Ratio to exceed the  following  respective  ratios at any time
                  during the following respective periods:

           PERIOD                                     RATIO
From the Closing Date through
October 31, 1998                                 5.25 to 1.00
From November 1, 1998 through
October 31, 2000                                 4.50 to 1.00
From November 1, 2000 and at                     4.00 to 1.00
all times thereafter

                                    (c) MINIMUM NET WORTH.  The Company shall at
                  all times maintain Consolidated Net Worth of not less than the
                  sum of (a) $45,000,000  (increasing to $50,000,000 on December
                  31,  1999),  (b) Ban 50% of the  cumulative  Consolidated  Net
                  Income for each fiscal quarter ending on or after December 31,
                  1997 (but specifically not including any Consolidated Net Loss
                  for any  such  fiscal  quarter)  plus (c) the  cumulative  net
                  proceeds of all equity  offerings (if any) made by the Company
                  for each fiscal quarter ending on or after September 30, 1997.



                                      -50-
<PAGE>
                  SECTION 8.10 MODIFICATIONS OF CERTAIN DOCUMENTS.

                  (a) The  Company  will  not,  and will not  permit  any of its
Subsidiaries to, change, amend,  supplement or otherwise modify the terms of the
Senior  Credit  Documents,  or refund or refinance  the same,  without the prior
consent  of the  Required  Investors,  if the effect of such  amendment  or such
refunding or refinancing is to:

                  (i) impose  upon the  Company,  directly  or  indirectly,  any
         prohibition  or limitation on its ability to make  regularly  scheduled
         payments of principal of or interest on the Notes, or any other amounts
         owing to the Investors under this Agreement,  except as provided in the
         subordination provisions set forth in Article XI; and

                  (ii) extend or shorten the  scheduled  maturity of any payment
         of any principal amount of the loans under the Senior Credit Agreement,
         except (x) altering or modifying the payment  schedule of such loans so
         as to cause the  average  life to maturity of such loans to be not more
         than three years longer than the average life to maturity of such loans
         as of the date hereof or (y) extending the final  maturity date of such
         loans by more than three years.

                  (b) The  Company  will  not,  and will not  permit  any of its
Subsidiaries to, consent to any modification, supplement or waiver of any of the
provisions of its certificate of  incorporation,  certificates of designation of
preferred  stock or by-laws,  if such  modification,  supplement or waiver could
reasonably be expected to be adverse to the interests of the Investors,  in each
case without the prior consent of the Required Investors.

                  SECTION  8.11 NATURE OF  BUSINESS.  The Company  will not, and
will not permit any of its Subsidiaries to, engage to any material extent in any
business  other than  businesses  of the type  conducted  by the Company and its
Subsidiaries  on the date  hereof and  businesses  reasonably  related  thereto;
PROVIDED that nothing herein shall prevent the Company and its Subsidiaries from
(i) expanding  the location of its business or businesses in the United  States,
(ii) ceasing or omitting to exercise any rights, licenses, permits or franchises
which in good faith in the judgment of the Company and its  Subsidiaries  can no
longer be  profitably  exercised or (iii)  engaging in a business or  businesses
that are ancillary to those engaged in by the Company or such  Subsidiary on the
date hereof.


                                      -51-

<PAGE>
                  SECTION 8.12 SALE OF  SUBSIDIARIES.  The Company will not, and
will not permit any of its  Subsidiaries  to, sell or  otherwise  dispose of any
shares of capital stock of or other ownership interest in any Subsidiary (except
in connection with any acquisition, merger or consolidation permitted by Section
8.03) or permit any  Subsidiary  to issue any  additional  shares of its capital
stock or other  incidents  of  ownership  except on a pro rata  basis to all its
stockholders, partners or owners, as the case may be.


                                   ARTICLE IX

                                EVENTS OF DEFAULT

                  SECTION  9.1  EVENTS  OF  DEFAULT:  REMEDIES.  If  any  of the
following events ("EVENTS OF DEFAULT") shall occur:

                  (a) the Company  shall fail to pay any  principal  of any Note
when and as the same  shall  become  due and  payable,  whether  at the due date
thereof or at a date fixed for prepayment thereof or otherwise;

                  (b) the Company  shall fail to pay any interest on any Note or
any fee or any other amount  (other than an amount  referred to in clause (a) of
this Section 9.01) payable  under this  Agreement or the Notes,  when and as the
same shall become due and payable,  and such failure shall  continue  unremedied
for a paled of five days;

                  (c) any  representation  or warranty made or deemed made by or
on  behalf of the  Obligors  in or in  connection  with  this  Agreement  or any
amendment  or  modification  hereof,  or in any report,  certificate,  financial
statement or other  document  furnished  pursuant to or in connection  with this
Agreement or any  amendment  or  modification  hereof,  shall prove to have been
incorrect in any material respect when made or deemed made;

                  (d) the Company shall fail to observe or perform any covenant,
condition or agreement contained in Section 7.01(a) through (d) and such failure
shall continue unremedied for a period of ten days after notice thereof from any
Investor to the Company;

                  (e) the Company shall fail to observe or perform any covenant,
condition or agreement contained in Article VII and Article VIII;


                                      -52-
<PAGE>
                  (f) the Company shall fail to observe or perform any covenant,
condition or agreement  contained in this Agreement  (other than those specified
in clauses (a) through (e), inclusive,  of this Article), and such failure shall
continue  unremedied  for a period  of 30 days  after  notice  thereof  from any
Investor to the company;

                  (g) the  Company  or any  Subsidiary  shall  fail to make  any
payment  (whether of principal or interest  and  regardless  of amount) at final
maturity  in  respect  of any  Indebtedness  (other  than the  Notes)  having an
aggregate unpaid principal balance in excess of $1,000,000, when and as the same
shall become due and  payable,  or any  default,  event or  condition  occurs or
exists with respect to such  Indebtedness,  or under any agreement or instrument
evidencing,  securing  or related  to such  Indebtedness,  that  results in such
Indebtedness becoming due prior to its stated maturity date;

                  (h)  an  involuntary  proceeding  shall  be  commenced  or  an
involuntary  petition shall be filed seeking (i) liquidation,  reorganization or
other relief in respect of the Company or any  Subsidiary or its debts,  or of a
substantial part of its assets, under any Federal,  state or foreign bankruptcy,
insolvency,  receivership  or similar law now or hereafter in effect or (ii) the
appointment  of a receive,  trustee,  custodian,  sequestrator,  conservator  or
similar  official for the Company or any Subsidiary or for a substantial part of
its assets,  and, in any such case,  such  proceeding or petition shall continue
undismissed  for 60 days or an order or decree  approving  or ordain" any of the
foregoing shall be entered;

                  (i)  the  Company  or any  Subsidiary  shall  (i)  voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other  relief  under any Federal,  state or foreign  bankruptcy,  insolvency,
receivership  or similar law now or  hereafter  in effect,  (ii)  consent to the
institution  of, or fail to  contest  in a timely and  appropriate  manner,  any
proceeding or petition described in clause (h) of this Section 9.01, (iii) apply
for  or  consent  to  the  appointment  of  a  receiver,   trustee,   custodian,
sequestrator,  conservator or similar official for the Company or any Subsidiary
or for a  substantial  part of its  assets,  (iv) file an answer  admitting  the
material allegations of a petition filed against it in any such proceeding,  (v)
make a general  assignment  for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;



                                      -53-
<PAGE>
                  (j) the Company or any Subsidiary  shall become unable,  admit
in writing or fail generally to pay its debts as they become due;

