<PAGE>
 
                                                                       EXHIBIT 2


                     IN THE UNITED STATES BANKRUPTCY COURT
                     FOR THE NORTHERN DISTRICT OF ILLINOIS
                               EASTERN DIVISION


 
In re:                        )
                              )
MERCURY FINANCE COMPANY,      )    Case No. 98 B 20763
                              )
a Delaware corporation,       )    Chapter 11
                              )
                  Debtor.     )    Honorable Erwin I. Katz


                     SECOND AMENDED PLAN OF REORGANIZATION
                                      OF
                            MERCURY FINANCE COMPANY
                    UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
                                        
<PAGE>
 
                                 INTRODUCTION

     MERCURY FINANCE COMPANY, A DELAWARE CORPORATION ("MERCURY" OR THE
"DEBTOR"), PROPOSES THE FOLLOWING PLAN OF REORGANIZATION (THE "PLAN") FOR THE
RESOLUTION OF ALL CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR.  REFERENCE
IS MADE TO THE DEBTOR'S DISCLOSURE STATEMENT FILED CONTEMPORANEOUSLY WITH THE
PLAN (THE "DISCLOSURE STATEMENT"), FOR A DISCUSSION OF THE DEBTOR'S HISTORY,
BUSINESSES, PROPERTIES, RESULTS OF OPERATIONS AND PROJECTIONS FOR FUTURE
OPERATIONS, AND FOR A SUMMARY AND ANALYSIS OF THE PLAN AND CERTAIN RELATED
MATTERS.  THE DEBTOR IS THE PROPONENT OF THE PLAN WITHIN THE MEANING OF SECTION
1129 OF THE BANKRUPTCY CODE, 11 U.S.C. (S) 1129.  ALL HOLDERS OF CLAIMS AGAINST
AND INTERESTS IN THE DEBTOR ENTITLED TO VOTE ON THE PLAN ARE ENCOURAGED TO READ
THE PLAN AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT
OR REJECT THE PLAN.  SUBJECT TO CERTAIN RESTRICTIONS AND REQUIREMENTS SET FORTH
IN THE PLAN, THE DEBTOR RESERVES THE RIGHT TO ALTER, AMEND, MODIFY, REVOKE OR
WITHDRAW THE PLAN PRIOR TO ITS CONSUMMATION.

                                   ARTICLE I
                     DEFINITIONS, RULES OF INTERPRETATION,
                     COMPUTATION OF TIME AND GOVERNING LAW
                                        
A.  DEFINITIONS.

     Certain capitalized terms used throughout the Plan are defined in this
Article I.  Other capitalized terms found in the Plan shall have the meaning
ascribed to such terms in the Bankruptcy Code or the Bankruptcy Rules (and shall
be construed in accordance with the rules of construction thereunder).

     ADMINISTRATIVE CLAIM means a Claim for payment of an administrative expense
of a kind specified in section 503(b) of the Bankruptcy Code and referred to in
section 507(a)(1) of the Bankruptcy Code, including, without limitation, the
actual, necessary costs and expenses incurred after the Petition Date of
preserving the Estate and operating the business of the Debtor, including wages,
salaries or commissions for services, compensation for legal, financial
advisory, accounting and other services and reimbursement of expenses awarded or
allowed under sections 330(a) or 331 of the Bankruptcy Code, and all fees and
charges assessed against the Estate under chapter 123 of title 28, United States
Code.

     ALLOWED ADMINISTRATIVE CLAIM means all or that portion of an Administrative
Claim which either (a) has been allowed by a Final Order as an Administrative
Claim, or (b) was incurred by the Debtor in the ordinary course of business
during its Reorganization Case and is determined to be due, owing, valid and
enforceable by the Debtor.

     ALLOWED CLAIM or ALLOWED UNSECURED CLAIM means that portion of any Claim,
other than an Administrative Claim, (a) as to which (x) no proof of claim has
been filed with the Court and (y) the liquidated and noncontingent amount of
which is scheduled by the Debtor pursuant to the Bankruptcy Code as undisputed,
or (b) as to which a proof of claim has been timely filed in a liquidated amount
with the Court pursuant to the Bankruptcy Code or any order of the Court, or
late filed with leave of the Court after notice and a hearing, provided that (x)
no objection to the allowance of such Claim or motion to expunge such claim has
been interposed before any final date for the filing of such objections or
motions set forth in the Confirmation Order or other Court order or (y) if such
objection or motion has been filed, such objection or motion  has been overruled
by a Final Order (but only to the extent such objection or motion has been
overruled), or (c) as to which a Final Order has been entered allowing such
Claim; except with respect to Claims in Class 7B which shall be liquidated and
allowed in accordance with the procedures substantially similar to those set
forth in Exhibit U attached to the Disclosure Statement.

     ALLOWED CLASS 7B CLAIM means a Class 7B Claim which is allowed in
accordance with the consensual allowance or arbitration procedures set forth in
Section 8.15 and in the Class 7B Liquidating Trust.

     Allowed Equity Interest means an Equity Interest that is of record as of
the Distribution Record Date in a stock register that is maintained by or on
behalf of the Debtor.
<PAGE>
 
     ALLOWED INDEMNIFICATION CLAIM means an Indemnification Claim (a) as to
which (x) no proof of claim has been filed with the Court and (y) the liquidated
and noncontingent amount of which is scheduled by the Debtor pursuant to the
Bankruptcy Code as undisputed, or (b) as to which a proof of claim has been
timely filed in a liquidated amount with the Court pursuant to the Bankruptcy
Code or any order of the Court, or late filed with leave of the Court after
notice and a hearing, provided that (x) no objection to the allowance of such
Claim or motion to expunge such claim has been interposed before any final date
for the filing of such objections or motions set forth in the Confirmation Order
or other Court order or (y) if such objection or motion has been filed, such
objection or motion  has been overruled by a Final Order (but only to the extent
such objection or motion has been overruled), or (c) which has been assumed by
the Debtor, including, but not limited to, claims against the Reliance Policies.

     AMENDED AND RESTATED BY-LAWS means the Amended and Restated By-laws of the
Reorganized Debtor which shall be substantially in the form set forth in Exhibit
I attached to the Disclosure Statement.

     AMENDED AND RESTATED CERTIFICATE OF INCORPORATION means the Amended and
Restated Certificate of Incorporation of the Reorganized Debtor which shall be
substantially in the form set forth in Exhibit I attached to the Disclosure
Statement.

     Ballots means the ballots accompanying the Disclosure Statement upon which
holders of Impaired Claims or Impaired Interests entitled to vote on the Plan
shall indicate their acceptance or rejection of the Plan in accordance with the
instructions regarding voting.

     Bankruptcy Code means title 11 of the United States Code, as now in effect
or hereafter amended.

     BANKRUPTCY RULES means, collectively, the Federal Rules of Bankruptcy
Procedure, as amended, promulgated under 28 U.S.C. (S) 2015 and the general and
local rules of the Court, as applicable from time to time in the Reorganization
Case.

     Bar Date means the bar date for Filing proofs of claim against the Debtor
as established by order of the Court.

     Beneficial Holder means the entity holding the beneficial interest in a
Claim or Interest.

     BENEFICIARIES means the holders of Allowed  Indemnification Claims other
than the estate of James A. Doyle and John N. Brincat.

     BENEFITS CLAIM means any Unsecured Claim against the Debtor arising from or
with respect to any benefits plan, but excluding any Claim alleged in or arising
from the facts and circumstances alleged in the action styled as Ferre v.
                                                                 --------
Mercury Finance Company, et al., No. 97C 5245 (N.D. Ill.).
-----------------------  ------                           

     Business Day means any day except a Saturday, Sunday or "legal holiday" (as
defined in Bankruptcy Rule 9006(a)).

     CAPITAL EXPENDITURE RESERVE means an amount to be agreed upon between the
Debtor and the Creditors' Committee.

     Cash means cash and cash equivalents.

     Claim means a claim against the Debtor, whether asserted or not asserted,
as defined in section 101(5) of the Bankruptcy Code.

     Class means a category of holders of Claims or Interests as defined in
Article III of the Plan.

     CLASS 7B BAR DATE means the date set forth in Section 6.01(a) of the Class
7B Liquidating Trust Agreement which is the bar date for filing requests for
allowance against the Debtors in order for such Requests to be considered in the
allocation/allowance procedure under the Class 7B Liquidating Trust Agreement.

                                      -2-
<PAGE>
 
     CLASS 7B LIQUIDATING TRUST means the trust established  under section 8.15
of the Plan and governed by to the Class 7B Liquidating Trust Agreement.

     CLASS 7B LIQUIDATING TRUST AGREEMENT means the Class 7B Liquidating Trust
Agreement in substantially the form set forth in Exhibit U to the Disclosure
Statement.

     COMPANY KPMG CLAIMS means all of the Debtor's, the Estate's and the
Reorganized Debtor's rights, title, and interests in and to any and all of their
respective claims against KPMG Peat Marwick, including without limitation those
relating to, arising from, or on account of: (a) the announcement on January 29,
1997 that the Debtor would restate its earnings for certain periods as a result
of accounting irregularities, (b) such accounting irregularities, and (c) the
actions or non-action of KPMG Peat Marwick with respect to the foregoing or with
respect to its role as auditor of and provider of other services, including
accounting, to the Debtor prior to and at the time of the announcement of the
accounting irregularities, together with complete and exclusive control of the
prosecution and/or settlement of all such clams against KPMG Peat Marwick and
the sole right to prosecute the same on behalf of and in the name of the Debtor,
the Reorganized Debtor and the Estate, subject, in each such case, to any
defenses, rights of setoff, or counterclaims that KPMG Peat Marwick may have or
be entitled to assert against the Debtor in respect of such claims.

     CONFIRMATION DATE means the date on which the Court enters the Confirmation
Order on its docket, within the meaning of Bankruptcy Rules 5003 and 9021.

     CONFIRMATION ORDER means the order of the Court confirming the Plan
pursuant to section 1129 of the Bankruptcy Code.

     CONSENT AGREEMENT means the agreement dated May 14, 1998 and attached as
Exhibit L to the Disclosure Statement.

     CONSUMER LITIGATION CLAIMS means all claims against the Debtor incurred in
the ordinary course of business which are asserted under lawsuits or complaints
and are pending as of the commencement of the Reorganization Case in state or
federal court set forth in Exhibit 1 attached to the Plan, excluding the
Securities Fraud Claims and derivative actions pending against the Debtor set
forth in Exhibit 2 attached to the Plan.

     CONSUMMATION means the occurrence of the Effective Date.

     CORPORATE INDEMNITIES means any obligations of the Debtor, pursuant to its
corporate charter and by-laws or agreements entered into any time prior to the
Effective Date, to indemnify directors, officers, agents and/or employees with
respect to all present and future actions, suits and proceedings against the
Debtor or such directors, officers, agents and/or employees, based upon any act
or omission related to service with, or for or on behalf of the Debtor.

     COURT means the United States Bankruptcy Court for the Northern District of
Illinois and, to the extent it may exercise jurisdiction in the Reorganization
Case, the United States District Court for the Northern District of Illinois, or
if either such Court ceases to exercise jurisdiction over the Reorganization
Case, such other court that exercises jurisdiction over the Reorganization Case.

     CREDITORS' COMMITTEE means the Official Creditors' Committee appointed
pursuant to section 1102 of the Bankruptcy Code in the Reorganization Case.

     D&O COMPANY RELEASE means release and waiver of (i) any and all claims
against the Debtor and Reorganized Debtor for indemnification or contribution
arising under any contract, arrangement or statute in excess of the amounts set
forth in Section 12.03 and (ii) interests of the Beneficiaries in the Debtor and
the Reorganized Debtor.

     DEBTOR means Mercury Finance Company.

                                      -3-
<PAGE>
 
     DELAWARE GENERAL CORPORATION LAW means title 8 of the Delaware Code, as now
in effect or hereafter amended.

     DISCLOSURE STATEMENT means the Debtor's Disclosure Statement Filed with the
Court on July 15, 1998, as it may be amended, modified or supplemented (and all
exhibits or schedules annexed thereto or referenced therein), which relates to
the Plan and which has been prepared and distributed in accordance with sections
1125 and 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018.

     DISTRIBUTION RECORD DATE means the Business Day immediately preceding the
Confirmation Date.

     DIVIDEND CLAIMS means any and all Claims relating to the Old Common Stock
for declared but unpaid dividends or rights.

     EFFECTIVE DATE means a date selected by the Debtor that is no more than ten
Business Days following the date on which all conditions to the Effective Date
set forth in Section 10.02 have been satisfied or, if capable of being waived,
duly and expressly waived.

     EMPLOYMENT AGREEMENT means the Employment Agreement, dated as of the
Effective Date by and between the Reorganized Debtor and Edward Harshfield.

     ENTITY means an entity as defined in section 101(15) of the Bankruptcy
Code.

     EQUITY HOLDERS' COMMITTEE means the Official Committee of Equity Holders
appointed by the Court.

     EQUITY INTERESTS means the rights of holders of Old Common Stock, including
redemption rights, and liquidation preferences.

     ESTATE means the estate created for the Debtor in its Reorganization Case
pursuant to section 541 of the Bankruptcy Code.

     EXCESS CASH means, as of the day immediately preceding the Effective Date,
the ending book cash balance of the Debtor on a fully consolidated basis, which
cash shall include overnight investments, cash, corporate accounts, credit card
cash, and branch cash including cash of Midland (but only to the extent such
branch cash in the aggregate exceeds $3,000,000) minus the sum of (a)
                                                 -----               
$20,000,000 or such greater amount to be agreed to by the Debtor and the
Creditors' Committee, (b) the Interest Reserve, (c) the Capital Expenditure
Reserve, (d) the Professional Fee Reserve, (e) the Signing Bonus and (f) the
aggregate amount of cash to be distributed under the Plan to all Classes other
than to Class 4.

     EXCHANGE ACT means the Securities and Exchange Act of 1934, as amended.

     EXCHANGE AGENT means an entity to be designated by the Debtor not less than
ten days prior to the hearing on confirmation of the Plan.

     EXPIRATION DATE means 5:00 p.m. eastern standard time on February 12, 1999,
the date fixed by the Court after which Ballots with respect to the Plan may no
longer be accepted by the Debtor without leave of Court.

     FILE, FILED OR FILING means file, filed or filing with the Court in the
Reorganization Case.

     FINAL ORDER means an order of the Court (a) as to which the time to appeal,
petition for certiorari, or move for reargument, rehearing or new trial has
expired and as to which no appeal, petition for certiorari, or other proceedings
for reargument, rehearing or new trial shall then be pending; (b) as to which
any right to appeal, petition for certiorari, reargue, rehear or retry shall
have been waived in writing in form and substance satisfactory to the Debtor; or
(c) in the event that an appeal, writ of certiorari, reargument, rehearing or
new trial has been sought, as to which (i) such order of the Bankruptcy Court
shall have been affirmed by the highest court to which such order was appealed;
(ii) certiorari has been denied as to such order; or (iii) reargument or
rehearing or new trial from such 

                                      -4-
<PAGE>
 
order shall have been denied, and the time to take any further appeal, petition
for certiorari or move for reargument, rehearing or new trial shall have expired
without such actions have been taken.

     IMPAIRED  means when used with reference to a Claim or Interest, a Claim or
Interest that is impaired within the meaning of section 1124 of the Bankruptcy
Code.

     INDEMNIFICATION CLAIMS means all Claims, if any, as to which the claimant
asserts rights based upon Corporate Indemnities.

     INDEMNIFICATION SETTLEMENT FUND means a fund of $13 million (such amount to
be deducted from the ending book cash balance of the Debtor on a consolidated
basis) for the benefit of the Beneficiaries.

     INTERESTS means Equity Interests and Old Options.

     INTEREST RESERVE means an amount in cash equal to the aggregate amount of
interest accrued on the New Senior Secured Notes and the New Junior Subordinated
Notes prior to the Effective Date.

     LETTER OF TRANSMITTAL means the documentation required to be provided to
the Exchange Agent as set forth in Sections 6.04 and 6.05 of the Plan.

     MERCURY means Mercury Finance Company, a Delaware corporation.

     NET SENIOR DEBT CLAIM means with respect to any holder of Senior Debt (i)
the Allowed Senior Debt Claim of such holder, less (ii) such holder's pro rata
share of the Excess Cash distributed to Class 4 pursuant to the Plan.

     NEW COLLATERAL DOCUMENTS means the Company Security Agreement, Company
Pledge Agreement, Subsidiaries Guaranty Agreement, Subsidiaries Security
Agreement, each substantially in the form of the Group Exhibit D attached to the
Disclosure Statement.

     NEW COMMON STOCK means the 25,000,000 shares of Common Stock par value
$0.01 per share of the Reorganized Debtor authorized pursuant to the Amended and
Restated Certificate of Incorporation, 10,000,000 shares of which are to be
issued and distributed in accordance with the Plan constituting 100% of the
total number of shares of such Common Stock to be issued and outstanding
immediately after the Effective Date.

     NEW INDENTURES means the New Senior Secured Note Indenture and the New
Junior Subordinated Note Indenture.

     NEW JUNIOR SUBORDINATED NOTES means the Junior Subordinated Notes of the
Reorganized Debtor, dated as of the Effective Date and issued pursuant to the
New Junior Subordinated Note Indenture substantially in the form of Exhibit E
attached to the Disclosure Statement, the total principal amount not to exceed
$22,500,000.

     NEW JUNIOR SUBORDINATED NOTE INDENTURE means the indenture under which the
New Junior Subordinated Notes will be issued, and which shall be substantially
in the form set forth in Exhibit F attached to the Disclosure Statement.

     NEW SENIOR SECURED NOTES means the Senior Secured Notes of the Reorganized
Debtor, dated as of the Effective Date and issued pursuant to the New Senior
Secured Note Indenture, substantially in the form of Exhibit B attached to the
Disclosure Statement.

     NEW SENIOR SECURED NOTE INDENTURE means the indenture under which the New
Senior Notes will be issued, and which shall be substantially in the form set
forth in Exhibit C attached to the Disclosure Statement.

     NEW SECURITIES means, collectively, (a) the New Senior Secured Notes, (b)
the New Junior Subordinated Notes, (c) the New Common Stock, and (d) the New
Warrants.

                                      -5-
<PAGE>
 
     NEW WARRANT AGREEMENT means the New Warrant Agreement in substantially the
form set forth in Exhibit H attached to the Disclosure Statement.

     NEW WARRANT AGENT means the agent appointed to act as such under the New
Warrant Agreement.

     NEW WARRANTS means the warrants, each to purchase one share of New Common
Stock, to be issued by the Reorganized Debtor having the terms and conditions
set forth in the New Warrant Agreement and issued in accordance with the Plan to
holders of Allowed Interests in Class 7A.  Three series of New Warrants shall be
issued under the New Warrant Agreement, each series representing the right to
purchase 580,000  shares of New Common Stock or 1,740,000 shares in the
aggregate.

     NONDEBTOR SUBSIDIARIES means, collectively, Mercury Finance Corporation of
Alabama; Mercury Finance Company of Arizona; Merc Finance Company of California;
Mercury Finance Company of Colorado; Mercury Finance Company of Delaware;
Mercury Finance Company of Florida; Mercury Finance Company of Georgia; Mercury
Finance Company of Idaho; Mercury Finance Company of Illinois; Mercury Finance
Company of Indiana; Mercury Finance Company of Iowa; Mercury Finance Company of
Kansas; Mercury Finance Company of Kentucky; Mercury Finance Company of
Louisiana; Mercury Finance Company of Michigan; Mercury Finance Company of
Mississippi; Mercury Finance Company of Missouri; Mercury Finance Company of
Nevada; Mercury Finance Company of New Mexico; Mercury Finance Company of New
York; Mercury Finance Company of North Carolina; Mercury Finance Company of
Ohio; MFC Finance Company of Oklahoma; Mercury Finance Company of Oregon;
Mercury Finance Company of Pennsylvania; Mercury Finance Company of South
Carolina; Mercury Finance Company of Tennessee; MFC Finance Company of Texas;
Mercury Finance Company of Utah; Mercury Finance Company of Virginia; Mercury
Finance Company of Washington; Mercury Finance Company of Wisconsin; Filco
Marketing  Company; MFC Financial Services, Inc.; Gulfco Finance Company; Gulfco
Investment Company; Midland Finance Co.; MFN Insurance Company.

     OLD COMMON STOCK means the common stock issued by Debtor and outstanding
immediately prior to the Distribution Record Date, including the associated
share purchase rights.

     OLD OPTIONS means the options outstanding immediately prior to the
Effective Date to purchase Old Common Stock.

     OUTSIDE DIRECTORS RESERVE means a fund of $350,000 deposited into a
segregated account by the Debtor to be used for purposes of reimbursement of
continuing indemnification costs of current outside directors for a period of
two years, with any remaining balance (in such account at the expiration of such
two-year period) thereafter reverting to the Reorganized Debtor.

     PERSON shall have the meaning set forth in the Bankruptcy Code.

     PETITION DATE means July 15, 1998.

     PLAN means this Second Amended Plan of Reorganization for the Debtor and
all exhibits annexed hereto or referenced herein, as it may be amended or
modified by the Debtor from time to time in accordance with the Bankruptcy Code
and the Bankruptcy Rules, and the terms and conditions of section 14.02 of the
Plan.

     PRIORITY CLAIM means an Allowed Claim for an amount entitled to priority
under section 507(a) of the Bankruptcy Code, other than an Administrative Claim
or a Tax Claim.

     PROFESSIONAL FEE RESERVE means an amount in cash equal to the Debtor's good
faith estimate of the aggregate amount of accrued and unpaid professional fees
payable to professional persons entitled to reimbursement of fees and expenses
from the Debtor.

     RELIANCE POLICIES means any and all policies providing the Debtor with
insurance for Corporate Indemnities, including without limitation, the
Directors' and Officers' Liability Policy Number NDA 1494742-96 issued by
Reliance Insurance Company, together with any applicable extended reporting
period.

                                      -6-
<PAGE>
 
     REORGANIZATION CASE means the Debtor's case under chapter 11 of the
Bankruptcy Code.

     REORGANIZED DEBTOR means the Debtor on and after the Effective Date.

     SCHEDULES means, collectively, the: (a) schedules of assets and liabilities
and the statements of financial affairs, if any, Filed by the Debtor in the
Reorganization Case, pursuant to section 521 of the Bankruptcy Code, the
Bankruptcy Rules and the Official Bankruptcy Forms; and (b) schedule of
unliquidated, disputed or contingent Claims, as required by any local rule of
the Court, as such requirements may be modified by any order of the Court.

     SECURED CLAIM means a Claim that is secured by a lien on property in which
the Estate has an interest or that is subject to setoff under section 553 of the
Bankruptcy Code, to the extent of the value of the Claim holder's interest in
the Estate's interest in such property or to the extent of the amount subject to
setoff, as applicable, as determined pursuant to section 506(a) of the
Bankruptcy Code.

     SECURITIES ACT means the Securities Act of 1933, 15 U.S.C. (S)(S) 77a-77aa,
as now in effect or hereafter amended.

     SECURITIES CLAIMANTS' COMMITTEE means the Official Committee of Securities
Fraud Claimants appointed by the Court.

     SECURITIES FRAUD CLAIMS means all claims, including unknown claims,
demands, rights, liabilities and causes of action of any kind whatsoever, known
or unknown, asserted or which might have been asserted in a direct, derivative
or other capacity against any person or entity, including, without limitation,
claims arising out of, relating to, or in connection with (i) the purchase, sale
or other decision or action made or taken, or declined, failed or refused to be
made or taken, or otherwise foregone, concerning or relating to Equity
Interests, (ii) the facts, transactions, events, occurrences, acts,
representations, disclosure, statements, omissions, or failures to act which
were alleged or could have been alleged in the pending litigation asserted
against the Debtor and other persons and entities, whether asserted individually
or on behalf of a class of plaintiffs which generally arise from the Debtor's
accounting practices and announcement of accounting irregularities, including
the litigation set forth on Exhibit 2 attached to the Plan, (iii) the adversary
proceeding, No. 98-A-01580, in the Debtor's bankruptcy against any and all
defendants other than KPMG, KPMG-related individuals, John N. Brincat and the
Estate of James A. Doyle, and (iv) the purchase, ownership or sale of the common
stock or other securities of the Debtor, (v) accounting irregularities or
alleged accounting errors relating to the Debtor, (vi) any restatements of the
Debtor's financial statements or results of operations; and (vii) the conduct of
the Debtor's restructuring process and bankruptcy proceeding, including all
decisions, actions, inactions and alleged negligence or misconduct relating
thereto.

     SENIOR DEBT CLAIMS means Claims arising from or with respect to amounts due
under the Debtor's commercial paper, short-term loans or senior term notes
against the Debtor or under any note issued by the Debtor in connection with the
purchase of Gulfco Finance Company or Gulfco Investment Company, including any
claim arising out of or in connection with such debt as  against the Debtor, but
excluding Claims arising from or with respect to amounts due under the
Subordinated Notes, in an aggregate amount equal to the outstanding principal
amounts due under such agreements (approximately $678,000,000 as of the Petition
Date), plus all accrued and unpaid interest thereon and any unpaid amounts
payable under the Consent Agreement.  All other claims, including, but not
limited to, make-whole payments or any additional interest payments or fees, are
waived against the Debtor for enforcement or collection by holders of Senior
Debt Claims; but reserved solely for purposes of calculating and allocating
distributions by and among the holders of Class 4 Claims.

     SIGNING BONUS means the amounts designated as a signing bonus and payable
to the new Chief Executive Officer under the Employment Agreement.

     STEERING COMMITTEE means the pre-petition Ad Hoc Steering Committee of the
holders of Senior Debt Claims.

     SUBORDINATED NOTEHOLDER means the holder of any Subordinated Notes.

     SUBORDINATED NOTES means the $22,500,000 principal amount of outstanding
Mercury subordinated notes.

                                      -7-
<PAGE>
 
     TAX CLAIM means an Allowed Claim for an amount entitled to priority under
section 507(a)(8) of the Bankruptcy Code.

     TRADE CLAIM means any unsecured Claim against the Debtor arising from or
with respect to the sale of goods or services to the Debtor, including Allowed
Claims based on rejection of executory contracts or unexpired leases, prior to
the Petition Date, in the ordinary course of the Debtor's business, including
but not limited to, any Claim of an employee that is not a Priority Claim or an
Indemnification Claim and any Claim of a Nondebtor Subsidiary against the
Debtor, but excluding any claim by KPMG Peat Marwick, whether arising by
contract or for contribution or indemnity.

     TRADE CLAIMANT means any holder of a Trade Claim.

     UNIMPAIRED CLAIM means a Claim that is not impaired within the meaning of
section 1124 of the Bankruptcy Code.

     UNSECURED CLAIM means any Claim which is not an Administrative Claim,
Secured Claim, Priority Claim, Tax Claim, Senior Debt Claim, Claim arising from
the Subordinated Notes, or Securities Fraud Claims.

B.  RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW.

     1.  RULES OF INTERPRETATION.  For purposes of the Plan: (a) whenever from
the context it is appropriate, each term, whether stated in the singular or the
plural, shall include both the singular and the plural; (b) any reference in the
Plan to a contract, instrument, release, indenture or other agreement or
document being in a particular form or on particular terms and conditions means
that such document shall be substantially in such form or substantially on such
terms and conditions; (c) any reference in the Plan to an existing document or
Exhibit Filed or to be Filed means such document or Exhibit, as it may have been
or may be amended, modified or supplemented; (d) if the Plan's description of
the terms of an Exhibit is inconsistent with the terms of the Exhibit, the terms
of the Exhibit shall control; (e) unless otherwise specified, all references in
the Plan to Articles, Sections, Clauses and Exhibits are references to Articles,
Sections, Clauses and Exhibits of or to the Plan; (f) the words "herein" and
"hereto" refer to the Plan in its entirety rather than to a particular portion
of the Plan; (g) captions and headings to Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the interpretation of the Plan; (h) the rules of construction set forth in
section 102 of the Bankruptcy Code shall apply to the extent such rules are not
inconsistent with any other provision in this Section 1.B.1.

