ACTION PERFORMANCE COMPANIES, INC.




        $115,000,000.00 (including $15,000,000.00 over-allotment option)

                 4 3/4% Convertible Subordinated Notes due 2005




                               PURCHASE AGREEMENT

                              dated March 18, 1998












NATIONSBANC MONTGOMERY SECURITIES LLC
CIBC OPPENHEIMER CORP.
EVEREN SECURITIES, INC.
PIPER JAFFRAY INC.
<PAGE>
                               PURCHASE AGREEMENT


                                                                  March 18, 1998


NATIONSBANC MONTGOMERY SECURITIES LLC
CIBC OPPENHEIMER CORP.
EVEREN SECURITIES, INC.
PIPER JAFFRAY INC.
c/o NATIONSBANC MONTGOMERY SECURITIES LLC
600 Montgomery Street
San Francisco, California  94111


Ladies and Gentlemen:

         Introductory.   Action   Performance   Companies,   Inc.,   an  Arizona
corporation  (the  "Company),  proposes to issue and sell to the several Initial
Purchasers named in Schedule A (the "Initial Purchasers"),  acting severally and
not  jointly,   the  respective   amounts  set  forth  in  such  Schedule  A  of
$100,000,000.00  aggregate  principal amount of the Company's 4 3/4% Convertible
Subordinated  Notes  due 2005 (the  "Firm  Offered  Notes").  The  Company  also
proposes to issue and sell to the Initial Purchasers not more than an additional
$15,000,000.00 aggregate principal amount of its 4 3/4% Convertible Subordinated
Notes due 2005 (the "Additional  Offered Notes," and collectively  with the Firm
Offered  Notes,  the "Notes") if and to the extent that  NationsBanc  Montgomery
Securities  LLC shall have  determined  to  exercise,  on behalf of the  Initial
Purchasers,  the right to purchase such amount granted to the Initial Purchasers
in Section 2 hereof.  NationsBanc  Montgomery  Securities LLC, CIBC  Oppenheimer
Corp., EVEREN Securities,  Inc. and Piper Jaffray Inc. have agreed to act as the
several  Initial  Purchasers  in  connection  with the  offering and sale of the
Notes.  The Notes will be  convertible  into  shares of common  stock,  $.01 par
value, of the Company (the "Underlying Securities" and, together with the Notes,
the "Securities"), as more fully set forth in the Indenture (as defined below).

         The  Securities  will be issued  pursuant to an  indenture  dated as of
March 24, 1998 (the  "Indenture")  between the Company and First Union  National
Bank, as trustee (the "Trustee").  Securities  issued in book-entry form will be
issued in the name of Cede & Co.,  as nominee of The  Depository  Trust  Company
(the  "Depositary")  pursuant  to a DTC  Agreement,  to be dated as of the First
Closing Date (as defined in Section 2) (the "DTC Agreement"), among the Company,
the Trustee and the Depositary.

         The holders of the  Securities  will be  entitled to the  benefits of a
registration   rights   agreement  to  be  dated  as  of  March  24,  1998  (the
"Registration Rights Agreement"),  among the Company and the Initial Purchasers,
pursuant  to which the Company  will agree to file,  within 60 days of the First
Closing  Date,  a  registration  statement  with  the  Securities  and  Exchange
Commission  (the  "Commission")  registering the Securities for resale under the
Securities  Act of 1933, as amended (the  "Securities  Act," which term, as used
herein,  includes  the  rules  and  regulations  of the  Commission  promulgated
thereunder).
<PAGE>
         The Company  understands that the Initial Purchasers propose to make an
offering of the  Securities  on the terms and in the manner set forth herein and
in the  Offering  Memorandum  (as  defined  below) and agrees  that the  Initial
Purchasers  may resell,  subject to the  conditions  set forth herein,  all or a
portion of the Securities to purchasers  (the  "Subsequent  Purchasers")  at any
time after the date of this Agreement. The Securities are to be offered and sold
to  or  through  the  Initial  Purchasers  without  being  registered  with  the
Commission under the Securities Act in reliance upon exemptions  therefrom.  The
terms of the  Securities  and the  Indenture  will require that  investors  that
acquire  Securities  expressly  agree  that  Securities  may only be  resold  or
otherwise transferred,  after the date hereof, if such Securities are registered
for resale under the  Securities  Act or if an exemption  from the  registration
requirements  of the  Securities  Act is  available  (including  the  exemptions
afforded  by  Rule  144A  ("Rule  144A")  or  Regulation  S   ("Regulation   S")
thereunder).

         The Company has prepared and delivered to each Initial Purchaser copies
of an  Offering  Memorandum  "subject  to  completion"  dated March 4, 1998 (the
"Preliminary  Offering  Memorandum")  and has  prepared and will deliver to each
Initial  Purchaser,  not later than 12:00 p.m. on the second  business day after
the date  hereof,  copies  of the  Offering  Memorandum  dated  March  18,  1998
describing the terms of the Securities,  each for use by such Initial  Purchaser
in connection with its  solicitation  of offers to purchase the  Securities.  As
used herein,  the "Offering  Memorandum" shall mean, with respect to any date or
time referred to in this  Agreement,  the Company's  Offering  Memorandum  dated
March 18, 1998,  including  amendments  or  supplements  thereto,  including any
international  supplement  thereto,  any exhibits thereto,  and the Incorporated
Documents  (as defined by Section 1(e) below),  in the most recent form that has
been  prepared  and  delivered  by the  Company  to the  Initial  Purchasers  in
connection with their  solicitation of offers to purchase  Securities.  Further,
any reference to the Preliminary  Offering Memorandum or the Offering Memorandum
shall be deemed to refer to and include any Additional  Issuer  Information  (as
defined in Section 3(g)) furnished by the Company prior to the completion of the
distribution of the Securities.

         All references in this Agreement to financial  statements and schedules
and other  information  which is  "contained,"  "included"  or  "stated"  in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial  statements  and schedules and other  information
which  are  incorporated  by  reference  in the  Offering  Memorandum;  and  all
references  in this  Agreement  to  amendments  or  supplements  to the Offering
Memorandum  shall be deemed to mean and include the filing of any document under
the  Securities  Exchange Act of 1934 (the "Exchange  Act",  which term, as used
herein,  includes  the  rules  and  regulations  of the  Commission  promulgated
thereunder)  which is  incorporated or deemed to be incorporated by reference in
the Offering Memorandum.

         The Company hereby confirms its agreements with the Initial  Purchasers
as follows:

         Section 1.  Representations and Warranties.

         The Company hereby  represents,  warrants and covenants to each Initial
Purchaser as follows:

                  (a) No  Registration  Required.  Subject to  compliance by the
Initial Purchasers with the  representations and warranties set forth in Section
2(e)  hereof and with the  procedures  set forth in Section 7 hereof,  it is not
necessary in connection  with the offer,  sale and delivery of the Securities to
the  Initial  Purchasers  and  to  each  Subsequent   Purchaser  in  the  manner
contemplated
                                       2
<PAGE>
by this Agreement and the Offering  Memorandum to register the Securities  under
the Securities Act or, until such time as the Securities are registered pursuant
to an effective registration statement, to qualify the Indenture under the Trust
Indenture Act of 1939 (the "Trust  Indenture  Act",  which term, as used herein,
includes the rules and regulations of the Commission promulgated thereunder).