                  (k) one or more  judgments  for the  payment  of  money  in an
aggregate  amount in excess of $1,000,000 (not fully covered by insurance) shall
be rendered against the Company,  any Subsidiary or any combination  thereof and
the same shall remain  undischarged  for a period of 60 consecutive  days during
which execution shall not be effectively  stayed, or any action shall be legally
taken by a judgment creditor to attach or levy upon any assets of the Company or
any Subsidiary to enforce any such judgment;

                  (l) an ERISA Event shall have occurred that, in the reasonable
opinion of the  Required  Investors,  when taken  together  with all other ERISA
Events that have occurred,  could reasonably be expected to result in a Material
Adverse Effect; or

                  (m) the actual or asserted  invalidity of the Guarantee of any
Subsidiary under this Agreement;

then,  and in every such event  (other than an event with respect to any Obligor
described in clause (h) or (i) of this Section 9.01), and at any time thereafter
during the continuance of such event,  the Required  Investors may, by notice to
the  Company  (with a copy to the Senior Debt  Representative  in the manner set
forth in Section  11.13,  PROVIDED that the failure to provide such copy, or any
delay in so providing such copy,  shall not affect the validity of such notice),
declare the Notes then  outstanding  to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable),  and thereupon the principal of the Notes so
declared to be due and payable,  together with accrued  interest thereon and all
fees and other  obligations of the Company accrued  hereunder,  shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind,  all of which are hereby  waived by the  Obligors;  and in case of any
event with respect to any Obligor described in clause (h) or (i) of this Section
9.01,  the  principal  of the Notes  then  outstanding,  together  with  accrued
interest  thereon  and all fees and other  obligations  of the  Company  accrued
hereunder,  shall  automatically  become due and payable,  without  presentment,
demand,  protest or other notice of any kind,  all of which are hereby waived by
the Company.




                                      -54-

<PAGE>
                                    ARTICLE X

                              SUBSIDIARY GUARANTEE

                  SECTION 10.1 THE GUARANTEE.  The Subsidiary  Guarantors hereby
jointly and severally  guarantee to each Investor and its successors and assigns
the prompt payment in full when due (whether at stated maturity, by acceleration
or  otherwise)  of the  principal  of and  interest on the Note(s)  held by each
Investor  of, the Company and all other  amounts  from time to time owing to the
Investors  by the  Company  under this  Agreement  and the  Notes,  in each case
strictly in accordance  with the terms thereof  (such  obligations  being herein
collectively  called the "GUARANTEED  OBLIGATIONS").  The Subsidiary  Guarantors
hereby further jointly and severally agree that if the Company shall fail to pay
in full when due (whether at stated maturity,  by acceleration or otherwise) any
of the Guaranteed  Obligations,  the Subsidiary Guarantors will promptly pay the
same,  without  any  demand  or notice  whatsoever,  and that in the case of any
extension  of time of payment or renewal of any of the  Guaranteed  Obligations,
the same will be promptly  paid in full when due (whether at extended  maturity,
by  acceleration  or otherwise) in accordance with the tams of such extension or
renewal.

                  SECTION 10.2 OBLIGATIONS UNCONDITIONAL. The obligations of the
Subsidiary Guarantors under Section 10.01 are absolute and unconditional,  joint
and several,  irrespective of the value,  genuineness,  validity,  regularity or
enforceability of the obligations of the Company under this Agreement, the Notes
or any other  agreement  or  instrument  referred to herein or  therein,  or any
substitution,  release or exchange of any other guarantee of or security for any
of  the  Guaranteed  Obligations,  and,  to  the  fullest  extent  permitted  by
applicable  law,  irrespective of any other  circumstance  whatsoever that might
otherwise  constitute a legal or  equitable  discharge or defense of a surety or
guarantor, it being the intent of this Section 10.02 that the obligations of the
Subsidiary  Guarantors hereunder shall be absolute and unconditional,  joint and
several, under any and all circumstances. Without limiting the generality of the
foregoing,  it is agreed that the occurrence of any one or more of the following
shall not altar or impair the liability of the Subsidiary  Guarantors  hereunder
which shall remain absolute and unconditional as described above:

                  (i) at any time or from  time to time,  without  notice to the
         Subsidiary Guarantors, the time for any performance of or


                                      -55-
<PAGE>
         compliance with any of the Guaranteed Obligations Hall be extended,
         or such performance or compliance shall be waived;

                  (ii) any of the acts  mentioned  in any of the  provisions  of
         this  Agreement  or the  Notes or any  other  agreement  or  instrument
         referred to herein or therein shall be done or omitted;

                  (iii) the maturity of any of the Guaranteed  Obligations shall
         be accelerated, or any of the Guaranteed Obligations shall be modified,
         supplemented  or  amended  in any  respect,  or any  right  under  this
         Agreement or the Notes or any other agreement or instrument referred to
         herein or therein shall be waived or any other  guarantee of any of the
         Guaranteed  Obligations  or any security  therefor shall be released or
         exchanged in whole or in part or otherwise dealt with; or

                  (iv) any lien or security interest granted to, or in favor of,
         any Investor as security for any of the  Guaranteed  Obligations  shall
         fail to be perfected.

The Subsidiary Guarantors hereby expressly waive diligence,  presentment, demand
of payment,  protest and all notices  whatsoever,  and any requirement  that any
Investor exhaust any right, power or remedy or proceed against the Company under
this  Agreement or the Notes or any other  agreement or  instrument  referred to
herein or therein,  or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.

                  SECTION 10.3 REINSTATEMENT.  The obligations of the Subsidiary
Guarantors under this Article X shall be automatically  reinstated if and to the
extent that for any reason any payment by or on behalf of the Company in respect
of the Guaranteed  Obligations is rescinded or must be otherwise restored by any
holder  of  any  of the  Guaranteed  Obligations,  whether  as a  result  of any
proceedings  in bankruptcy  or  reorganization  or otherwise and the  Subsidiary
Guarantors jointly and severally agree that they will indemnify each Investor on
demand for all reasonable  costs and expenses  (including,  without  limitation,
reasonable  fees of counsel)  incurred by such Investor in connection  with such
rescission or  restoration,  including  any such costs and expenses  incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent  transfer or similar  payment  under any  bankruptcy,  insolvency  or
similar law.



                                      -56-
<PAGE>
                  SECTION 10.4  SUBROGATION.  Each Subsidiary  Guarantor  hereby
waives all rights of subrogation or contribution, whether arising by contract or
operation of law (including,  without  limitation,  any such right arising under
the Bankruptcy Code) or otherwise by reason of any payment by it pursuant to the
provisions of this Article X and further agrees with the Company for the benefit
of each of its creditors (including, without limitation, each Investor) that any
such payment by it shall constitute a contribution of capital by such Subsidiary
Guarantor to the Company (or an investment in the equity  capital of the Company
by such Subsidiary Guarantor).

                  SECTION 10.5 REMEDIES.  The Subsidiary  Guarantors jointly and
severally  agree that, as between the  Subsidiary  Guarantors and the Investors,
the  obligations  of the  Company  under  this  Agreement  and the  Notes may be
declared to be forthwith due and payable as provided in Article IX (and shall be
deemed  to have  become  automatically  due  and  payable  in the  circumstances
provided in Article IX) for purposes of Section 10.01  notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against the Company and that, in
the event of such declaration (or such  obligations  being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by the  Company)  shall  forthwith  become  due and  payable  by the  Subsidiary
Guarantors for purposes of Section 10.01.