     2.  COMPUTATION OF TIME.  In computing any period of time prescribed or
allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.

     3.  GOVERNING LAW.  Except to the extent that the Bankruptcy Code or
Bankruptcy Rules are applicable, and subject to the provisions of any contract,
instrument, release, indenture or other agreement or document entered into in
connection with the Plan, the rights and obligations arising under the Plan
shall be governed by, and construed and enforced in accordance with, the laws of
the State of Illinois, without giving effect to the principles of conflicts of
law thereof.

                                   ARTICLE II
                         ADMINISTRATIVE AND TAX CLAIMS

     In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Tax Claims, as described below, have not been
classified.

     2.01  ADMINISTRATIVE CLAIMS.  Unless otherwise agreed to by the parties,
each holder of an Allowed Administrative Claim shall receive cash equal to the
unpaid portion of such Allowed Administrative Claim on the later of (a) the
Effective Date and (b) the date on which such Claim becomes an Allowed
Administrative Claim; provided, however, that the Administrative Claims that
represent liabilities incurred by the Debtor in the ordinary course of its
business during the Reorganization Case shall be paid in the ordinary course of
business and in accordance with any terms and conditions of any agreements
relating thereto.

                                      -8-
<PAGE>
 
     2.02   BAR DATE FOR ADMINISTRATIVE CLAIMS.

     (a)  Pre-Confirmation Date Claims and Expenses.  All applications for final
compensation of professional persons for services rendered and reimbursement of
expenses incurred on or before the Confirmation Date and all other requests for
payment of administrative costs and expenses incurred on or before the
Confirmation Date under section 507(a)(1) or 507(b) of the Bankruptcy Code
(except only for Trade Claims incurred in the ordinary course of business and
claims under 28 U.S.C. (S) 1930) shall be filed no later than 45 days after the
Confirmation Date.

     (b)  Effect of Failure to Timely File Claim or Request for Payment.  Any
request for payment of an Administrative Claim which is not filed by the
applicable deadline set forth above shall be barred.  Under no circumstance will
the applicable deadlines set forth above be extended by order of the Court or
otherwise.  Any holders of Administrative Claims who are required to file a
claim or request for payment of such Claims or expenses and who do not file such
claims or requests by the applicable bar date shall be forever barred from
asserting such Claims or expenses against the Debtor, any property of the Debtor
or any distributions under the Plan.

     2.03   TAX CLAIMS.  Unless otherwise agreed to by the parties, each holder
of a Tax Claim will receive cash equal to the unpaid portion of such Tax Claim
on or as soon as practical after the later of (i) the Effective Date, and (ii)
the date on which such Claim becomes an Allowed Claim; provided, however, that
at the option of the Reorganized Debtor, the Reorganized Debtor may pay Tax
Claims over a period not exceeding six (6) years after the date of assessment of
the Tax Claim as provided in subsection 1129(a)(9)(C) of the Bankruptcy Code.
If the Reorganized Debtor elects this option as to any Tax Claim, then the
payment of such Tax Claim shall be made in equal semiannual installments with
the first installment due on the latest of: (i) the Effective Date, (ii) 30
calendar days after the date on which an order allowing such Tax Claim becomes a
Final Order, and (iii) such other time as may be agreed to by the holder of such
Tax Claim and the Reorganized Debtor.  Each installment shall include simple
interest on the unpaid portion of such Tax Claim, without penalty of any kind,
at the statutory rate of interest provided for such taxes under applicable
nonbankruptcy law; provided, however, that the Reorganized Debtor shall reserve
the right to pay any Tax Claim, or any remaining balance of such Tax Claim, in
full, at any time on or after the Effective Date, without premium or penalty.

                                  ARTICLE III
          CLASSIFICATION OF CLAIMS AGAINST AND INTERESTS IN THE DEBTOR

     The classification of the Claims and Interests listed below shall be for
all purposes, including voting, confirmation and distribution pursuant to the
Plan.  A Claim or Interest is in a particular class only to the extent that the
Claim or Interest is an Allowed Claim or Allowed Interest in that Class and has
not been paid, released, or otherwise satisfied before the Effective Date; a
Claim or Interest which is not an Allowed Claim or Interest is not in any class.


     3.01  CLASS 1  PRIORITY CLAIMS.  Class 1 consists of all Priority Claims,
not otherwise treated as unclassified in Article II above.

     3.02  CLASS 2 - SECURED CLAIMS.  Class 2 consists of all holders of Secured
Claims.

     3.03  CLASS 3  TRADE CLAIMS, CONSUMER LITIGATION CLAIMS, BENEFITS CLAIMS
AND UNSECURED CLAIMS.  Class 3 consists of all holders of Trade Claims, Consumer
Litigation Claims, Benefits Claims and Unsecured Claims.


     3.04  CLASS 4  SENIOR DEBT CLAIMS.  Class 4 consists of all holders of
Senior Debt Claims.

     3.05  CLASS 5  SUBORDINATED NOTEHOLDER CLAIMS.  Class 5 consists of all
holders of Subordinated Notes.

     3.06  CLASS 6  INDEMNIFICATION CLAIMS.  Class 6 consists of all holders of
Indemnification Claims.

     3.07  CLASS 7A  EQUITY INTERESTS.  Class 7A consists of all holders of Old
Common Stock.

                                      -9-
<PAGE>
 
     3.08  CLASS 7B  SECURITIES FRAUD CLAIMS AND DIVIDEND CLAIMS.  Class 7B
consists of all holders of Securities Fraud Claims and Dividend Claims.


     3.09  CLASS 8 - OLD OPTIONS.  Class 8 consists of all holders of Old
Options.

     3.10  SUMMARY OF CLAIMS AND INTERESTS.

<TABLE> 
<CAPTION> 
CLASS          DESCRIPTION                            STATUS
-----          -----------                            ------
<S>            <C>                                    <C>  
Class 1        Priority Claims                        Unimpaired; deemed to have accepted
                                                      the Plan
                                                 
Class 2        Secured Claims                         Unimpaired; deemed to have accepted
                                                      the Plan
Class 3        Trade Claims, Consumer Litigation      Unimpaired; deemed to have accepted
               Claims, Benefits Claims and            the Plan
               Unsecured Claims                  
                                                 
Class 4        Senior Debt Claims                     Impaired; entitled to vote
                                                 
Class 5        Subordinated Noteholder Claims         Impaired; entitled to vote
                                                 
Class 6        Indemnification Claims                 Impaired; entitled to vote
                                                 
Class 7A       Equity Interests                       Impaired; entitled to vote
                                                 
Class 7B       Securities Fraud Claims and            Impaired; entitled to vote
               Dividend Claims                   
                                                 
Class 8        Old Options                            Impaired; deemed to have rejected the
                                                      Plan
</TABLE> 

                                   ARTICLE IV
                 TREATMENT OF CLASSES UNIMPAIRED UNDER THE PLAN

     4.01  CLASS 1  PRIORITY CLAIMS.  Allowed Class 1 Claims are Unimpaired.
Unless otherwise agreed to by the parties, each holder of an Allowed Claim in
Class 1 shall be paid the allowed amount of such Claim in full in cash on the
later of (a) the Effective Date, and (b) the date such Claim becomes an Allowed
Claim.

     4.02  CLASS 2  SECURED CLAIMS.  Allowed Class 2 Claims are Unimpaired.
Each Class 2 Claimant shall retain, unaltered, the legal, equitable and
contractual rights, including, without limitation, any liens that secure such
Allowed Claims, to which such Allowed Claim entitles Claimant; provided,
however, that each Claimant holding an Allowed Claim in Class 2 may only
exercise such rights and remedies with respect to the assets and property that
secure such Allowed Claim, without recourse of any kind against the Debtor.  Any
Allowed Claim in Class 2 based on any deficiency claim by a Class 2 Claimant
shall become, and shall be treated for all purposes under this Plan as an
Allowed Trade Claim and shall be classified as a Class 3 Claim.

     4.03  CLASS 3  TRADE CLAIMS, CONSUMER LITIGATION CLAIMS, BENEFITS CLAIMS
AND UNSECURED CLAIMS.  Allowed Claims in Class 3 are Unimpaired.  The legal,
equitable and contractual rights of holders of Allowed Claims in Class 3 shall
not be affected by the Reorganization Case, and each holder shall be entitled to
payment of the full amount of its Allowed Claim in complete settlement,
satisfaction and discharge of its Class 3 Claim.

                                      -10-
<PAGE>
 
                                   ARTICLE V
                 TREATMENT OF CLASSES IMPAIRED UNDER THE PLAN

                                        
     5.01  CLASS 4  SENIOR DEBT CLAIMS.  Allowed Class 4 Claims are Impaired.
Each holder of an Allowed Class 4 Claim shall receive, in complete settlement,
satisfaction and discharge of its Class 4 Claim: (i) its pro rata share of
Excess Cash; (ii) New Senior Secured Notes in the principal amount of 75% of its
Net Senior Debt Claims; and (iii) its pro rata share of 9,500,000 shares of the
New Common Stock.

     5.02  CLASS 5  SUBORDINATED NOTEHOLDER CLAIMS.  Allowed Claims in Class 5
are Impaired.  Each holder of an Allowed Claim in Class 5 shall receive, in
complete settlement, satisfaction and discharge of its Class 5 Claims, its pro
rata share of the New Junior Subordinated Notes.

     5.03  CLASS 6  INDEMNIFICATION CLAIMS.  Allowed Indemnification Claims in
Class 6 are Impaired. Each holder of an Allowed Indemnification Claim shall be
entitled to (i) continue to assert such Claims against the Debtor to the extent
of coverage under the Reliance Policies and (ii) the Debtor's cooperation in
aiding the Class 6 Claimants in pursuing their rights under the Reliance
Policies.

     5.04  CLASS 7A  EQUITY INTERESTS.  Interests in Class 7A are Impaired.
Each holder of an Allowed Equity Interest in Class 7A shall be enjoined from
pursuing any Claim against the Debtor or Reorganized Debtor (including any
Securities Fraud Claim) and, subject to Section 8.14, shall receive, in complete
settlement, satisfaction and discharge of its Equity Interest, its pro rata
share of (i) 500,000 shares of the New Common Stock and (ii) all of the New
Warrants subject to the terms and conditions of the New Warrant Agreement.

     5.05  CLASS 7B  SECURITIES FRAUD CLAIMS AND DIVIDEND CLAIMS.  Claims in
Class 7B are Impaired.  Each holder of an Allowed Claim in Class 7B (as
determined by procedures set forth in Section 8.15 and in the Class 7B
Liquidating Trust Agreement attached as Exhibit U to the Disclosure Statement
(the "Class 7B Liquidating Trust Agreement")) shall be enjoined from pursuing
any Claim against the Debtor or Reorganized Debtor (including any Securities
Fraud Claim) and, shall  receive, in complete settlement, satisfaction and
discharge of its Class 7B Claims, a share of the beneficial interests in the
Class 7B Liquidating Trust.  On the Effective Date, the Debtor shall transfer to
the Class 7B Liquidating Trust: (i) $5 million in cash (to be deducted from the
ending book cash balance of the Debtor on a consolidated basis); (ii) the
Company KPMG Claims; and (iii) $250,000 in cash for fees and costs to be
incurred in connection with the administration of the Class 7B Liquidating
Trust.

     5.06  CLASS 8  OLD OPTIONS.  Holders of Old Options are Impaired.  The
holders of Old Options shall receive no distributions under the Plan.  On the
Effective Date, all of the Old Options shall be cancelled and extinguished.

                                  ARTICLE VI
             GENERAL PROVISIONS REGARDING TREATMENT OF CLAIMS AND
                  INTERESTS AND DISTRIBUTIONS UNDER THE PLAN
                                        
     6.01  DISTRIBUTION DATE.  Except as otherwise provided in the Plan,
property to be distributed under the Plan to an Impaired Class (a) shall be
distributed on or as soon as practicable after the Effective Date to each holder
of an Allowed Claim of that Class that is an Allowed Claim as of the Effective
Date, and (b) shall be distributed to each holder of an Allowed Claim of that
Class that is allowed after the Effective Date, to the extent allowed, as soon
as practicable after the order of the Court allowing the Claim becomes a Final
Order.  Property to be distributed under the Plan to a Class that is not
Impaired or on account of an Administrative Claim shall be distributed on the
latest of (i) the distribution dates specified in the preceding sentence, or
(ii) the date on which the distribution to the holder of the Claim would have
been due and payable in the ordinary course of business or under the terms of
the Claim in the absence of the Reorganization Case.

     6.02  DISTRIBUTION RECORD DATE--SENIOR DEBT CLAIMS AND SUBORDINATED
NOTEHOLDER CLAIMS.  As of the close of business on the Distribution Record Date,
the respective transfer registers for the Senior Debt Claims and holders of
Subordinated Note Claims as maintained by the Debtor, or their respective
agents, shall be closed.

                                      -11-
<PAGE>
 
     6.03  EXCHANGE AGENT.  The Debtor may designate an entity or entities to
serve as Exchange Agent to distribute all the property to be distributed under
the Plan, including, without limitation the delivery of the New Common Stock,
the New Senior Secured Notes, and the New Junior Subordinated Notes and the New
Warrants.

     6.04  SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTIONS--SENIOR DEBT
CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS.  As a condition to participation
under the Plan, each holder of a Senior Debt Claim or a Subordinated Noteholder
Claim is required to provide evidence of the securities evidencing the Senior
Debt Claims and Subordinated Noteholders Claims ("Old Securities") by (i)
completing and returning a Letter of Transmittal to the Exchange Agent, together
with certificates (to the extent such exist) representing their Old Securities
(the "Tendered Certificates"), or (ii) completing the book-entry confirmation
procedure, promptly after the Confirmation Date.  Holders of Senior Debt Claims
relating to commercial paper need not tender any certificates, as no such
certificates exist evidencing the commercial paper.  Promptly following the
Effective Date, the Exchange Agent will mail to those persons who have properly
completed and returned Letters of Transmittal and Tendered Certificates or
completed the book-entry confirmation procedure, certificates representing the
New Senior Secured Notes, the New Junior Subordinated Notes and/or the New
Common Stock to be issued in accordance with the Plan.  HOLDERS  OF OLD
SECURITIES WHO HAVE NOT PROPERLY COMPLETED AND RETURNED TO THE EXCHANGE AGENT
LETTERS OF TRANSMITTAL OR COMPLETED THE BOOK-ENTRY CONFIRMATION PROCEDURE WITHIN
TWO YEARS OF THE EFFECTIVE DATE, TOGETHER WITH THE TENDERED CERTIFICATES, WILL
NOT RECEIVE THE CERTIFICATES OR CASH TO WHICH THEY ARE OTHERWISE ENTITLED
PURSUANT TO THE PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER DISTRIBUTION UNDER
THE PLAN.  The Debtor selected two years as opposed to the five year period
permitted (but not required) under section 1143 of the Bankruptcy Code because
the securities mature in less than five years and the Debtor believes that the
cost and expense of establishing an escrow fund for delinquent tenders outweighs
the risk that substantial holders of Old Securities will fail to surrender their
certificates within one year.

     Book-Entry Transfer.  The Exchange Agent will establish an account with
respect to the Old Securities at DTC.  Any tendering financial institution that
is a participant in DTC's book-entry transfer facility system must make a book-
entry delivery of the Old Securities by causing DTC to transfer such Old
Securities into the Exchange Agent's account at DTC in accordance with DTC's
Automated Tender Offer Program ("ATOP") procedures for transfers.  Such holder
of Old Securities using ATOP should transmit its acceptance to DTC on or prior
to the Expiration Date (or comply with the guaranteed delivery procedures set
forth below), DTC will verify such acceptance, execute a book-entry transfer of
the tendered Old Securities Notes into the Exchange Agent's account at DTC and
then send to the Exchange Agent confirmation of such book-entry transfer,
including an agent's message confirming that DTC has received an express
acknowledgment from such holder that such holder has received and agrees to be
bound by the Letter of Transmittal and that the company may enforce the Letter
of Transmittal against such holder (a "book-entry confirmation").

     A beneficial owner of Old Securities that are held by or registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial owner
wishes to participate.

     DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

     Letters of Transmittal.  Signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution (as defined below), unless the Old
Securities tendered pursuant thereto are tendered for the account of an Eligible
Institution.  If signatures on a Letter of Transmittal are required to be
guaranteed, such guarantees must be by a member firm of a registered national
securities exchange in the United States, a member of the National Association
of Securities Dealers, Inc., or by a commercial bank or trust company having an
office or a correspondent in the United States (each of which is an "Eligible
Institution").  If Old Securities are registered in the name of a person other
than the person signing the Letter of Transmittal, in order to be validly
tendered, the Old Securities must be endorsed or accompanied by properly
completed power of authority, with signature guaranteed by an Eligible
Institution.

                                      -12-
<PAGE>
 
     Holders of Old Securities who are not holders of record should:

          (i)   obtain a properly completed Letter of Transmittal (or facsimile
                thereof) from the record holder,

          (ii)  obtain and include with the Letter of Transmittal a properly
                competed stock or bond power, as the case may be, from the
                record holder, or

          (iii) effect a record transfer of their Old Securities prior to
                delivery of the Letter of Transmittal.

     If a holder desires to tender Old Securities pursuant to the Letter of
Transmittal but is unable to locate the Tendered Certificates, such holder
should write to or telephone the Exchange Agent about procedures for obtaining
replacement certificates for Old Securities or arranging for indemnification.

     ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF
RECEIPT), AND ACCEPTANCE OF BALLOTS, LETTERS OF TRANSMITTAL AND TENDERED
CERTIFICATES WILL BE RESOLVED BY THE DEBTOR, WHOSE DETERMINATION WILL BE FINAL
AND BINDING, SUBJECT ONLY TO REVIEW BY THE COURT UPON APPLICATION WITH DUE
NOTICE TO ANY AFFECTED PARTIES IN INTEREST.  THE DEBTOR RESERVES THE RIGHT TO
REJECT ANY AND ALL BALLOTS, LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES NOT
IN PROPER FORM, OR LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES, THE
DEBTOR'S ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF THE DEBTOR OR ITS COUNSEL,
BE UNLAWFUL.

     6.05  DISTRIBUTION RECORD--OLD COMMON STOCK.  At the close of business on
the Distribution Record Date, the transfer ledgers for the Old Common Stock
shall be closed, and there shall be no further changes in the record holders of
the Old Common Stock.  The Debtor shall have no obligation to recognize any
transfer of the Old Common Stock occurring on or after the Distribution Record
Date.  The Debtor shall be entitled instead to recognize and deal for all
purposes hereunder with only those record holders stated on the transfer ledgers
as of the close of business on the Distribution Record Date.

     As a condition to participation under the Plan, each holder of a Equity
Interest is required to provide evidence of the securities evidencing the Equity
Interest ("Old Securities") by (i) completing and returning a Letter of
Transmittal to the Exchange Agent, together with certificates (to the extent
such exist) representing their Old Securities (the "Tendered Certificates").
Promptly following the Effective Date, the Exchange Agent will mail to those
persons who have properly completed and returned Letters of Transmittal and
Tendered Certificates, certificates representing the New Common Stock and New
Warrants to be issued in accordance with the Plan.  HOLDERS  OF OLD SECURITIES
WHO HAVE NOT PROPERLY COMPLETED AND RETURNED TO THE EXCHANGE AGENT LETTERS OF
TRANSMITTAL WITHIN TWO YEARS OF THE EFFECTIVE DATE, TOGETHER WITH THE TENDERED
CERTIFICATES, WILL NOT RECEIVE THE CERTIFICATES TO WHICH THEY ARE OTHERWISE
ENTITLED PURSUANT TO THE PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER
DISTRIBUTION UNDER THE PLAN.  The Debtor selected two years as opposed to the
five year period permitted (but not required) under section 1143 of the
Bankruptcy Code because the securities mature in less than five years and the
Debtor believes that the cost and expense of establishing an escrow fund for
delinquent tenders outweighs the risk that substantial holders of Old Securities
will fail to surrender their certificates within one year.

     Letters of Transmittal.  Signatures on a Letter of Transmittal must be
guaranteed by an Eligible Institution (as defined below), unless the Old
Securities tendered pursuant thereto are tendered for the account of an Eligible
Institution or such signature guarantee if not otherwise required by applicable
law.  If signatures on a Letter of Transmittal are required to be guaranteed,
such guarantees must be by a member firm of a registered national securities
exchange in the United States, a member of the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office or a correspondent in the United States (each of which is an "Eligible
Institution").  If Old Securities are registered in the name of a person other
than the person signing the Letter of Transmittal, in order to be validly
tendered, the Old Securities must be endorsed or accompanied by properly
completed power of authority, with signature guaranteed by an Eligible
Institution.

                                      -13-
<PAGE>
 
     Holders of Old Securities who are not holders of record should:

          (i)   obtain a properly completed Letter of Transmittal (or facsimile
                thereof) from the record holder,

          (ii)  obtain and include with the Letter of Transmittal a properly
                competed stock or bond power, as the case may be, from the
                record holder, or

          (iii) effect a record transfer of their Old Securities prior to
                delivery of the Letter of Transmittal.

     If a holder desires to tender Old Securities pursuant to the Letter of
Transmittal but is unable to locate the Tendered Certificates, such holder
should write to or telephone the Exchange Agent about procedures for obtaining
replacement certificates for Old Securities or arranging for indemnification.

     ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF
RECEIPT), AND ACCEPTANCE OF BALLOTS, LETTERS OF TRANSMITTAL AND TENDERED
CERTIFICATES WILL BE RESOLVED BY THE DEBTOR, WHOSE DETERMINATION WILL BE FINAL
AND BINDING, SUBJECT ONLY TO REVIEW BY THE COURT UPON APPLICATION WITH DUE
NOTICE TO ANY AFFECTED PARTIES IN INTEREST.  THE DEBTOR RESERVES THE RIGHT TO
REJECT ANY AND ALL BALLOTS, LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES NOT
IN PROPER FORM, OR LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES, THE DEBTORS
ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF THE DEBTOR OR ITS COUNSEL, BE
UNLAWFUL.

     6.06  Accrual of Interest.  Pursuant to the terms of the New Senior Secured
Note Indenture and the New Junior Subordinated Note Indenture, interest on the
New Senior Secured Notes and the New Junior Subordinated Notes shall begin to
accrue at the respective rates set forth in the New Senior Secured Notes and the
New Junior Subordinated Notes on the ninety-first day following the Petition
Date and shall be payable as set forth therein, respectively.

     6.07  Unclaimed Distributions.  If any holder of a Claim or Interest
entitled to a distribution directly from the Exchange Agent under the Plan
cannot be located on the Effective Date, such distributions shall be set aside
and maintained by the Exchange Agent.  If such person is located within two
years of the Effective Date, such distributions shall be distributed to such
person.  If such person cannot be located within two years of the Effective
Date, any such securities shall become the property of and shall be released to
the Reorganized Debtor; provided, however, that nothing contained in this Plan
shall require the Reorganized Debtor to attempt to locate such person.

     6.08  TAX PROVISIONS.  Pursuant to section 1146(c) of the Bankruptcy Code,
the issuance, transfer or other exchange of a security, or the making or
delivery of an instrument of transfer under the Plan shall not be taxed under
any state or local law imposing a stamp tax, transfer tax, or similar tax or
fee.

     6.09  SETOFFS.  Except with respect to Senior Debt Claims, the Debtor may,
but shall not be required to, setoff against any Claim (for purposes of
determining the allowed amount of such Claim on which distribution shall be
made), any claims of any nature whatsoever that the Debtor may have against the
claimant, but neither the failure to do so nor the allowance of any Claim
hereunder shall constitute a waiver or release by the Debtor of any such claim
the Debtor may have against such claimant.

                                  ARTICLE VII
             PROVISIONS FOR TREATMENT OF DISPUTED, CONTINGENT AND
                UNLIQUIDATED CLAIMS AND ADMINISTRATIVE EXPENSES
                                        
     7.01  Characterization of Disputed Claims.  Except for Class 7B Claims for
which Requests for Allowance must be filed on or before the Class 7B Bar Date
and which will be allowed or disallowed pursuant to the procedures set forth in
Section 8.15 and in the Class 7B Liquidating Trust Agreement, pursuant to
subsection 1111(a) of the Bankruptcy Code, a proof of a Claim is deemed filed
under section 501 of the Bankruptcy Code if that Claim is included in the
schedules filed under section 1106(a)(2) of the Bankruptcy Code, except if the
Claim is scheduled as disputed, contingent, or unliquidated.  Such a disputed,
contingent, or unliquidated claim must be 

                                      -14-
<PAGE>
 
asserted by its holder, or an indenture trustee representing such holder, by the
timely filing of a proof of claim. If a proof of claim is not filed in a timely
manner, the Claim may be deemed to be disallowed.

     7.02  RESOLUTION OF CONTESTED CLAIMS AND INTERESTS.  The Debtor shall have
the right to object to and contest the allowance of any Claim or Interest Filed
or deemed Filed with the Court, whether or not such Claim was scheduled as
disputed, contingent or unliquidated.  The Senior Debt Claims shall be deemed
allowed.

                                 ARTICLE VIII
                          IMPLEMENTATION OF THE PLAN

     8.01  CONTINUED CORPORATE EXISTENCE AND VESTING OF ASSETS IN THE
REORGANIZED DEBTOR.  The Debtor shall, as the Reorganized Debtor, continue to
exist after the Effective Date as a separate corporate entity, with all powers
of a corporation under the laws of the State of Delaware and without prejudice
to any right to alter or terminate such existence (whether by merger or
otherwise) under such applicable state law.  Except as otherwise expressly
provided in the Plan on the Confirmation Date, the Reorganized Debtor shall be
vested with all of the property of the Estate free and clear of all claims,
liens, encumbrances, charges and other interests of creditors and equity
security holders, and may operate its business free of any restrictions imposed
by the Bankruptcy Code or by the Court, including, without limitation, any
contracts or leases entered into or assumed by the Debtors after the Petition
Date; provided, however, that the Reorganized Debtor shall continue as a debtor
in possession under the Bankruptcy Code until the Effective Date, and
thereafter, subject to the terms of this Plan, the Reorganized Debtor may
operate its business free of any restriction imposed by the Bankruptcy Code or
the Court.

     8.02  AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.  On the Effective
Date, the Reorganized Debtor shall file its Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware in accordance
with Section 103 of the Delaware General Corporation Law.  The Amended and
Restated Certificate of Incorporation will, among other things, provide (to the
extent necessary to effectuate the terms of the Plan) for (i) the prohibition of
the issuance of non-voting equity securities, and (ii) the authorization of
25,000,000 shares of the New Common Stock, and which encompasses the shares to
be issued upon exercise of the New Warrants; the shares to be issued upon the
exercise of stock options granted for the establishment of a stock option plan
for management of the Reorganized Debtors.  Confirmation of the Plan shall
constitute an election by the Debtor not to be governed by Section 203 of the
Delaware General Corporation Law.

     8.03  AMENDED AND RESTATED BY-LAWS.  The Reorganized Debtor shall adopt and
effect the Amended and Restated By-laws in accordance with Section 109 of the
Delaware General Corporation Law.

     8.04  NEW SECURITIES.  On the Effective Date, the Reorganized Debtor (i)
shall issue, in accordance with the provisions of Article V, the New Senior
Secured Notes, the New Junior Subordinated Notes, the New Common Stock and the
New Warrants, and (ii) shall execute and deliver the New Collateral Documents,
the New Indentures, and the New Warrant Agreement.  In addition, the Nondebtor
Subsidiaries will issue the Subsidiaries Guaranty Agreement and the Subsidiaries
Security Agreement.