                  (b) No Integration of Offerings or General  Solicitation.  The
Company has not,  directly or indirectly,  solicited any offer to buy or offered
to sell, and will not, directly or indirectly, solicit any offer to buy or offer
to sell, in the United States or to any United States  citizen or resident,  any
security  which is or would be integrated  with the sale of the  Securities in a
manner that would require the  Securities to be registered  under the Securities
Act. None of the Company, its affiliates (as such term is defined in Rule 501(b)
under the Securities Act (each, an "Affiliate")), or any person acting on its or
any of their behalf (other than the Initial  Purchasers,  as to whom the Company
makes no  representation  or warranty) has engaged or will engage, in connection
with the  offering of the  Securities,  in any form of general  solicitation  or
general  advertising within the meaning of Rule 502(c) under the Securities Act.
With respect to those Securities sold in reliance upon Regulation S, (i) none of
the Company,  its  Affiliates or any person acting on its or their behalf (other
than the Initial  Purchasers,  as to whom the Company makes no representation or
warranty) has engaged or will engage in any directed  selling efforts within the
meaning of Regulation S and (ii) each of the Company and its  affiliates and any
person acting on its or their behalf (other than the Initial  Purchasers,  as to
whom the Company  makes no  representation  or  warranty)  has complied and will
comply with the offering restrictions set forth in Regulation S. Notwithstanding
the foregoing,  the Company makes no  representation or warranty relating to any
actions taken by the Initial Purchasers.

                  (c)  Eligibility  for Resale  under  Rule 144A.  The Notes are
eligible for resale  pursuant to Rule 144A and will not be, at the First Closing
Date and the  Second  Closing  Date,  as the case may be,  of the same  class as
securities listed on a national  securities  exchange registered under Section 6
of the Exchange Act or quoted in a U.S. automated interdealer quotation system.

                  (d) The Offering Memorandum. The Offering Memorandum does not,
and at the First Closing Date and the Second  Closing,  as the case may be, will
not,  include an untrue statement of a material fact or omit to state a material
fact  necessary  in order to make the  statements  therein,  in the light of the
circumstances  under which they were made,  not  misleading;  provided that this
representation,  warranty  and  agreement  shall not apply to  statements  in or
omissions from the Offering  Memorandum  made in reliance upon and in conformity
with  information  furnished to the Company in writing by any Initial  Purchaser
through NationsBanc  Montgomery Securities LLC expressly for use in the Offering
Memorandum.  Each  of the  Preliminary  Offering  Memorandum  and  the  Offering
Memorandum,  as of its date,  contains  all the  information  specified  in, and
meeting the requirements  of, Rule  144A(d)(4).  The Company has not distributed
and will not  distribute,  prior to the later of the First  Closing Date and the
completion  of the  Initial  Purchasers'  distribution  of the  Securities,  any
offering  material in  connection  with the offering and sale of the  Securities
other than a preliminary Offering Memorandum or the Offering Memorandum.

                  (e)  Incorporated   Documents.   The  Offering  Memorandum  as
delivered  from time to time shall  incorporate  by  reference  the most  recent
Annual  Report of the  Company on Form 10-K filed with the  Commission  and each
Quarterly  Report of the  Company  on Form 10-Q and each  Current  Report of the
Company on Form 8-K filed with the Commission since the filing of the end of the
fiscal year to which such Annual  Report  relates.  Subject to  amendments to be
filed in accordance with the Commission's comment letter dated February 27, 1998
generally in the form of a draft previously  provided to counsel for the Initial
Purchasers, the documents
                                       3
<PAGE>
incorporated  or  deemed  to  be  incorporated  by  reference  in  the  Offering
Memorandum  at the time they were or  hereafter  are filed  with the  Commission
(collectively,  the  "Incorporated  Documents")  complied and will comply in all
material  respects  with the  requirements  of the Exchange  Act and,  when read
together with the other information in the Offering  Memorandum,  at the date of
the Offering Memorandum,  the First Closing Date and the Second Closing Date, as
the case may be, do not and will not, as of their respective  dates,  include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements  therein,  in the light of
the circumstances under which they were made, not misleading.

                  (f) The  Purchase  Agreement.  This  Agreement  has been  duly
authorized,  executed and delivered by, and is a valid and binding agreement of,
the  Company,  enforceable  in  accordance  with its terms,  except as rights to
indemnification  hereunder  may be limited by  applicable  law and except as the
enforcement  hereof may be limited by  bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar  laws  relating  to or  affecting  the  rights and
remedies of creditors or by general equitable principles.

                  (g) The Registration  Rights  Agreement and DTC Agreement.  At
the First Closing Date and the Second  Closing Date, as the case may be, each of
the Registration Rights Agreement and the DTC Agreement will be duly authorized,
executed and  delivered  by, and will be a valid and binding  agreement  of, the
Company,  enforceable  in  accordance  with its  terms,  except as the rights to
indemnification  thereunder  may be limited by applicable  law and except as the
enforcement  thereof may be limited by bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar  laws  relating  to or  affecting  the  rights and
remedies of creditors or by general equitable principles.

                  (h)  Authorization  of  the  Securities  .  The  Notes  to  be
purchased  by  the  Initial   Purchasers  from  the  Company  are  in  the  form
contemplated  by the Indenture,  have been duly authorized for issuance and sale
pursuant to this  Agreement and the Indenture and, at the First Closing Date and
the Second Closing Date, as the case may be, will have been duly executed by the
Company and, when  authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor,  will constitute valid
and binding  agreements of the Company,  enforceable  in  accordance  with their
terms,  except  as  the  enforcement  thereof  may  be  limited  by  bankruptcy,
insolvency,  reorganization,  moratorium  or other  similar laws  relating to or
affecting  the  rights  and  remedies  of  creditors  or  by  general  equitable
principles and will be entitled to the benefits of the Indenture.

                  (i) Underlying Securities.  The Underlying Securities reserved
for issuance upon conversion of the Notes have been duly authorized and reserved
and, when issued upon  conversion of such Notes in accordance  with the terms of
the Indenture,  will be validly issued,  fully paid, and non-assessable and will
not be subject to preemptive or similar rights.

                  (j)  Authorization  of the  Indenture.  The Indenture has been
duly  authorized  by the Company  and, at the First  Closing Date and the Second
Closing  Date, as the case may be, will have been duly executed and delivered by
the Company and will  constitute  a valid and binding  agreement of the Company,
enforceable  against the  Company in  accordance  with its terms,  except as the
enforcement  thereof may be limited by bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar  laws  relating  to or  affecting  the  rights and
remedies of creditors or by general equitable principles.
                                       4
<PAGE>
                  (k)  Description  of the  Securities  and the  Indenture.  The
Securities  and the  Indenture  will  conform in all  material  respects  to the
respective  statements relating thereto contained in the Offering Memorandum and
will be in  substantially  the  respective  forms  previously  delivered  to the
Initial Purchasers.

                  (l) No Material Adverse Change.  Except as otherwise disclosed
in the  Offering  Memorandum,  subsequent  to the  respective  dates as of which
information is given in the Offering Memorandum:  (i) there has been no material
adverse change,  or any development  that could reasonably be expected to result
in a material adverse change,  in the condition,  financial or otherwise,  or in
the earnings,  business,  operations  or prospects,  whether or not arising from
transactions  in the  ordinary  course  of  business,  of the  Company  and  its
subsidiaries,  considered  as one entity  (any such change is called a "Material
Adverse  Change");  (ii) the Company  and its  subsidiaries,  considered  as one
entity, have not incurred any material liability or obligation, indirect, direct
or  contingent,  not in the  ordinary  course of business  nor entered  into any
material  transaction or agreement not in the ordinary  course of business;  and
(iii) there has been no dividend or distribution  of any kind declared,  paid or
made by the  Company  or,  except  for  dividends  paid to the  Company or other
subsidiaries,  any  of its  subsidiaries  on  any  class  of  capital  stock  or
repurchase or redemption by the Company or any of its  subsidiaries of any class
of capital stock.