                  SECTION  10.6  INSTRUMENT  FOR  THE  PAYMENT  OF  MONEY.  Each
Subsidiary  Guarantor hereby  acknowledges  that the guarantee in this Article X
constitutes an instrument for the payment of money, and consents and agrees that
any Investor,  at its sole option,  in the event of a dispute by such Subsidiary
Guarantor  in the payment of any moneys due  hereunder,  shall have the right to
bring motion-action under New York CPLR Section 3213.

                  SECTION  10.7  CONTINUING  GUARANTEE.  The  guarantee  in this
Article  X  is a  continuing  guarantee,  and  shall  apply  to  all  Guaranteed
Obligations whenever arising.

                  SECTION 10.8 RIGHTS OF CONTRIBUTION. The Subsidiary Guarantors
hereby agree,  as between  themselves,  that if any Subsidiary  Guarantor  shall
become an Excess  Funding  Guarantor (as defined below) by reason of the payment
by  such  Subsidiary  Guarantor  of  any  Guaranteed  Obligations,   each  other
Subsidiary  Guarantor  shall,  on demand of such Excess  Funding  Guarantor (but
subject to the next sentence), pay to such


                                      -57-

<PAGE>
Excess Funding Guarantor an amount equal to such Subsidiary Guarantor's Pro Rata
Share (as defined below and determined,  for this purpose,  without reference to
the property,  debts and  liabilities of such Excess  Funding  Guarantor) of the
Excess Payment (as defined below) in respect of such Guaranteed Obligations. The
payment  obligation of a Subsidiary  Guarantor to any Excess  Funding  Guarantor
under this Section 10.08 shall be subordinate and subject in right of payment to
the prior payment in full of the obligations of such Subsidiary  Guarantor under
the other  provisions of this Article X and such Excess Funding  Guarantor shall
not exercise  any right or remedy with respect to such excess until  payment and
satisfaction in full of all of such obligations.

                  For  purposes  of this  Section  10.08,  (i)  "EXCESS  FUNDING
GUARANTOR"  means,  in  respect  of any  Guaranteed  Obligations,  a  Subsidiary
Guarantor  that has  paid an  amount  in  excess  of its Pro Rata  Share of such
Guaranteed  Obligations,   (ii)  "EXCESS  PAYMENT"  means,  in  respect  of  any
Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess
of its Pro Rata Share of such Guaranteed  Obligations and (iii) "PRO RATA SHARE"
means, for any Subsidiary Guarantor, the ratio (expressed as a parentage) of (x)
the amount by which the aggregate present fair saleable value of all property of
such Subsidiary Guarantor (excluding any shares of stock of any other Subsidiary
Guarantor)  exceeds  the  amount  of all  the  debts  and  liabilities  of  such
Subsidiary  Guarantor  (including   contingent,   subordinated,   unmatured  and
unliquidated  liabilities,  but excluding  the  obligations  of such  Subsidiary
Guarantor  hereunder and any obligations of any other Subsidiary  Guarantor that
have been  Guaranteed by such  Subsidiary  Guarantor) to (y) the amount by which
the  aggregate  fair  saleable  value of all  property of all of the  Subsidiary
Guarantors  exceeds  the  amount  of all the debts  and  liabilities  (including
contingent,  subordinated, unmatured and unliquidated liabilities, but excluding
the  obligations  of the  Subsidiary  Guarantors  hereunder)  of the  Subsidiary
Guarantors,  determined (A) with respect to any  Subsidiary  Guarantor that is a
party hereto on the Closing Date,  as of the Closing Date,  and (B) with respect
to any other  Subsidiary  Guarantor,  as of the date such  Subsidiary  Guarantor
becomes a Subsidiary Guarantor hereunder.

                  SECTION 10.9 GENERAL LIMITATION ON GUARANTEE  OBLIGATIONS.  In
any action or  proceeding  involving  any state  corporate  law, or any state or
Federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors  generally,  if the obligations of the Subsidiary  Guarantors under
Section 10.01 would  otherwise,  be held or  determined  to be void,  invalid or
unenforceable, or subordinated to the claims of any


                                      -58-

<PAGE>
other creditors,  on account of the amount of its liability under Section 10.01,
then,  notwithstanding any other provision hereof to the contrary, the amount of
such liability  shall,  without any further action by any Subsidiary  Guarantor,
any Investor or any other Person,  be  automatically  limited and reduced to the
highest amount that is valid and enforceable and not  subordinated to the claims
of other creditors as determined in such action or proceeding.

                  SECTION 10.10 SUBORDINATION OF GUARANTEES.  The obligations of
the Subsidiary Guarantors under this Article X to the Investors are subordinated
as provided in Section 11.11.

                                   ARTICLE XI

                                  SUBORDINATION

                  SECTION 11.1 AGREEMENT TO SUBORDINATE.  The Company  covenants
and agrees, and each Investor likewise covenants and agrees, that, to the extent
and in the manner  hereinafter  set forth in this Article XI, the payment of the
principal of and interest and premium (if any) on the Notes,  and all other sums
due and payable by the Company to the Investors  hereunder (for purposes of this
Article XI,  collectively,  the "Subordinated  Debt"), are hereby expressly made
subordinate and subject in right of payment to the prior payment in full in cash
of all Senior Debt. Each Investor hereby agrees not to amend or otherwise modify
any  provision of this Article XI (and any defined term used in this Article XI)
without the prior written  consent of the requisite  number of holders of Senior
Debt as provided in the Senior Credit Agreement.  The holders of Senior Debt and
their agent under the Senior Credit  Agreement are third-party  beneficiaries of
the provisions of this Article XI and are entitled to rely thereon.

                  SECTION 11.2 BANKRUPTCY, LIQUIDATION, DISSOLUTION, ETC. In the
event  of  (a)  any  insolvency  or  bankruptcy  case  or  proceeding,   or  any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith,  relative to the Company or to its creditors,  as such, or
to its assets,  or (b) any  liquidation,  dissolution or other winding up of the
Company,   whether  voluntary  or  involuntary  and  whether  or  not  involving
insolvency or bankruptcy,  or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company,  then and in any
such event:



                                      -59-
<PAGE>
                  (i) the  holders of Senior  Debt shall be  entitled to receive
         payment  in full in cash of all  amounts  due or to become due on or in
         respect of all Senior Debt,  before any Investor is entitled to receive
         any payment on account of the Subordinated Debt; and

                  (ii) any payment or  distribution  of assets of the Company of
         any kind or  character,  whether in cash,  property or  securities,  by
         set-off or otherwise,  to which any Investor  would be entitled but for
         the  provisions  of this  Article  XI,  including  any such  payment or
         distribution  which  may be  payable  or  deliverable  by reason of the
         payment of any other  Indebtedness of the Company being subordinated to
         the  payment  of the  Subordinated  Debt  (other  than any  payment  or
         distribution in the form of equity or debt securities of the Company or
         any  successor  obliger  of  Senior  Debt  provided  for by a  plan  of
         reorganization  or  readjustment  which,  in the case of any such  debt
         securities, are (x) subordinated in right of payment to all Senior Debt
         that may at the time be  outstanding  to the same  extent  as,  or to a
         greater extent than, the Subordinated Debt is subordinate to the Senior
         Debt as  provided in this  Article XI and (y) are not payable  prior to
         the  payment  in  full  of  the  Senior  Debt)  shall  be  paid  by the
         liquidating  trustee or agent or other  person  making such  payment or
         distribution,   whether  a  trustee  in   bankruptcy,   a  receiver  or
         liquidating  trustee or  otherwise,  directly  to the holders of Senior
         Debt or their  representative or  representatives  or to the trustee or
         trustees under any indenture under which any instruments evidencing any
         of such  Senior Debt may have been  issued,  ratably  according  to the
         aggregate  amounts  remaining unpaid on account of the principal of and
         interest  and premium (if any) on, the Senior Debt held or  represented
         by each, to the extent necessary to make payment in full in cash of all
         Senior Debt  remaining  unpaid,  after giving effect to any  concurrent
         payment or distribution to the holders of such Senior Debt; and