     8.05  SETTLEMENT AND COMPROMISE.  On the Effective Date, in exchange for
the D&O Company Release:

           (i)   the Debtor shall create the Indemnification Settlement Fund, to
                 be established and administered in accordance with the
                 provisions of the Confirmation Order;

           (ii)  the Debtor shall create the Outside Directors Reserve, to be
                 established as a segregated escrow account in accordance with
                 the provisions of the Confirmation Order;

           (iii) the Debtor shall assume the indemnification obligations set
                 forth in Section 12.03, subject to the limits stated therein;
                 and 

           (iv)  the Debtor shall give the release set forth in Section 11.03.

                                      -15-
<PAGE>
 
     The entry of the Confirmation Order shall constitute the Court's finding
that such compromise or settlement is in the best interest of the Debtor, and is
fair, equitable and reasonable and that it is made in good faith.


     8.06  CANCELLATION OF SECURITIES AND AGREEMENTS. Except as expressly
provided in the Plan or in the Confirmation Order, on the Effective Date, the
Debtor's commercial paper, short-term notes, senior notes, the Gulfco notes,
Subordinated Notes, Old Common Stock, options, shareholder's rights plans and
all the documentation relating thereto shall be cancelled and all obligations of
the Debtor under or in respect of any of the foregoing shall be terminated.

     8.07  MANAGEMENT OF THE REORGANIZED DEBTOR.  Upon the Effective Date, the
operation of the Reorganized Debtor shall become the general responsibility of
the board of directors who shall, thereafter, have the responsibility for the
management, control and operation of the Reorganized Debtor.  The board of
directors of the Reorganized Debtor shall be comprised of eleven (11) persons,
seven of whom will be designated by the Creditors' Committee, one of whom shall
be the new CEO, two of whom shall be nominated  by the new CEO and shall be
reasonably acceptable to the Creditors' Committee, and one of whom will be
nominated by the Equity Holders' Committee and shall be reasonably acceptable to
the Creditors' Committee and the new CEO.  The identity of each of the nominees
shall be announced prior to hearing on the Confirmation Date of the Plan.  Such
persons shall be deemed elected pursuant to the Confirmation Order, and such
elections shall be effective on and after the Effective Date, without any
requirement of further action by stockholders of the Reorganized Debtor.  The
initial chairman of the board of directors of the Reorganized Debtor shall be
chosen by the board of directors of the Reorganized Debtor after the Effective
Date.  Upon the Effective Date, the Employment Agreement shall be executed and
delivered by the Reorganized Debtor and the new CEO and shall then become
effective.

     8.08  OFFICERS.  On the Effective Date, the existing officers of the
Reorganized Debtor shall be retained and shall remain as officers and shall
continue to serve until such time as they may resign, be removed or replaced by
the board of directors of the Reorganized Debtor.

     8.09  SATURDAY, SUNDAY OR LEGAL HOLIDAY.  If any payment or act under the
Plan is required to be made or performed on a  date  that is not a Business Day,
then the making of such payment or the performance of such act may be completed
on the next succeeding Business Day, but shall be deemed to have been completed
as of the required date.

     8.10  OTHER DOCUMENTS AND ACTIONS.  The Debtor and the Reorganized Debtor
may execute such documents and take such other action as is necessary to
effectuate the transactions provided for in the Plan.

     8.11  CORPORATE ACTIONS.  The issuance of the New Common Stock and the New
Warrants, the adoption of the Amended and Restated Certificate of Incorporation
and By-laws by the Reorganized Debtor, the selection of certain directors and
officers of the Reorganized Debtor, the execution and delivery of any documents
to be executed and delivered under the Plan (including the Employment
Agreement), and other matters under the Plan involving the corporate structure
of the Debtor or corporate action by the Debtor shall be deemed to have occurred
and be effective on and after the Effective Date without any requirement of
further action by stockholders or directors of the Debtor pursuant to and in
accordance with Section 303 of the Delaware General Corporation Law.  Without
limiting the foregoing, upon entry of the Confirmation Order by the Clerk of the
Court, the Filing by the Debtor or the Reorganized Debtor of the Amended and
Restated Certificate of Incorporation and By-laws shall be authorized and
approved in all respects.  On the Effective Date, or as soon thereafter as is
practicable, pursuant to applicable state law, the Reorganized Debtor shall file
with the applicable state governmental agencies or offices the respective
Certificates of Incorporation and By-laws.

     8.12  REGISTRATION RIGHTS.  The Reorganized Debtor shall use its reasonable
best efforts to register the New Senior Secured Notes, New Junior Subordinated
Notes and the New Common Stock pursuant to the Registration Rights Agreement.

     8.13  LISTING OF THE NEW COMMON STOCK AND WARRANTS.  The Reorganized Debtor
shall use its reasonable best efforts to list each series of the New Warrants
and the New Common Stock on the Nasdaq National Market.

                                      -16-
<PAGE>
 
     8.14  FRACTIONAL SHARES  - DISTRIBUTION OF NEW COMMON STOCK AND NEW
WARRANTS.  No fractional shares of New Common Stock or New Warrants shall be
distributed under the Plan.  Rather, Interests that would otherwise receive a
fractional share or Warrant shall be treated as follows:

     (a)  On the date of final distribution of New Common Stock to the holders
of Class 7A Equity Interests, the aggregate of all fractional shares of New
Common Stock that would otherwise be distributed to such persons shall instead
be placed in a separate pool (hereinafter, the "Fractional New Common Stock
Pool").  All holders of Allowed Equity Interests entitled to a fractional
interest in New Common Stock shall be placed on a list (the "New Common Stock
Distribution List") in descending order according to the size of the fractional
interest in the New Common Stock to which each such holder is entitled.  In the
event two or more holders of Allowed Equity Interests are entitled to the same
fractional interest (rounded to six decimal places) in New Common Stock, their
relative ranking on the New Common Stock Distribution List shall be determined
by lot.  Based upon the New Common Stock Distribution List, a whole share of New
Common Stock shall be distributed to holders entitled to the largest fractions
of New Common Stock until all of the whole shares of New Common Stock in the
Fractional New Common Stock Pool shall have been distributed.  The fractional
New Common Stock shall be carried to six decimal places, with the number five
(5) being rounded down.

     (b)  On the date of the final distribution of New Warrants to the holders
of Class 7A Equity Interests, the aggregate of all fractional New Warrants that
would otherwise be distributed to such persons shall instead be placed in a
separate pool (hereinafter, the "Fractional New Warrants Pool").  All holders of
Allowed Interests entitled to a fractional interest in New Common Stock shall be
placed on a list (the "New Warrants Distribution List") in descending order
according to the size of the fractional interest in the New Warrants to which
each such holder is entitled.  In the event two or more holders of Allowed
Equity Interests are entitled to the same fractional interest (rounded to six
decimal places) in New Warrants, their relative ranking on the New Warrants
Distribution List shall be determined by lot.  Based upon the New Warrants
Distribution List, a whole New Warrant shall be distributed to holders entitled
to the largest fractions of New Warrants until all of the whole New Warrants in
the Fractional New Warrants Pool shall have been distributed. The fractional New
Warrants shall be carried to six decimal places, with the number five (5) being
rounded down.

     8.15  Administration of the Class 7B Liquidating Trust.  On the Effective
Date: (i) the Debtor shall duly execute two originals of the Class 7B
Liquidating Trust Agreement, a copy of which is attached to the Disclosure
Statement as Exhibit U, (ii) deliver one signed original thereof to the Trustees
identified below, thereby establishing a trust which shall be known as the Class
7B Liquidating Trust, and (iii) file one fully executed original of the Class 7B
Liquidating Trust Agreement with the clerk of the Court.

     The provisions of the Class 7B Liquidating Trust Agreement are incorporated
into the Plan, as if the same were fully set forth herein.  The operation of the
Class 7B Liquidating Trust shall be governed by the provisions of the Class 7B
Liquidating Trust Agreement and this Section 8.15 of the Plan.  Reference should
be made to the Class 7B Liquidating Trust Agreement for a complete statement of
the terms and conditions governing the operation of the Class 7B Liquidating
Trust and the administration of the assets of the Class 7B Liquidating Trust
since not all of such terms and conditions are set forth in this Section 8.15.
It is the intent of the Plan that the provisions of the Class 7B Liquidating
Trust Agreement shall be consistent with the provisions of this Section 8.15 of
the Plan.  To the extent, if any, that the provisions of the Class 7B
Liquidating Trust Agreement and the provisions of this Section 8.15 of the Plan
may be inconsistent, the provisions of this Section 8.15 of the Plan shall
govern.

     The Trustees.  Initially the current members of the Securities Claimants'
     ------------                                                             
Committee shall serve as Trustees.  The Trustees shall serve for the duration of
the Class 7B Liquidating Trust, subject to earlier death, resignation, mandatory
disqualification, or removal.  If at any time subsequent to the Effective Date
there are less than three (3) Trustees, within ten (10) days thereof the
remaining Trustees shall elect a successor Trustee or Trustees, subject to the
Court's approval.  For purposes of the Class 7B Liquidating Trust Agreement,
"mandatory disqualification" of a Trustee will occur in the event that the Class
7B Claim asserted by such Trustee is disallowed in its entirety or is allocated
a distribution in an amount less than Fifteen Thousand Dollars ($15,000),
whether by virtue of a consensual allowance/allocation approved by the Court or
a decision by the Arbitrator.

     Initial Trust Assets.  On the Effective Date, the Reorganized Debtor shall
     --------------------                                                      
transfer and assign to the Class 7B Liquidating Trust, to be held in trust, for
the holders of Allowed Class 7B Claims all of the Debtor's, the 

                                      -17-
<PAGE>
 
Reorganized Debtor's, and the Estate's rights, title, and interest in and to all
of the following (collectively, the "INITIAL TRUST ASSETS"): (a) the sum of Five
Million Dollars ($5,000,000) in cash which sum shall be transferred pursuant to
the wire transfer instructions provided by the Securities Claimant's Committee;
and (b) the Company KPMG Claims, as that term is defined above in Article I.A.
of the Plan, together with complete and exclusive control of the prosecution
and/or settlement of the Company KPMG Claims and (c) $250,000 in cash for fees
and costs to be incurred in connection with the administration of the Class 7B
Liquidating Trust. The Company KPMG Claims and attendant prosecution rights
shall be deemed to be assets of the Class 7B Liquidating Trust as of the
Effective Date. Upon delivery of the distributions to the Class 7B Liquidating
Trust required to be made by the Debtor pursuant to Section 5.05 and this
paragraph, the Debtor and the Reorganized Debtor shall have no obligation or
liability to the Trust or any of the Beneficiaries of the Trust, other than to
cause the claims administrator to forward Requests for Allowance to the Class 7B
Claims Administrator and to cooperate with the Trustees, as set forth in Section
2.04 of the Class 7B Liquidating Trust, in the prosecution of the Company KPMG
Claims.

     Subsequent Trust Assets.  In addition to the Initial Trust Assets, other
     -----------------------                                                 
assets may be transferred to the Class 7B Liquidating Trust.  These assets may
and shall include any proceeds received by the Class 7B Liquidating Trust as a
result of the Company KPMG Claims as well as any proceeds or claims received by
the Class 7B Liquidating Trust pursuant to the settlement agreement which is
attached as Exhibit T to the Disclosure Statement ("Class Settlement Agreement")
or otherwise pursuant to the Plan or agreements implementing the Plan.  All
assets transferred to the Class 7B Liquidating Trust which are not included
within the definition of the Initial Trust Assets are referred to herein as the
"Subsequent Trust Assets."  The Initial Trust Assets and the Subsequent Trust
Assets are collectively referred to herein as the "Trust Assets."

     Powers of Trustees.  Pursuant to the Class 7B Liquidating Trust Agreement,
     ------------------                                                        
the Trustees will have the power and authority to do, among other actions, the
following:

     A.  Receive and hold the Trust Assets and invest the same, from time to
time, in accordance with the parameters set forth in the Class 7B Liquidating
Trust Agreement;

     B.  Take such actions on behalf of the Class 7B Liquidating Trust as may be
required in connection with the Class Settlement Agreement;

     C.  Devise, implement, supervise, modify, and administer procedures for the
allowance of Class 7B Claims and the allocation of the assets of the Class 7B
Liquidating Trust among the holders of Allowed Class 7B Claims, subject to the
limitations imposed by Class 7B Liquidating Trust Agreement or the Plan;

     D.  Utilize and distribute the Trust Assets to satisfy Allowed Class 7B
Claims in accordance with procedures set forth in the Class 7B Liquidating Trust
Agreement and the Plan;

     E.  Hire such employees, administrative personnel or claims administrators
and engage such legal, financial, accounting, investment, and other advisors,
custodians of assets, including without limitation the Arbitrator and a
Mediator, if any, as those terms are defined in the Class 7B Liquidating Trust
Agreement, and agents as the business of the Class 7B Liquidating Trust
requires, and to delegate to such Persons such powers, authority, and discretion
as the Trustees in their discretion deem advisable or necessary to carry out the
terms of the Class 7B Liquidating Trust (this provision E. is not intended to,
and shall not, include the hiring of any legal, financial, accounting, or any
other type of advisors or experts, by any Class 7B claimant or group of Class 7B
claimants for purposes of proving a Claim, defending objections thereto, or
asserting objections thereto);

     F.  Compensate, utilizing the Trust Assets, such employees, legal,
financial, accounting, investment, and other advisors, and agents, described in
E. above, provided, however, that accountants, lawyers, and investment advisors
engaged by the Trustees on behalf of the Class 7B Liquidating Trust to represent
interests of the Class 7B Liquidating Trust shall be compensated only with the
approval of the Court after such notice and hearing as the Court may require
(this provision F is not intended to, and shall not, include the utilization of
any Trust Assets to compensate any legal, financial, accounting, or any other
type of advisors or experts, retained by any Class 7B claimant, any group of
Class 7B claimants, any individual members of the Securities Claimants'
Committee, or individual Trustees for the purpose(s) of representing their own
respective interests);

                                      -18-
<PAGE>
 
     G.  Make such decisions as they may deem appropriate, and in accordance
with the voting procedures set forth in Section 4.03 of the Class 7B Liquidating
Trust Agreement, in connection with the prosecution, non-prosecution, or
resolution of the Company KPMG Claims or claims constituting Trust Assets; and

     H.  Apply to the Court for instructions to the Trustees as they may deem
proper or necessary in connection with the administration of the Class 7B
Liquidating Trust or the performance of their duties.

     Except as otherwise provided by applicable law:  (i) no Trustee shall be
liable to the Class 7B Liquidating Trust or to any Person holding a Class 7B
Claim, except for his, her, or its own willful misconduct;  and (ii) except to
the extent any act or failure to act on the part of a Trustee shall constitute
willful misconduct; (a) no Trustee shall be liable for any act or omission of
any Co-Trustee or any officer, agent, or employee of the Class 7B Liquidating
Trust; (b) the Trustees shall be entitled to rely upon the advice of counsel or
other advisors to the Class 7B Liquidating Trust or the Trustees, reports
prepared by the Class 7B Claims Administrator, and information provided by any
other Person employed by the Class 7B Liquidating Trust; and (c) all actions
taken and determinations made by the Trustees, unless otherwise expressly
provided in the Class 7B Liquidating Agreement, the Plan, or an order of the
Court, shall be final and binding upon all Persons having any interest in the
Class 7B Liquidating Trust.

     Each Trustee shall be reimbursed by the Class 7B Liquidating Trust for his,
her, or its reasonable expenses incurred in the performance of his, her, or its
duties ad Trustee under the Class 7B Liquidating Trust Agreement, provided that
any request for such reimbursement is approved by the Court after such notice
and hearing as the Court may require, and provided, further, that any legal fees
and costs incurred by an individual Trustee, or any other Class 7B claimant, on
its own account and not on behalf of the Class 7B Liquidating Trust shall not be
paid from Trust Assets but shall be paid from the allocation such Trustee or
Class 7B claimant receives pursuant to the allowance/allocation procedures set
forth in the Class 7B Liquidating Trust Agreement.

     Company KPMG Claims-Other Claims Constituting Subsequent Trust Assets.  The
     ---------------------------------------------------------------------      
Debtor will use its best efforts to obtain a tolling of the statute of
limitations for the Company KPMG Claims until sixty (60) days after the
allowance and allocation process set forth below and in the Class 7B Liquidating
Trust Agreement has become final.  Thereafter, control and all decisions
regarding the Company KPMG Claims or other claims constituting Subsequent Trust
Assets, including without limitation the filing (or non-filing), prosecution,
and settlement thereof, shall be made by the vote of the representative(s) of
the holders of Allowed Class 7B Claims holding at least a majority in dollar
amount of all Allowed Class 7B Claims (singly a "REPRESENTATIVE" or collectively
"REPRESENTATIVES") which Representative(s) may be, but is/are not required to
be, a Trustee or Trustees of the Class 7B Liquidating Trust, provided, however,
that any decision (i) to release, or (ii) to settle the Company KPMG Claims or
claim constituting a Subsequent Trust Asset, in whole or in part, or (iii) to
dismiss such claims, if suit has been filed, shall be submitted to the Court for
approval after notice and hearing as the Court may require, and provided,
further, that all proceeds recovered, if any, as a result of the resolution of
the Company KPMG Claims or claims constituting Subsequent Trust Assets shall
remain Trust Assets and be distributed in accordance with Section 6.04 of the
Class 7B Liquidating Trust Agreement, all of which remains subject to the
judgment reduction provisions contained within the Class Settlement Agreement.
The Representative(s) shall provide status reports to the Trustees no less
frequently than semi-annually regarding actions taken and decisions made with
respect to the Company KPMG Claims and claims constituting Subsequent Trust
Assets.

     Procedures for Claims' Allowance and Allocation.
     ----------------------------------------------- 

     Request for Allowance/Allocation.  In connection with confirmation of the
     --------------------------------                                         
Plan, the Debtor shall seek approval of the Court for the form of notice to be
sent to parties who may hold Claims in Class 7B ("Notice"), as well as the form,
the timing, and the place for publication of such notice, and shall cause such
notice to be sent and published as ordered by the Court.  Prior to seeking such
approval from the Court, the Debtor shall obtain the review and approval from
the Securities Claimants' Committee of the forms of notice and the place for
publication hereof.  The forms of notice, among other things, shall advise Class
7B claimants that to be eligible to participate in the consensual allowance
process described below or obtain any allocation or distribution from the Class
7B Liquidating Trust, they, or their representatives (if they are a member of a
class described in a class action pending against the Debtor on the Petition
Date or are individual holders of Class 7B claims whose claims arise from their
purchase of Old Common Stock before January 29, 1997 and who continue to hold
such Old Common Stock as of the Distribution Record Date (the "Old and Cold
Holders")) must submit a Request for Allowance/Allocation prior to 

                                      -19-
<PAGE>
 
the date set forth below and in accordance with procedures set forth below. In
addition, the Notice shall advise Class 7B Claimants that if they are members of
a group included within the Class set forth in the Notice: (1) there is no need
to take any affirmative steps or submit any information at this time to
participate in the partial settlement, (2) their rights are already being
represented in the allowance process by the designated counsel for the group in
which the class member's claim falls, (3) a representative of that group will be
permitted to file a Request for Allowance on behalf of that entire group, (4)
counsel for the designated class representative of each group within the class
receiving an allocation from the settlement fund will, subject to approval of
the court in which the claims asserted by that group were initiated, issue a
supplemental Notice to members of the group which will provide information
regarding the outcome of the allocation procedure, the estimate of the average
per share recovery that will be achieved by members of the group as a result of
the settlement, and (5) the plan of allocation approved by the court pursuant in
which the proceeds of the settlement will be ultimately distributed to members
of the group.

     Date before which Request for Allowance/Allocation must be Filed.  In
     ----------------------------------------------------------------     
addition to the provisions which the Court may require, the notice shall notify
such parties that in order to be eligible for any allocation or distribution
from the Class 7B Liquidating Trust, (i) they (or their representatives if they
are either a member of a class described in a class action pending against the
Debtor on the Petition Date or an Old and Cold Holder) must file a Request for
Allowance/Allocation in the form approved by the Court (a "REQUEST FOR
ALLOWANCE") with the Claims Center on or before April 9, 1999.  For purposes of
the filing of a Request for Allowance, a representative of a class may include
the class representative, or if the class has not been certified or no such
representative has been appointed, lead counsel for plaintiffs in such class
action.  For purposes of the filing of a Request for Allowance except to the
extent that the Court determines at the time of the confirmation of the Plan
that the interests of the Old and Cold Holders are represented in pending class
actions, a representative of the Old and Cold Holders shall be approved by the
Court at the time of confirmation of the Plan and may file a Request for
Allowance on behalf of the class of Old and Cold Holders.

     Evidence to Accompany Request for Allowance.  Any Request for Allowance
     -------------------------------------------                            
filed on behalf of an individual holder of a Class 7B Claim shall be accompanied
by true and correct copies of confirmations, brokerage account statements, or
other sufficient evidence of: (i) the date(s) of purchase(s), (ii) the purchase
price(s), (iii) the date(s) of sale(s), (iv) the sale price(s), and (v) the
number of shares of stock purchased or sold on such date(s) and at such
price(s).  Any Request for Allowance filed on behalf of a class of holders of
Class 7B Claims or by the representative of the Old and Cold Holders shall be
accompanied by evidence sufficient to allow the Arbitrator described below to
determine the basis for an award with respect to allowance and/or allocation of
the Class 7B Claims contained in such class.

     No Priority; No Automatic Allowance.  The filing of a Request for Allowance
     -----------------------------------                                        
will not automatically result in the allowance of the Class 7B Claim described
therein.  No Allowed Class 7B Claim shall be afforded any priority over any
other Allowed Class 7B claim in distribution.  All Claims for which a Request
for Allowance is filed shall be subject to objection and the claims allowance
and allocation process in accordance with the procedures established by the
Trustees.

     Forwarding Requests for Allowance.  As soon as practicable after April 9,
     ---------------------------------                                        
1999, the Reorganized Debtor shall cause the Claims Center to forward copies of
all Requests for Allowance filed on behalf of claimants asserting a right to be
included in Class 7B to the Trustees, c/o the Class 7B claims administrator
selected by the Securities Claimants' Committee (the "CLASS 7B CLAIMS
ADMINISTRATOR").  Prior to or on the Confirmation Date, the Securities
Claimants' Committee will select the Class 7B Claims Administrator and provide
notice of the selection to the Debtor, the United States Trustee, counsel for
the Creditors' Committee, and counsel for the Equity Committee.

     Selection of Arbitrator.  Prior to or on the Confirmation Date, the
     -----------------------                                            
Securities Claimants' Committee (i) will select an arbitrator (the "ARBITRATOR")
to serve in connection with allowance of Class 7B Claims and the allocation of
the Trust Assets among the various classes of claimants represented in class
actions which were pending against the Debtor on the Petition Date and other
holders of Allowed Claims in Class 7B, and (ii) will provide notice of the
selection to the Debtor, the United States trustee, counsel for the Unsecured
Creditors' Committee, and counsel for the Equity Committee.  At confirmation of
the Plan, the selection of the Arbitrator will be presented to the Court for
approval.  The reasonable expenses of the Arbitrator as well as such fees as may
be agreed upon between the Arbitrator and the Trustees in writing shall be paid
first from the funds provided by this Section 8.15 of the Plan and, 

                                      -20-
<PAGE>
 
if such funds have been exhausted, then from the Trust Assets. The arrangements
relating to the compensation and reimbursement of the Arbitrator will be
presented to the Court for approval at the hearing on confirmation of the Plan.

     Allowance/Allocation/Arbitration Procedures.  Within fifteen (15) days of
     -------------------------------------------                              
the Confirmation Date, the Trustees shall establish:  (i) a procedure for
resolving, on a consensual basis, the allowance of Class 7B Claims and
allocation of Trust Assets among holders of the Allowed Class 7B Claims, and
(ii) a process for the arbitration of allowance of Class 7B Claims and
allocation of Trust Assets among holders of the Allowed Class 7B Claims in the
event that there is no resolution on a consensual basis.  If the Trustees
determine that the services of a mediator (a "MEDIATOR") would be of assistance
in the efforts to attain a consensual allowance ad allocation, they may engage a
Mediator for that purpose.

     Consensual Allowance and Allocation.  If, as a result of the efforts of the
     -----------------------------------                                        
Trustees, a Mediator if any, and any claimants who indicated on their Request
for Allowance a desire to provide input regarding a consensual allowance, a
proposal with respect to a consensual allowance of Class 7B Claims and
allocation of Trust Assets on account of such Claims is accepted by a unanimous
vote of the Trustee then in office, in accordance with procedures adopted by the
Trustees, then the agreement shall be submitted by the Trustees to the Court for
approval, upon such notice as the Court shall order.

     No Consensus; Arbitration.  If, on or before May 14, 1999, or such later
     -------------------------                                               
date as the Trustees shall establish, no motion is filed with the Court seeking
approval of a consensual allowance of Class 7B Claims and allocation of Trust
Assets on account of such Claims, then an arbitration of any unresolved issues
relating to the allowance of Claims in Class 7B and the allocation of Trust
Assets shall be conducted by the Arbitrator as soon as practicable, in
accordance with such rules as the Arbitrator shall establish to the extent that
the Trustees have not done so.  The arbitration shall be completed on or before
July 31, 1999.

     Binding Arbitration.  The arbitration shall be binding in nature, and the
     -------------------                                                      
only grounds of any application to vacate or modify any decision or award of the
Arbitrator shall be that the Arbitrator was other than a neutral party, that the
award was obtained by fraud, or that the award constituted an abuse of
discretion or violated public policy.

     Post-Award Proceedings.  Any application to vacate or modify an award of
     ----------------------                                                  
the Arbitrator shall be only to the Court, and any notice of appeal from such an
award must be filed within fourteen (14) days after the Arbitrator shall have
provided a copy of his award to the Trustees and any party to the arbitration,
via facsimile to each of the Trustees and via overnight delivery service in a
method requiring a receipt therefor or via certified mail return receipt
requested to any other party to the arbitration.  In the event such an
application is filed, with respect thereto the Arbitrator may, utilizing Trust
Assets, engage counsel to defend the award in connection with any such
application.

     Expenses of Post-Award Proceedings.  A party filing an application to
     ----------------------------------                                   
vacate or modify the award of the Arbitrator shall be responsible for his, her,
or its own costs, expenses and attorneys' fees.  In addition, if an application
is unsuccessful in that the party making the application does not obtain a
modification or the vacation of the award of the Arbitrator, that party shall
bear all expenses of the application, including the reasonable fees and expenses
incurred in connection therewith by the Arbitrator.

     Distribution.  The Trustees shall distribute the Trust Assets then held in
     ------------                                                              
the Class 7B Liquidating Trust, net of costs and expenses properly chargeable to
the Trust Assets under the Plan or the Class 7B Liquidating Trust Agreement, as
soon as practicable after either the award of the Arbitrator or order of the
Court approving a consensual allocation of Trust Assets has become final and not
subject to modification, reversal or appeal, and shall make such distribution in
accordance with such arbitration award or such order of the Court.  If,
subsequent to such distribution, the Class 7B Liquidating Trust shall acquire
additional Trust Assets, then as soon as practicable after receipt by the Class
7B Liquidating Trust, the Trustees shall distribute those additional Trust
Assets, net of costs and expenses properly chargeable to the Trust Assets under
the Plan or the Class 7B Liquidating Trust Agreement (including net of
attorneys' fees and costs incurred in connection with such additional assets)
according to the same allocation determined previously by consensus or
arbitration, as the case may be.  With respect to any distribution of Trust
Assets to Allowed Class 7B Claims which are included within a class action
against the Debtor which was pending on the Petition Date, the Trustees shall
make such distribution by delivering it to an escrow account 

                                      -21-
<PAGE>
 
designated by lead counsel for that class in such class action and such
distribution shall remain in that escrow account until such time as (i) such
lead counsel has been able to apply to the court in which the respective class
action is pending as to the matter of a method of final distribution and an
award of attorneys' fees and costs, and (ii) any order on such application has
become final.