                  (m)  Independent  Accountants.  Arthur Andersen LLP, which has
expressed  its opinion with respect to the financial  statements  (which term as
used in this  Agreement  includes  the related  notes  thereto)  and  supporting
schedules filed with the Commission and included in the Offering Memorandum, are
independent  public or  certified  public  accountants  within  the  meaning  of
Regulation S-X under the Securities Act and the Exchange Act.

                  (n)  Preparation  of the Financial  Statements.  The financial
statements,   together  with  the  related  schedules  and  notes,  included  or
incorporated  by  reference  in  the  Offering  Memorandum  present  fairly  the
consolidated financial position of the Company and its subsidiaries as of and at
the dates  indicated and the results of their  operations and cash flows for the
periods  specified.  Such financial  statements have been prepared in conformity
with generally  accepted  accounting  principles as applied in the United States
applied on a consistent basis throughout the periods involved,  except as may be
expressly  stated in the related notes thereto.  The financial data set forth in
the  Offering  Memorandum  under the captions  "Summary -- Summary  Consolidated
Financial Data",  "Capitalization"  and "Selected  Consolidated  Financial Data"
fairly present the information set forth therein on a basis consistent with that
of the audited financial statements  contained in the Offering  Memorandum.  The
pro forma financial data and/or  statements of the Company and its  subsidiaries
and the related notes thereto  included  under the caption  "Unaudited Pro Forma
Condensed  Combined  Financial   Information"  and  elsewhere  in  the  Offering
Memorandum present fairly the information  contained therein, have been prepared
in accordance  with the  Commission's  rules and guidelines  with respect to pro
forma  financial  statements,  and have  been  properly  presented  on the bases
described  therein,  and the  assumptions  used in the  preparation  thereof are
reasonable and the  adjustments  used therein are  appropriate to give effect to
the transactions and circumstances  referred to therein. The Company's ratios of
earnings  to fixed  charges  set  forth in the  Offering  Memorandum  under  the
captions   "Summary--Summary   Consolidated   Financial   Data",  and  "Selected
Consolidated Financial Data" have been calculated in compliance with Item 503(d)
of Regulation S-K under the Securities Act.

                  (o)  Incorporation  and Good  Standing  of the Company and its
Subsidiaries.   Each  of  the  Company  and  its   subsidiaries  has  been  duly
incorporated and is validly existing as a
                                       5
<PAGE>
corporation  in  good  standing  under  the  laws  of  the  jurisdiction  of its
incorporation  and has corporate  power and authority to own,  lease and operate
its  properties  and to  conduct  its  business  as  described  in the  Offering
Memorandum  and,  in the case of the  Company,  to enter  into and  perform  its
obligations under each of this Agreement, the Registration Rights Agreement, the
DTC Agreement, the Securities,  and the Indenture.  Each of the Company and each
subsidiary is duly qualified as a foreign  corporation to transact  business and
is in  good  standing  in each  jurisdiction  in  which  such  qualification  is
required,  whether by reason of the  ownership  or leasing  of  property  or the
conduct of  business,  except  for such  jurisdictions  where the  failure to so
qualify or to be in good standing would not,  individually  or in the aggregate,
result in a Material Adverse Change.  All of the issued and outstanding  capital
stock of each subsidiary has been duly  authorized and validly issued,  is fully
paid  and  nonassessable  and is  owned  by the  Company,  directly  or  through
subsidiaries,  free and clear of any security interest,  mortgage, pledge, lien,
encumbrance  or  claim.  The  Company  does  not  own or  control,  directly  or
indirectly,  any  corporation,  association  or  other  entity  other  than  the
subsidiaries listed on Schedule B hereto.

                  (p)  Capitalization  and  Other  Capital  Stock  Matters.   At
December 31, 1997, on a consolidated basis, after giving pro forma effect to the
issuance and sale of the Securities  pursuant hereto,  the Company would have an
authorized  and  outstanding   capitalization  as  set  forth  in  the  Offering
Memorandum  under  the  caption  "Capitalization"  (other  than  for  subsequent
issuances of capital stock, if any, pursuant to employee benefit plans described
in the Offering  Memorandum or upon exercise of outstanding  options or warrants
described in the Offering Memorandum). The Common Stock conforms in all material
respects to the description thereof set forth in the Offering Memorandum. All of
the  outstanding  shares of Common Stock have been duly  authorized  and validly
issued, are fully paid and nonassessable and have been issued in compliance with
federal and state  securities  laws.  None of the  outstanding  shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase  securities of the Company.
There are no authorized or outstanding  options,  warrants,  preemptive  rights,
rights  of  first  refusal  or other  rights  to  purchase,  or  equity  or debt
securities  convertible  into or  exchangeable  or exercisable  for, any capital
stock of the  Company or any of its  subsidiaries  other  than those  accurately
described in the Offering  Memorandum.  The  description of the Company's  stock
option,  stock bonus and other stock plans or  arrangements,  and the options or
other rights granted thereunder, set forth in the Offering Memorandum (including
through  incorporation by reference) accurately and fairly describes such plans,
arrangements, options and rights.

                  (q) Stock  Exchange  Listing.  The Common Stock is  registered
pursuant  to  Section  12(g) of the  Exchange  Act and is listed  on the  Nasdaq
National  Market,  and the Company has taken no action designed to, or likely to
have the effect of,  terminating the  registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Nasdaq National Market,  nor
has the Company  received any  notification  that the Commission or the National
Association  of  Securities   Dealers,   Inc.  (the  "NASD")  is   contemplating
terminating such registration or listing.

                  (r)  Non-Contravention  of  Existing  Instruments;  No Further
Authorizations  or  Approvals  Required.  Neither  the  Company  nor  any of its
subsidiaries  is in  violation  of its charter or by-laws or is in default  (or,
with the  giving of notice or lapse of time,  would be in  default)  ("Default")
under  any  indenture,  mortgage,  loan or  credit  agreement,  note,  contract,
franchise,  lease  or  other  instrument  to  which  the  Company  or any of its
subsidiaries  is a party or by which it or any of them may be bound,  including,
without limitation, the Company's Credit Facility with First Union National Bank
or the Company's 8.05% Senior Notes due 1999, or to which any of the
                                       6
<PAGE>
property or assets of the Company or any of its  subsidiaries  is subject (each,
an "Existing  Instrument"),  except for such Defaults as would not, individually
or in  the  aggregate,  result  in a  Material  Adverse  Change.  The  Company's
execution,  delivery and performance of this Agreement,  the Registration Rights
Agreement,  the DTC Agreement,  and the Indenture, and the issuance and delivery
of the Securities and consummation of the transactions  contemplated  hereby and
thereby and by the Offering  Memorandum  (i) will not result in any violation of
the provisions of the charter or by-laws of the Company or any subsidiary,  (ii)
will not conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering  Event  (as  defined  below)  under,  or result  in the  creation  or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its  subsidiaries  pursuant  to, or require the consent of any
other part to, any Existing  Instrument,  except for such  conflicts,  breaches,
Defaults,  liens,  charges or encumbrances as would not,  individually or in the
aggregate,  result in a Material Adverse Change and (iii) will not result in any
violation  of any law,  administrative  regulation  or  administrative  or court
decree  applicable to the Company or any subsidiary,  except for such violations
as would  not  result  in a  Material  Adverse  Change.  No  consent,  approval,
authorization  or other order of, or  registration  or filing with, any court or
other  governmental  or  regulatory  authority  or agency,  is required  for the
Company's   execution,   delivery  and  performance  of  this   Agreement,   the
Registration  Rights  Agreement,  the DTC  Agreement  or the  Indenture,  or the
issuance and delivery of the Securities,  or  consummation  of the  transactions
contemplated hereby and thereby and by the Offering  Memorandum,  except such as
have been obtained or made by the Company and are in full force and effect under
the  Securities  Act,  applicable  state  securities  or blue sky laws.  As used
herein, a "Debt Repayment  Triggering  Event" means any event or condition which
gives,  or with the giving of notice or lapse of time would give,  the holder of
any note,  debenture or other evidence of indebtedness  (or any person acting on
such  holder's  behalf)  the right to  require  the  repurchase,  redemption  or
repayment of all or a portion of such  indebtedness by the Company or any of its
subsidiaries.