                  (iii)  in  the  event  that,   notwithstanding  the  foregoing
         provisions of this Section 11.02,  any Investor shall have received any
         such  payment or  distribution  of assets of the Company of any kind or
         character, whether in cash, property or securities,  including any such
         payment or  distribution  which may be payable or deliverable by reason
         of  the  payment  of  any  other  Indebtedness  of  the  Company  being
         subordinated to the payment of the Subordinated Debt (but excluding any
         payment of the character  described in the parenthetical  clause in the
         foregoing clause (ii)) before all


                                      -60-
<PAGE>
         Senior  Debt  is paid in full in  cash,  then  and in such  event  such
         payment  or  distribution  shall be held in trust  for the  holders  of
         Senior  Debt and paid over or  delivered  forthwith  to the  trustee in
         bankruptcy,  receiver,  liquidating trustee, custodian, assignee, agent
         or other Person making payment or distribution of assets of the Company
         for application to the payment of all Senior Debt remaining  unpaid, to
         the  extent  necessary  to pay all Senior  Debt in full in cash,  after
         giving effect to any concurrent  payment or  distribution to or for the
         holders of Senior Debt.

                  If the  Investors  shall have failed to file proper  claims or
proofs of claim with respect to the Notes in any proceeding of the type referred
to in the first  sentence  of this  Section  11.02  prior to 30 days  before the
expiration  of the time to file such  claims or proofs of claim,  the  Investors
hereby appoint and empower the Senior Debt Representative to file such claims or
proofs of claim, and if the Investors shall fail to vote any such claim at least
15 days prior to the  expiration  of the time to vote such claim,  the Investors
hereby  appoint and empower the Senior Debt  Representative  to vote such claim;
PROVIDED  that the Senior Debt  Representative  shall have no obligation to file
and/or vote any such claim.  If the Senior  Debt  Representative  votes any such
claim in accordance  with the  provisions of this paragraph no Investor shall be
entitled to modify,  revoke or withdraw such vote.  The Investors  shall execute
and deliver,  at the expense of the holders of the Senior Debt, such agreements,
instruments  and  documents  as the Senior Debt  Representative  may  reasonably
request to carry out the provisions of this paragraph.

                  SECTION 11.3  NO PAYMENT IN CERTAIN CIRCUMSTANCES.

                  (a) In the event  that any  principal  of or  interest  on the
Senior  Debt is not paid when due,  whether  at stated  maturity,  by  mandatory
prepayment, by acceleration or otherwise, but after expiration of any applicable
grace  period  (each a  "SENIOR  DEBT  PAYMENT  DEFAULT")  and the  Senior  Debt
Representative  shall have given written notice of such  non-payment (a "Payment
Default Notice"),  then no payment shall be made by the Company,  or accepted by
any Investor,  on account of the Subordinated Debt unless and until such payment
shall have been made or such Senior Debt Payment Default is waived in accordance
with the tams of such Senior Debt.

                  (b) In the  event  that any  Event of  Default  under,  and as
defined in, the Senior Credit Agreement (other than a Senior Debt


                                      -61-
<PAGE>
Payment  Default) (each a "SENIOR DEBT NONPAYMENT  DEFAULT") shall have occurred
and be continuing and the Company and the Investors shall have received  written
notice  of  such  Senior  Debt   Non-Payment   Default   from  the  Senior  Debt
Representative (a "Payment Blockage  Notice"),  then no payment shall be made by
the Company,  or accepted by any Investor,  on account of the Subordinated  Debt
(including any  repurchase of the Notes) during the period (a "PAYMENT  BLOCKAGE
PERIOD")  commencing  on the date the Company and the  Investors  received  such
Payment  Blockage  Notice  and  ending on the  earlier  of (i) the date 180 days
thereafter and (ii) the date on which the Senior Debt NonPayment  Default giving
rise to the Payment  Blockage  Period is cured or waived in accordance  with the
terms of the Senior  Credit  Documents;  PROVIDED that (x) the holders of Senior
Debt shall not be entitled to  institute  a Payment  Blockage  Period more often
than once  within  any  period of 360  consecutive  days and (y) no Senior  Debt
Non-Payment  Default or event which,  with the giving of notice  and/or lapse of
time, would become a Senior Debt  Non-Payment  Default which existed on the date
of the commencement of any such blockage period may be used as the basis for any
subsequent Payment Blockage Notice unless such Senior Debt NonPayment Default or
event,  as the case may be, shall in the interim have been cured or waived for a
period of not less than 90 consecutive days.

                  (c) The  failure  of the  Company  to make  any  payment  with
respect to the  Subordinated  Debt by reason of the  operation  of this  Section
11.03 shall not be construed as preventing the occurrence of an Event of Default
hereunder.  Immediately  upon the  expiration  of any period  under this Section
11.03 during which no payment may be made on account of the  Subordinated  Debt,
the  Company  may  resume  making  any  and  all  payments  on  account  of  the
Subordinated  Debt  (including  any payment of  principal,  interest  (including
interest at the  applicable  post-default  interest  rate  specified  in Section
2.04(b)) or any other amount missed during such period).

                  (d) The  Company  will  not  make any  optional  or  mandatory
prepayment  of the Notes as provided for under  Section  3.01 and the  Investors
shall not  accept any such  prepayment  to the extent  that such  prepayment  is
prohibited  under the Senior  Credit  Agreement,  unless the  lenders  under the
Senior Credit Agreement shall have given their written consent thereto.

                  (e) In the event  that,  notwithstanding  the  foregoing,  the
Investors shall have received any payment prohibited by the foregoing provisions
of this Section 11.03, then and in such event such payment


                                      -62-
<PAGE>
shall be held in trust  for the  holders  of the  Senior  Debt and paid  over or
delivered  forthwith  to the  agent  for the  holders  of the  Senior  Debt  for
application  to the Senior Debt  remaining  unpaid  after  giving  effect to any
concurrent  payment or  distribution to the holders of Senior Debt in respect of
the Savior Debt.  No amount paid by the Company to the Investors and paid ova by
the  Investors  to the  holders of the Senior Debt  pursuant to this  Article XI
shall, as between Me Company and the Investors, be deemed to be a payment by the
Company to or on account of the Subordinated Debt.

                  (f) The  provisions  of this Section  11.03 shall not apply to
any payment with respect to which Section 11.02 would be applicable.

                  SECTION 11.4 PAYMENTS OTHERWISE  PERMITTED.  Nothing contained
in this Article XI or elsewhere in this  Agreement or in the Notes shall prevent
the Company,  at any time except  during the  pendency of any case,  proceeding,
dissolution,  liquidation  or other  winding up,  assignment  for the benefit of
creditors or other marshalling of assets and liabilities of the Company referred
to in Section 11.02 or under the  conditions  described in Section  11.03,  from
making payments at any time of the Subordinated Debt.