     Termination.  Following (i) a final determination of the Company KPMG
     -----------                                                          
Claims and other claims constituting Trust Assets, whether by virtue of
prosecution or settlement thereof, or  (ii) a decision by the Trustees not to
take any action with respect to the Company KPMG Claims and other claims
constituting Trust Assets, at such time as all Trust Assets, including any and
all sums resulting from prosecution or settlement of the Company KPMG Claims, or
other claims constituting Trust Assets, have been fully and finally distributed,
the Trustees shall apply to the Court for an order of the Court terminating the
Class 7B Liquidating Trust, upon such notice as the Court shall order.  Upon the
Court's order terminating the Class 7B Liquidating Trust becoming final, the
Class 7B Liquidating Trust shall be terminated, and the Trustees shall be
discharged of all responsibilities with respect to the Trust.


                                  ARTICLE IX
                      ACCEPTANCE OR REJECTION OF THE PLAN

     9.01  PRESUMED ACCEPTANCE OF PLAN.  Classes 1, 2 and 3 are unimpaired under
the Plan, and, therefore, conclusively are presumed to have accepted the Plan in
accordance with  Section 1126(f) of the Bankruptcy Code.

     9.02  DEEMED NON-ACCEPTANCE OF PLAN.   Class 8 is deemed to have rejected
the Plan and will not be solicited for acceptances or rejections of the Plan.

     9.03  VOTING CLASSES.  Each holder of an Allowed Claim or an Allowed
Interest in Classes 4, 5, 6, 7A and 7B shall be entitled to vote to accept or
reject the Plan.

     9.04  ACCEPTANCE BY IMPAIRED CLASSES.  An Impaired Class of Claims shall
have accepted the Plan if (i) the holders (other than those designated under
section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the
Allowed Claims actually voting in such Class have voted to accept the Plan and
(ii) the holders (other than those designated under section 1126(e) of the
Bankruptcy Code) of more than one-half in number of the Allowed Claims actually
voting in such Class have voted to accept the Plan.  An Impaired Class of
Interests shall have accepted the Plan if the holders (other than  those
designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds
in amount of the Allowed Interests actually voting in such Class have voted to
accept the Plan.

     9.05  NON-CONSENSUAL CONFIRMATION.  The Debtor will seek confirmation of
the Plan under section 1129(b) of the Bankruptcy Code in view of the deemed non-
acceptance by Class 8.  In the event that any other Impaired Class of Claims or
Interests does not accept the Plan in accordance with section 1126 of the
Bankruptcy Code, the Debtor hereby requests that the Court confirm the Plan in
accordance with section 1129(b) of the Bankruptcy Code.  Subject to Section 1127
of the Bankruptcy Code, the Debtor reserves the right to modify the Plan to the
extent that confirmation pursuant to section 1129(b) of the Bankruptcy Code
requires modification.

                                   ARTICLE X
                             CONDITIONS PRECEDENT

     10.01  Conditions to Confirmation.  It is a condition to confirmation of
the Plan that:

            (i) the Confirmation Order include provisions:

                (a)  authorizing the Reorganized Debtor to adopt and file the
                     Amended and Restated Certificate of Incorporation and By-
                     laws;
                (b)  authorizing the issuance of the New Common Stock and New
                     Warrants;
                (c)  approving the compromise and settlement as set forth in
                     Section 8.05 and authorizing all transactions contemplated
                     therein;

                                      -22-
<PAGE>
 
                (d)  authorizing the issuance of the New Senior Secured Notes
                     and the New Junior Subordinated Notes;
                (e)  authorizing all of the other transactions contemplated by
                     the Plan in order to effectuate the Plan;
                (f)  exempting the New Senior Secured Notes, the New Junior
                     Subordinated Notes, the New Common Stock and the New
                     Warrants from registration under the Securities Act and
                     state or local laws, pursuant to Section 1145;
                (g)  making the provisions of the Confirmation Order non-
                     severable and mutually dependent;

          (ii)  the Debtor shall have filed (a) an objection to the allowance of
                claims asserted by John N. Brincat and the estate of James A.
                Doyle and (b) an adversary proceeding which seeks to subordinate
                any Equity Interests held by John N. Brincat and the estate of
                James A. Doyle; and

          (iii) in the event KPMG shall have filed any claim against the Debtor
                prior to the Confirmation Date, the Debtor shall file an
                objection to the allowance of such Claims and such Claims shall
                have been disallowed by Final Order.

     10.02  CONDITIONS TO THE EFFECTIVE DATE.  The Confirmation Order shall
contain the provisions set forth in Section 10.01 of the Plan (unless waived in
accordance with the provisions of Section 10.03) and the Confirmation Order
shall be in full force and effect and shall not have been reversed, stayed,
modified or amended.  The Debtor shall provide written notice to the Creditors'
Committee, Securities Claimants' Committee and Equity Holders' Committee of the
occurrence of the Effective Date.

     10.03  WAIVER OF CONDITIONS.  The Debtor, with the consent of the
Creditors' Committee (and the consent of the Equity Holders' Committee if such
waiver relates to the conditions set forth in Article X(i)(a), (b), (f) or
(ii)(b)), may waive any condition set forth in this Article X at any time,
without notice, without leave of the Court, and without any formal action other
than proceeding to consummate the Plan.


                                  ARTICLE XI
                         EFFECTS OF PLAN CONFIRMATION
                                        
     11.01  DISCHARGE.  Except as otherwise expressly provided in the Plan or
Confirmation Order, as of the Effective Date, the Debtor shall be discharged
forthwith from, and the Confirmation Order shall operate as an injunction
against, the commencement or continuation of an action, the employment of
process, or an act to collect, recover or offset, any Claim (including any
Securities Fraud Claim (or any claim for contribution or indemnity relating
thereto)) and any "debt" (as that term is defined in section 101(12) of the
Bankruptcy Code) and any Interest (or Claims or debt related thereto) from or
against the Debtor or the Reorganized Debtor, and the Debtor's and the
Reorganized Debtor's liability in respect thereof shall be extinguished
completely, whether reduced to judgment or not, liquidated or unliquidated,
contingent or noncontingent, asserted or unasserted, fixed or not, matured or
unmatured, disputed or undisputed, legal or equitable, known or unknown, or
arising from any agreement of the Debtor entered into or obligation of any kind
of the Debtor incurred before the Confirmation Date, or from any conduct of the
Debtor occurring  prior to the Confirmation Date or that otherwise arose before
the Confirmation Date (including, without limitation, all interest, if any, on
any such debts, whether such interest accrued before or after the date of
commencement of the applicable Reorganization Case), and the Debtor and the
Reorganized Debtor shall be released and discharged from any liability of a kind
specified in section 502(g), 502(h) and 502(i) of the Bankruptcy Code, whether
or not a proof of claim is filed or deemed filed under section 501 of the
Bankruptcy Code, such Claim is allowed under section 502 of the Bankruptcy Code,
or the holder of such Claim has accepted the Plan.

     11.02  RELEASE.  On the Effective Date, in consideration for, or as part
of, the treatment accorded to the holders of Impaired Claims and Interests under
the Plan, each holder of such  Claims or Interests against or in the Debtor
shall be deemed to have released the Debtor from any and all causes of action
and claims, in law or in equity, whether based on tort, fraud, contract or
otherwise, which arose prior to the date of the filing of the Petition Date.

                                      -23-
<PAGE>
 
     11.03  RELEASE BY THE DEBTOR OF DIRECTORS, OFFICERS AND EMPLOYEES.  Except
for the estate of James A. Doyle and John N. Brincat, as of the Effective Date
and subject to the settlement and compromise set forth in Section 8.05, the
Debtor shall be deemed to have waived and released its present and former
directors, officers and employees from any and all claims of the Debtor
(including claims which the Debtor or Debtor in Possession otherwise has legal
power to assert, compromise or settle in connection with its Reorganization
Case) against such present and former directors, officers and employees arising
on or prior to the Effective Date.

     11.04  TERM OF INJUNCTIONS OR STAYS.  Unless otherwise provided, all
injunctions or stays provided for in the Reorganization Case pursuant to Section
105 or 362 of the Bankruptcy Code or otherwise in effect on the Confirmation
Date shall remain in full force and effective until the Effective Date.

     11.05  EXCULPATION.  Except with respect to KPMG Peat Marwick, neither the
Debtor, the Reorganized Debtor, any of their respective officers, directors,
employees, advisors, agents, professionals or representatives, benefit plan
administrators or trustees, nor the members of the Steering Committee or the
parties to the Consent Agreement and their principals, advisors, professionals
and agents, nor the Creditors' Committee, Equity Holders' Committee, Securities
Claimants' Committee and their members, advisors, professionals and agents shall
have or incur any liability to any holder of a Claim or Interest for any act or
omission in connection with or arising out actions taken or omitted to be taken
in good faith in connection with the Debtor's restructuring, the Plan, the
Reorganization Case, including all prepetition activities leading to the
promulgation and confirmation of the Plan, and administration of the Plan or the
property to be distributed under the Plan; provided, however, such exculpation
shall not relate to post confirmation conduct deemed to be willful misconduct or
gross negligence.  Upon the Confirmation Date, the Securities Claimants'
Committee shall dismiss or shall be deemed to have dismissed with prejudice
adversary proceeding No. 98-A-01580 against the non-director defendants therein.

     11.06  REVESTING.  Except as otherwise expressly provided in the Plan or in
the New Collateral Documents, on the Effective Date, the Debtor will be vested
with all of the property of its Estate free and clear of all Claims, liens,
encumbrances, charges and other interests of creditors and equity security
holders, and may operate its business free of any restrictions imposed by the
Bankruptcy Code or by the Court.  The Debtor shall continue as debtor in
possession under the Bankruptcy Code until the Effective Date and, thereafter,
the Reorganized Debtor may operate its business free of any restrictions imposed
by the Bankruptcy Code or the Court except as specifically authorized by the
Plan.

     11.07  RETENTION OF CAUSES OF ACTION/RESERVATION OF RIGHTS.

     (a) Except as provided in Sections 11.03 or 11.05 and subsection (c) below,
nothing contained in the Plan or the Confirmation Order shall be deemed to be a
waiver or relinquishment of any rights or causes of action that the Debtor or
the Reorganized Debtor may have or which the Reorganized Debtor may choose to
assert on behalf of the Estate under any provision of the Bankruptcy Code or any
similar applicable non-bankruptcy law, including, without limitation, (i) any
and all Claims against any entity, including but not limited to KPMG Peat
Marwick, to the extent such entity asserts a crossclaim, counterclaim and/or
claim for setoff which seeks affirmative relief against the Debtor, the
Reorganized Debtor, their officers, directors or representatives; (ii) the
avoidance of any transfer by or obligation of the Debtor, or (iii) the turnover
of any property to the Estate, all of which are expressly reserved by the Plan,
or (iv) derivative actions currently pending on behalf of the Debtor which shall
be dismissed by the Reorganized Debtor immediately following the Effective Date.

     (b) Nothing contained in the Plan or the Confirmation Order shall be deemed
to be a waiver or relinquishment of any claim, cause of action, right or setoff,
or other legal or equitable defense which the Debtor had immediately prior to
the Petition Date, against or with respect to any claim left unaltered or
unimpaired by the Plan.  The Reorganized Debtor shall have, retain, reserve and
be entitled to assert all such claims, causes of action, rights of setoff and
other legal or equitable defenses which it had immediately prior to the Petition
Date fully as if the Reorganization Case had not been commenced; and all of the
Reorganized Debtor's legal and equitable rights respecting any claim left
unaltered or unimpaired by the Plan may be asserted after the Confirmation Date
to the same extent as if the Reorganization Case had not been commenced.

                                      -24-
<PAGE>
 
     (c) Except for the estate of James A. Doyle, John N. Brincat and KPMG Peat
Marwick, the Debtor waives and releases any rights or causes of action for the
recovery of preferential payments or fraudulent conveyances against any party.

     11.08  POST-CONSUMMATION EFFECT OF EVIDENCES OF CLAIMS OR INTERESTS.
Outstanding notes, stock certificates and other evidences of Claims against or
Interests in the Debtor in Classes 4, 5, 6, 7A, 7B and 8 shall, effective upon
the Effective Date, represent only the right to participate in the distributions
contemplated by the Plan, if any.

                                  ARTICLE XII
             TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
                                        

     12.01  ASSUMPTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES.   On the
Effective Date, and to the extent permitted by applicable law, all executory
contracts and unexpired leases of the Debtor set forth on Exhibit 3 attached to
the Plan shall be assumed in accordance with the provisions of sections 365 and
1123 of the Bankruptcy Code and, in the case of contracts evidencing Corporate
Indemnities, subject to the provisions of Section 12.03, unless such executory
contracts or unexpired leases are rejected by the Debtor's motion prior to
confirmation or in connection with the confirmation hearing.

     Contracts or leases entered into after the Petition Date will be performed
by the Reorganized Debtor in the ordinary course of business.

     12.02  CLAIMS BASED ON REJECTION OF EXECUTORY CONTRACTS OR UNEXPIRED
LEASES.  Any Claims arising out of the rejection of contracts or leases must be
filed with the Court within the time set by any Final Order rejecting an
executory contract or unexpired lease or 30 days after the Effective Date.  Any
Claims not filed within such time will be forever barred from assertion against
the Debtor or Reorganized Debtor, its estate and property.  Unless otherwise
ordered by the Court or provided in this Plan, all such Claims for which proofs
of Claim are required to be filed will be treated as Class 3 Claims.

     12.03  LIMITED SURVIVAL OF THE DEBTOR'S CORPORATE INDEMNITIES.  Except as
provided in Section 5.03 and this Section 12.03, the Corporate Indemnities shall
not be discharged or impaired by Confirmation of this Plan.  Such obligations
shall be deemed and treated as executory contracts to be assumed by the Debtor
and the Reorganized Debtor pursuant to the Plan, and shall continue as
obligations of the Reorganized Debtor, subsequent to the Effective Date,
provided that the Debtor's or Reorganized Debtor's obligations on such Corporate
Indemnities shall be limited as follows:

            (i)   the claims of officers, agents and employees who remain
                  employed by the Reorganized Debtor as of the first day
                  immediately following the Effective Date (excluding any claims
                  covered by the Indemnification Settlement Fund) shall be fully
                  assumed;

            (ii)  the claims of officers, agents, and employees (other than the
                  claims of the estate of James A. Doyle and John N. Brincat in
                  respect of which no obligations shall be assumed), who are no
                  longer Employed by the Reorganized Debtor as of the first day
                  immediately following the Effective Date, shall be assumed
                  only to the extent that they relate to costs and expenses
                  incurred after the Effective Date in connection with their
                  participation in an agency or government investigation and
                  shall be limited to $250,000 in the aggregate, such claims to
                  be submitted to the Reorganized Debtor and paid upon adequate
                  verification;

            (iii) the Beneficiaries shall be entitled to assert Allowed
                  Indemnification Claims, but shall be entitled to compensation
                  on account of such claims only (x) out of the Indemnification
                  Settlement Fund, and (y) to the extent of insurance coverage
                  available under the Reliance Policies; and

            (iv)  the claims of persons who are outside directors as of the day
                  preceding the Effective Date shall be assumed and limited to
                  the sum of (x) any remaining fee retainer in possession of 

                                      -25-
<PAGE>
 
                  the professionals retained by such directors and (y) the
                  available balance from time to time of the Outside Directors
                  Reserve. Nothing in this subsection shall limit any rights of
                  such persons provided under Section 12.03(iii) of this Plan.

                                 ARTICLE XIII
                           RETENTION OF JURISDICTION
                                        
     13.01  RETENTION OF JURISDICTION.  Notwithstanding the entry of the
Confirmation Order or the Effective Date having occurred, the Court shall retain
original and exclusive jurisdiction to (a) determine any disputed Claims, (b)
determine requests for payment of Claims entitled to priority under section
507(a)(1) of the Bankruptcy Code, including compensation of and reimbursement of
expenses of professionals and other parties entitled thereto, (c) resolve
controversies and disputes regarding interpretation and implementation of the
Plan, (d) enter orders in aid of the Plan, including, without limitation,
appropriate orders (which may include contempt or other sanctions) to protect
the Debtor and the Reorganized Debtor in accordance with sections 524 and 1141
of the Bankruptcy Code and the terms and conditions of the Confirmation Order,
(e) modify the Plan pursuant to Section 14.02 of the Plan, (f) determine any and
all applications, adversary proceedings and contested or litigated matters
pending on the Effective Date, (g) allow, disallow, estimate, liquidate or
determine any Claim or Interest and to enter or enforce any order requiring the
filing of any such Claim before a particular date, (h) determine any and all
pending applications for the rejection of executory contracts or unexpired
leases, or for the assignment of assumed executory contracts and unexpired
leases, and to hear and determine, and if need to be liquidate, any and all
Claims arising from any such rejection, assumption and/or assignment, (i)
determine any actions or controversies arising under or in connection with the
Plan, the Confirmation Order, the Class 7B Liquidating Trust or any contract,
instrument, release, or other agreement created in connection with the Plan, (j)
enter and implement orders as are necessary or appropriate if the Confirmation
Order is for any reason modified, stayed, reversed, revoked or vacated, (k)
enter a final decree closing the Reorganization Case, (l) determine any actions
or controversies related to or asserted against the Exchange Agent and (m) enter
and implement orders as are necessary to the transactions set forth in Section
8.05 of the Plan.

     13.02  FAILURE OF COURT TO EXERCISE JURISDICTION.  If the Court abstains
from exercising or declines to exercise jurisdiction, or determines that it is
otherwise without jurisdiction over any matter or proceeding arising out of,
related to or otherwise connected with the Reorganization Case, including the
matters set forth in this Article XIII , this Article shall not prohibit, or
limit or otherwise affect the exercise of jurisdiction by any other court having
competent jurisdiction with respect to such matter or proceeding.

                                  ARTICLE XIV
                            MISCELLANEOUS PROVISIONS

     14.01  RETIREE BENEFITS.  On and after the Effective Date, pursuant to
section 1129(a)(13) of the Bankruptcy Code and applicable nonbankruptcy law, the
Reorganized Debtor shall continue to be obligated to pay all retiree benefits,
as that term is defined in section 1114 of the Bankruptcy Code, and shall
continue to pay such retiree benefits as they become due at the level
established at any time prior to confirmation of the Plan pursuant to subsection
(e)(1)(B) or (g) of section 1114, for the duration of the period the Debtor has
obligated itself to provide such benefits; provided, however, that nothing
herein shall extend or otherwise modify the duration of such period or prohibit
the Debtor's ability or the Reorganized Debtor's ability to modify the terms and
conditions of the retiree benefits as otherwise permitted by such plans and
otherwise applicable nonbankruptcy law.

     14.02  MODIFICATION OF PLAN.  The Debtor reserves the sole right, in
accordance with the Bankruptcy Code and Bankruptcy Rules, to amend or modify the
Plan prior to the entry of the Confirmation Order.  After the entry of the
Confirmation Order, the Reorganized Debtor may, upon order of the Court, amend
or modify the Plan in accordance with section 1127(b) of the Bankruptcy Code and
the Bankruptcy Rules or remedy any defect or omission or reconcile any
inconsistency in the Plan in such manner as may be necessary to carry out the
purpose and intent of the Plan.

     14.03  WITHDRAWAL OF PLAN.  The Debtor reserves the right, at any time
prior to the entry of the Confirmation Order, to revoke and withdraw the Plan.
If the Debtor revokes or withdraws the Plan under this 

                                      -26-
<PAGE>
 
section, or if entry of the Confirmation Order does not occur, then the Plan
shall be deemed null and void. In that event, nothing contained in the Plan
shall be deemed to constitute a waiver or release of any Claims by or against or
any Interests in the Debtor, to prejudice in any manner the rights of the Debtor
in any further proceedings involving the Debtor, or constitute an admission
against interest by the Debtor or any other party in interest.

     14.04  HEADINGS.  The headings used in this Plan are inserted for
convenience only and neither constitute a portion of the Plan nor in any manner
affect the provisions of the Plan.

     14.05  SUCCESSORS AND ASSIGNS.  The rights, benefits and obligations of any
person or entity named or referred to in the Plan shall be binding upon, and
shall inure to the benefit of, the heir, executor, administrator, successor or
assign of such person or entity.

     14.06  PAYMENT OF STATUTORY FEES.  All fees payable pursuant to section
1930 of Title 28 of the United States Code, as determined by the Bankruptcy
Court at the hearing pursuant to section 1128 of the Bankruptcy Code, shall be
paid on or before the Effective Date.

     14.07  NOTICES.  Any notice, request or demand given or made under this
Plan or under the Bankruptcy Code or the Bankruptcy Rules shall be in writing
and shall be hand delivered or sent by a reputable overnight courier service,
and shall be deemed given when received at the following addresses whether hand
delivered or sent by overnight courier service:

               Mark E. Dapier
               General Counsel
               Mercury Finance Company
               100 Field Drive
               Suite 340
               Lake Forest, Illinois 60045

with a copy to:

               Lewis S. Rosenbloom
               David D. Cleary
               McDermott, Will & Emery
               227 West Monroe Street
               Chicago, Illinois  60606-5096

Notwithstanding anything to the contrary provided herein, all notices concerning
this Plan shall be served upon the entities prescribed and in the manner
prescribed under the Bankruptcy Code and the Bankruptcy Rules.

     14.08  SEVERABILITY OF PLAN PROVISIONS.  If prior to confirmation, any term
or provision of the Plan which does not govern the treatment of Claims or
Interests or the conditions to confirmation or the Effective Date is held by the
Court to be invalid, void or unenforceable, the Court shall have the power to
alter and interpret such term or provision to make it valid or enforceable to
the maximum extent practicable, consistent with the original purpose of the term
or provision held to be invalid, void or unenforceable, and such term or
provision shall then be applicable as altered or interpreted.  Notwithstanding
any such holding, alteration or interpretation, the remainder of the terms and
provision of the Plan will remain in full force and effect and will in no way be
affected, impaired or invalidated by such holdings, alteration or
interpretation.  The Confirmation Order shall constitute a final judicial
determination and shall provide that each term and provision of the Plan as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.

     14.09  EXHIBITS.  Exhibits to the Plan or Disclosure Statement that are not
filed simultaneously with the Plan shall be filed with the Court not less than
ten days prior to the hearing on the Disclosure Statement to be conducted
pursuant to the Bankruptcy Rule 3017 and shall be mailed to the Creditors'
Committee, the Securities and Exchange Commission, the Commissioner of
Securities for the State of Illinois and any party in interest that makes a
written request for such Exhibit to the Debtor.

                                      -27-
<PAGE>
 
     14.10  NO ADMISSIONS.  Notwithstanding anything herein to the contrary,
nothing contained in the Plan shall be deemed as an admission by the Debtor with
respect to any matter set forth herein including, without limitation, liability
on any Claim or the propriety of any Claims classification.

                                 ARTICLE XIII
                             CONFIRMATION REQUEST
                                        
     The Debtor requests confirmation of the Plan under Section 1129(b) of the
Bankruptcy Code.


Dated:   December 29, 1998

                              MERCURY FINANCE COMPANY



                              By:  /s/ WILLIAM A. BRANDT, JR.
                                   ---------------------------------------
                                       William A. Brandt, Jr.
                                       President and Chief Executive Officer


Prepared by:


Lewis S. Rosenbloom
David D. Cleary
McDERMOTT, WILL & EMERY
227 West Monroe Street
Chicago, Illinois 60606-5096
(312) 372-2000

Counsel for Mercury Finance
Company

                                      -28-
<PAGE>
 
                               EXHIBIT 1 TO PLAN
                               -----------------
                                        
                              CONSUMER LITIGATION


<TABLE>
<CAPTION>
 NO.                   CASE NAME AND NUMBER                                      VENUE
-----------------------------------------------------------------------------------------------------------------------
<S>    <C>                                                        <C> 
 1.    TAWANA BLAND v. MFC d/b/a MFC of GA and Bill Heard         Muscogee County State Court
       Chevrolet Co.                                              Georgia
       SC95-CV331                                           
-----------------------------------------------------------------------------------------------------------------------
 2.    BRENDA BOOHER v. Fain Lunsford, Sr., Raymond               Sullian County Circuit Court
       Hilliard d/b/a/ A&B Used Cars, a/k/a Raymond's Bus &       Tennessee
       Car Garage; Lynn Anders d/b/a Factory Outlet         
       Furniture; and MFC  C10405(L)                        
                                                            
-----------------------------------------------------------------------------------------------------------------------
 3.   MACK CALHOUN, JR. v. MFC d/b/a MFC of GA and GT            Muscogee State Court
      Motors, Inc., f/k/a Players Auto Sales                     Georgia
      SC95-CV333                                            
-----------------------------------------------------------------------------------------------------------------------
 4.   COLUMBUS FINANCE CO. v. MFC, Gayrius Mickels, Roy          Muscogee State Court
      Ray Automotive                                             Georgia
      97-CV-2426                                            
-----------------------------------------------------------------------------------------------------------------------
  5.  RUFUS CULLEN v. MFC                                        Seminole County Court
      98-1-SP-19-Z                                               Florida
-----------------------------------------------------------------------------------------------------------------------
  6.  WILLIAM DEARMON v. MFC, Individually and d/b/a MFC         Williamson County Chancery Court
      of Tennessee, Individually and American Bankers            Florida
      Insurance Company of Florida                          
      24583                                                 
-----------------------------------------------------------------------------------------------------------------------
  7.  SHIRLEY DEWHART v. Brooks & Thomas Motor Co., Inc.,        Muscogee County Superior Court
      d/b/a Mike Collins Nissan and MFC                          Georgia
      97CV-3326                                             
-----------------------------------------------------------------------------------------------------------------------
  8.  RAYMOND E. EWING v. Midland Finance Company; Gerald        U.S. District Court, N.Dist., E. Div.
      Mizel and MFC 96C0222                                      Illinois
                                                            
-----------------------------------------------------------------------------------------------------------------------
  9.  BOBBY & FRANCES LUCILLE GUALTNEY v. MFC                    Muscogee County Magistrate Court
      97-301                                                     Georgia
-----------------------------------------------------------------------------------------------------------------------
  10. TODD GORDON v. State of Florida et al. 97-3053             Miami District Court
                                                                  Florida
-----------------------------------------------------------------------------------------------------------------------
  11. DAVID GROPPI v. MFC                                        Cuyahoga City Common Pleas Court
      348448                                                     Ohio
-----------------------------------------------------------------------------------------------------------------------
  12. KATHY HOLLIDAY v. MFC d/b/a MFC of GA and Bill Heard       Muscogee County State Court
      Chevrolet Company                                          Georgia
      SC95-CV-330                                           
-----------------------------------------------------------------------------------------------------------------------
  13. ANGELA K. HUMPHRIES v. MFC                                 Jefferson County Circuit Court
      CV97-676                                                   Alabama
-----------------------------------------------------------------------------------------------------------------------
  14. EULA M. JACKSON v. Motor Cars, Inc., d/b/a Cars            Muscogee County State Court
      Unlimited and MFC d/b/a MFC of GA                          Georgia
      SC-95-CV-332                                          
-----------------------------------------------------------------------------------------------------------------------
  15. MICHAEL JOHNSON & CAROLE J. JOHNSON v. MFC d/b/a MFC       Muscogee County State Court
      of GA and Maloof Motor Company, Inc.                       Georgia
      SC95-CV-326                                           
-----------------------------------------------------------------------------------------------------------------------
  16. TERESA JOHNSTON v. James Luce MFC of Florida and MFC       Pinellas County Circuit Court
      97-003786-C1008                                            Florida
-----------------------------------------------------------------------------------------------------------------------
</TABLE> 
<PAGE>
 