                  (s) No Material  Actions or  Proceedings.  Except as otherwise
disclosed  in the  Offering  Memorandum,  there  are no  legal  or  governmental
actions,  suits  or  proceedings  pending  or,  to the  best  of  the  Company's
knowledge,  threatened  (i)  against  or  affecting  the  Company  or any of its
subsidiaries,  (ii) which has as the subject thereof any officer or director of,
or property owned or leased by, the Company or any of its  subsidiaries or (iii)
relating to environmental or discrimination  matters, where in any such case (A)
there is a reasonable  possibility that such action, suit or proceeding might be
determined  adversely to the Company or such subsidiary and (B) any such action,
suit or proceeding, if so determined adversely,  would reasonably be expected to
result in a Material  Adverse Change or adversely affect the consummation of the
transactions  contemplated by this Agreement. No material labor dispute with the
employees  of the Company or any of its  subsidiaries  exists or, to the best of
the Company's knowledge, is threatened or imminent.

                  (t)  Intellectual   Property  Rights.   The  Company  and  its
subsidiaries own or possess sufficient  trademarks,  trade names, patent rights,
copyrights,   licenses,  approvals,  trade  secrets  and  other  similar  rights
(collectively,  "Intellectual  Property Rights") reasonably necessary to conduct
their  businesses as now conducted;  and the expected  expiration of any of such
Intellectual  Property  Rights  would not result in a Material  Adverse  Change.
Except as disclosed in the Offering  Memorandum,  neither the Company nor any of
its  subsidiaries  has  received  any notice of  infringement  or conflict  with
asserted Intellectual Property Rights of others, which infringement or conflict,
if the subject of an unfavorable  decision,  would result in a Material  Adverse
Change.

                  (u)  All  Necessary   Permits,   etc.  The  Company  and  each
subsidiary  possess  such  valid and  current  certificates,  authorizations  or
permits issued by the appropriate state, federal or
                                       7
<PAGE>
foreign  regulatory  agencies or bodies  necessary to conduct  their  respective
businesses,  and neither the Company nor any  subsidiary has received any notice
of proceedings  relating to the revocation or modification of, or non-compliance
with,  any such  certificate,  authorization  or permit which,  singly or in the
aggregate,  if the subject of an unfavorable decision,  ruling or finding, could
result in a Material Adverse Change.

                  (v)  Title  to  Properties.   The  Company  and  each  of  its
subsidiaries  has good and  marketable  title to all the  properties  and assets
reflected  as owned in the  financial  statements  referred  to in Section  1(n)
above, in each case free and clear of any security interests,  mortgages, liens,
encumbrances,  equities,  claims  and  other  defects,  except  such  as do  not
materially and adversely affect the value of such property and do not materially
interfere  with  the use made or  proposed  to be made of such  property  by the
Company or such  subsidiary.  The real  property,  improvements,  equipment  and
personal  property  held under lease by the Company or any  subsidiary  are held
under valid and enforceable leases, with such exceptions as are not material and
do not  materially  interfere  with the use made or  proposed to be made of such
real property,  improvements,  equipment or personal  property by the Company or
such subsidiary.

                  (w) Tax  Law  Compliance.  The  Company  and its  consolidated
subsidiaries  have filed all  necessary  federal,  state and foreign  income and
franchise tax returns or have  properly  requested  extensions  thereof and have
paid all taxes  required to be paid by any of them and, if due and payable,  any
related or similar  assessment,  fine or penalty levied against any of them. The
Company has made  adequate  charges,  accruals  and  reserves in the  applicable
financial  statements  referred  to in  Section  1(n)  above in  respect  of all
federal,  state and  foreign  income and  franchise  taxes for all periods as to
which the tax liability of the Company or any of its  consolidated  subsidiaries
has not been finally determined.

                  (x) Company Not an "Investment Company".  The Company has been
advised of the rules and requirements  under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and after receipt
of payment for the Securities  will not be, an "investment  company"  within the
meaning of  Investment  Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company Act.

                  (y) Insurance.  Each of the Company and its  subsidiaries  are
insured by  recognized,  financially  sound  institutions  with policies in such
amounts  and with such  deductibles  and  covering  such risks as are  generally
deemed adequate and customary for their businessess  including,  but not limited
to, policies  covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage,  destruction,  acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able  (i) to renew  its  existing  insurance  coverage  as and when  such
policies expire or (ii) to obtain comparable coverage from similiar institutions
as may be necessary or  appropriate to conduct its business as now conducted and
at a cost that  would not result in a Material  Adverse  Change.  Neither of the
Company nor any subsidiary  has been denied any insurance  coverage which it has
sought or for which it has applied.

                  (z) No Price  Stabilization or  Manipulation.  The Company has
not taken and will not take,  directly or indirectly,  any action designed to or
that  might be  reasonably  expected  to cause or  result  in  stabilization  or
manipulation  of the price of any security of the Company to facilitate the sale
or resale of the Securities.
                                       8
<PAGE>
                  (aa) No Unlawful Contributions or Other Payments.  Neither the
Company nor any of its subsidiaries nor, to the best of the Company's knowledge,
any  employee  or  agent  of  the  Company  or  any  subsidiary,  has  made  any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character necessary to
be disclosed in the Offering  Memorandum in order to make the statements therein
not misleading.

                  (bb)  Company's  Accounting  System.  The Company  maintains a
system of accounting controls  sufficient to provide reasonable  assurances that
(i)  transactions  are  executed  in  accordance  with  management's  general or
specific  authorization;  (ii)  transactions are recorded as necessary to permit
preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted  only in accordance  with  management's  general or specific
authorization;  and (iv) the recorded accountability for assets is compared with
existing  assets at reasonable  intervals and  appropriate  action is taken with
respect to any differences.

                  (cc) Compliance with  Environmental  Laws. Except as disclosed
in the Offering  Memorandum or as otherwise  would not,  individually  or in the
aggregate,  result in a Material Adverse Change (i) to the best of the Company's
knowledge,  neither the Company nor any of its  subsidiaries  is in violation of
any federal,  state, local or foreign law or regulation relating to pollution or
protection of human health or the environment  (including,  without  limitation,
ambient air, surface water,  groundwater,  land surface or subsurface strata) or
wildlife,  including  without  limitation,  laws  and  regulations  relating  to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants,  wastes,  toxic substances,  hazardous  substances,  petroleum and
petroleum  products  (collectively,  "Materials of Environmental  Concern"),  or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage,  disposal,  transport or handling of Materials of  Environment  Concern
(collectively,  "Environmental  Laws"),  which  violation  includes,  but is not
limited to, noncompliance with any permits or other governmental  authorizations
required for the  operation  of the business of the Company or its  subsidiaries
under  applicable  Environmental  Laws,  or  noncompliance  with the  terms  and
conditions thereof, nor has the Company or any of its subsidiaries  received any
written communication,  whether from a governmental  authority,  citizens group,
employee or otherwise,  that alleges that the Company or any of its subsidiaries
is in  violation of any  Environmental  Law;  (ii) there is no claim,  action or
cause of action filed with a court or governmental  authority,  no investigation
with respect to which the Company has received  written  notice,  and no written
notice by any person or entity alleging  potential  liability for  investigatory
costs, cleanup costs,  governmental  responses costs, natural resources damages,
property damages,  personal  injuries,  attorneys' fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of
any Material of Environmental  Concern at any location owned, leased or operated
by the  Company or any of its  subsidiaries,  now or in the past  (collectively,
"Environmental  Claims"),  pending or, to the best of the  Company's  knowledge,
threatened  against  the  Company  or any of its  subsidiaries  or any person or
entity whose  liability  for any  Environmental  Claim the Company or any of its
subsidiaries  has retained or assumed  either  contractually  or by operation of
law;  and  (iii) to the best of the  Company's  knowledge,  there are no past or
present actions,  activities,  circumstances,  conditions,  events or incidents,
including,  without limitation,  the release, emission,  discharge,  presence or
disposal of any Material of Environmental  Concern, that reasonably could result
in a  violation  of any  Environmental  Law or form  the  basis  of a  potential
Environmental  Claim against the Company or any of its  subsidiaries  or against
any person or entity whose liability for any Environmental  Claim the Company or
any of its subsidiaries has retained or assumed either contractually or by
                                       9
<PAGE>
operation of law.