                  SECTION  11.5  SUBROGATION.  Subject to the payment in full in
cash of all Senior Debt, the Investors  shall be subrogated to the rights of the
holders of such  Senior  Debt to receive  payments  and  distributions  of cash,
property and securities applicable to the Senior Debt until the principal of and
interest on the Notes shall be paid in full.  For purposes of such  subrogation,
no payments or distributions to the holders of Senior Debt of any cash, property
or securities to which the Investors would be entitled except for the provisions
of this  Article XI, and no payments  over  pursuant to the  provisions  of this
Article XI to the holders of Senior Debt by the  Investors  shall,  as among the
Company, its creditors (other than holders of Senior Debt), and the Investors be
deemed to be a payment or  distribution  by the  Company to or on account of the
Senior Debt.

                  SECTION 11.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.  The
provisions  of this  Article XI are and are  intended  solely for the purpose of
defining the relative rights of the Investors on the one hand and the holders of
Senior Debt on the other hand. Nothing contained in this Article XI or elsewhere
in this Agreement or the Notes is intended to or shall (a) impair,  as among the
Company,  its creditors  (other than holders of Senior Debt) and the  Investors,
the obligation of the


                                      -63-
<PAGE>
Company,  which is  absolute  and  unconditional,  to pay to the  Investors  the
principal of and  interest or premium (if any) on, and any other amount  payable
by the Company  under,  the Notes or this  Agreement  as and when the same shall
become due and payable in accordance with their  respective  tams; or (b) affect
the relative  rights  against the Company of the  Investors and creditors of the
Company  (other than the holders of Senior  Debt);  or (c) prevent the Investors
from exercising all remedies otherwise  permitted by applicable law upon default
under this Agreement, subject to the rights of the holders of Senior Debt (i) in
any case, proceeding,  dissolution,  liquidation or other winding up, assignment
for the benefit of creditors or other  marshalling of assets and  liabilities of
the  Company  referred  to in Section  11.02,  to  receive,  pursuant  to and in
accordance with such Section, cash, property and securities otherwise payable or
deliverable to the Investors or (ii) under the  conditions  specified in Section
11.03, to prevent any payment prohibited by Section 11.03.

                  SECTION 11.7 NO WAIVER OF SUBORDINATION  PROVISIONS.  No right
of any present or future holder of any Senior Debt to enforce  subordination  as
herein  provided  shall at any time in any way be  prejudiced or impaired by any
act or  failure  to act on the part of the  Company  or by any act or failure to
act, in good faith, by any such holder, or by any  non-compliance by the Company
with the tams,  provisions  and covenants of this  Agreement,  regardless of any
knowledge thereof any such holder may have or be otherwise charged with. Without
in any way limiting the  generality  of the foregoing  sentence,  the holders of
Senior  Debt may,  at any time and from time to time,  without the consent of or
notice to the Investors,  without incurring  responsibility to the Investors and
without impairing or releasing the subordination  provided in this Article XI or
the obligations hereunder of the Investors to the holders of Senior Debt, do any
one or more of the following:  (a) change the manner,  place or terms of payment
or  extend  the  time of  payment  of,  or renew or  alter,  Senior  Debt or any
instrument  evidencing  the same or any  agreement  under  which  Senior Debt is
outstanding;  (b) sell,  exchange,  release or otherwise  deal with any property
pledged,  mortgaged or otherwise  securing  Senior Debt,  or waive any provision
thereof or the  occurrence  of any  default  thereunder;  (c) release any Person
liable in any manner for the  collection  of Senior  Debt;  and (d)  exercise or
refrain from exercising any rights against the Company and any other Person.

                  SECTION  11.8  NOTICE  TO   INVESTORS.   Notwithstanding   the
provisions of this Article XI or any other provision of this Agreement,


                                      -64-
<PAGE>
the Investors  shall not be charged with knowledge of the existence of any facts
that  would  prohibit  the  making  of  any  payment  to it in  respect  of  the
Subordinated  Debt,  unless and until the Investors shall have received  written
notice  thereof  from an Obligor or a holder of Senior Debt or from any trustee,
fiduciary  or agent  therefor;  and,  prior to the  receipt of any such  written
notice,  the Investors  shall be entitled in all respects to assume that no such
facts exist.  The Investors shall be entitled to rely on the delivery to it of a
written notice by a Person representing itself to be a holder of Senior Debt (or
a trustee,  fiduciary or agent  therefor) to establish that such notice has been
given by a holder of Senior Debt (or a trustee, fiduciary or agent therefor). In
the event that the  Investors  determine in good faith that further  evidence is
required  with  respect to the right of any Person as a holder of Senior Debt to
participate  in any payment or  distribution  pursuant  to this  Article XI, the
Investors  may  request  such  Person  to  furnish  evidence  to the  reasonable
satisfaction  of the  Investors  as to the  amount of  Senior  Debt held by such
Person,  the extent to which such  Person is  entitled  to  participate  in such
payment or  distribution  and any other  facts  pertinent  to the rights of such
Person  under  this  Article  XI and if  such  evidence  is not  furnished,  the
Investors may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.

                  SECTION 11.9  RELIANCE.  Upon any payment or  distribution  of
assets of the Company  referred to in this  Article XI, the  Investors  shall be
entitled  to rely  upon any order or decree  entered  by any court of  competent
jurisdiction in which such insolvency,  bankruptcy,  receivership,  liquidation,
reorganization,  dissolution,  winding  up or  similar  case  or  proceeding  is
pending,  or a certificate of the trustee in bankruptcy,  receiver,  liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution,  delivered to the Investors for the purpose
of  ascertaining  the  Persons  entitled  to  participate  in  such  payment  or
distribution,  the holders of Senior Debt and other Indebtedness of the Company,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XI.

                  SECTION 11.10  REINSTATEMENT.  If, at any time, all or part of
any payment with respect to Senior Debt  theretofore  made by the Company or any
other Person is rescinded or must otherwise be returned by the holders of Senior
Debt for any reason whatsoever (including,  without limitation,  the insolvency,
bankruptcy  or  reorganization  of  the  Company  or  such  other  Person),  the
subordination provisions set forth in this


                                      -65-
<PAGE>
Article XI shall continue to be effective or be reinstated,  as the case may be,
all as though such payment had not been made.

                  SECTION 11.11 SUBSIDIARY  GUARANTEES.  The obligations of each
Subsidiary  Guarantor  under Article X are  subordinate  and subject in right of
payment in full in cash of any Senior Debt of such  Subsidiary  Guarantor to the
same extent and in the same manner set forth in the preceding provisions of this
Article XI and, for purposes of applying  this  Section 11 . 11,  references  in
such  preceding  sections  to "the  Company"  shall  be  deemed  to refer to the
relevant Subsidiary Guarantor.

                  SECTION 11.12 LIMITATIONS ON REMEDIES.

                  (a) Notwithstanding anything contained herein to the contrary,
during any period  commencing on the date of receipt of a Payment Default Notice
under Section  11.03(a) or a Payment  Blockage Notice under Section 11.03(b) and
ending on the  earlier of (i) the date the  default  that is the subject of such
Payment Default Notice or Payment Blockage Notice,  as the case may be, is cured
or waived or (ii) 90 days after receipt by the Investors of such Payment Default
Notice or Payment Blockage  Notice,  as the case may be, the Investors shall not
(A)  accelerate the Notes as provided in Section 9.01, (B) initiate any judicial
proceeding  or action to collect the Notes or (C) initiate any case,  proceeding
or other action in respect of any Obligor of the type  referred to in clause (a)
or (b) of Section 11.02 unless,  prior to the expiration of such period, (x) the
holder or holders (or their  respective  agent(s)) of any Senior Debt shall take
any action of the type  referred to in clauses (A), (B) and (C) above in respect
of such Senior Debt or (y) any Senior  Debt and/or the  Subordinated  Debt shall
have become automatically due payable in accordance with their respective tams.