<TABLE>
<CAPTION>
 NO.                   CASE NAME AND NUMBER                                      VENUE
-----------------------------------------------------------------------------------------------------------------------
<S>    <C>                                                        <C> 
  17.  DAWN-FUNDERBERG-KALINOWSKI on behalf of herself and    US BK Court, N. Dist., IL
       those similarly situated, v MFC and MFC of Illinois    Illinois
       98A00854
       "New Case Filed 4/29/98
-------------------------------------------------------------------------------------------------------------------
  18.  DEBRA H. PORTER v. MFC d/b/a MFC of GA and Maloof      Muscogee County State Court
       Motor Company, Inc.                                    Georgia
       SC95-CV-325
-------------------------------------------------------------------------------------------------------------------
  19.  MILTON D. PORTER AND ANGELA N. BROWN v. MFC d/b/a      Muscogee County State Court
       MFC of GA and Mark Levy Auto Center, Inc.              Georgia
 
-------------------------------------------------------------------------------------------------------------------
  20.  WAYMON PRIOR, ET AL. v. MFC of Alabama and American    Coffee County, Elba Division,
       Bankers Insurance                                      Alabama
 
-------------------------------------------------------------------------------------------------------------------
  21.  ANGELA D. SCARVER v. Edwards Chevrolet Co, Inc.,       (Not listed)
       American Bankers, Roadguard, MFC of Alabama and MFC
       Corporation
-------------------------------------------------------------------------------------------------------------------
  22.  JOSEPH P. & MARIE SIOFELE v. Martha Cornejo; MFC and   Riverside County Municipal Court
       MFC d/b/a/ MERC Finance Company; California Coastal    California
       Recovery; and Does 1 to 10
       8068
-------------------------------------------------------------------------------------------------------------------
  23.  MARION SIMS & MARY EPTING v. MFC and A.B., jointly     Smith County Court
       and severally                                          Mississippi
 
-------------------------------------------------------------------------------------------------------------------
  24.  MYRON B. STAPLES V, MFC and John Hall                  Milwaukee County Circuit Court
       96-CV-5065                                             Wisconsin
-------------------------------------------------------------------------------------------------------------------
  25.  RANDALL SCOTT STARKS, d/b/a Starks & Associates v.     Harris County District Court
       MFC a/k/a MFC Finance Company                          Texas
       H-97-1379
-------------------------------------------------------------------------------------------------------------------
  26.  RALPH G. STEWART v. B&M Motors, James D. Davis d/b/a   Walker County Circuit Court
       B&M Motors, MFC and A,B,C,D                            Alabama
 
-------------------------------------------------------------------------------------------------------------------
  27.  DION TAYLOR & Claudia Anderson v. Celozzi Ettelson     DuPage County Circuit Court
       Chevrolet, Inc. and MFC                                Illinois
       97L-00264
-------------------------------------------------------------------------------------------------------------------
  28.  JAMES E. THOMAS & DOROTHY L. DIXON V. Bill Heard       Russell County Circuit Court
       Chevrolet, Bill Bratton, John Does 1-10, and MFC,      Alabama
       Inc.
       CV95-47
-------------------------------------------------------------------------------------------------------------------
  29.  LLOYD WAINWRIGHT & MITCH BUCHOLZ v. MFC of Wisconsin   Racine County Circuit Court
       and MFC                                                Wisconsin
       97CV-0922
-------------------------------------------------------------------------------------------------------------------
  30.  VNESSA WALLACE  V. MFC d/b/a MFC of GA and Gateway     Muscogee County State Court
       Lincoln-Mercury                                        Georgia
       SC95-CV327
-------------------------------------------------------------------------------------------------------------------
  31.  DOUGLAS & LINDA WALTERS v. MFC and American Bankers    Fayette County Circuit Court
       Life Assurance Company                                 Alabama
       CV94-054
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
 
                               EXHIBIT 2 TO PLAN
                               -----------------
                                        
                             SECURITIES LITIGATION

                                        
1.   Each of the civil actions pending in the United States District Court for
     the Northern District of Illinois in the Consolidated Pretrial Proceeding
     captioned In the Matter of Mercury Finance Company of Illinois, Case No. 97
               ----------------------------------------------------             
     C 3035 (N.D.Ill.) Ill. filed March 20, 1997);

2.   The case captioned Ferree v. Mercury Finance Company, et al., No. 97 C 5245
                        -----------------------------------------               
     (N.D. Ill. filed July 24, 1997);

3.   The case captioned Realtech Software, Inc. et al. v. Mercury Finance Co.
                        -----------------------------------------------------
     et. al., No. 97 CH 1277 (Cir. Ct. Cook Co. Ill. filed January 31, 1997);
     -------                                                                 

4.   The case captioned Crandon Capital Partners v. John N. Brincat et al., No.
                        --------------------------------------------------     
     97 CH 1491 (Cir. Ct. Cook Co. Ill. filed February 5, 1997);

5.   The case captioned Malone v. John N. Brincat et al., No. 15510-NC (Del. Ch.
                        --------------------------------                        
     filed February 4, 1997);

6.   The cases captioned Thorp et al. v. Mercury Finance Co. et al., No. 97 CH
                         ------------------------------------------           
     1440 (Cir. Ct. Cook Co. Ill. filed February 4, 1997); State Board of
                                                           --------------
     Administration of Florida et al. v. Brincat et. al., No. 97 CH 1440 (Cir.
     ---------------------------------------------------                      
     Ct. Cook Co. Ill., Application for intervention filed November 22, 1997);

7.   The case captioned Kittle et al. v. Mercury Finance Co. et al., No. 97 CH
                        -------------------------------------------           
     3639 (Cir. Ct. Cook Co. Ill. filed March 25, 1997);

8.   The case captioned Pontikes et al. v. John N. Brincat et al., No. 97 CH
                        -----------------------------------------           
     3039 (Cir. Ct. Cook Co. Ill. filed March 12, 1997);

9.   The case captioned Dloogatch et al. v. John N. Brincat et al., No. 97 CH
                        ------------------------------------------           
     8790 (Cir. Ct. Cook Co. Ill. filed July 16, 1997);

10.  The case captioned Wexler v. John N. Brincat et al., No. 15512-NC (Del. Ch.
                        --------------------------------                        
     filed February 5, 1997);

11.  The case captioned Krasnow v. John Brincat et al., No. 15525-NC (Del. Ch.
                        ------------------------------                        
     filed February 7, 1997);

12.  The case captioned Trauscht v. John N. Brincat et al., No. 15524-NC (Del.
                        ----------------------------------                    
     Ch. filed February 6, 1997);

13.  The case captioned Damaskus v. John N. Brincat et al., No. 15546-NC (Del.
                        ----------------------------------                    
     Ch. filed February 14, 1997);

14.  The case captioned Schwartz v. John N. Brincat et al., No. 15567-NC (Del.
                        ----------------------------------                    
     Ch. filed February 24, 1997;

15.  The case captioned Grinnell v. John N. Brincat et al., No. 15568-NC (Del.
                        ----------------------------------                    
     Ch. filed February 24, 1997);

16.  The case captioned Cumming v. John N. Brincat et al., No. 15569-NC (Del.
                        ---------------------------------                    
     Ch. filed February 24, 1997);

17.  The case captioned Sutherland v. John N. Brincat et al., No. 15582-NC (Del.
                        ------------------------------------                    
     Ch. filed February 27, 1997);
<PAGE>
 
18.  The case captioned Gulf Trust v. John N. Brincat et al., No. 15581-NC (Del.
                        ------------------------------------                    
     Ch. filed February 27, 1997);

19.  The case captioned Jackson v. Brincat et al., No. 97 C 1941 (N.D. Ill.
                        -------------------------                          
     filed March 20, 1997);

20.  T. Rowe Price Financial Services Fund, Inc., et al. v. Mercury Finance Co.,
     -------------------------------------------------------------------------- 
     et al. Case No. 97 C 4782 N.D. Ill. filed July 3, 1997.  (Motion for
     finding of relatedness denied.)

21.  Robert F. Wells, et al. v. John N. Brincat, et al., No. 98 L 013108 (Cir.
     --------------------------------------------------                       
     Ct. Cook Co. Ill. filed November 13, 1998).

22.  Shriners Hospital for Children v. Mercury Finance Co, et al., No. 98 C 1480
     -----------------------------------------------------------                
     (N.D. Ill. Filed March 15, 1998).

                                    Ex 2 - 2
<PAGE>
 
                               EXHIBIT 3 TO PLAN
                               -----------------
                                        
                   EXECUTORY CONTRACTS AND UNEXPIRED LEASES
                               TO BE ASSUMED/1/

                                        
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
  NO.             NAME/ADDRESS OF PARTY                                               DESCRIPTION
              TO CONTRACT OR UNEXPIRED LEASE                                  OF CONTRACT OR UNEXPIRED LEASE
------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                     <C>                                                          
 1.       ADT AUTOMOTIVE SERVICES, INC.                           Contract to provide collateral recovery services             
          ATTN:  GENERAL COUNSEL                                                                                                  
          435 METROPLEX DRIVE                                                                                                     
          NASHVILLE, TN  37211                                                                                                    
------------------------------------------------------------------------------------------------------------------------------------
 2.       ALTERNATIVE COMMUNICATIONS AND TELECONSULTING           Contract to provide long-distance communication services     
          585 CHEROKEE ROAD                                                                                                       
          HIGHLAND PARK, IL  60035                                                                                                
------------------------------------------------------------------------------------------------------------------------------------
 3.       ARCUS DATA SECURITY                                     Contract to provide data storage services                    
          222 W LAS COLINAS BLVD                                                                                                  
          SUITE 850                                                                                                               
          IRVING, TX  75039                                                                                                       
------------------------------------------------------------------------------------------------------------------------------------
 4.       ARNFED GENERAL AGENCY, INC.                             Contract to provide workman's compensation insurance         
          805 SOUTH WHEATLEY                                                                                                      
          SUITE 600                                                                                                               
          RIDGELAND, MS 39158                                                                                                     
------------------------------------------------------------------------------------------------------------------------------------
 5.       BANK ONE, ILLINOIS, NA                                  Contract to provide trustee and investment management services 
          ATTN:  BOB ZEIGLER                                      in connection with the Mercury Finance Company Savings Plan (401K)

          800 DAVID STREET                                        plan
          EVANSTON, IL  60201
                                                                  Contract to provide trustee services in connection with the
                                                                  Mercury Finance Company Retirement Plan
         
                                                                  Various contracts relating to the cash management system (i.e.
                                                                  wire transfer agreement, ACH collection, Allotment agreement,
                                                                  control disbursement agreement)
------------------------------------------------------------------------------------------------------------------------------------
 6.       BERKOW, DAVID                                           Non-compete and Termination Benefits Contract
          1310 KINGSLEY DRIVE
          ARLINGTON HEIGHTS, IL  60004
------------------------------------------------------------------------------------------------------------------------------------
 7.       CAREY, GEORGE                                           Non-Compete And Termination Benefits Contract
          794 N OAKWOOD AVENUE
          LAKE FOREST, IL  60045
------------------------------------------------------------------------------------------------------------------------------------
 8.       CAUL, MICHAEL H                                         Non-Compete And Termination Benefits Contract
          10791 N. 101ST PLACE
          SCOTTSDALE, AZ  85260
------------------------------------------------------------------------------------------------------------------------------------
 9.       CIMCO COMMUNICATIONS                                    Contract to Provide Data Communication Services
          18W100 22ND STREET
          SUITE 109
          OAKBROOK TERRACE, IL  60181
------------------------------------------------------------------------------------------------------------------------------------
10.       COLLINS, JAMES R                                        Non-Compete And Termination Benefits Contract
          9829 S HOYNE
          CHICAGO, IL  60643
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

_______________________
/1/  Unless such contract or unexpired lease is rejected by motion on or prior
to the Confirmation Date.
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
  NO.             NAME/ADDRESS OF PARTY                                               DESCRIPTION
              TO CONTRACT OR UNEXPIRED LEASE                                  OF CONTRACT OR UNEXPIRED LEASE
------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C> 
11.       DAPIER, MARK E.                                            Non-Compete And Termination Benefits Contract
          445 E. DEERPATH
          LAKE FOREST, IL  60045
------------------------------------------------------------------------------------------------------------------------------------
12.       DATA CLEAN CORP                                            Contract to provide computer equipment cleaning services
          1033 GRACELAND AVENUE
          DES PLAINES, IL  60016
------------------------------------------------------------------------------------------------------------------------------------
13.       EQUIFAX CREDIT INFORMATION SERVICES, INC.                  Contract to provide consumer credit reporting
          1600 PEACHTREE STREET
          ATLANTA, GA  30309
------------------------------------------------------------------------------------------------------------------------------------
14.       EXPERIAN INFORMATION SOLUTIONS, INC.                       Contract to provide consumer credit reporting
          425 NORTH MARTINGALE ROAD
          SUITE 600
          SCHAUMBURG, IL  60173
------------------------------------------------------------------------------------------------------------------------------------
15.       FIDELITY INVESTMENTS                                       Contract to provide trustee, record management, plan
          120 N LASALLE                                              administration and investment services in connection with the
          SUITE 2700 IN4                                             Mercury Finance Company Savings Plan (401K Plan)
          CHICAGO, IL  60602
------------------------------------------------------------------------------------------------------------------------------------
16.       FIRST ALLAMERICA FINANCIAL                                 Contract to provide administration services and excess employee

          LIFE INSURANCE COMPANY                                     benefit loss insurance in connection with employee health 
          440 LINCOLN                                                benefit plan
          WORCESTER, MA  01605
------------------------------------------------------------------------------------------------------------------------------------
17.       GEOCAPITAL CORPORATION                                     Contract to provide investment management services in 
          767 FIFTH AVENUE                                           connection with the Mercury Finance Company Retirement Plan
          NEW YORK, NY  10153
------------------------------------------------------------------------------------------------------------------------------------
18.       GOULD, STEVEN G                                            Agreement to reimburse employee relocation expenses; and
          14365 W BRAEMORE                                           Non-Compete and Termination Benefits Contract
          GREEN OAKS, IL  60048
------------------------------------------------------------------------------------------------------------------------------------
19.       AL GREEN                                                   Agreement to Reimburse Employee Relocation Expenses; and
          2480 OTTER CREEK LN                                        Non-Compete and Termination Benefits Contract
          ELGIN, IL   60123-5608
------------------------------------------------------------------------------------------------------------------------------------
20.       HARRIS TRUST COMPANY OF NEW YORK                           Contract to act as Registrar and Stock Transfer Agent in
          77 WATER STREET                                            connection with Common Stock
          NEW YORK, NY  10005
------------------------------------------------------------------------------------------------------------------------------------
21.       HARTFORD FIRE INSURANCE COMPANY                            Contract to provide commercial automobile liability insurance
          HARTFORD PLAZA
          HARTFORD, CT  06115
------------------------------------------------------------------------------------------------------------------------------------
22.       HEWITT ASSOCIATES, LLC                                     Contract to provide actuarial and consulting services in
          100 HALF DAY ROAD                                          connection with the Mercury Finance Company Retirement Plan
          LINCOLNSHIRE, IL  60069
------------------------------------------------------------------------------------------------------------------------------------
23.       INFINITI FINANCIAL SERVICES                                Automobile lease
          990 WEST 190TH STREET
          TORRANCE, CA  90502
------------------------------------------------------------------------------------------------------------------------------------
24.       ITT HARTFORD INSURANCE GROUP                               Contract to provide employer's liability insurance
          HARTFORD PLAZA
          HARTFORD, CT  08115
------------------------------------------------------------------------------------------------------------------------------------
25.       LAM, CHARLES                                               Agreement to reimburse employee relocation expenses; and
          14360 W BRAEMORE CLOSE                                     Non-Compete and Termination Benefits Contract
          GREEN OAKS, IL  60048
------------------------------------------------------------------------------------------------------------------------------------
26.       LARRY FRYKMAN OFFICE MACHINES                              Contract to provide office equipment maintenance
          281 E MESSNER DRIVE
          WHEELING, IL  60090
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex.3-2
<PAGE>
 
<TABLE> 
<CAPTION> 
----------------------------------------------------------------------------------------------------------------------------------
  NO.             NAME/ADDRESS OF PARTY                                               DESCRIPTION
              TO CONTRACT OR UNEXPIRED LEASE                                  OF CONTRACT OR UNEXPIRED LEASE
----------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C>    
27.       LLOYD'S OF LONDON                                          Contract to provide accidental death & dismemberment insurance
          CORPORATE RISK INTERNATIONAL
          11250 WAPLES MILL RD
          FAIRFAX, VA  22030
------------------------------------------------------------------------------------------------------------------------------------
28.       LUTGEN, ROBERT M.                                          Agreement to Provide Employee Relocation Expenses; and
          14881 RIVER OAKS DR.                                       Non-Compete and Termination Benefits Contract
          LINCOLNSHIRE, IL  60069
------------------------------------------------------------------------------------------------------------------------------------
29.       MARTIN PARTNERS LLC                                        Executive Placement Agreement
          224 S. MICHIGAN AVENUE
          SUITE 620
          CHICAGO, IL  60604
------------------------------------------------------------------------------------------------------------------------------------
30.       WILLIAM M. MERCER                                          Contract to provide consulting services with respect to 
          10 S WACKER DRIVE                                          employee benefit plans
          SUITE 1700
          CHICAGO, IL  60606
         
------------------------------------------------------------------------------------------------------------------------------------
31.       MERCURY FINANCE COMPANY                                    Mercury Finance Company Amended and Restated 1989 Stock Option
          100 FIELD DRIVE, SUITE 340                                 and Incentive Compensation Plan
          LAKE FOREST, IL  60045
         
------------------------------------------------------------------------------------------------------------------------------------
32.       NATIONAL LOAN EXCHANGE CORPORATION                         Contract to provide exclusive asset-marketing services for
          11475 OLDE CABIN ROAD                                      written-off loan receivables
          SUITE 2200
          ST LOUIS, MO  63141
         
------------------------------------------------------------------------------------------------------------------------------------
33.       NATIONSBANK, N.A.                                          Contract for Indemnification of NationsBank for Payment of
          ATTN:  LOUISA A. COMBS                                     Certain Drafts
          101 SOUTH TRYON STREET, 28TH FLOOR
          CHARLOTTE, NC  28255-0074
         
------------------------------------------------------------------------------------------------------------------------------------
34.       PARADATA FINANCIAL SYSTEMS                                 Contract to Provide Computer Consulting Services
          18102 CHESTERFIELD AIRPORT ROAD
          SUITE J
          CHESTERFIELD, MO  63005
------------------------------------------------------------------------------------------------------------------------------------
35.       PETERS, DAVE                                               Non-Compete and Termination Benefits Contract
          2337 TIFFANY CIRCLE
          FLORENCE, MS  39073
---------------------------------------------------------------------------------------------------------------------------------
36.       PROGRESSIVE CASUALTY INSURANCE CO                          Contracts to provide collateral protection insurance and 
          PROGRESSIVE NORTHERN INSURANCE CO.                         related services
          6300 WILSON MILLS ROAD
          MAYFIELD VILLAGE, OH  44143
         
------------------------------------------------------------------------------------------------------------------------------------
37.       RELIANCE INSURANCE COMPANY                                 Two contracts providing officer and director insurance
          77 WATER STREET
          NEW YORK, NY 10005
------------------------------------------------------------------------------------------------------------------------------------
38.       STATE MUTUAL/FIRST ALLAMERICA                              Contract to service employee welfare benefits
          440 LINDOLN STREET
          WORCHESTER, MA  01605
------------------------------------------------------------------------------------------------------------------------------------
39.       STAUTZENBACH, EDWARD G.                                    Non-Compete and Termination Benefits Contract
          610 E. FAIRVIEW
          ARLINGTON HGTS, IL  60005
------------------------------------------------------------------------------------------------------------------------------------
40.       SUNGARD RECOVERY SERVICES                                  Contract to provide computer services
          3100 ARNOLD LANE
          NORTHBROOK, IL  60062
------------------------------------------------------------------------------------------------------------------------------------
41.       TWIN CITY FIRE INSURANCE COMPANY                           Contract to provide commercial general liability insurance
          HARTFORD PLAZA
          HARTFORD, CT 06115
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex. 3-3
<PAGE>
 
<TABLE>
<CAPTION>  
----------------------------------------------------------------------------------------------------------------------------------
  NO.             NAME/ADDRESS OF PARTY                                               DESCRIPTION
              TO CONTRACT OR UNEXPIRED LEASE                                  OF CONTRACT OR UNEXPIRED LEASE
----------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C>                                                          
42.       UNITED FINANCIAL CASUALTY COMPANY                          Collateral protection insurance and related services
          747 ALPHA DRIVE
          HIGHLAN HEIGHTS, OH  44143
----------------------------------------------------------------------------------------------------------------------------------
43.       US STORAGE                                                 Contract to provide storage space
          177 DEER LAKE ROAD
          DEERFIELD, IL  60015
----------------------------------------------------------------------------------------------------------------------------------
44.       VISION SERVICES                                            Contract to provide administrative services and vision care
          3333 QUALITY DRIVE                                         benefits
          RANCHO CORDOVA, CA  95670
          