                  (dd) ERISA  Compliance.  The Company and its  subsidiaries and
any "employee  benefit plan" (as defined  under the Employee  Retirement  Income
Security  Act  of  1974,  as  amended,   and  the   regulations   and  published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections  414(b),  (c), (m) or (o) of the Internal  Revenue Code of
1986, as amended, and the regulations and published  interpretations  thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably  expected to occur
with respect to any  "employee  benefit plan"  established  or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates,  if such "employee  benefit plan" were terminated,  would have
any "amount of unfunded benefit  liabilities" (as defined under ERISA).  Neither
the Company,  its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably  expects  to incur any  liability  under  (i) Title IV of ERISA  with
respect to termination  of, or withdrawal  from, any "employee  benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates  that is intended to be qualified under Section 401(a) of the Code is
so  qualified  and  nothing has  occurred,  whether by action or failure to act,
which would cause the loss of such qualification.

         Any  certificate  signed by an officer of the Company and  delivered to
the Initial  Purchasers or to counsel for the Initial Purchasers shall be deemed
to be a representation  and warranty by the Company to each Initial Purchaser as
to the matters set forth therein.

         Section 2.  Purchase, Sale and Delivery of the Securities.

                  (a) The Firm Offered  Notes.  The Company  agrees to issue and
sell to the several Initial  Purchasers,  severally and not jointly,  all of the
Firm  Offered  Notes  upon the  terms  herein  set  forth.  On the  basis of the
representations,  warranties and agreements herein contained, and upon the terms
but subject to the conditions  herein set forth, the Initial  Purchasers  agree,
severally and not jointly,  to purchase from the Company the aggregate principal
amount of Firm Offered Notes set forth  opposite their names on Schedule A, at a
discounted  purchase price of 4 3/4% of the principal  amount thereof payable on
the First Closing Date.

                  (b) The First Closing Date.  Delivery of certificates  for the
Firm Offered Notes in definitive form to be purchased by the Initial  Purchasers
and  payment  therefor  shall be made at the offices of  NationsBanc  Montgomery
Securities LLC, 600 Montgomery Street, San Francisco,  California (or such other
place as may be agreed to by the  Company and the  Initial  Purchasers)  at 6:00
a.m. San  Francisco  time,  on March 24,  1998,  or such other time and date not
later than 10:30  a.m.,  San  Francisco  time,  on April 2, 1998 as the  Initial
Purchasers  shall  designate by notice to the Company (the time and date of such
closing  are  called  the  "First  Closing  Date").  Delivery  of other  closing
documents  shall  be  made  at the  offices  of  O'Connor,  Cavanagh,  Anderson,
Killingsworth & Beshears, P.A., One East Camelback Road, Phoenix, Arizona on the
First Closing Date.

                  (c)  Delivery of the Firm  Offered  Notes.  The Company  shall
deliver, or cause to be delivered,  to NationsBanc Montgomery Securities LLC for
the accounts of the several Initial
                                       10
<PAGE>
Purchasers  certificates  for the Firm Offered  Notes at the First  Closing Date
against the  irrevocable  release of a wire  transfer of  immediately  available
funds for the amount of the purchase price therefor.  The  certificates  for the
Firm Offered Notes shall be in such denominations  ($1,000 or integral multiples
thereof) and registered in the name of Cede & Co., as nominee of the Depositary,
pursuant to the DTC Agreement and shall be made  available for inspection on the
business day  preceding the First Closing Date at a location in New York City as
the Initial  Purchasers may  designate,  provided that  certificated  Securities
originally purchased by or transferred to institutional  "accredited  investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who are
also not  "qualified  institutional  buyers"  (as defined in Rule 144A under the
Securities Act) will be issued in minimum denominations of $250,000.  Time shall
be of the  essence,  and  delivery  at the  time  and  place  specified  in this
Agreement is a further condition to the obligations of the Initial Purchasers.

                  (d) Delivery of Offering Memorandum to the Initial Purchasers.
Not later than 12:00 p.m. on the second  business day following the date of this
Agreement,  the Company  shall  deliver or cause to be  delivered  copies of the
Offering  Memorandum  in such  quantities  and at  such  places  as the  Initial
Purchasers shall reasonably request.

                  (e) Initial Purchasers as Qualified Institutional Buyers. Each
Initial  Purchaser  severally  and not jointly  represents  and warrants to, and
agrees with, the Company that it is a "qualified institutional buyer" within the
meaning of Rule 144A (a  "Qualified  Institutional  Buyer")  and an  "accredited
investor"  within  the  meaning  of Rule  501(a)  under the  Securities  Act (an
"Accredited Investor").

                  (f)  Additional  Offered  Notes;  The Second  Closing Date. In
addition, on the basis of the representations,  warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Initial Purchasers to purchase, severally
and not  jointly,  up to an  aggregate  principal  amount of  $15,000,000.00  of
Additional  Offered Notes at the purchase price per dollar of original principal
amount to be paid for the Firm  Offered  Notes,  for use  solely by the  Initial
Purchasers  in covering  any  over-allotments  in  connection  with the sale and
distribution  of the Firm Offered  Notes.  The option  granted  hereunder may be
exercised  at any time (but not more than once) within 30 days after the date of
this  Agreement,  upon notice by  NationsBanc  Montgomery  Securities LLC to the
Company setting forth the aggregate principal amount of Additional Offered Notes
as to which the Initial  Purchasers  are  exercising  the option,  the names and
denominations in which the certificates for such notes are to be registered, and
the time and place at which such  certificates  will be delivered.  Such time of
delivery  (which may not be earlier than the First Closing  Date),  being herein
referred to as the "Second  Closing  Date," shall be determined  by  NationsBanc
Montgomery  Securities LLC, but if at any time other than the First Closing Date
shall not be earlier  than three nor later  than five full  business  days after
receipt by the  Company of such  notice of  exercise.  The  aggregate  principal
amount of  Additional  Offered  Notes to be purchased by each Initial  Purchaser
shall be determined by multiplying the aggregate  principal amount of Additional
Offered Notes to be sold by the Company pursuant to such notice of exercise by a
fraction,  the  numerator  of which is the  aggregate  principal  amount of Firm
Offered  Notes to be purchased by such Initial  Purchaser as set forth  opposite
its name in Schedule A and the denominator of which is $100,000,000  (subject to
such  adjustments  to eliminate any  fractional  note  purchases as  NationsBanc
Montgomery  Securities  LLC in its discretion  may make).  Certificates  for the
Additional  Offered Notes will be made  available for inspection on the business
day  preceding the Second  Closing Date at a location in New York,  New York, as
may be designated by NationsBanc
                                       11
<PAGE>
Montgomery  Securities  LLC.  The  manner of  payment  for and  delivery  of the
Additional  Offered  Notes  shall  be the  same as for the  Firm  Offered  Notes
purchased  from the Company as specified  in the  preceding  paragraphs  of this
Section  2. At any time  before  lapse  of the  option,  NationsBanc  Montgomery
Securities  LLC  may  cancel  such  option  by  giving  written  notice  of such
cancellation to the Company.