                  (b) Prior to taking  any  action  of the type  referred  to in
clauses  (A),  (B) and (C) of Section  11.12(a),  the  Investors  shall give the
Senior  Debt  Representative  not  less  than 5  Business  Days'  notice  of the
Investors'  intent to take any such action (which notice may be given during the
continuation  of any paled during which the Investors are blocked from receiving
payments under Section 11.03).

                  SECTION  11.13  NOTICES.  All notices or other  communications
required  or  permitted  to be made by the  holders of Senior Debt or the Senior
Debt   Representative   to  the  Investors  shall  be  made  to  the  Investor's
Representative, at its address provided under Section 12.01


                                      -66-
<PAGE>
(and  upon  receipt  of  any  such  notice  or  communication,   the  Investor's
Representative  shall  furnish a copy  thereof  to each  Investor,  and  receipt
thereof  by the  Investor's  Representative  shall  be  deemed  to  satisfy  the
requirements  of this  Article XI for  delivery  thereof to the  Investors).  By
acceptance  of the benefits of this Article XI, the holders of Senior Debt agree
with the  Investors  that (i) all  notices or other  communications  required or
permitted  to be made to the holders of Senior Debt under this Article XI by the
Investors  or the  Investor's  Representative  may be  made to the  Senior  Debt
Representative  at its address  specified in Section  10.03 of the Senior Credit
Agreement  and  (ii)  SunTrust  Bank,   South  Florida,   National   Association
("SunTrust")  shall be the Senior Debt  Representative  for all purposes  hereof
until such time as the Investor's  Representative  shall have received notice in
writing from SunTrust or the then current Senior Debt Representative  specifying
a  new   Servitor   Debt   Representative,   following   which  the   Investor's
Representative and each Investor shall be fully protected in dealing solely with
such Senior Debt Representative for purposes of this Article XI.


                                   ARTICLE XII

                                  MISCELLANEOUS

                  SECTION 12.1 NOTICES.  Except in the case of notices and other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail or sent by telecopy,  to the intended  recipient  thereof at its
respective  address  (or  telecopy  number)  set forth  beneath  its name on the
signature  pages  hereto.  Any party  hereto may change its  address or telecopy
number for notices  and other  communications  hereunder  by notice to the other
parties hereto. All notices and other  communications  given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt or if mailed by certified mail or registered  mail,
on the date three days after the date of mailing.

                  SECTION 12.2 WAIVERS; AMENDMENTS.

                  (a) No  failure or delay by any  Investor  in  exercising  any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any


                                      -67-
<PAGE>
abandonment  or  discontinuance  of steps  to  enforce  such a right  or  power,
preclude  any other or further  exercise  thereof or the  exercise  of any other
right  or  power.  The  rights  and  remedies  of the  Investors  hereunder  are
cumulative  and are not  exclusive  of any  rights or  remedies  that they would
otherwise  have. No waiver of any provision of this  Agreement or consent to any
departure by the Obligors  therefrom shall in any event be effective  unless the
same  shall be patted by  paragraph  (b) of this  Section  12.02,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
purpose for which given.  Without limiting the generality of the foregoing,  the
issuance of a Note shall not be construed as a waiver of any Default, regardless
of whether any  Investor may have had notice or knowledge of such Default at the
time.

                  (b) Neither this  Agreement  nor any  provision  hereof may be
waived,  amended or modified  except  pursuant to an agreement or  agreements in
writing entered into by the Obligors and the Required  Investors;  PROVIDED that
no such agreement shall (i) increase the commitment of any Investor  without the
written consent of such Investor,  (ii) reduce the principal  amount of any Note
or reduce the rate of interest  thereon,  or reduce any fees payable  hereunder,
without the written consent of each Investor  affected  thereby,  (iii) postpone
the  scheduled  date of  payment  of the  principal  amount of any Note,  or any
interest thereon, or any fees payable hereunder,  or reduce the amount of, waive
or excuse any such payment,  or postpone the scheduled date of expiration of any
commitment  of any  Investor,  without  the  written  consent  of each  Investor
affected  thereby,  (iv) change any provision of this Agreement that would alter
the pro rata  sharing of  payments  required  thereunder,  without  the  written
consent of each  Investor,  or (v) change any of the  provisions of this Section
12.02 or the definition of "Required  Investors" or any other  provision  hereof
specifying  the number or  percentage of Investors  required to waive,  amend or
modify any  rights  hereunder  or make any  determination  or grant any  consent
hereunder,  without  the  written  consent  of  each  Investor.  Notwithstanding
anything  herein to the  contrary,  in the event  that  within 60 days after the
Closing  Date the  Company  requests  the  Investors  to amend  or  modify  this
Agreement  to  increase  the  aggregate  principal  amount of the  Notes  issued
hereunder, such amendment will require the consent of each Investor.

                  SECTION 12.3  EXPENSES; INDEMNITY; DAMAGE WAIVER.

                  (a) The  Company  shall pay (i) all  reasonable  out-of-pocket
expenses incurred by any Investor and its Affiliates, including the


                                      -68-
<PAGE>
reasonable fees, charges and disbursements of Milbank,  Tweed,  Hadley & McCloy,
special New York counsel to Chase Capital,  in connection with the  preparation,
negotiation,  execution  and  delivery  of  this  Agreement  or any  amendments,
modifications  or  waivers  of  the  provisions   hereof  (whether  or  not  the
transactions  contemplated  hereby or thereby shall be consummated,  subject, in
the case of Chase Capital and its  Affiliates  only, to the limitation set forth
in the letter  between the Company and Chase Capital  Partners  dated October 1,
1997 and (ii) all out-of-pocket expenses incurred by any Investor, including the
above fees,  charges and  disbursements  of any  counsel  for any  Investor,  in
connection  with the  enforcement or protection of its rights in connection with
this Agreement,  including its rights under this Section 12.03, or in connection
with the Notes  issued  hereunder,  including  in  connection  with any workout,
restructuring or negotiations in respect thereof.

                  (b) The  Company  shall  indemnify  each  Investor,  and  each
Related Party of any of the foregoing  Poisonous  (each such Person being called
an "INDEMNITEE")  against,  and hold each Indemnitee  harmless from, any and all
losses, claims, damages,  liabilities and related expenses,  including the fees,
charges and  disbursements  of any counsel  for any  Indemnitee,  incurred by or
asserted  against any  Indemnitee  arising out of, in  connection  with, or as a
result of (i) the  execution or delivery of this  Agreement or any  agreement or
instrument  contemplated  hereby, the performance by the parties hereto of their
respective  obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Note or the use of the proceeds
therefrom,  (iii)  any  actual or  alleged  presence  or  release  of  Hazardous
Materials on or from any property owned or operated by the Company or any of its
Subsidiaries,  or any Environmental  Liability related in any way to the Company
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding  relating to any of the foregoing,  whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto;  PROVIDED that such indemnity shall not, as to any Indemnitee, be
available  to the extent  that such  losses,  claims,  damages,  liabilities  or
related  expenses are determined by a court of competent  jurisdiction  by final
and nonappealable  judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee. Promptly after receipt by an Indemnitee of notice
of any complaint or the commencement of any action or proceeding with respect to
which indemnification is being sought hereunder, such Indemnitee will notify the
Company in writing of such  complaint or of the  commencement  of such action or
proceeding, but failure so to notify the Company will not