----------------------------------------------------------------------------------------------------------------------------------
45.       WORLDCOM                                                   Contract to provide long-distance communication services
          ATTN: RONALD STUART - LEGAL DEPT
          6929 N LAKEWOOD AVENUE
          TULSA, OK  74117
----------------------------------------------------------------------------------------------------------------------------------
46.       XEROX                                                      Contract to provide office equipment maintenance and service
          350 S NORTHWEST HIGHWAY
          PARK RIDGE, IL  60068
----------------------------------------------------------------------------------------------------------------------------------
47.       XYPLEX                                                     Contract to provide computer network services
          295 FOSTER STREET
          LITTLETON, MA  01460
----------------------------------------------------------------------------------------------------------------------------------
48.       FOLMAR & ASSOC.                                            Real Property Lease
          P.O. BOX 16765                                             Store # 280:  Meridian, MS
          MOBILE, AL  36616
----------------------------------------------------------------------------------------------------------------------------------
49.       ATLANTIC STRUCTURES, L.P.                                  Real Property Lease
          C/O THE RUBENSTEIN CO.                                     Store #189:  Marietta, GA
          SUITE 201
          TWO LOGAN SQUARE
          PHILADELPHIA, PA  19103
----------------------------------------------------------------------------------------------------------------------------------
50.       CLAUDE DEBOTTON AS AGENT FOR THE DEBOTTON TRUST            Real Property Lease
          1001 BALTIMORE PIKE                                        Store # 325 (Philadelphia West):  Broomall, PA
          SPRINGFIELD, PA 19064
----------------------------------------------------------------------------------------------------------------------------------
51.       BANK ONE OF CHICAGO,                                       Real Property Lease
          AS TRUSTEE FOR TRUST NO. R3772                             Midland:  7541 Northwestern Avenue, Chicago, IL
          LAND TRUST DEPARTMENT
          ATTN:  CATHY MARTIN
          14 SOUTH LAGRANGE
          LAGRANGE, IL  60525
----------------------------------------------------------------------------------------------------------------------------------
52.       BENNETT & GRIGG ASSOCIATES, INC.                           Real Property Lease
          806-M HIGHWAY 66 S                                         Store # 193:  Kernersville, NC
          KERNERSVILLE, NC  27284
----------------------------------------------------------------------------------------------------------------------------------
53.       BRISCOE INVESTMENTS LIMITED PARTNER                        Real Property Lease
          250 S. EXEUCTIVE DRIVE                                     Store # 215:  Hales Corner, WI
          SUITE 301
          BROOKFIELD, WI  53005
----------------------------------------------------------------------------------------------------------------------------------
54.       BYRAM PROPERTIES                                           Real Property Lease
          510 S. CONGRESS, SUITE 400                                 Store # 137:  Austin, TX
          AUSTIN, TX  78704
----------------------------------------------------------------------------------------------------------------------------------
55.       ATLANTA SOUTHERN BUSINESS PARK LTD.                        Real Property Lease
          3000 CORPORATE CENTER DR., SUITE 300                       Store # 212 (Atlanta South):  Morrow, GA
          P.O. BOX 870485
          MORROW, GA. 30287
----------------------------------------------------------------------------------------------------------------------------------
56.       PIERCE PROPERTIES LTD.                                     Real Property Lease
          4041 E. THOMAS ROAD, SUITE 200                             Store # 162:  Phoenix, AZ
          PHOENIX, AZ  85108
----------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex. 3-4
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
     NO.       NAME/ADDRESS OF PARTY                                                        DESCRIPTION
           TO CONTRACT OR UNEXPIRED LEASE                                          OF CONTRACT OR UNEXPIRED LEASE     
-----------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C> 
     57.  ALLEN DEVELOPMENT GROUP, INC.                              Real Property Lease
          5210 ARMOUR ROAD, SUITE 300                                Store # 113:  Columbus Auto, Columbus, GA
          COLUMBUS, GA  31904
------------------------------------------------------------------------------------------------------------------------------------
     58.  DELTA BUILDING INC.                                        Real Property Lease
          C/O MR. FILO COATS                                         Store # 820:  Grenada, MS
          P.O. BOX 1443
          GRENADA, MS  38904
------------------------------------------------------------------------------------------------------------------------------------
     59.  DELTA PLAZA ASSOCIATES                                     Real Property Lease
          10132 US HIGHWAY 19                                        Store # 223:  Port Richey, FL
          PORT RICHEY, FL  34668
------------------------------------------------------------------------------------------------------------------------------------
     60.  DESERT INN OFFICE CENTER II                                Real Property Lease
          2785 E. DESERT INN RD., SUITE 130                          Store # 142:  Las Vegas, NV
          LAS VEGAS, NV  89121
------------------------------------------------------------------------------------------------------------------------------------
     61.  DUKE REALTY INVESTMENTS, INC.                              Real Property Lease
          4225 NAPERVILLE ROAD, SUITE 1500                           Location:  100 Field Drive, Suite 340, Lake Forest, IL  6045
          LISLE, IL  60532
------------------------------------------------------------------------------------------------------------------------------------
     62.  HAWTHORN ASSOCIATES                                        Real Property Lease
          C/O EATON & LAUTH REAL ESTATE SERVICES                     Store # 188:  Indianapolis North, IN
          12220 N. MERIDIAN ST., SUITE 175
          CARMEL, IN 46032
------------------------------------------------------------------------------------------------------------------------------------
     63.  FIRST CAPITAL LANSING PROPERTIES                           Real Property Lease
          6810 S. CEDAR STREET, SUITE 3C                             Store # 304:  Lansing, MI
          LANSING, MI  48911
------------------------------------------------------------------------------------------------------------------------------------
     64.  HARDING DAHM & CO., INC.                                   Real Property Lease
          P.O. BOX 1448                                              Store # 306:  Fort Wayne, IN
          FT. WAYNE, IN. 46858-1448
------------------------------------------------------------------------------------------------------------------------------------
     65.  GALAXY DEVELOPMENT LTD.                                    Real Property Lease
          2511 MILES ROAD, NORTH F                                   Store # 246:  Cleveland, OH
          CLEVELAND, OH  44125-5499
------------------------------------------------------------------------------------------------------------------------------------
     66.  GLENWOOD SQUARE SHOPPING CENTER                            Real Property Lease
          1000 NATIONSBANK CENTER                                    Store # 139:  Norfolk, VA
          ONE COMMERCIAL
          NORFOLK, VA  23510
------------------------------------------------------------------------------------------------------------------------------------
     67.  RIVERAIN LIMITED PARTNERSHIP                               Real Property Lease
          C/O LARRY STEIN REALTY                                     Store # 311 (Dayton):  Centerville, OH
          2 RIVERPLACE, SUITE 300
          P.O. BOX 544
          DAYTON, OH 45401
------------------------------------------------------------------------------------------------------------------------------------
     68.  HALL BROTHERS INVESTMENTS                                  Real Property Lease
          P.O. BOX 55686                                             Store # 224:  Lexington, KY
          LEXINGTON, KY  40555-5686
------------------------------------------------------------------------------------------------------------------------------------
     69.  HOUMA BUILDING PARTNERSHIP                                 Real Property Lease
          1340 W. TUNNEL BOULEVARD                                   Store # 290:  Houma, LA
          SUITE 600
          HOUMA, LA  70360
------------------------------------------------------------------------------------------------------------------------------------
     70.  HUBBARD REALTY OF WINSTON-SALEM                            Real Property Lease
          285 S. STRATFORD ROAD                                      Store # 265:  Winston-Salem, NC
          WINSTON-SALEM, NC  27013
------------------------------------------------------------------------------------------------------------------------------------
     71.  AXIS COMMERCIAL REALTY, INC.                               Real Property Lease
          1660 S. ALBION STREET                                      Store # 254:  Northglenn, CO
          SUTIE 806
          DENVER, CO  80222
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex. 3-5
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
     NO.       NAME/ADDRESS OF PARTY                                                        DESCRIPTION
           TO CONTRACT OR UNEXPIRED LEASE                                          OF CONTRACT OR UNEXPIRED LEASE     
------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C> 
     72.  JEFFERSON PARK PROPERTIES                                  Real Property Lease
          C/O SIMON PROPERTIES                                       Store # 606:  Middleburg Heights, OH
          4635 RICHMOND RD., SUITE 105
          WARRENSVILLE HEIGHTS, OH  44125
------------------------------------------------------------------------------------------------------------------------------------
     73.  KK PARTNERSHIP                                             Real Property Lease
          28901 CLEMENS ROAD, UNIT 105                               Store # 289 (Cleveland West):  Westlake, OH
          WESTLAKE, OH  44145
------------------------------------------------------------------------------------------------------------------------------------
     74.  BELL WEST SHOPPING CENTER                                  Real Property Lease
          C/O MPB REALTY SERVICES                                    Store # 192:  Phoenix, AZ
          200 E. MONTEREY WAY
          PHOENIX, AZ  85012
------------------------------------------------------------------------------------------------------------------------------------
     75.  LAKESIDE DEVELOPMENT CO.                                   Real Property Lease
          955 EXECUTIVE PARKWAY, SUITE 210                           Store # 217 (Roanoke):  Salem, VA
          ST. LOUIS, MO  63141
------------------------------------------------------------------------------------------------------------------------------------
     76.  LANDMARK COMMERCIAL INC.                                   Real Property Lease
          5022 WRIGHTSVILLE AVENUE                                   Store # 307:  Wilmington, NC
          WILMINGTON, NC  28403
------------------------------------------------------------------------------------------------------------------------------------
     77.  PACESETTER ENTERPRISES                                     Real Property Lease
          C/O A.C. GOLD AND COMPANY                                  Store # 208:  South Holland, IL
          2711 W. 183RD ST., SUITE 211
          HOMEWOOD, IL  60430
------------------------------------------------------------------------------------------------------------------------------------
     78.  MCGINNIS PARTNERS                                          Real Property Lease
          555 E. LOOCKERMAN STREET                                   Store # 303:  Dover, DE
          DOVER, DE  19901
------------------------------------------------------------------------------------------------------------------------------------
     79.  MEGA PROPERTIES                                            Real Property Lease
          4849 N. MILWAUKEE AVENUE                                   Store # 152 (Lawrence):  Chicago, IL
          SUITE 302
          CHICAGO, IL  60630
------------------------------------------------------------------------------------------------------------------------------------
     80.  MITCHELL & NANCY NANCE                                     Real Property Lease
          5301 BRAGG BOULEVARD                                       Store # 109:  Fayette Auto, Fayetteville, NC
          FAYETTEVILLE, NC  28303
------------------------------------------------------------------------------------------------------------------------------------
     81.  CANYON CREEK NATIONAL BANK                                 Real Property Lease
          333 W. CAMPBELL ROAD                                       Store # 226:  Richardson, TX
          RICHARDSON, TX  75080
------------------------------------------------------------------------------------------------------------------------------------
     82.  NORTHBROOK LTD                                             Real Property Lease
          C/O SLR MANAGEMENT CORP.                                   Store # 133:  No. Charleston, NC
          P.O. BOX 1524
          FAIRFIELD, NJ  07007
------------------------------------------------------------------------------------------------------------------------------------
     83.  O'REILLY INVESTMENT COMPANY                                Real Property Lease
          P.O. BOX 1897                                              Store # 333:  Springfield, MO
          SPRINGFILED, MO  65801
------------------------------------------------------------------------------------------------------------------------------------
     84.  ORANGE TREE PROPERTIES                                     Real Property Lease
          2000 WELLS ROAD, SUITE B                                   Store # 136:  Jacksonville Auto, Orange Park, FL
          ORANGE PARK, FL  32073
------------------------------------------------------------------------------------------------------------------------------------
     85.  BRENNER LAND TRUST                                         Real Property Lease
          C/O WILLIAM F. BRENNER                                     Store # 187:  Joliet, IL
          2110 S. WABASH
          CHICAGO, IL  60616
------------------------------------------------------------------------------------------------------------------------------------
     86.  PATTON JR., JOSEPH D.                                      Real Property Lease
          32 VICK PARK "B"                                           Store # 335:  Rochester, NY
          ROCHESTER, NY  14607
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex. 3-6
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
NO.          NAME/ADDRESS OF PARTY                                                         DESCRIPTION
          TO CONTRACT OR UNEXPIRED LEASE                                          OF CONTRACT OR UNEXPIRED LEASE     
------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C> 
     87.  ROCKWELL BUILDING PARTNERSHIP                              Real Property Lease
          C/O MR. ELDON L. HOYLE                                     Store # 111:  Junction City, KS
          HOYLE REALTORS
          419 N. WASHINGTON ST.
          P.O. BOX 845
          JUNCTION CITY, KS. 66441-0845
------------------------------------------------------------------------------------------------------------------------------------
     88.  PEMBROKE VIRGINIA ASSOCIATES                               Real Property Lease
          281 INDEPENDENCE BOULEVARD                                 Store # 107:  Virginia Beach, VA
          VIRGINIA BEACH, VA  23462-2979
------------------------------------------------------------------------------------------------------------------------------------
     89.  PORTEN, MICHAEL L.                                         Real Property Lease
          P.O. BOX 941                                               Store # 108:  Hinesville, GA
          HINESVILLE, GA  31313
------------------------------------------------------------------------------------------------------------------------------------
     90.  PRINCIPLE DEVELOPMENT LTD.                                 Real Property Lease
          1001 EISENHOWER BOULEVARD                                  Store # 326:  Johnstown, PA
          SUITE A
          JOHNSTOWN, PA  15904
------------------------------------------------------------------------------------------------------------------------------------
     91.  OAK CREEK OFFICE PARK L.L.C.                               Real Property Lease
          C/O ASSET MANAGEMENT ASSOCIATES                            Store # 332:  Flint, MI
          1309 S. LINDEN AVE., SUITE A
          FLINT, MI  48532
------------------------------------------------------------------------------------------------------------------------------------
     92.  BENDERSON, RANDALL 1993-1                                  Real Property Lease
          570 DELAWARE AVENUE                                        Store # 334:  Buffalo, NY
          BUFFALO, NY  14202
------------------------------------------------------------------------------------------------------------------------------------
     93.  RBR&ST                                                     Real Property Lease
          P.O. BOX 1636                                              Store # 310:  Asheville, NC
          ASHEVILLE, NC  28802-1636
------------------------------------------------------------------------------------------------------------------------------------
     94.  REALTY ASSOCIATES, INC.                                    Real Property Lease
          2904 B TAZEWELL PIKE                                       Store # 207:  Knoxville, TN
          KNOXVILLE, TN  37918
------------------------------------------------------------------------------------------------------------------------------------
     95.  GILBERT CUBBAGE CPM                                        Real Property Lease
          CASE POMEROY PROPERTIES                                    Store # 203 (Orlando West):  Orlando, FL
          10407 CENTURION PARKWAY, N., SUITE 108
          JACKSONVILLE, FL  32256
------------------------------------------------------------------------------------------------------------------------------------
     96.  SMETANA 8876 ASSOCIATES                                    Real Property Lease
          8876 GULF FREEWAY, SUITE 240                               Store # 138:  Houston, TX
          HOUSTON, TX  77017
                                                                     Store # 5008:  Houston Recovery, Houston, TX
------------------------------------------------------------------------------------------------------------------------------------
     97.  SPIEGEL, SAM AND SIMONE                                    Real Property Lease
          10 FAIRWAY DRIVE, SUITE 114                                Store # 144:  West Palm Beach, FL
          DEERFIELD BEACH, FL  33441
------------------------------------------------------------------------------------------------------------------------------------
     98.  STATE STREET INVESTORS OF ROCKFORD                         Real Property Lease
          5301 E. STATE STREET, SUITE 205                            Store # 196:  Rockford, IL
          ROCKFORD, IL  61108
------------------------------------------------------------------------------------------------------------------------------------
     99.  STUART HOFFMAN & RICHARD ROGGE                             Real Property Lease
          7925 N. 76TH STREET                                        Store # 194:  Milwaukee, WI
          MILWAUKEE, WI  52223
------------------------------------------------------------------------------------------------------------------------------------
    100.  TOWNE BROTHERS REALTY                                      Real Property Lease
          7206 HILLSIDE                                              Store # 140:  Hillside, IL
          SPRING GROVE, IL  60081
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex. 3-7
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------------------------------------
NO.          NAME/ADDRESS OF PARTY                                                              DESCRIPTION
          TO CONTRACT OR UNEXPIRED LEASE                                               OF CONTRACT OR UNEXPIRED LEASE     
------------------------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                        <C>  
    101.  PARAMOUNT DEVELOPMENT CORP.                                Real Property Lease
          4710 OLEANDER DR.                                          Store # 339:  Myrtle Beach, SC
          MYRTLE BEACH, SC  29477
------------------------------------------------------------------------------------------------------------------------------------
    102.  TURN-KEY PARTNERSHIP                                       Real Property Lease
          2310 VILLAGE PARK COURT, NORTH                             Store # 341:  Mansfield, OH
          MANSFILED, OH  44906
------------------------------------------------------------------------------------------------------------------------------------
    103.  TWO ORACLE LIMITED COMPANY                                 Real Property Lease
          C/O ROMANO REAL ESTATE CORPORATION                         Store # 274:  Tucson, AZ
          3900 E. VIA PALOMITA
          TUCSON, AZ  85718
------------------------------------------------------------------------------------------------------------------------------------
    104.  VIRGINIA BEACH ASSOCIATES                                  Real Property Lease
          281 INDEPENDENCE BOULEVARD                                 Store # 5002 (Virginia Beach Recovery):  Virginia Beach, VA
          VIRGINIA BEACH, VA  23462-2979
------------------------------------------------------------------------------------------------------------------------------------
    105.  WRUBEL DEVELOPMENT                                         Real Property Lease
          #7 EXECUTIVE ESTATES DRIVE                                 Store # 123:  Belleville Auto Lot, Belleville, IL
          MILLSTADT, IL  62260
------------------------------------------------------------------------------------------------------------------------------------
    106.  YOUNG HO KIM                                               Real Property Lease
          3054-A BERKMAR DRIVE                                       Store # 222:  Charlottesville, VA
          CHARLOTTESVILLE, VA  22011
------------------------------------------------------------------------------------------------------------------------------------
    107.  3701 COMMERCIAL LLC                                        Real Property Lease
          333 SKOKIE BOULEVARD, SUITE 111                            Northbrook Computer Center, Northbrook, Illinois
          NORTHBROOK, IL  60062
------------------------------------------------------------------------------------------------------------------------------------
    108.  4905 TILGHMAN, L.P.                                        Real Property Lease
          C/O SOMERSET PROPERTIES, INC.                              Store # 328:  Allentown, PA
          768 N. BETHLEHEM PIKE, SUITE 203
          LOWER GWYNEDD, PA  19002
------------------------------------------------------------------------------------------------------------------------------------
    109.  7272 CORPORATION                                           Real Property Lease
          7887 SAN FELIPE, SUITE 237                                 Store # 197:  Houston North, TX
          HOUSTON, TX  77063
------------------------------------------------------------------------------------------------------------------------------------
    110.  ASSED, JED                                                 Undertaking Letter Agreement dated 1/13/98
          11411 BLACKHAWK
          HOUSTON, TX  77089
------------------------------------------------------------------------------------------------------------------------------------
    111.  BIGGERS, SABRINA K.                                        Undertaking Letter Agreement dated 1/16/98
          1580 CANTER DRIVE
          FLORISSANT, MO  63033
------------------------------------------------------------------------------------------------------------------------------------
    112.  BOKSA, BONNIE                                              Undertaking Letter Agreement dated 9/22/97
          1701 W. BELMONT
          LIBERTYVILLE, IL  60048
------------------------------------------------------------------------------------------------------------------------------------
    113.  BOROWIAK, LARRY                                            Undertaking Letter Agreement dated 3/31/97
          1600 SURRIDGE COURT
          MUNDELEIN, IL  60060
------------------------------------------------------------------------------------------------------------------------------------
    114.  BOSSON, RICHARD                                            Undertaking Letter Agreement dated 4/23/97
          3300 COVE CAY DRIVE
          APT 1-G
          CLEARWATER, FL  34620
------------------------------------------------------------------------------------------------------------------------------------
    115.  BRINCAT, JEFFREY                                           Undertaking Letter Agreement dated 6/2/97
          16 CAMBRIDGE DRIVE
          HAWTHORNE WOODS, IL  60047
------------------------------------------------------------------------------------------------------------------------------------
    116.  BRINCANT, JOHN JR.                                         Undertaking Letter Agreement dated 6/16/97
          21357 W. BOSCHOME
          KILDEER, IL  60047
------------------------------------------------------------------------------------------------------------------------------------
    117.  CAREY, GEORGE                                              Undertaking Letter Agreement dated 4/15/97
          794 N. OAKWOOD AVENUE
          LAKE FOREST, IL  60045
------------------------------------------------------------------------------------------------------------------------------------
</TABLE> 

                                    Ex. 3-8
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------- 
NO.            NAME/ADDRESS OF PARTY                               DESCRIPTION 
          TO CONTRACT OR UNEXPECTED LEASE                 OF CONTRACT OR UNEXPIRED LEASE
------------------------------------------------------------------------------------------------------- 
<S>                                                      <C>  
118.  CHOOKASZIAN, DENNHIS H.                            Indemnification Agreement dated 3/20/97       
      C/O KIRKLAND AND ELLIS                                                                           
      200 EAST RANDOLPH                                                                                
      CHICAGO, IL  60601                                                                               
---------------------------------------------------------------------------------------------------------
119.  CROFT, WILLIAM C.                                  Indemnification Agreement dated 3/20/97       
      C/O KIRKLAND AND ELLIS                                                                           
      200 EST RANDOLPH                                                                                 
      CHICAGO, IL  60601                                                                               
---------------------------------------------------------------------------------------------------------
120.  FRANCIS, MIKE                                      Undertaking Letter Agreement dated 1/19/98    
      319 SOUTH 2ND STREET                                                                             
      VIVIAN, LA  71082                                                                                
---------------------------------------------------------------------------------------------------------
121.  GORDON, EDWARD                                     Undertaking Letter Agreement dated 7/2/97     
      C/O LEVIN MIDDLEBROOKS THOMAS ET AL                                                              
      ATTN:  JAMES R. GREEN                                                                            
      P.O. BOX 12308                                                                                   
      316 S. BAYLEN STREET                                                                             
      PENSACOLA, FL  32581                                                                             
---------------------------------------------------------------------------------------------------------
122.  GOULD, STEVEN                                      Indemnification Agreement dated 4/6/89        
      14365 W. BRAEMORE CLOSE                                                                          
      GREEN OAKS, IL  60048                                                                            
---------------------------------------------------------------------------------------------------------
123.  GREEN, AL                                          Undertaking Letter Agreement dated 1/12/98    
      2480 OTTER CREEK LANE                                                                            
      ELGIN, IL  60123-5608                                                                            
---------------------------------------------------------------------------------------------------------
124.  GUNTHER, JOHN                                      Undertaking Letter Agreement dated 6/17/98    
      3456 ASHMORE LANE                                                                                
      PACE, FL  32571                                                                                  
---------------------------------------------------------------------------------------------------------
125.  GUTHRIE, JIM                                       Undertaking Letter Agreement dated 1/30/98    
      18352 DALLAS PARKWAY                                                                             
      BOX 136-337                                                                                      
      DALLAS, TX  75287                                                                                
---------------------------------------------------------------------------------------------------------
 126.  HAILEY, STEVEN A.                                  Undertaking Letter Agreement dated 3/24/98   
       1252 HWY 1194                                                                                   
       MARKSVILLE, LA  71351                                                                           
-------------------------------------------------------------------------------------------------------
 127.  HOLMES, JOHN                                       Undertaking Letter Agreement dated 3/12/98   
       133 WHITELOCK DRIVE                                                                             
       MARIETTA, GA  30064                                                                             
-------------------------------------------------------------------------------------------------------
 128.  IKERD, GAY                                         Undertaking Letter Agreement dated 2/2/98    
       3772 HIGHWAY 452                                                                                
       MARKSVILLE, LA  71351                                                                           
-------------------------------------------------------------------------------------------------------
 129.  JOHNSON, CLIFFORD R.                               Indemnification Agreement dated 3/20/97      
       C/O KIRKLAND AND ELLIS                                                                          
       200 EAST RANDOLPH                                                                               
       CHICAGO, IL  60601                                                                              
-------------------------------------------------------------------------------------------------------
 130.  JOHNSON, THELMA                                    Undertaking Letter Agreement dated 1/30/98   
       1310 HAMBLEH ROAD                                                                               
       HUMBLE, TX  77339                                                                               
-------------------------------------------------------------------------------------------------------
 131.  JOYNER, BUD                                        Undertaking Letter Agreement dated 1/13/98   
       1725 HOLMAN ROAD                                                                                
       HOSCHTON, GA  30548                                                                             
-------------------------------------------------------------------------------------------------------
 132.  KAPLAN, DAVE                                       Undertaking Letter Agreement dated 1/13/98   
       1877 NW 99TH AVENUE                                                                             
       PLANTATION, FL  33324                                                                           
-------------------------------------------------------------------------------------------------------
</TABLE> 

                                   Ex.  3-9

<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------- 
NO.            NAME/ADDRESS OF PARTY                               DESCRIPTION 
          TO CONTRACT OR UNEXPECTED LEASE                 OF CONTRACT OR UNEXPIRED LEASE
------------------------------------------------------------------------------------------------------- 
<S>                                                 <C>  
 133.  KURCZYNSKI, GREG                             Undertaking Letter Agreement dated 1/30/98   
       62 WINDSOR DRIVE                                                                                
       ENGLEWOOD, FL  34226-0008                                                                       
-------------------------------------------------------------------------------------------------------
 134.  LABEACH, MARJORIE                            Undertaking Letter Agreement dated 1/2/98    
       1275 RIVER VISTA ROW, #137                                                                      
       SAN DIEGO, CA  92111                                                                            
-------------------------------------------------------------------------------------------------------
 135.  LAIBLIN, WALTER A.                           Undertaking Letter Agreement Dated 6/17/98   
       1736 S. HIAWASSEE ROAD                                                                          
       APT. 36                                                                                         
       ORLANDO, FL 32835-6406                                                                          
-------------------------------------------------------------------------------------------------------
 136.  LAM, CHARLES                                 Undertaking Letter Agreement dated 1/5/98    
       9050 PARK BLVD. #8                                                                              
       LARGO, FL  33777                                                                                
-------------------------------------------------------------------------------------------------------
 137.  LAWSON, RICHARD                              Undertaking Letter Agreement dated 3/13/98   
       511-6 BAYMEADOWS ROAD, #106                                                                     
       JACKSONVILLE, FL  32217                                                                         
-------------------------------------------------------------------------------------------------------
 138.  LOEF, JAMES                                  Undertaking Letter Agreement dated 9/17/97   
       273 SHADOW BEND                              
       WHEELING, IL  60090                                                                             
-------------------------------------------------------------------------------------------------------
 139.  LUCE, JAMES D.                               Undertaking Letter Agreement dated 1/12/98   
       7514 NEBRASKA AVE.                                                                              
       NEW PORT RICHEY, FL  34653                                                                      
-------------------------------------------------------------------------------------------------------
 140.  MCDONALD, JANETH                             Undertaking Letter Agreement dated 1/2/98    
       429 SHERIDAN ROAD, #10                                                                          
       HIGHWOOD, IL  60040                                                                             
-------------------------------------------------------------------------------------------------------
 141.  MCNALLY, ANDREW IV                           Indemnification Agreement dated 3/20/97            
       C/O KIRKLAND AND ELLIS                                                                          
       200 EAST RANDOLPH                                                                               
       CHICAGO, IL  60601                                                                              
-------------------------------------------------------------------------------------------------------
 142.  MCPHEE, BRUCE I.                             Indemnification Agreement dated 3/20/97            
       C/O KIRKLAND AND ELLIS                                                                          
       200 EAST RANDOLPH                                                                               
       CHICAGO, IL  60601                                                                              
-------------------------------------------------------------------------------------------------------
 143.  METZ, DENISE                                 Undertaking Letter Agreement dated 2/3/98          
       1445 CHURCHHILL CT                                                                              
       APT #106 K                                                                                      
       MUNDELEIN, IL  60060                                                                            
-------------------------------------------------------------------------------------------------------
 144.  MIZEL, GERALD                                Undertaking Letter Agreement                       
       15 COUNTRY LANE                                                                                 
       NORTHFIELD, IL  60093                                                                           
-------------------------------------------------------------------------------------------------------
 145.  OWEN, BRAD                                   Undertaking Letter Agreement dated 9/25/97         
       1752 NORTH SHORE AVENUE                                                                         
       CHICAGO, IL  60626                                                                              
-------------------------------------------------------------------------------------------------------
 146.  PARKS, KENNETH                               Undertaking Letter Agreement dated 6/18/98         
       373 WINDERMERE BLVD.                                                                            
       ALEXANDRIA, LA  71303                                                                           
-------------------------------------------------------------------------------------------------------
 147.  PERNA, REGINA                                Undertaking Letter Agreement dated 5/28/97         
       6871 W. MT VERON COURT                                                                          
       GURNEE, IL  60031                                                                               
-------------------------------------------------------------------------------------------------------
 148.  PETERS, DAVE                                 Undertaking Letter Agreement dated 1/98             
       2337 TIFFANY CIRCLE                                                                             
       FLORENCE, MS  39073                                                                             
-------------------------------------------------------------------------------------------------------
</TABLE> 

                                   Ex. 3-10
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------- 
NO.            NAME/ADDRESS OF PARTY                               DESCRIPTION 
          TO CONTRACT OR UNEXPECTED LEASE                 OF CONTRACT OR UNEXPIRED LEASE
------------------------------------------------------------------------------------------------------- 
<S>                                                       <C> 
 149.  PIATKIEWIC, BOB                                    Undertaking Letter Agreement dated 1/21/98   
       1521 ARLINGTON AVENUE                                                                           
       BATON ROUGE, LA  70808                                                                          
-------------------------------------------------------------------------------------------------------
 150.  POND, CHARLEY                                      Undertaking Letter Agreement dated 4/1/97    
       25985 N. OAK HILL ROAD                                                                          
       LAKE BARRINGTON, IL  60010                                                                      
-------------------------------------------------------------------------------------------------------
 151.  PORTER, DON                                        Undertaking Letter Agreement dated 1/16/98   
       2500 CHAPELWOOD DRIVE                                                                           
       PITTSBURGH, PA  15241                                                                           
-------------------------------------------------------------------------------------------------------
 152.  PRATT, JOHN                                        Indemnification Agreement dated 4/6/89       
       15210 LAUREL LANE S.                                                                            
       PEMBROKE PINES, FL  33207                                                                       
-------------------------------------------------------------------------------------------------------
 153.  SCHUBLE, GARY                                      Undertaking Letter Agreement dated 1/12/98   
       2657 LOTA COURT                                                                                 
       ORANGE PARK, FL  32073                                                                          
-------------------------------------------------------------------------------------------------------
 154.  SHANER, CAROLYN                                    Undertaking Letter Agreement dated 10/6/97   
       401 LONGOASTLE DRIVE, #4                                                                        
       GREEN CASTLE, IN  46135                                                                         
-------------------------------------------------------------------------------------------------------
 155.  SMITH, DAN G.                                      Undertaking Letter Agreement dated 1/9/98    
       3114 PEBBLE HILL CT.                                                                            
       SELLERSBURG, IN  47172                                                                          
-------------------------------------------------------------------------------------------------------
 156.  SMITH, ROBERT L.                                   Undertaking Letter Agreement dated 1/27/98   
       122 FAIRBURY DR.                                                                                
       GOOSE CREEK, SC  29445                                                                          
-------------------------------------------------------------------------------------------------------
 157.  SNYDER, LOREN                                      Undertaking Letter Agreement dated 6/17/98   
       2308 BRIAR LANE                                                                                 
       LINDENHURST, IL  60046                                                                          
-------------------------------------------------------------------------------------------------------
 158.  STAUTZENBACH, EDWARD G.                            Undertaking Letter Agreement dated 10/20/97  
       610 E. FAIRVIEW                                                                                 
       ARLINGTON HGTS, IL  60005                                                                       
-------------------------------------------------------------------------------------------------------
 159.  STEINGRABER, FRED G.                               Indemnification Agreement dated 3/20/97      
       C/O KIRKLAND AND ELLIS                                                                          
       200 EAST RANDOLPH                                                                               
       CHICGO, IL  60601                                                                               
-------------------------------------------------------------------------------------------------------
 160.  STEPHENS, JOHN                                     Undertaking Letter Agreement dated 1/15/98   
       8154 HWY 107                                                                                    
       MANSURA, LA  71350-0000                                                                         
-------------------------------------------------------------------------------------------------------
 161.  TAYLOR, DAVE                                       Undertaking Letter Agreement dated 1/98      
       1720 ARABIAN LANE                                                                               
       PALM HARBOR, FL  34685                                                                          
-------------------------------------------------------------------------------------------------------
 162.  TERRA, ESTATE OF DANIEL J.                         Undertaking Letter Agreement dated 9/15/97   
       528 ROSLYN                                                                                      
       KENILWORTH, IL  60043                                                                           
-------------------------------------------------------------------------------------------------------
 163.  TILSON, SHEILA                                     Undertaking Letter Agreement dated 5/27/97   
       1023 SHADY TREE LANE                                                                            
       WHEELING, IL  60090                                                                             
-------------------------------------------------------------------------------------------------------
 164.  VALLEM, BRADLEY                                    Undertaking Letter Agreement dated 4/9/97    
       206 LONSDALE                                                                                    
       PROSPECT HEIGHTS, IL  60070                                                                     
-------------------------------------------------------------------------------------------------------
 165.  WALKER, CLIFF                                      Undertaking Letter Agreement dated 1/14/98   
       1439 MARKEL DRIVE                                                                               
       WINTERGARDEN, FL  34787                                                                         
-------------------------------------------------------------------------------------------------------
</TABLE> 

                                   Ex. 3-11
<PAGE>
 
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------- 
NO.            NAME/ADDRESS OF PARTY                               DESCRIPTION 
          TO CONTRACT OR UNEXPECTED LEASE                 OF CONTRACT OR UNEXPIRED LEASE
------------------------------------------------------------------------------------------------------- 
<S>                                                       <C> 
 166.  WATSON, CHARLES                                    Undertaking Letter Agreement dated 1/19/98   
       9014 MARVA DRIVE                                                                                
       SHREVEPORT, LA  71118                                                                           
-------------------------------------------------------------------------------------------------------
 167.  WICKLANDER, PHILIP                                 Indemnification Agreement dated 3/20/97      
       C/O KIRKLAND AND ELLIS                                                                          
       200 EAST RANDOLPH                                                                               
       CHICAGO, IL  60601                                                                              
-------------------------------------------------------------------------------------------------------
 168.  WILT, BILL                                         Undertaking Letter Agreement dated 12/20/97  
       6421 W. CORONA DRIVE                                                                            
       CHANDLER, AZ  85226                                                                             
-------------------------------------------------------------------------------------------------------
 169.  WOODALL, RALPH                                     Undertaking Letter Agreement dated 1/98      
       186 BLANCO PEAK                                                                                 
       KERNERSVILLE, NC  27284                                                                         
-------------------------------------------------------------------------------------------------------
 170.  ZLATOS, FRANK                                      Undertaking Letter Agreement dated 1/23/98   
       770 THOMASZEWSKI                                                                                
       LEMONT, IL  60439                                                                               
-------------------------------------------------------------------------------------------------------
</TABLE>

                                   Ex. 3-12
<PAGE>
 
                        UNITED STATES BANKRUPTCY COURT
                     FOR THE NORTHERN DISTRICT OF ILLINOIS
                               EASTERN DIVISION

 
In re:                    )
                          ) Case No. 98 B 20763
MERCURY FINANCE COMPANY,  ) Honorable Erwin I. Katz
a Delaware Corporation,   ) Chapter 11
                          )
          Debtor.         )
_________________________ )



                       SUPPLEMENTAL MODIFICATION TO THE
                     SECOND AMENDED PLAN OF REORGANIZATION
                          OF MERCURY FINANCE COMPANY
                          --------------------------
                                        

          Mercury Finance Company, Debtor and Debtor-In-Possession, hereby
submits the following supplemental modification to the Second Amended Plan of
Reorganization of Mercury Finance Company Under Chapter 11 of the Bankruptcy
Code (the "Plan") dated as of December 29, 1998:


          1.  Exhibit 3 to the Plan is hereby modified to read in its entirety
as attached hereto as Exhibit A and incorporated herein.