         Section 3.  Additional Covenants.

         The Company further covenants and agrees with each Initial Purchaser as
follows:

                  (a)  Initial  Purchasers'  Review of Proposed  Amendments  and
Supplements.   Prior  to  amending  or  supplementing  the  Offering  Memorandum
(including any amendment or supplement through incorporation by reference of any
report  filed under the  Exchange  Act prior to the First  Closing  Date and the
Second  Closing  Date,  as the case may be),  the Company  shall  furnish to the
Initial  Purchasers  for  review  a copy  of each  such  proposed  amendment  or
supplement,  and the Company shall not make or file any such proposed  amendment
or supplement to which the Initial Purchasers reasonably object.

                  (b) Amendments and Supplements to the Offering  Memorandum and
Other  Securities  Act Matters.  If, prior to the completion of the placement of
the  Securities by the Initial  Purchasers  with the  Subsequent  Purchasers (as
evidenced by a notice in writing from the Initial  Purchasers  to the  Company),
any event shall occur or condition exist as a result of which it is necessary to
amend or  supplement  the Offering  Memorandum  in order to make the  statements
therein,  in the light of the  circumstances  when the  Offering  Memorandum  is
delivered to a purchaser,  not  misleading,  or if in the opinion of the Initial
Purchasers  it is  otherwise  necessary  to amend  or  supplement  the  Offering
Memorandum to comply with law, the Company agrees to promptly  prepare  (subject
to  Section  3(a)  hereof),  and  furnish  at its  own  expense  to the  Initial
Purchasers,  amendments or  supplements  to the Offering  Memorandum so that the
statements in the Offering Memorandum as so amended or supplemented will not, in
the light of the  circumstances  when the Offering  Memorandum is delivered to a
purchaser,  be  misleading  or so that the  Offering  Memorandum,  as amended or
supplemented, will comply with law.

         Following  the  effectiveness  of  an  applicable  shelf   registration
statement  and  for so  long  as  the  Securities  are  outstanding  if,  in the
reasonable judgment of the Initial Purchasers,  the Initial Purchasers or any of
their affiliates (as such term is defined in the rules and regulations under the
Securities  Act) are required to deliver a prospectus in  connection  with sales
of, or  market-making  activities  with  respect  to,  such  securities,  (A) to
periodically amend the applicable registration statement so that the information
contained  therein  complies  with  the  requirements  of  Section  10(a) of the
Securities  Act,  (B) to  amend  the  applicable  registration  statement  or to
supplement  the related  prospectus or the documents  incorporated  therein when
necessary to reflect any material changes in the information provided therein so
that the  registration  statement and the prospectus will not contain any untrue
statement  of a material  fact or omit to state any material  fact  necessary in
order to make the statements therein, in the light of the circumstances existing
as of the  date the  prospectus  is so  delivered,  not  misleading,  and (C) to
provide the Initial Purchasers with copies of each amendment or supplement filed
and such other documents as the Initial Purchasers may reasonably request.

         The Company hereby expressly  acknowledges that the indemnification and
contribution  provisions of Sections 8 and 9 hereof are specifically  applicable
and relate to each  offering  memorandum,  registration  statement,  prospectus,
amendment or supplement referred to in this
                                       12
<PAGE>
Section 3(b).

                  (c) Copies of the Offering  Memorandum.  The Company agrees to
furnish the Initial  Purchasers,  without charge, as many copies of the Offering
Memorandum  and any  amendments  and  supplements  thereto  as they  shall  have
reasonably requested.

                  (d) Blue Sky Compliance.  The Company shall cooperate with the
Initial Purchasers and counsel for the Initial Purchasers to qualify or register
the Securities for sale under (or obtain exemptions from the application of) the
Blue  Sky or state  securities  laws of those  jurisdictions  designated  by the
Initial  Purchasers,  shall  comply  with  such  laws and  shall  continue  such
qualifications,  registrations  and exemptions in effect so long as required for
the distribution of the Securities. Notwithstanding the above, the Company shall
not be required to qualify as a foreign  corporation  or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not presently qualified or where it would be subject to taxation as a foreign
corporation.  The Company  will advise the  Initial  Purchasers  promptly of the
suspension  of the  qualification  or  registration  of (or any  such  exemption
relating to) the Securities for offering, sale or trading in any jurisdiction or
any  initiation or threat of any  proceeding  for any such  purpose,  and in the
event of the issuance of any order suspending such  qualification,  registration
or exemption,  the Company  shall use its best efforts to obtain the  withdrawal
thereof at the earliest possible moment.

                  (e) Use of Proceeds.  The Company shall apply the net proceeds
from the sale of the  Securities  sold by it in the manner  described  under the
caption "Use of Proceeds" in the Offering Memorandum.

                  (f) The  Depositary.  The  Company  will  cooperate  with  the
Initial  Purchasers  and use its best  efforts  to permit the  Securities  to be
eligible for clearance and settlement through the facilities of the Depositary.

                  (g) Additional Issuer Information.  Prior to the completion of
the placement of the  Securities by the Initial  Purchasers  with the Subsequent
Purchasers  (as evidenced by a notice in writing from the Initial  Purchasers to
the Company), the Company shall file, on a timely basis, with the Commission and
the Nasdaq National Market all reports and documents  required to be filed under
Section  13 or 15(d) of the  Exchange  Act.  Additionally,  at any time when the
Company  is not  subject to Section  13 or 15(d) of the  Exchange  Act,  for the
benefit of holders and beneficial  owners from time to time of  Securities,  the
Company shall furnish,  at its expense,  upon request, to holders and beneficial
owners of  Securities  and  prospective  purchasers  of  Securities  information
("Additional  Issuer  Information")  satisfying the  requirements  of subsection
(d)(4) of Rule 144A.

                  (h)  Agreement  Not To  Offer or Sell  Additional  Securities.
During the period of 120 days following the date of the Offering Memorandum, the
Company will not,  without the prior written  consent of NationsBanc  Montgomery
Securities  LLC  (which  consent  may be  withheld  at the  sole  discretion  of
NationsBanc  Montgomery  Securities LLC),  directly or indirectly,  sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Exchange Act,
or otherwise  dispose of or  transfer,  or announce the offering of, or file any
registration  statement  under  the  Securities  Act in  respect  of,  any  debt
securities of the Company or securities  exchangeable  for or  convertible  into
debt securities of the Company (other than as  contemplated by this  Agreement).
Notwithstanding  the above,  this Section  15(h) shall not apply to increases in
amounts  available under the Company's  existing  Revolving Credit Facility with
First Union National Bank.
                                       13
<PAGE>
                  (i)  Future  Reports  to the  Initial  Purchasers.  During the
period  of  five  years  hereafter  the  Company  will  furnish  to  NationsBanc
Montgomery  Securities LLC at 600 Montgomery  Street,  San Francisco,  CA 94111,
Attention: Murray C. Huneke, CIBC Oppenheimer Corp., One World Financial Center,
200 Liberty  Street,  38th Floor,  New York,  NY 10281,  Attention:  Mark Harms,
EVEREN Securities,  Inc., 1901 Avenue of the Stars, Suite 1460, Los Angeles,  CA
90067,  Attention:  Tod Jadwin,  and Piper Jaffray  Inc.,  222 South 9th Street,
Minneapolis, MN 55402, Attention:  Douglas R. Witaker (i) as soon as practicable
after the end of each fiscal  year,  copies of the Annual  Report of the Company
containing  the balance sheet of the Company as of the close of such fiscal year
and statements of income,  stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's  independent  public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy  statement,  Annual Report on Form 10-K,  Quarterly Report on Form
10-Q,  Current  Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of  its  capital  stock  or  debt  securities  (including  the  holders  of  the
Securities).