                                      -69-
<PAGE>
relieve the Company from any liability  which the Company may have  hereunder or
otherwise,  except to the extent that such  failure  materially  prejudices  the
Company's  rights.  If the Company so elects or is requested by such Indemnitee,
the Company will assume the defense of such action or proceeding,  including the
employment of counsel reasonably satisfactory to such Indemnitee and the payment
of the fees and disbursements of such counsel, and in such event such Indemnitee
will  cooperate in connection  therewith as reasonably  requested by the Company
(subject to the expenses of such Indemnitee  being  reimbursed by the Company as
provided above). In the event,  however,  such Indemnitee  reasonably determines
that  having  common  counsel  would  present  such  counsel  with a conflict of
interest  or if the  Company  fails to  assume  the  defense  of the  action  or
proceeding in a timely manner,  then such Indemnitee may employ separate counsel
to represent or defend it in any such action or proceeding  and the Company will
pay the reasonable fees and  disbursements of such counsel,  PROVIDED,  HOWEVER,
that the Company will not be required to pay the fees and  disbursements of more
than one separate counsel for all Indemnified Parties in any jurisdiction in any
single action or  proceeding.  In any action or proceeding  the defense of which
the Company  assumes,  any Indemnitee will have the right to participate in such
litigation and to retain its own counsel at such Indemnitee's own expense.

                  (c) To the extent  permitted by  applicable  law, the Obligors
shall not assert,  and hereby waive,  any claim against any  Indemnitee,  on any
theory of liability,  for special,  indirect,  consequential or punitive damages
(as opposed to direct or actual damages)  arising out of, in connection with, or
as a result of, this  Agreement  or any  agreement  or  instrument  contemplated
hereby, the Transactions, any Note or the use of the proceeds thereof.

                  (e) All amounts due under this Section  12.03 shall be payable
promptly after written demand therefor.

                  SECTION 12.4 SUCCESSORS AND ASSIGNS.

                  (a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto, all future holders of the Notes, and
their respective successors and assigns permitted hereby, except that no Obligor
may assign or  otherwise  transfer  any of its rights or  obligations  hereunder
without the prior written consent of each Investor (and any attempted assignment
or transfer by any Obliger without such consent shall be null and void). Nothing
in this Agreement,


                                      -70-
<PAGE>
expressed or implied,  shall be construed to confer upon any Person  (other than
the parties hereto,  their  respective  successors and assigns  permitted hereby
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Investors and, to the extent  expressly  provided in Article XI, the holders
of Senior Debt and the Senior Debt Representative) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

                  (b)  Notwithstanding  anything  herein  to  the  contrary,  no
Investor  may assign all or any portion of its rights under this  Agreement  and
the Note(s) held by such  Investor (i) to a Person  engaged in the  operation of
any  business  involving  the sale of  carbonic  gas or the  rental of bulls CO2
cylinders or high pressure cylinders,  (ii) to any Person other than a Qualified
Investor  and  (iii)  unless  such  assignment  complies  with the  registration
requirements (or an applicable exemption therefrom) under the Securities Act and
any applicable  state  securities laws. From and after the effective date of any
transfer of a Note by any holder  thereof to another  Person,  such Person shall
become a party to this Agreement,  be an "Investor" for all purposes hereof and,
to the extent of the  interest  assigned  pursuant  to such  transfer,  have the
rights and  obligations  of an Investor under this  Agreement,  and the relevant
transferring  Investor shall, to the extent of the interest assigned thereby, be
released  from its  obligations  under this  Agreement  (and, in the case of any
transfer  covering all of such  transferring  Investor's  rights and obligations
under this  Agreement,  such Investor shall cease to be a party hereto but shall
continue to be entitled to the benefits of Section 12.03).

                  (c) The Company shall keep at its principal executive office a
register for the  registration  and registration of transfers of Notes. The name
and address of each holder of one or more Notes,  each transfer  thereof and the
name and address of each  transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be  registered  shall be deemed and  treated as the
owner and holder thereof for all purposes  hereof,  and the Company shall not be
affected by any notice or knowledge to the  contrary.  The Company shall give to
any  holder  of a Note  that  is a  Qualified  Investor  promptly  upon  request
therefor,  a  complete  and  correct  copy of the  names  and  addresses  of all
registered holders of Notes.

                  (d)  Upon  surrender  of any Note at the  principal  executive
office of the Company for registration of transfer or exchange (and in


                                      -71-
<PAGE>
the  case  of a  surrender  for  registration  of  transfer,  duly  endorsed  or
accompanied by a written  instrument of transfer duly executed by the registered
holder of such Note or his attorney duly  authorized in writing and  accompanied
by the address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver,  at the Company's expense (except as provided
below),  one or more new Notes (as requested by the holder  thereof) in exchange
therefor,  in an aggregate principal amount equal to the unpaid principal amount
of the  surrendered  Note. Each such new Note shall be payable to such Person as
such  holder may request  and shall be  substantially  in the form of Exhibit A.
Each  such new Note  shall be  dated  and bear  interest  from the date to which
interest shall have been paid on the  surrendered  Note or dated the date of the
surrendered  Note if no interest  shall have been paid thereon.  The Company may
require  payment  of a sum  sufficient  to cover any  stamp tax or  governmental
charge  imposed in respect of any such  transfer  of Notes.  Notes  shall not be
transferred in denominations of less than $3,000,000, PROVIDED that if necessary
to enable the  registration  of  transfer  by a holder of its entire  holding of
Notes,  one  Note  may  be  in a  denomination  of  less  than  $3,000,000.  Any
transferee,  by its acceptance of a Note  registered in its name (or the name of
its  nominee),  shall be deemed to have  made the  representations  set forth in
Article IV.

                  SECTION   12.5   SURVIVAL.    All    covenants,    agreements,
representations   and  warranties  made  by  the  Obligors  herein  and  in  the
certificates  or other  instruments  delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the  execution  and delivery of this  Agreement and the
issuance  of any Note  regardless  of any  investigation  made by any such other
party or on its behalf and notwithstanding that any Investor may have had notice
or knowledge of any Default or incorrect  representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the  principal of or any accrued  interest on any Note or any fee or any
other  amount  payable  under this  Agreement  is  outstanding  and unpaid.  The
provisions  of Section  12.03 shall  survive and remain in full force and effect
regardless of the  consummation of the  transactions  contemplated  hereby,  the
repayment of the Notes or the  termination  of this  Agreement or any  provision
hereof.

                  SECTION 12.6  COUNTERPARTS; INTEGRATION; EFFECTIVENESS.  This
Agreement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an


                                      -72-
<PAGE>
original,  but all of  which  when  taken  together  shall  constitute  a single
contract.  This  Agreement  constitutes  the entire  contract  among the parties
relating  to the  subject  matter  hereof  and  supersede  any and all  previous
agreements and understandings,  oral or written,  relating to the subject matter
hereof Delivery of an executed counterpart of a signature page of this Agreement
by telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

                  SECTION 12.7  SEVERABILITY.  Any  provision of this  Agreement
held to be invalid,  illegal or unenforceable  in any jurisdiction  shall, as to
such jurisdiction,  be ineffective to the extent of such invalidity,  illegality
or unenforceability without affecting the validity,  legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular  jurisdiction  shall not invalidate  such provision in any other
jurisdiction.

                  SECTION 12.8  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS.