                                   Ex. 3-28
<PAGE>
 
                                   EXHIBIT A
                                   ---------



                        UNITED STATES BANKRUPTCY COURT
                     FOR THE NORTHERN DISTRICT OF ILLINOIS
                               EASTERN DIVISION

In re:                           )
                                 )    Case No. 98 B 20763
MERCURY FINANCE COMPANY,         )    Honorable Erwin I. Katz
a Delaware Corporation,          )    Chapter 11
                                 )
          Debtor.                )
________________________________ )



                  MODIFICATIONS TO THE SECOND AMENDED PLAN OF
                  -------------------------------------------
                   REORGANIZATION OF MERCURY FINANCE COMPANY
                   -----------------------------------------
                                        

          Mercury Finance Company, Debtor and Debtor-In-Possession, hereby
submits the following modifications (the "Plan Modifications") to the Second
Amended Plan of Reorganization of Mercury Finance Company Under Chapter 11 of
the Bankruptcy Code (the "Plan")/2/ dated as of December 29, 1998:

          1.   Certain terms, the definitions for which are set forth in Article
1 of the Plan, are hereby redefined as follows:

               a.  The term "DISTRIBUTION RECORD DATE" is hereby modified to
read in its entirety as follows :


               "DISTRIBUTION RECORD DATE means the Business Day immediately
preceding the Effective Date."


               b.  The term "EXCESS CASH" is hereby modified to read in its
entirety as follows:

____________________
/2/  Capitalized terms as used in this Plan Modification shall have  
the meanings ascribed to them in the Plan, unless otherwise defined herein. In 
addition, in accordance with Article 1 of the Plan, any term used in the Plan or
this Plan Modification that is not defined in this Plan or this Plan           
Modification, but that is used in the Bankruptcy Code or the Bankruptcy Rules, 
shall have the meaning ascribed to such term in the Bankruptcy Code or the     
Bankruptcy Rules.                                                               

                                   Ex. 3-13
<PAGE>
 
          "EXCESS CASH means, as of the day immediately preceding the Effective
          Date, the ending book cash balance of the Debtor on a fully
          consolidated basis, which cash shall include overnight investments,
          cash, corporate accounts, credit card cash, and branch cash including
          cash of Midland (but only to the extent such branch cash in the
          aggregate exceeds $3,000,000) and proceeds from the sale of the credit
          card portfolio when received, minus the sum of (a) $55,100,000 or such
                                        -----                                   
          greater amount to be agreed to by the Debtor and the Creditors'
          Committee, (b) the Interest Reserve, (c) the Professional Fee Reserve,
          (d) the Signing Bonus, (e) ordinary course payments accrued but not
          paid on the Effective Date, including but not limited to, D&O
          insurance premiums for the Reorganized Debtor's board of directors,
          and (f) the aggregate amount of cash to be distributed under the Plan
          other than to Class 4."

          c.  The term "NEW COMMON STOCK" is hereby modified to read in its
entirety as follows:

          "NEW COMMON STOCK means the 50,000,000 shares of Common Stock par
          value $0.01 per share of the Reorganized Debtor authorized pursuant to
          the Amended and Restated Certificate of Incorporation, 10,000,000
          shares of which are to be issued and distributed in accordance with
          the Plan constituting 100% of the total number of shares of such
          Common Stock to be issued and outstanding immediately after the
          Effective Date."

          d.  The term "OUTSIDE DIRECTORS RESERVE" is hereby modified to read in
its entirety as follows:

          "OUTSIDE DIRECTORS RESERVE means a fund of $350,000 deposited into a
          segregated account by the Debtor to be used for purposes of
          reimbursement of continuing indemnification costs of current outside
          directors."

          e.  The term "REORGANIZED DEBTOR" is hereby modified to read in its
entirety as follows:

          "REORGANIZED DEBTOR means the Debtor on and after the Effective Date
          and shall thereafter be known as Mercury Finance Company or any other
          name designated by the board of directors for the Reorganized Debtor."

          f.  The term "TRADE CLAIMS" is hereby modified to read in its entirety
as follows:

          "TRADE CLAIM means any Unsecured Claim against the Debtor arising from
          or with respect to the sale of goods or services to the Debtor,
          including Allowed Claims based on rejection of executory contracts or
          unexpired leases, prior to the Petition Date, in the ordinary course
          of the Debtor's business, including but not limited to, any Claim of
          an employee and/or director that is not a Priority Claim or an
          Indemnification Claim and any Claim of a Nondebtor Subsidiary against
          the Debtor, but excluding any claim by KPMG Peat Marwick, whether
          arising by contract or for contribution or indemnity."

                                   Ex. 3-14
<PAGE>
 
          Section 2.03 of the Plan is hereby modified to read in its entirety as
follows:

          "2.03   TAX CLAIMS.  The Debtor waives jurisdiction of the Court
          pursuant to section 5.05 of the Code.  Notwithstanding the limited
          waiver of section 5.05 of the Code, and unless otherwise agreed to by
          the parties, each holder of a Tax Claim will receive Cash equal to the
          unpaid portion of such Tax Claim on or as soon as practical after the
          later of (i) the Effective Date, and (ii) the date on which such Claim
          becomes an Allowed Claim; provided, however, that at the option of the
          Reorganized Debtor, the Reorganized Debtor may pay Tax Claims over a
          period not exceeding six (6) years after the date of assessment of the
          Tax Claim as provided in subsection 1129(a)(9)(C) of the Bankruptcy
          Code.  If the Reorganized Debtor elects this option as to any Tax
          Claim, then the payment of such Tax Claim shall be made in equal
          semiannual installments with the first installment due on the latest
          of: (i) the Effective Date, (ii) 30 calendar days after the date on
          which an order allowing such Tax Claim becomes a Final Order, and
          (iii) such other time as may be agreed to by the holder of such Tax
          Claim and the Reorganized Debtor.  Each installment shall include
          simple interest on the unpaid portion of such Tax Claim, without
          penalty of any kind, at the statutory rate of interest provided for
          such taxes under applicable nonbankruptcy law; provided, however, that
          the Reorganized Debtor shall reserve the right to pay any Tax Claim,
          or any remaining balance of such Tax Claim, in full, at any time on or
          after the Effective Date, without premium or penalty."

     3.   Section 3.08 of the Plan is hereby modified to read in its entirety as
follows:

          "3.08 CLASS 7B SECURITIES FRAUD CLAIMS AND DIVIDEND CLAIMS. Class 7B
          consists of all holders of Securities Fraud Claims and Dividend
          Claims, other than Beneficiaries."

     4.   Section 6.04 of the Plan is hereby modified to read in its entirety as
follows:

          6.04  SURRENDER OF INSTRUMENTS AND RECEIPT OF DISTRIBUTIONS--SENIOR
          DEBT CLAIMS AND SUBORDINATED NOTEHOLDER CLAIMS.  As a condition to
          participation under the Plan, each holder of a Senior Debt Claim or a
          Subordinated Noteholder Claim is required to provide evidence of the
          securities evidencing the Senior Debt Claims and Subordinated
          Noteholders Claims ("Old Securities") by (i) completing and returning
          a Letter of Transmittal to the Exchange Agent, together with
          certificates (to the extent such exist) representing their Old
          Securities (the "Tendered Certificates"), or (ii) completing the book-
          entry confirmation procedure, promptly after the Confirmation Date.
          Holders of Senior Debt Claims relating to commercial paper need not
          tender any certificates, as no such certificates exist evidencing the
          commercial paper.  Promptly following the Effective Date, the Exchange
          Agent will mail to those persons who have properly completed and
          returned Letters of Transmittal and Tendered Certificates or completed
          the book-entry confirmation procedure, certificates representing the
          New Senior Secured Notes, the New Junior Subordinated Notes and/or the
          New Common Stock to be issued in accordance with the Plan.  HOLDERS
          OF OLD SECURITIES WHO HAVE NOT PROPERLY COMPLETED AND RETURNED TO THE
          EXCHANGE AGENT LETTERS OF TRANSMITTAL OR COMPLETED THE BOOK-ENTRY
          CONFIRMATION PROCEDURE WITHIN TWO YEARS OF THE EFFECTIVE DATE,
          TOGETHER WITH THE TENDERED CERTIFICATES, WILL NOT RECEIVE THE
          CERTIFICATES OR CASH TO WHICH THEY ARE OTHERWISE ENTITLED PURSUANT TO
          THE PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER DISTRIBUTION UNDER THE
          PLAN.  The Debtor selected two years as opposed to the five year
          period permitted (but not required) under section 1143 of the
          Bankruptcy Code because the securities mature in less than five years
          and the Debtor believes that the cost and expense of establishing an
          escrow fund for delinquent tenders outweighs the risk that substantial
          holders of Old Securities will fail to surrender their certificates
          within two years.

               Book-Entry Transfer. The Exchange Agent will establish an account
          with respect to the Old Securities at DTC. Any tendering financial
          institution that is a participant in DTC's book-entry transfer
          facility system must make a book-entry delivery of the Old Securities
          by causing DTC to

                                   Ex. 3-15
<PAGE>
 
          transfer such Old Securities into the Exchange Agent's account at DTC
          in accordance with DTC's procedures for transfers. Such holder of Old
          Securities should transmit its acceptance to DTC on or prior to the
          two years from the Effective Date (or comply with the guaranteed
          delivery procedures set forth below), DTC will verify such acceptance,
          execute a book-entry transfer of the tendered Old Securities Notes
          into the Exchange Agent's account at DTC and then send to the Exchange
          Agent confirmation of such book-entry transfer, including an agent's
          message confirming that DTC has received an express acknowledgment
          from such holder that such holder has received and agrees to be bound
          by the Letter of Transmittal and that the company may enforce the
          Letter of Transmittal against such holder (a "book-entry
          confirmation").

               A beneficial owner of Old Securities that are held by or
          registered in the name of a broker, dealer, commercial bank, trust
          company or other nominee or custodian is urged to contact such entity
          promptly if such beneficial owner wishes to participate.

               DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES
          DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

               Letters of Transmittal. Signatures on a Letter of Transmittal
          must be guaranteed by an Eligible Institution (as defined below),
          unless the Old Securities tendered pursuant thereto are tendered for
          the account of an Eligible Institution. If signatures on a Letter of
          Transmittal are required to be guaranteed, such guarantees must be by
          a member firm of a registered national securities exchange in the
          United States, a member of the National Association of Securities
          Dealers, Inc., or by a commercial bank or trust company having an
          office or a correspondent in the United States (each of which is an
          "Eligible Institution"). If Old Securities are registered in the name
          of a person other than the person signing the Letter of Transmittal,
          in order to be validly tendered, the Old Securities must be endorsed
          or accompanied by properly completed power of authority, with
          signature guaranteed by an Eligible Institution.

               Holders of Old Securities who are not holders of record on the
          Distribution Record Date should:

               (i)    obtain a properly completed Letter of Transmittal (or
               facsimile thereof) from the record holder on the Distribution
               Record Date,

               (ii)   obtain and include with the Letter of Transmittal a
               properly competed stock or bond power, as the case may be, from
               the record holder, or

               (iii)  effect a record transfer of their Old Securities prior to
               delivery of the Letter of Transmittal.

               If a holder desires to tender Old Securities pursuant to the
          Letter of Transmittal but is unable to locate the Tendered
          Certificates, such holder should write to or telephone the Exchange
          Agent about procedures for obtaining replacement certificates for Old
          Securities or arranging for indemnification.

               ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING
          TIME OF RECEIPT), AND ACCEPTANCE OF BALLOTS, LETTERS OF TRANSMITTAL
          AND TENDERED CERTIFICATES WILL BE RESOLVED BY THE DEBTOR, WHOSE
          DETERMINATION WILL BE FINAL AND BINDING, SUBJECT ONLY TO REVIEW BY THE
          COURT UPON APPLICATION WITH DUE NOTICE TO ANY AFFECTED PARTIES IN
          INTEREST. THE DEBTOR RESERVES THE RIGHT TO REJECT ANY AND ALL BALLOTS,
          LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES NOT IN PROPER FORM,
          OR LETTERS OF TRANSMITTAL AND TENDERED CERTIFICATES, THE DEBTOR'S
          ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF THE DEBTOR OR ITS
          COUNSEL, BE UNLAWFUL.

     5.   Section 6.05 of the Plan is hereby modified to read in its entirety as
follows:

                                   Ex. 3-16
<PAGE>
 
          "6.05  DISTRIBUTION RECORD DATE--OLD COMMON STOCK.  At the close of
          business on the Distribution Record Date, the transfer ledgers for the
          Old Common Stock shall be closed, and there shall be no further
          changes in the record holders of the Old Common Stock.  The Debtor
          shall have no obligation to recognize any transfer of the Old Common
          Stock occurring on or after the Distribution Record Date.  The Debtor
          shall be entitled instead to recognize and deal for all purposes
          hereunder with only those record holders stated on the transfer
          ledgers as of the close of business on the Distribution Record Date.

          As a condition to participation under the Plan, each holder of a
          Equity Interest is required to provide evidence of the securities
          evidencing the Equity Interest ("Old Securities") by (i) completing
          and returning a Letter of Transmittal to the Exchange Agent, together
          with certificates (to the extent such exist) representing their Old
          Securities (the "Tendered Certificates"). Promptly following the
          Effective Date, the Exchange Agent will mail to those persons who have
          properly completed and returned Letters of Transmittal and Tendered
          Certificates, certificates representing the New Common Stock and New
          Warrants to be issued in accordance with the Plan. HOLDERS OF OLD
          SECURITIES WHO HAVE NOT PROPERLY COMPLETED AND RETURNED TO THE
          EXCHANGE AGENT LETTERS OF TRANSMITTAL WITHIN TWO YEARS OF THE
          EFFECTIVE DATE, TOGETHER WITH THE TENDERED CERTIFICATES, WILL NOT
          RECEIVE THE CERTIFICATES TO WHICH THEY ARE OTHERWISE ENTITLED PURSUANT
          TO THE PLAN NOR WILL THEY BE ENTITLED TO ANY OTHER DISTRIBUTION UNDER
          THE PLAN. The Debtor selected two years as opposed to the five year
          period permitted (but not required) under section 1143 of the
          Bankruptcy Code because the securities mature in less than five years
          and the Debtor believes that the cost and expense of establishing an
          escrow fund for delinquent tenders outweighs the risk that substantial
          holders of Old Securities will fail to surrender their certificates
          within two years.

          Letters of Transmittal.  Signatures on a Letter of Transmittal must be
          guaranteed by an Eligible Institution (as defined below), unless the
          Old Securities tendered pursuant thereto are tendered for the account
          of an Eligible Institution or such signature guarantee if not
          otherwise required by applicable law.  If signatures on a Letter of
          Transmittal are required to be guaranteed, such guarantees must be by
          a member firm of a registered national securities exchange in the
          United States, a member of the National Association of Securities
          Dealers, Inc., or by a commercial bank or trust company having an
          office or a correspondent in the United States (each of which is an
          "Eligible Institution").  If Old Securities are registered in the name
          of a person other than the person signing the Letter of Transmittal,
          in order to be validly tendered, the Old Securities must be endorsed
          or accompanied by properly completed power of authority, with
          signature guaranteed by an Eligible Institution.

               Holders of Old Securities who are not holders of record on the
          Distribution Record Date should:

               (i)    obtain a properly completed Letter of Transmittal (or
                      facsimile thereof) from the record holder on the
                      Distribution Record Date, or

               (ii)   obtain and include with the Letter of Transmittal a
                      properly competed stock or bond power, as the case may be,
                      from the record holder.

               If a holder desires to tender Old Securities pursuant to the
          Letter of Transmittal but is unable to locate the Tendered
          Certificates, such holder should write to or telephone the Exchange
          Agent about procedures for obtaining replacement certificates for Old
          Securities or arranging for indemnification.

          ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF
          RECEIPT), AND ACCEPTANCE OF BALLOTS, LETTERS OF TRANSMITTAL AND
          TENDERED CERTIFICATES WILL BE RESOLVED BY THE DEBTOR, WHOSE
          DETERMINATION WILL BE FINAL AND BINDING, SUBJECT ONLY TO REVIEW BY THE
          COURT UPON APPLICATION WITH DUE NOTICE TO ANY AFFECTED PARTIES IN
          INTEREST.  THE DEBTOR RESERVES THE RIGHT TO REJECT ANY AND ALL
          BALLOTS, LETTERS OF

                                   Ex. 3-17
<PAGE>
 
          TRANSMITTAL AND TENDERED CERTIFICATES NOT IN PROPER FORM, OR LETTERS
          OF TRANSMITTAL AND TENDERED CERTIFICATES, THE DEBTORS ACCEPTANCE OF
          WHICH WOULD, IN THE OPINION OF THE DEBTOR OR ITS COUNSEL, BE
          UNLAWFUL."

     6.   Section 6.07 of the Plan is hereby modified to read in its entirety as
follows:

          "6.07  UNCLAIMED DISTRIBUTIONS.  If any holder of a Claim or Interest
          entitled to a distribution directly from the Exchange Agent under the
          Plan cannot be located on the Effective Date, such distributions shall
          be set aside and maintained by the Exchange Agent.  If such person is
          located within two years of the Effective Date, such distributions
          shall be distributed to such person.  If such person cannot be located
          within two years of the Effective Date, any such securities shall
          become the property of and shall be released to the Reorganized
          Debtor; provided, however, that nothing contained in this Plan shall
          require the Reorganized Debtor or the Exchange Agent to attempt to
          locate such person."

     7.   Section 8.02 of the Plan is hereby modified to read in its entirety as
follows:

          "8.02  AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.  On the
          Effective Date, the Reorganized Debtor shall file its Amended and
          Restated Certificate of Incorporation with the Secretary of State of
          the State of Delaware in accordance with Section 103 of the Delaware
          General Corporation Law.  The Amended and Restated Certificate of
          Incorporation will, among other things, provide (to the extent
          necessary to effectuate the terms of the Plan) for (i) the prohibition
          of the issuance of non-voting equity securities, and (ii) the
          authorization of 50,000,000 shares of the New Common Stock, and which
          encompasses the shares to be issued upon exercise of the New Warrants;
          and the shares to be issued upon the exercise of stock options granted
          for management of the Reorganized Debtor pursuant to the amended stock
          option plan.  Confirmation of the Plan shall constitute an election by
          the Reorganized Debtor not to be governed by Section 203 of the
          Delaware General Corporation Law."

                                   Ex. 3-18
<PAGE>
 
     8.   Section 8.06 of the Plan is hereby modified to read in its entirety as
follows:

          "8.06  CANCELLATION OF SECURITIES AND AGREEMENTS. Except as expressly
          provided in the Plan or in the Confirmation Order, on the Effective
          Date, the Debtor's commercial paper, short-term notes, senior notes,
          the Gulfco notes, Subordinated Notes, Old Common Stock, options,
          shareholder's rights plans and all the documentation relating thereto,
          shall be cancelled and all obligations of the Debtor under or in
          respect of any of the foregoing shall be terminated.  Notwithstanding
          the foregoing, although all stock options of the Debtor shall be
          cancelled, the Debtor's existing option plan shall be amended as set
          forth in Exhibit 4 to the Plan to permit the grant of new options in
          accordance with the Plan, as amended."

     9.   Section 8.07 of the Plan is hereby modified to read in its entirety as
follows:

          "8.07  MANAGEMENT OF THE REORGANIZED DEBTOR.  Upon the Effective Date,
          the operation of the Reorganized Debtor shall become the general
          responsibility of the board of directors who shall, thereafter, have
          the responsibility for the management, control and operation of the
          Reorganized Debtor.  The board of directors of the Reorganized Debtor
          shall be comprised of seven (7) persons, 4 of whom will be designated
          by the Creditors' Committee, one of whom shall be the new CEO, 1 of
          whom shall be nominated  by the new CEO and shall be reasonably
          acceptable to the Creditors' Committee, and one of whom will be
          nominated by the Equity Holders' Committee and shall be reasonably
          acceptable to the Creditors' Committee and the new CEO.  The identity
          of each of the nominees shall be announced prior to or at the hearing
          on the confirmation of the Plan.  Such persons shall be deemed elected
          pursuant to the Confirmation Order, and such elections shall be
          effective on and after the Effective Date, without any requirement of
          further action by stockholders of the Reorganized Debtor.  The initial
          chairman of the board of directors of the Reorganized Debtor shall be
          chosen by the board of directors of the Reorganized Debtor after the
          Effective Date.  Upon the Effective Date, the Employment Agreement
          shall be executed and delivered by the Reorganized Debtor and the new
          CEO and shall then become effective."

     10.  Section 8.11 of the Plan is hereby modified to read in its entirety as
follows:

          "8.11  CORPORATE ACTIONS.  The issuance of the New Common Stock and
          the New Warrants, the amendment of the Debtor's existing option plan,
          the adoption of the Amended and Restated Certificate of Incorporation
          and By-laws by the Reorganized Debtor, the selection of certain
          directors and officers of the Reorganized Debtor, the execution and
          delivery of any documents to be executed and delivered under the Plan
          (including the Employment Agreement, including the stock option
          agreement attached thereto), and other matters under the Plan
          involving the corporate structure of the Debtor or corporate action by
          the Debtor shall be deemed to have occurred and be effective on and
          after the Effective Date without any requirement of further action by
          stockholders or directors of the Debtor pursuant to and in accordance
          with Section 303 of the Delaware General Corporation Law.  Without
          limiting the foregoing, upon entry of the Confirmation Order by the
          Clerk of the Court, the Filing by the Debtor or the Reorganized Debtor
          of the Amended and Restated Certificate of Incorporation and By-laws
          shall be authorized and approved in all respects.  On the Effective
          Date, or as soon thereafter as is practicable, pursuant to applicable
          state law, the Reorganized Debtor shall file with the applicable state
          governmental agencies or offices the respective Certificates of
          Incorporation and By-laws."

     11.  Section 8.15 of the Plan is hereby modified to read in its entirety as
follows:

                                   Ex. 3-19
<PAGE>
 
          "8.15  ADMINISTRATION OF THE CLASS 7B LIQUIDATING TRUST.  On the
          Effective Date: (i) the Debtor shall duly execute two originals of the
          Class 7B Liquidating Trust Agreement, a copy of which is attached to
          the Disclosure Statement as Exhibit U, (ii) deliver one signed
          original thereof to the Trustees identified below, thereby
          establishing a trust which shall be known as the Class 7B Liquidating
          Trust, and (iii) file one fully executed original of the Class 7B
          Liquidating Trust Agreement with the clerk of the Court.

          The provisions of the Class 7B Liquidating Trust Agreement are
          incorporated into the Plan, as if the same were fully set forth
          herein. The operation of the Class 7B Liquidating Trust shall be
          governed by the provisions of the Class 7B Liquidating Trust Agreement
          and this Section 8.15 of the Plan. Reference should be made to the
          Class 7B Liquidating Trust Agreement for a complete statement of the
          terms and conditions governing the operation of the Class 7B
          Liquidating Trust and the administration of the assets of the Class 7B
          Liquidating Trust since not all of such terms and conditions are set
          forth in this Section 8.15. It is the intent of the Plan that the
          provisions of the Class 7B Liquidating Trust Agreement shall be
          consistent with the provisions of this Section 8.15 of the Plan. To
          the extent, if any, that the provisions of the Class 7B Liquidating
          Trust Agreement and the provisions of this Section 8.15 of the Plan
          may be inconsistent, the provisions of this Section 8.15 of the Plan
          shall govern.

          The Trustees. Initially the current members of the Securities
          ------------ 
          Claimants' Committee shall serve as Trustees. The Trustees shall serve
          for the duration of the Class 7B Liquidating Trust, subject to earlier
          death, resignation, mandatory disqualification, or removal. If at any
          time subsequent to the Effective Date there are less than three (3)
          Trustees, within ten (10) days thereof the remaining Trustees shall
          elect a successor Trustee or Trustees, subject to the Court's
          approval. For purposes of the Class 7B Liquidating Trust Agreement,
          "mandatory disqualification" of a Trustee will occur in the event that
          the Class 7B Claim asserted by such Trustee is disallowed in its
          entirety or is allocated a distribution in an amount less than Fifteen
          Thousand Dollars ($15,000), whether by virtue of a consensual
          allowance/allocation approved by the Court or a decision by the
          Arbitrator.

          Initial Trust Assets. On the Effective Date, the Reorganized Debtor
          --------------------
          shall transfer and assign to the Class 7B Liquidating Trust, to be
          held in trust, for the holders of Allowed Class 7B Claims all of the
          Debtor's, the Reorganized Debtor's, and the Estate's rights, title,
          and interest in and to all of the following (collectively, the
          "INITIAL TRUST ASSETS"): (a) the sum of Five Million Dollars
          ($5,000,000) in cash which sum shall be transferred pursuant to the
          wire transfer instructions provided by the Securities Claimants'
          Committee; and (b) the Company KPMG Claims, as that term is defined
          above in Article I.A. of the Plan, together with complete and
          exclusive control of the prosecution and/or settlement of the Company
          KPMG Claims and (c) $250,000 in cash, which sum shall be transferred
          pursuant to wire transfer instructions provided by the Securities
          Claimants' Committee, for fees and costs to be incurred in connection
          with the administration of the Class 7B Liquidating Trust. The Company
          KPMG Claims and attendant prosecution rights shall be deemed to be
          assets of the Class 7B Liquidating Trust as of the Effective Date.
          Upon delivery of the distributions to the Class 7B Liquidating Trust
          required to be made by the Debtor pursuant to Section 5.05 and this
          paragraph, the Debtor and the Reorganized Debtor shall have no
          obligation or liability to the Trust or any of the beneficiaries of
          the Trust, other than to cause the claims administrator to forward
          Requests for Allowance to the Class 7B Claims Administrator and to
          cooperate with the Trustees, as set forth in Section 2.04 of the Class
          7B Liquidating Trust Agreement, in the prosecution of the Company KPMG
          Claims.

          Subsequent Trust Assets. In addition to the Initial Trust Assets,
          -----------------------
          other assets may be transferred to the Class 7B Liquidating Trust.
          These assets may and shall include any proceeds received by the Class
          7B Liquidating Trust as a result of the Company KPMG Claims as well as
          any proceeds or claims received by the Class 7B Liquidating Trust
          pursuant to the settlement agreement which is attached as Exhibit T to
          the Disclosure Statement ("Class Settlement Agreement") or otherwise
          pursuant to the Plan or agreements

                                   Ex. 3-20
<PAGE>
 
implementing the Plan. All assets transferred to the Class 7B Liquidating Trust
which are not included within the definition of the Initial Trust Assets are
referred to herein as the "Subsequent Trust Assets." The Initial Trust Assets
and the Subsequent Trust Assets are collectively referred to herein as the
"Trust Assets."