                  (j) Registration  Rights  Agreement.  The Company shall comply
with all provisions and obligations of the Registration  Rights  Agreement,  and
shall comply with all applicable federal and state securities laws in connection
with the Registration Rights Agreement.

                  (k) No  Integration.  The Company  agrees that it will not and
will cause its  Affiliates  not to make any offer or sale of  securities  of the
Company  of any  securities  if, as a result of the  doctrine  of  "integration"
referred  to in Rule 502 under the  Securities  Act,  such  offer or sale  would
render invalid (for the purpose of (i) the sale of the Securities by the Company
to the  Initial  Purchasers,  (ii) the resale of the  Securities  by the Initial
Purchasers  to Subsequent  Purchasers  or (iii) the resale of the  Securities by
such  Subsequent  Purchasers  to others)  the  exemption  from the  registration
requirements  of the  Securities Act provided by Section 4(2) thereof or by Rule
144A or by Regulation S thereunder or otherwise.

                  (l)  Restriction on  Repurchases.  Until the expiration of two
years after the original  issuance of the Securities,  the Company will not, and
will cause its  Affiliates  not to,  purchase or agree to purchase or  otherwise
acquire any of the Securities which are "restricted securities" (as such term is
defined under Rule 144(a)(3)  under the Securities  Act),  whether as beneficial
owner or otherwise  (except as agent acting as a securities  broker on behalf of
and for  the  account  of  customers  in the  ordinary  course  of  business  in
unsolicited broker's  transactions) unless,  immediately upon any such purchase,
the Company or any  Affiliate  shall submit such  Securities  to the Trustee for
cancellation.

                  (m) Legended Securities.  Each certificate for a Security will
bear the legend contained in "Transfer  Restrictions" in the Offering Memorandum
for the time period and upon the other terms stated in the Offering Memorandum.

                  (n)  PORTAL.  The Company  will use its best  efforts to cause
such Notes to be eligible for the National  Association  of Securities  Dealers,
Inc. PORTAL market (the "PORTAL market").

                  (o) Form D. The  Company  will file with the  Commission,  not
later than 15 days after the First Closing Date and the Second  Closing Date, as
the case may be, five copies of a notice on Form D under the Securities Act (one
of which will be manually signed by a person duly
                                       14
<PAGE>
authorized by the Company);  will otherwise comply with the requirements of Rule
503  under  the  Securities  Act;  and  will  furnish  promptly  to the  Initial
Purchasers  evidence  of each such  required  timely  filing  (including  a copy
thereof).

                  (p)  Due   Diligence.   In   connection   with  the   original
distribution of the Securities,  the Company agrees that,  prior to any offer or
resale of the Securities by the Initial  Purchasers,  the Initial Purchasers and
counsel  for the  Initial  Purchasers  shall  have the right to make  reasonable
inquiries  into the  business of the Company and its  subsidiaries.  The Company
also  agrees to provide  answers to each  prospective  Subsequent  Purchaser  of
Securities who so requests  concerning the Company and its  subsidiaries (to the
extent that such  information is available or can be acquired and made available
to prospective  Subsequent Purchasers without unreasonable effort or expense and
to the extent the provision thereof is not prohibited by applicable law) and the
terms and  conditions  of the  offering  of the  Securities,  as provided in the
Offering Memorandum.

         NationsBanc Montgomery Securities LLC, on behalf of the several Initial
Purchasers, may, in its sole discretion, waive in writing the performance by the
Company  of any one or more of the  foregoing  covenants  or extend the time for
their performance.

         Section 4.  Payment of Expenses

         The  Company  agrees to pay all costs,  fees and  expenses  incurred in
connection with the  performance of its obligations  hereunder and in connection
with the transactions  contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Securities  (including all
printing and  engraving  costs),  (ii) all necessary  issue,  transfer and other
stamp taxes in  connection  with the issuance and sale of the  Securities to the
Initial  Purchasers,  (iii)  all fees and  expenses  of the  Company's  counsel,
independent public or certified public accountants and other advisors,  (iv) all
costs and  expenses  incurred  in  connection  with the  preparation,  printing,
filing,  shipping and distribution of each preliminary  Offering  Memorandum and
the Offering Memorandum  (including financial statements and exhibits),  and all
amendments and supplements  thereto,  this Agreement,  the  Registration  Rights
Agreement, the Indenture, the DTC Agreement, and the Notes, (v) all filing fees,
attorneys' fees and expenses  incurred by the Company or the Initial  Purchasers
in connection with  qualifying or registering (or obtaining  exemptions from the
qualification  or  registration  of) all or any part of the Securities for offer
and sale under the Blue Sky laws and, if  requested  by the Initial  Purchasers,
preparing and printing a "Blue Sky Survey" or  memorandum,  and any  supplements
thereto,  advising the Initial Purchasers of such qualifications,  registrations
and  exemptions,  (vi) the fees and expenses of the Trustee,  including the fees
and  disbursements  of counsel for the Trustee in connection  with the Indenture
and the Securities,  (vii) any fees payable in connection with the rating of the
Securities with the ratings  agencies and the listing of the Securities with the
PORTAL market,  (viii) any filing fees incident to, and any reasonable  fees and
disbursements of counsel to the Initial Purchasers in connection with the review
by the NASD, if any, of the terms of the sale of the  Securities,  (ix) all fees
and expenses (including  reasonable fees and expenses of counsel) of the Company
in connection with approval of the Securities by DTC for "book-entry"  transfer,
and (x) the  performance  by the  Company  of its other  obligations  under this
Agreement.  Except as  provided  in this  Section 4,  Section  6,  Section 8 and
Section 9 hereof, the Initial Purchasers shall pay their own expenses, including
the fees and disbursements of their counsel.

         Section 5. Conditions of the Obligations of the Initial Purchasers. The
obligations  of the  several  Initial  Purchasers  to  purchase  and pay for the
Securities as provided herein on the First Closing Date and, with respect to the
Additional Offered Notes, the Second Closing Date, shall be
                                       15
<PAGE>
subject to the accuracy of the representations and warranties on the part of the
Company  set forth in Section 1 hereof as of the date hereof and as of the First
Closing  Date as though then made and,  with respect to the  Additional  Offered
Notes,  and as of the Second  Closing  Date as though  then made,  to the timely
performance by the Company of its covenants and other obligations hereunder, and
to each of the following additional conditions:

                  (a)  Accountants'  Comfort  Letter.  On the date  hereof,  the
Initial  Purchasers  shall have received from Arthur  Andersen LLP,  independent
public or certified public  accountants for the Company, a letter dated the date
hereof addressed to the Initial Purchasers,  in form and substance  satisfactory
to the Initial  Purchasers,  containing  statements and  information of the type
ordinarily  included in accountant's  "comfort  letters" to Initial  Purchasers,
delivered  according to Statement of Auditing  Standards  Nos. 72 and 76 (or any
successor  bulletins),  with  respect to the  audited  and  unaudited  financial
statements  and  certain  financial   information   contained  in  the  Offering
Memorandum   (including  such   statements  and   information   incorporated  by
reference).

                  (b) No Material  Adverse Change or Ratings Agency Change.  For
the  period  from and  after the date of this  Agreement  and prior to the First
Closing  Date and,  with respect to the  Additional  Offered  Notes,  the Second
Closing Date:

                           (i) in the judgment of the Initial  Purchasers  there
         shall not have occurred any Material Adverse Change; and

                           (ii) there shall not have  occurred any  downgrading,
         nor shall any  notice  have been  given of any  intended  or  potential
         downgrading  or of any  review  for a  possible  change  that  does not
         indicate the direction of the possible  change,  in the rating accorded
         any  securities  of the  Company  or any  of  its  subsidiaries  by any
         "nationally recognized statistical rating organization" as such term is
         defined for purposes of Rule 436(g)(2) under the Securities Act.