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

                  (b)  Each  Obligor  hereby  irrevocably  and   unconditionally
submits,  for itself and its property,  to the nonexclusive  jurisdiction of the
Supreme  Court of the State of New York  sitting  in New York  County and of the
United  States  District  Court of the  Southern  District of New York,  and any
appellate court from any thereof,  in any action or proceeding arising out of or
relating to this  Agreement,  or for recognition or enforcement of any judgment,
and each of the parties hereto hereby  irrevocably  and  unconditionally  agrees
that all  claims in respect of any such  action or  proceeding  may be heard and
determined  in such New York State or, to the extent  permitted  by law, in such
Federal  court.  Each of the parties  hereto agrees that a final judgment in any
such  action or  proceeding  shall be  conclusive  and may be  enforced in other
jurisdictions  by suit on the judgment or in any other  manner  provided by law.
Nothing in this Agreement shall affect any right that any Investor may otherwise
have to bring any action or proceeding  relating to this  Agreement  against any
Obligor or its properties in the courts of any jurisdiction.

                  (c)  Each  Obligor  hereby  irrevocably  and   unconditionally
waives, to the fullest extent it may legally and effectively do so, any


                                      -73-
<PAGE>
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding  arising out of or relating to this  Agreement in any court
referred to in Section 12.08(b).  Each of the parties hereto hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

                  (d)  Each  party to this  Agreement  irrevocably  consents  to
service of process in the manner provided for notices in Section 12.01.  Nothing
in this  Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

                  SECTION 12.9 WAIVER OF JURY TRIAL.  EACH PARTY  HERETO  HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS  CONTEMPLATED  HEREBY (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.09.

                  SECTION 12.10 HEADINGS.  Article and Section  headings and the
Table of Contents used herein are for  convenience  of reference  only,  are not
part of this  Agreement  and shall not affect the  construction  of, or be taken
into consideration in interpreting, this Agreement.

                  SECTION 12.11 CONFIDENTIALITY. Each of the Investors agrees to
maintain the confidentiality of the Information (-as defined below), except that
Information may be disclosed (a) to its and its Affiliates' directors, officers,
employees and agents,  including  accountants,  legal counsel and other advisors
(it being  understood  that the Persons to whom such  disclosure is made will be
informed of the  confidential  nature of such Information and instructed to keep
such  Information  confidential),  (b) to the extent requested by any regulatory
authority,  (c) to the extent  required by applicable  laws or regulations or by
any  subpoena or similar  legal  process  (and the  Investor  or the  Investor's
Representative shall promptly notify the Company of any such disclosure), (d) to
any other party to this  Agreement,  (e) in connection  with the exercise of any
remedies hereunder or any suit, action or proceeding relating to


                                      -74-

<PAGE>
this  Agreement  or the  enforcement  of rights  hereunder,  (f)  subject  to an
agreement containing provisions  substantially the same as those of this Section
12.11, to any transferee  permitted under Section 12.04  (including  prospective
transferee)  of its rights or  obligations  under this  Agreement,  (g) with the
consent  of the  Company  or (h) to the  extent  such  Information  (i)  becomes
publicly  available  other than as a result of a breach of this Section 12.11 or
(ii) becomes available to any Investor on a nonconfidential  basis from a source
other than the Company.  For the purposes of this Section  12.11,  "INFORMATION"
means all information  received from the Company  relating to the Company or any
Subsidiary or their respective business, other than any such information that is
available to any Investor on a nonconfidential  basis prior to disclosure by the
Company;  PROVIDED  that, in the case of  information  received from the Company
after the date hereof,  such  information  is clearly  identified at the time of
delivery as  confidential  unless such  information  is received  pursuant to an
inspection   under   Section   7.06.   Any  Person   required  to  maintain  the
confidentiality  of  Information  as  provided  in this  Section  12.11 shall be
considered  to have  complied  with its  obligation  to do so if such Person has
exercised  the same  degree  of care to  maintain  the  confidentiality  of such
Information as such Person would accord to its own confidential  information and
has taken measures to cause its representatives to do the same. Each holder of a
Note, by its acceptance of a Note,  will be deemed to have agreed to be bound by
and to be entitled to the  benefits  of this  Section  12.11 as though it were a
party to this Agreement.




                                      -75-
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.

                                             NUCO2 INC.


                                             By:/S/ JOSEPH CRISCUOLO
                                                -----------------------
                                                Title: President

                                             Address for Notices:

                                             NuCo2 Inc.
                                             2800 S.E. Market Place
                                             Stuart, Florida 34997

                                             Attention: Ms. Joann Sabatino

                                             Fax No.: (561) 221-1690

                                             Telephone No.: (561) 221-1754




                                      -76-
<PAGE>
                                             SUBSIDIARY GUARANTORS

                                             NUCO2 ACQUISITION CORP.


                                             By: /S/JOSEPH CRISCUOLO
                                                 -----------------------
                                               Title: Vice President


                                             KOCH COMPRESSED GASES, INC.


                                             By:/S/ JOSEPH CRISCUOLO
                                                -----------------------
                                                Title: Vice President



                                      -77-

<PAGE>
                                    INVESTORS

AMOUNT OF NOTE                         CHASE EQUITY ASSOCIATES L.P.

$15,000,000                            By Chase Capital Partners, its general
                                       partner


                                       By:/S/ RICHARD D. WATERS
                                          ------------------------
                                          Title:

                                       Address for Notices:

                                       Chase Capital Partners
                                       380 Madison Avenue
                                       12th Floor
                                       New York, New York 10017

                                       Attention: Mr. Richard D. Waters, Jr.

                                       Fax No.: (212) 622-3950

                                       Telephone No.: (212) 622-3096



                                      -78-
<PAGE>



AMOUNT OF NOTE                         DK ACQUISITION PARTNERS, L.P.

$5,000,000                             By M.H. Davidson & Co.,
                                            its general partner


                                       By: /S/ THOMAS L. KEMPNER
                                           -------------------------
                                           Title: General Partner

                                       Address for Notices:

                                       DK ACQUISITION PARTNERS, L.P.
                                       c/o M.H. Davidson & Co.
                                       885 Third Avenue
                                       Suite 3300
                                       New York, New York 10022

                                       Attention: Mr. Thomas L. Kempner, Jr.

                                       Fax No.: (212) 371-4318

                                       Telephone No.: (212) 371-3000


                                      -79-
<PAGE>
AMOUNT OF NOTE

$2,000,000                             EMPIRE INSURANCE COMPANY, as executed on
                                       their behalf by their Investment Manager,
                                       Cohanzick Management, L.L.C.


                                       By: /S/ DAVID SHERMAN
                                           ---------------------
                                           Title: President

                                       Address for Notices:
                                       Empire Insurance Company
                                       122 Fifth Ave.
                                       New York, NY 10011
                                       Attn: Frank Colalucci
                                       Telephone No.: (212) 386-3113
                                       Fax No.: (212) 691-6374

                                       with a copy to:
                                       c/o Cohanzick Management, L.L.C.
                                       110 E. 42nd Street
                                       Suite 1305
                                       New York, New York 10017
                                       Attention:  Mr. David Sherman
                                       Fax No. (212) 953-5833
                                       Telephone No.:  (212) 953-6900




                                      -80-

<PAGE>


AMOUNT OF NOTE                         ORIX USA CORPORATION

$3,000,000

                                       By: /S/ FRANKLIN CLARKE
                                           -----------------------
                                           Title: President & CEO


                                       Address for Notices:

                                       Orix USA Corporation
                                       780 Third Avenue
                                       48th Floor
                                       New York, New York 10017

                                       Attention: Mr. Franklin Clarke

                                       Fax No.: (212) 418-8308

                                       Telephone No.: (212) 418-8355


                                      -81-