     Powers of Trustees.  Pursuant to the Class 7B Liquidating Trust Agreement,
     ------------------                                                        
the Trustees will have the power and authority to do, among other actions, the
following:

A.  Receive and hold the Trust Assets and invest the same, from time to time, in
accordance with the parameters set forth in the Class 7B Liquidating Trust
Agreement;

B.  Take such actions on behalf of the Class 7B Liquidating Trust as may be
required in connection with the Class Settlement Agreement;

C.  Devise, implement, supervise, modify, and administer procedures for the
allowance of Class 7B Claims and the allocation of the assets of the Class 7B
Liquidating Trust among the holders of Allowed Class 7B Claims, subject to the
limitations imposed by Class 7B Liquidating Trust Agreement or the Plan;

D.  Utilize and distribute the Trust Assets to satisfy Allowed Class 7B Claims
in accordance with procedures set forth in the Class 7B Liquidating Trust
Agreement and the Plan;

E.  Hire such employees, administrative personnel or claims administrators and
engage such legal, financial, accounting, investment, and other advisors,
custodians of assets, including without limitation the Arbitrator and a
Mediator, if any, as those terms are defined in the Class 7B Liquidating Trust
Agreement, and agents as the business of the Class 7B Liquidating Trust
requires, and to delegate to such Persons such powers, authority, and discretion
as the Trustees in their discretion deem advisable or necessary to carry out the
terms of the Class 7B Liquidating Trust (this provision E. is not intended to,
and shall not, include the hiring of any legal, financial, accounting, or any
other type of advisors or experts, by any Class 7B claimant or group of Class 7B
claimants for purposes of proving a Claim, defending objections thereto, or
asserting objections thereto);

F.  Compensate, utilizing the Trust Assets, such employees, legal, financial,
accounting, investment, and other advisors, and agents, described in E. above,
provided, however, that accountants, lawyers, and investment advisors engaged by
the Trustees on behalf of the Class 7B Liquidating Trust to represent interests
of the Class 7B Liquidating Trust shall be compensated only with the approval of
the Court after such notice and hearing as the Court may require (this provision
F is not intended to, and shall not, include the utilization of any Trust Assets
to compensate any legal, financial, accounting, or any other type of advisors or
experts, retained by any Class 7B claimant, any group of Class 7B claimants, any
individual members of the Securities Claimants' Committee, or individual
Trustees for the purpose(s) of representing their own respective interests);

G.  Make such decisions as they may deem appropriate, and in accordance with the
voting procedures set forth in Section 4.03 of the Class 7B Liquidating Trust
Agreement, in connection with the prosecution, non-prosecution, or resolution of
the Company KPMG Claims or claims constituting Trust Assets; and

H.  Apply to the Court for instructions to the Trustees as they may deem proper
or necessary in connection with the administration of the Class 7B Liquidating
Trust or the performance of their duties.

Except as otherwise provided by applicable law: (i) no Trustee shall be liable
to the Class 7B Liquidating Trust or to any Person holding a Class 7B Claim,
except for his, her, or its own willful misconduct; and (ii) except to the
extent any act or failure to act on the part of a 

                                   Ex. 3-21
<PAGE>
 
Trustee shall constitute willful misconduct; (a) no Trustee shall be liable for
any act or omission of any Co-Trustee or any officer, agent, or employee of the
Class 7B Liquidating Trust; (b) the Trustees shall be entitled to rely upon the
advice of counsel or other advisors to the Class 7B Liquidating Trust or the
Trustees, reports prepared by the Class 7B Claims Administrator, and information
provided by any other Person employed by the Class 7B Liquidating Trust; and (c)
all actions taken and determinations made by the Trustees, unless otherwise
expressly provided in the Class 7B Liquidating Agreement, the Plan, or an order
of the Court, shall be final and binding upon all Persons having any interest in
the Class 7B Liquidating Trust.

     Each Trustee shall be reimbursed by the Class 7B Liquidating Trust for his,
her, or its reasonable expenses incurred in the performance of his, her, or its
duties ad Trustee under the Class 7B Liquidating Trust Agreement, provided that
any request for such reimbursement is approved by the Court after such notice
and hearing as the Court may require, and provided, further, that any legal fees
and costs incurred by an individual Trustee, or any other Class 7B claimant, on
its own account and not on behalf of the Class 7B Liquidating Trust shall not be
paid from Trust Assets but shall be paid from the allocation such Trustee or
Class 7B claimant receives pursuant to the allowance/allocation procedures set
forth in the Class 7B Liquidating Trust Agreement.

     Company KPMG Claims-Other Claims Constituting Subsequent Trust Assets.  The
     ---------------------------------------------------------------------      
Debtor will use its best efforts to obtain a tolling of the statute of
limitations for the Company KPMG Claims until sixty (60) days after the
allowance and allocation process set forth below and in the Class 7B Liquidating
Trust Agreement has become final.  Thereafter, control and all decisions
regarding the Company KPMG Claims or other claims constituting Subsequent Trust
Assets, including without limitation the filing (or non-filing), prosecution,
and settlement thereof, shall be made by the vote of the representative(s) of
the holders of Allowed Class 7B Claims holding at least a majority in dollar
amount of all Allowed Class 7B Claims (singly a "REPRESENTATIVE" or collectively
"REPRESENTATIVES") which Representative(s) may be, but is/are not required to
be, a Trustee or Trustees of the Class 7B Liquidating Trust, provided, however,
that any decision (i) to release, or (ii) to settle the Company KPMG Claims or
claim constituting a Subsequent Trust Asset, in whole or in part, or (iii) to
dismiss such claims, if suit has been filed, shall be submitted to the Court for
approval after notice and hearing as the Court may require, and provided,
further, that all proceeds recovered, if any, as a result of the resolution of
the Company KPMG Claims or claims constituting Subsequent Trust Assets shall
remain Trust Assets and be distributed in accordance with Section 6.04 of the
Class 7B Liquidating Trust Agreement, all of which remains subject to the
judgment reduction provisions contained within the Class Settlement Agreement.
The Representative(s) shall provide status reports to the Trustees no less
frequently than semi-annually regarding actions taken and decisions made with
respect to the Company KPMG Claims and claims constituting Subsequent Trust
Assets.

     Procedures for Claims' Allowance and Allocation.
     ----------------------------------------------- 

     Request for Allowance/Allocation.  In connection with confirmation of the
     --------------------------------                                         
Plan, the Debtor shall seek approval of the Court for the form of notice to be
sent to parties who may hold Claims in Class 7B ("Notice"), as well as the form,
the timing, and the place for publication of such notice, and shall cause such
notice to be sent and published as ordered by the Court.  Prior to seeking such
approval from the Court, the Debtor shall obtain the review and approval from
the Securities Claimants' Committee of the forms of notice and the place for
publication hereof.  The forms of notice, among other things, shall advise Class
7B claimants that to be eligible to participate in the consensual allowance
process described below or obtain any allocation or distribution from the Class
7B Liquidating Trust, they, or their representatives (if they are a member of a
class described in a class action pending against the Debtor on the Petition
Date or are individual holders of Class 7B claims whose claims arise from their
purchase of Old Common Stock before January 29, 1997 and who continue to hold
such Old Common Stock as of the Distribution Record Date (the "Old and Cold
Holders")) must submit a Request for Allowance/Allocation prior to the date set
forth below 

                                   Ex. 3-22
<PAGE>
 
and in accordance with procedures set forth below. In addition, the Notice shall
advise Class 7B Claimants that if they are members of a group included within
the Class set forth in the Notice: (1) there is no need to take any affirmative
steps or submit any information at this time to participate in the partial
settlement, (2) their rights are already being represented in the allowance
process by the designated counsel for the group in which the class member's
claim falls, (3) a representative of that group will be permitted to file a
Request for Allowance on behalf of that entire group, (4) counsel for the
designated class representative of each group within the class receiving an
allocation from the settlement fund will, subject to approval of the court in
which the claims asserted by that group were initiated, issue a supplemental
Notice to members of the group which will provide information regarding the
outcome of the allocation procedure, the estimate of the average per share
recovery that will be achieved by members of the group as a result of the
settlement, and (5) the plan of allocation approved by the court pursuant in
which the proceeds of the settlement will be ultimately distributed to members
of the group.

     Date before which Request for Allowance/Allocation must be Filed.  In
     ----------------------------------------------------------------     
addition to the provisions which the Court may require, the notice shall notify
such parties that in order to be eligible for any allocation or distribution
from the Class 7B Liquidating Trust, (i) they (or their representatives if they
are either a member of a class described in a class action pending against the
Debtor on the Petition Date or an Old and Cold Holder) must file a Request for
Allowance/Allocation in the form approved by the Court (a "REQUEST FOR
ALLOWANCE") with the Claims Center on or before April 9, 1999.  For purposes of
the filing of a Request for Allowance, a representative of a class may include
the class representative, or if the class has not been certified or no such
representative has been appointed, lead counsel for plaintiffs in such class
action.  For purposes of the filing of a Request for Allowance except to the
extent that the Court determines at the time of the confirmation of the Plan
that the interests of the Old and Cold Holders are represented in pending class
actions, a representative of the Old and Cold Holders shall be approved by the
Court at the time of confirmation of the Plan and may file a Request for
Allowance on behalf of the class of Old and Cold Holders.

     Evidence to Accompany Request for Allowance.  Any Request for Allowance
     -------------------------------------------                            
filed on behalf of an individual holder of a Class 7B Claim shall be accompanied
by true and correct copies of confirmations, brokerage account statements, or
other sufficient evidence of: (i) the date(s) of purchase(s), (ii) the purchase
price(s), (iii) the date(s) of sale(s), (iv) the sale price(s), and (v) the
number of shares of stock purchased or sold on such date(s) and at such
price(s).  Any Request for Allowance filed on behalf of a class of holders of
Class 7B Claims or by the representative of the Old and Cold Holders shall be
accompanied by evidence sufficient to allow the Arbitrator described below to
determine the basis for an award with respect to allowance and/or allocation of
the Class 7B Claims contained in such class.

     No Priority; No Automatic Allowance.  The filing of a Request for Allowance
     -----------------------------------                                        
will not automatically result in the allowance of the Class 7B Claim described
therein.  No Allowed Class 7B Claim shall be afforded any priority over any
other Allowed Class 7B claim in distribution.  All Claims for which a Request
for Allowance is filed shall be subject to objection and the claims allowance
and allocation process in accordance with the procedures established by the
Trustees.

     Forwarding Requests for Allowance.  As soon as practicable after April 9,
     ---------------------------------                                        
1999, the Reorganized Debtor shall cause the Claims Center to forward copies of
all Requests for Allowance filed on behalf of claimants asserting a right to be
included in Class 7B to the Trustees, c/o the Class 7B claims administrator
selected by the Securities Claimants' Committee (the "CLASS 7B CLAIMS
ADMINISTRATOR").  Prior to or on the Confirmation Date, the Securities
Claimants' Committee will select the Class 7B Claims Administrator and provide
notice of the selection to the Debtor, the United States Trustee, counsel for
the Creditors' Committee, and counsel for the Equity Committee.

                                   Ex. 3-23
<PAGE>
 
          Selection of Arbitrator. The Securities Claimants' Committee (i) has
          -----------------------
          selected Nicholas J. Bua (the "ARBITRATOR") to serve in connection
          with allowance of Class 7B Claims and the allocation of the Trust
          Assets among the various classes of claimants represented in class
          actions which were pending against the Debtor on the Petition Date and
          other holders of Allowed Claims in Class 7B, and (ii) will provide
          notice of the selection to the Debtor, the United States trustee,
          counsel for the Unsecured Creditors' Committee, and counsel for the
          Equity Committee. At confirmation of the Plan, the selection of the
          Arbitrator will be presented to the Court for approval. The reasonable
          expenses of the Arbitrator as well as such fees as may be agreed upon
          between the Arbitrator and the Trustees in writing shall be paid first
          from the funds provided by this Section 8.15 of the Plan and, if such
          funds have been exhausted, then from the remaining Trust Assets. The
          arrangements relating to the compensation and reimbursement of the
          Arbitrator will be presented to the Court for approval at the hearing
          on confirmation of the Plan.

          Allowance/Allocation/Arbitration Procedures. Within fifteen (15) days
          -------------------------------------------
          of the Confirmation Date, the Trustees shall establish: (i) a
          procedure for resolving, on a consensual basis, the allowance of Class
          7B Claims and allocation of Trust Assets among holders of the Allowed
          Class 7B Claims, and (ii) a process for the arbitration of allowance
          of Class 7B Claims and allocation of Trust Assets among holders of the
          Allowed Class 7B Claims in the event that there is no resolution on a
          consensual basis. If the Trustees determine that the services of a
          mediator (a "MEDIATOR") would be of assistance in the efforts to
          attain a consensual allowance ad allocation, they may engage a
          Mediator for that purpose.

          Consensual Allowance and Allocation. If, as a result of the efforts of
          -----------------------------------
          the Trustees, a Mediator if any, and any claimants who indicated on
          their Request for Allowance a desire to provide input regarding a
          consensual allowance, a proposal with respect to a consensual
          allowance of Class 7B Claims and allocation of Trust Assets on account
          of such Claims is accepted by a unanimous vote of the Trustee then in
          office, in accordance with procedures adopted by the Trustees, then
          the agreement shall be submitted by the Trustees to the Court for
          approval, upon such notice as the Court shall order.

          No Consensus; Arbitration. If, on or before May 14, 1999, or such
          -------------------------
          later date as the Trustees shall establish, no motion is filed with
          the Court seeking approval of a consensual allowance of Class 7B
          Claims and allocation of Trust Assets on account of such Claims, then
          an arbitration of any unresolved issues relating to the allowance of
          Claims in Class 7B and the allocation of Trust Assets shall be
          conducted by the Arbitrator as soon as practicable, in accordance with
          such rules as the Arbitrator shall establish to the extent that the
          Trustees have not done so. The arbitration shall be completed on or
          before July 31, 1999 or such later date as the Trustees shall
          establish.

          Binding Arbitration. The arbitration shall be binding in nature, and
          -------------------
          the only grounds of any application to vacate or modify any decision
          or award of the Arbitrator shall be that the Arbitrator was other than
          a neutral party, that the award was obtained by fraud, or that the
          award constituted an abuse of discretion or violated public policy.

          Post-Award Proceedings. Any application to vacate or modify an award
          ----------------------
          of the Arbitrator shall be only to the Court, and any notice of appeal
          from such an award must be filed within fourteen (14) days after the
          Arbitrator shall have provided a copy of his award to the Trustees and
          any party to the arbitration, via facsimile to each of the Trustees
          and via overnight delivery service in a method requiring a receipt
          therefor or via certified mail return receipt requested to any other
          party to the arbitration. In the event such an application is filed,
          with respect thereto the Arbitrator may, utilizing Trust Assets,
          engage counsel to defend the award in connection with any such
          application.

          Expenses of Post-Award Proceedings. A party filing an application to
          ----------------------------------
          vacate or modify the award of the Arbitrator shall be responsible for
          his, her, or its own costs, expenses and attorneys' fees. In addition,
          if an application is unsuccessful in that the party making the

                                   Ex. 3-24
<PAGE>
 
          application does not obtain a modification or the vacation of the
          award of the Arbitrator, that party shall bear all expenses of the
          application, including the reasonable fees and expenses incurred in
          connection therewith by the Arbitrator.

          Distribution. The Trustees shall distribute the Trust Assets then held
          ------------
          in the Class 7B Liquidating Trust, net of costs and expenses properly
          chargeable to the Trust Assets under the Plan or the Class 7B
          Liquidating Trust Agreement, as soon as practicable after either the
          award of the Arbitrator or order of the Court approving a consensual
          allocation of Trust Assets has become final and not subject to
          modification, reversal or appeal, and shall make such distribution in
          accordance with such arbitration award or such order of the Court. If,
          subsequent to such distribution, the Class 7B Liquidating Trust shall
          acquire additional Trust Assets, then as soon as practicable after
          receipt by the Class 7B Liquidating Trust, the Trustees shall
          distribute those additional Trust Assets, net of costs and expenses
          properly chargeable to the Trust Assets under the Plan or the Class 7B
          Liquidating Trust Agreement (including net of attorneys' fees and
          costs incurred in connection with such additional assets) according to
          the same allocation determined previously by consensus or arbitration,
          as the case may be. With respect to any distribution of Trust Assets
          to Allowed Class 7B Claims which are included within a class action
          against the Debtor which was pending on the Petition Date, the
          Trustees shall make such distribution by delivering it to an escrow
          account designated by lead counsel for that class in such class action
          and such distribution shall remain in that escrow account until such
          time as (i) such lead counsel has been able to apply to the court in
          which the respective class action is pending as to the matter of a
          method of final distribution and an award of attorneys' fees and
          costs, and (ii) any order on such application has become final.

          Termination. Following (i) a final determination of the Company KPMG
          Claims and other claims constituting Trust Assets, whether by virtue
          of prosecution or settlement thereof, or (ii) a decision by the
          Trustees not to take any action with respect to the Company KPMG
          Claims and other claims constituting Trust Assets, at such time as all
          Trust Assets, including any and all sums resulting from prosecution or
          settlement of the Company KPMG Claims, or other claims constituting
          Trust Assets, have been fully and finally distributed, the Trustees
          shall apply to the Court for an order of the Court terminating the
          Class 7B Liquidating Trust, upon such notice as the Court shall order.
          Upon the Court's order terminating the Class 7B Liquidating Trust
          becoming final, the Class 7B Liquidating Trust shall be terminated,
          and the Trustees shall be discharged of all responsibilities with
          respect to the Trust."

12.  Section 11.05 of the Plan is hereby modified to read in its entirety as
     follows:

     "11.05 EXCULPATION. Except with respect to KPMG Peat Marwick, neither the
     Debtor, the Reorganized Debtor, any of their respective officers,
     directors, employees, advisors, agents, professionals or representatives,
     benefit plan administrators or trustees, nor the members of the Steering
     Committee or the parties to the Consent Agreement and their principals,
     advisors, professionals and agents, nor the Creditors' Committee, Equity
     Holders' Committee, Securities Claimants' Committee and their members,
     advisors, professionals and agents shall have or incur any liability to any
     holder of a Claim or Interest for any act or omission in connection with or
     arising out actions taken or omitted to be taken in good faith in
     connection with the Debtor's restructuring, the Plan, the Reorganization
     Case, including all prepetition activities leading to the promulgation and
     confirmation of the Plan, and administration of the Plan, including the
     execution of corporate governance, debt and securities regulation documents
     and filings, or the property to be distributed under the Plan; provided,
     however, such exculpation shall not relate to post confirmation conduct
     deemed to be willful misconduct or gross negligence. Upon the Confirmation
     Date, the Securities Claimants' Committee shall dismiss or shall be deemed
     to have dismissed, with prejudice, adversary proceeding No. 98-A-01580
     against the non-director defendants therein."

                                   Ex. 3-25
<PAGE>
 
13.  Section 12.03 of the Plan is hereby modified to read in its entirety as
     follows:

     "12.03 LIMITED SURVIVAL OF THE DEBTOR'S CORPORATE INDEMNITIES. Except as
     provided in Section 5.03 and this Section 12.03, the Corporate Indemnities
     shall not be discharged or impaired by Confirmation of this Plan. Such
     obligations shall be deemed and treated as executory contracts to be
     assumed by the Debtor and the Reorganized Debtor pursuant to the Plan, and
     shall continue as obligations of the Reorganized Debtor, subsequent to the
     Effective Date, provided that the Debtor's or Reorganized Debtor's
     obligations on such Corporate Indemnities shall be limited as follows:

          (i)  the claims of officers, agents and employees who remain employed
               by the Reorganized Debtor as of the first day immediately
               following the Effective Date (excluding any claims covered by the
               Indemnification Settlement Fund) shall be fully assumed;

          (ii) the claims of officers, agents, and employees (other than the
               claims of the estate of James A. Doyle and John N. Brincat in
               respect of which no obligations shall be assumed), who are no
               longer employed by the Reorganized Debtor as of the first day
               immediately following the Effective Date, shall be assumed only
               to the extent that they relate to reasonable costs and expenses
               incurred after the Effective Date in connection with their
               participation in an agency or government investigation and shall
               be limited to $250,000 in the aggregate, such claims to be
               submitted to the Reorganized Debtor and paid upon adequate
               verification or, to the extent such claims exceed $250,000, paid
               on a pro rata basis;

          (iii)  the Beneficiaries shall be entitled to assert Allowed
               Indemnification Claims, but shall be entitled to compensation on
               account of such claims only (x) out of the Indemnification
               Settlement Fund, and (y) to the extent of insurance coverage
               available under the Reliance Policies; and

          (iv) the claims of persons who are outside directors as of the day
               preceding the Effective Date shall be assumed and limited to the
               sum of (x) any remaining fee retainer in possession of the
               professionals retained by such directors and (y) the available
               balance from time to time of the Outside Directors Reserve.
               Nothing in this subsection shall limit any rights of such persons
               provided under Section 12.03(iii) of this Plan."

14.  Section 13.01 of the Plan is hereby modified to read in its entirety as
     follows:

     "13.01 RETENTION OF JURISDICTION. Notwithstanding the entry of the
     Confirmation Order or the Effective Date having occurred, the Court shall
     retain original and exclusive jurisdiction to (a) determine any disputed
     Claims, (b) determine requests for payment of Claims entitled to priority
     under section 507(a)(1) of the Bankruptcy Code, including compensation of
     and reimbursement of expenses of professionals and other parties entitled
     thereto, (c) resolve controversies and disputes regarding interpretation
     and implementation of the Plan, (d) enter orders in aid of the Plan,
     including, without limitation, appropriate orders (which may include
     contempt or other sanctions) to protect the Debtor and the Reorganized
     Debtor in accordance with sections 524 and 1141 of the Bankruptcy Code and
     the terms and conditions of the Confirmation Order, (e) modify the Plan
     pursuant to Section 14.02 of the Plan, (f) determine any and all
     applications, adversary proceedings and contested or litigated matters
     pending on the Effective Date, (g) allow, disallow, estimate, liquidate or
     determine any Claim or Interest and to enter or enforce any order requiring
     the filing of any such Claim before a particular date, (h) determine any
     and all pending applications for the rejection of executory contracts or
     unexpired leases, or for the assignment of assumed executory contracts and
     unexpired leases, and to hear and determine, and if need be to liquidate,
     any and all Claims arising from any such rejection, assumption and/or
     assignment, (i) determine any actions or controversies arising under or in
     connection with the Plan, the Confirmation Order, the Class 7B Liquidating
     Trust or any contract,

                                   Ex. 3-26
<PAGE>
 
     instrument, release, or other agreement created in connection with the
     Plan, (j) enter and implement orders as are necessary or appropriate if the
     Confirmation Order is for any reason modified, stayed, reversed, revoked or
     vacated, (k) enter a final decree closing the Reorganization Case, (l)
     determine any actions or controversies related to or asserted against the
     Exchange Agent, (m) enter and implement orders as are necessary to the
     transactions set forth in Section 8.05 of the Plan and (n) determine any
     and all claims and controversies of the Debtor against Lyndon Insurance
     Group and Aon Automotive Group, Inc."

15.  The following definition shall be inserted after the existing definition of
     INTEREST RESERVE:

     "KPMG  OR KPMG PEAT MARWICK MEANS KPMG Peat Marwick LLP and any of its
     related entities or partners.

                                   Ex. 3-27
<PAGE>
 
                            MERCURY FINANCE COMPANY

                                   AMENDMENT
                                      TO
    AMENDED AND RESTATED 1989 STOCK OPTION AND INCENTIVE COMPENSATION PLAN
(As approved by the United States Bankruptcy Court for the Northern District of
Illinois pursuant to Section 303 of the General Corporation Law of the State of
                                   Delaware)


1.   Amendment
     ---------

     By order of the United States Bankruptcy Court for the Northern District of
     Illinois, Mercury Finance Company (the "Company") hereby further amends the
     Mercury Finance Company Amended and Restated 1989 Stock Option and
     Incentive Compensation Plan (the "Plan") by unanimous action of the
     Directors and Stockholders of the Company pursuant to Section 303 of the
     General Corporation Law of the State of Delaware as follows:

     a.  Sections 1(2), 2.05, 2.06, 2.08, 2.09, 5.01(a), 5.02 and 6.02 are
         hereby deleted in their entirety.

     b.  Section 2.03 is hereby amended by changing the reference to "par value
         $1.00 per share" to "par value $0.01 per share."

     c.  Section 2.12 is hereby amended by deleting the portion of the sentence
         after the word "Participant."

     d.  Section 2.13 is hereby amended by deleting the portion of the sentence
         after the term "Option Date."

     e.  Section 3 is hereby amended to reserve for issuance under the Plan
         950,000 shares of Common Stock and by adding the following sentence at
         the end of the paragraph :

               No "covered employee" (as such term is defined in Section 162(m)
               of the Internal Revenue Code of 1986, as amended) shall be
               granted more than 500,000 shares of Common Stock in any calendar
               year with respect to a stock option.

     f.  The first sentence of Section 4.01 is hereby amended to read as
         follows:

               The Committee that administers the Plan shall consist of not
               fewer than two (2) members of the Board of Directors who are non-
               employee directors within the meaning of Securities and Exchange
               Commission Rule 16b-3(b)(3)(i).  Such persons may be appointed
               from time to time by the Board.

     g.  Section 4.02 (c) is hereby amended by deleting the phrase:

           "and except for the grants to directors provided for in paragraph
           5.02,"

                                   Ex. 3-28
<PAGE>
 
h.   Section 5.01(b) is hereby renumbered 5.01(a) and amended to add directors
     as a class of eligible participants.

i.   Section 5.03 is hereby amended by deleting the phrase "Options and each
     award under Section 5.01(b) of this Plan will consist of."

j.   Section 6.01 is hereby amended by adding the following clause at the
     end of the paragraph:

               ; provided that such Common Stock has been held by the
               Participant for at least six months.

k.   Section 6.03 is amended by adding the following phrase at the beginning
     of the first sentence:

               Except as otherwise provided in the form of option agreement
               or

l.   Section 9 is hereby amended to delete all references to Daniel Terra.

m.   Section 10 is hereby amended to permit in the discretion of the Committee
     limited transferability of stock options to members of the holder's
     immediate family and trusts or family limited partnership for their
     benefit.

n.   Section 16 is hereby amended to permit the use of share withholding to
     pay income taxes associated with the exercise of nonqualified stock
     options.

o.   Section 17 is amended by deleting the present language and substituting the
     following:

               The Board of Directors may from time to time amend or revise the
               terms of this Plan in whole or in part, but no amendment shall
               disqualify the Plan from the exemption provided by Securities and
               Exchange Commission Rule 16b-3. In addition no such amendment
               shall be made without the approval of the Company's stockholders
               to the extent such approval is required by law or regulatory
               authority.

p.   Section 18.02 is hereby amended by deleting the present language and
     substituting the following:

               The Board of Directors may terminate the Plan at any time with
               respect to any shares not yet subject to Options. Unless
               terminated earlier by the Board of Directors, the Plan will
               terminate ten years from the effective date of this Amendment.

2.   Effect and Effective Date.
     ------------------------- 

     This Amendment and all provisions of the Plan implementing this
     Amendment shall be effective as if approved by  unanimous consent of the
     Directors and Stockholders on February __, 1999.

                                   Ex. 3-29
<PAGE>
 
     3.  Authority and Restatement
         -------------------------

     The proper officers of this Corporation are hereby authorized to take all
actions they deem necessary and appropriate to carry out the purposes and intent
of the foregoing Amendment and to prepare a Restatement of the Plan containing
all of the changes set forth in the foregoing Amendment.

                                   Ex. 3-30