                  (c) Opinion of Counsel for the  Company.  On each of the First
Closing Date and the Second  Closing  Date,  the Initial  Purchasers  shall have
received the favorable opinion of O'Connor, Cavanagh, Anderson,  Killingsworth &
Beshears,  P.A. counsel for the Company, dated as of such Closing Date, the form
of which is attached as Exhibit A.

                  (d) Opinion of Counsel for the Initial Purchasers.  On each of
the First  Closing  Date and the  Second,  the  Initial  Purchasers  shall  have
received the  favorable  opinion of Fried,  Frank,  Harris,  Shriver & Jacobson,
counsel for the Initial Purchasers,  dated as of such Closing Date, with respect
to such matters as may be reasonably requested by the Initial Purchasers.

                  (e) Officers'  Certificate.  On each of the First Closing Date
and the Second  Closing  Date,  the  Initial  Purchasers  shall have  received a
written  certificate  executed  by the  Chairman of the Board,  Chief  Executive
Officer or  President  of the Company and the Chief  Financial  Officer or Chief
Accounting Officer of the Company,  dated as of such Closing Date, to the effect
set forth in  subsection  (b)(ii) of this  Section 5, and  further to the effect
that:

                           (i) for the  period  from and  after the date of this
         Agreement  and prior to the  Closing  Date there has not  occurred  any
         Material Adverse Change;

                           (ii) the representations, warranties and covenants of
         the  Company  set  forth in  Section 1 of this  Agreement  are true and
         correct with the same force and effect as 
                                       16
<PAGE>
         though expressly made on and as of the Closing Date; and

                           (iii)  the   Company  has   complied   with  all  the
         agreements and satisfied all the conditions on its part to be performed
         or satisfied at or prior to the Closing Date.

                  (f) Bring-down  Comfort  Letter.  On each of the First Closing
Date and the Second  Closing Date,  the Initial  Purchasers  shall have received
from Arthur Andersen LLP, independent public or certified public accountants for
the Company, a letter dated such date, in form and substance satisfactory to the
Initial Purchasers,  to the effect that they reaffirm the statements made in the
letter  furnished by them pursuant to  subsection  (a) of this Section 5, except
that the  specified  date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the Closing Date.

                  (g) PORTAL Listing.  At the Closing Date, the Notes shall have
been designated for trading on the PORTAL market.

                  (h)  Registration  Rights  Agreement.  The Company  shall have
entered into the Registration  Rights Agreement and the Initial Purchasers shall
have received executed counterparts thereof.

                  (i)  Additional  Documents.  On or  before  each of the  First
Closing Date and the Second Closing Date, the Initial Purchasers and counsel for
the Initial  Purchasers  shall have  received  such  information,  documents and
opinions as they may  reasonably  require for the  purposes of enabling  them to
pass upon the issuance and sale of the Securities as contemplated  herein, or in
order to evidence the accuracy of any of the representations and warranties,  or
the satisfaction of any of the conditions or agreements, herein contained.

         If any condition  specified in this Section 5 is not satisfied when and
as required to be  satisfied,  this  Agreement  may be terminated by the Initial
Purchasers by notice to the Company at any time on or prior to the Closing Date,
which  termination  shall be without  liability  on the part of any party to any
other party,  except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.

         Section 6.  Reimbursement  of  Initial  Purchasers'  Expenses.  If this
Agreement is terminated by the Initial Purchasers pursuant to Section 5, Section
10 or Section 16, or if the sale to the Initial  Purchasers of the Securities on
the Closing Date is not consummated because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or to comply with any
provision  hereof,  the Company  agrees to reimburse the Initial  Purchasers (or
such  Initial  Purchasers  as have  terminated  this  Agreement  with respect to
themselves),  severally,  upon demand for all out-of-pocket  expenses that shall
have been reasonably  incurred by the Initial  Purchasers in connection with the
proposed purchase and the offering and sale of the Securities, including but not
limited to reasonable  fees and  disbursements  of counsel,  printing  expenses,
travel expenses, postage, facsimile and telephone charges.

         Section 7.  Offer,  Sale and  Resale  Procedures.  Each of the  Initial
Purchasers and the Company  hereby  establish and agree to observe the following
procedures in connection with the offer and sale of the Securities:

                  (a)  Offers  and  Sales  only  to   Institutional   Accredited
Investors or Qualified  Institutional Buyers. Offers and sales of the Securities
will be made only by the Initial Purchasers
                                       17
<PAGE>
or  Affiliates  thereof  qualified to do so in the  jurisdictions  in which such
offers or sales are made.  Each  such  offer or sale  shall  only be made (A) to
persons  that  the  offeror  or  seller  reasonably  believes  to  be  qualified
institutional  buyers (as defined in Rule 144A under the Securities Act), (B) to
other  institutional  accredited  investors  (as such  term is  defined  in Rule
501(a)(1),  (2),  (3) or  (7) of  Regulation  D)  that  the  offeror  or  seller
reasonably  believes to be and, with respect to sales and  deliveries,  that are
Accredited  Investors  ("Institutional  Accredited  Investors")  or (C) non-U.S.
persons  outside  the United  States to whom the  offeror  or seller  reasonably
believes  offers  and  sales  of the  Securities  may be made in  reliance  upon
Regulation S under the  Securities  Act, upon the terms and conditions set forth
in Annex I hereto, which Annex I is hereby expressly made a part hereof.

                  (b) No General Solicitation. The Securities will be offered by
approaching prospective Subsequent Purchasers on an individual basis. No general
solicitation or general advertising (within the meaning of Rule 502(c) under the
Securities  Act)  will be used in the  United  States  in  connection  with  the
offering of the Securities.

                  (c)  Purchases  by  Non-Bank  Fiduciaries.  In the  case  of a
non-bank  Subsequent  Purchaser of a Security  acting as a fiduciary  for one or
more  third  parties,  in  connection  with an offer and sale to such  purchaser
pursuant to clause (i) above,  each third party  shall,  in the  judgment of the
applicable  Initial  Purchaser,  be an  Institutional  Accredited  Investor or a
Qualified Institutional Buyer or a non-U.S. person outside the United States.

                  (d)  Restrictions on Transfer.  Upon original  issuance by the
Company,  and  until  such  time as the same is no  longer  required  under  the
applicable  requirements  of the  Securities  Act, the Notes (and all securities
issued in exchange therefor or in substitution thereof) shall bear the following
legend:

                  THE NOTE EVIDENCED  HEREBY HAS NOT BEEN  REGISTERED  UNDER THE
U.S.  SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, NEITHER THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE, NOR ANY INTEREST OR PARTICIPATION  HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE  DISPOSED  OF IN THE  ABSENCE  OF SUCH  REGISTRATION  OR  UNLESS  SUCH
TRANSACTION IS EXEMPT FROM OR NOT SUBJECT TO, REGISTRATION. UNLESS THE SHARES OF
COMMON STOCK HAVE BEEN  REGISTERED  UNDER THE  SECURITIES  ACT, A HOLDER OF THIS
NOTE WILL BE ABLE TO EXERCISE THE CONVERSION  RIGHT ONLY IF THE HOLDER CERTIFIES
THAT IT IS A "QUALIFIED  INSTITUTIONAL  BUYER" OR AN  INSTITUTIONAL  "ACCREDITED
INVESTOR" AS DEFINED BELOW.

                  THE HOLDER OF THIS NOTE,  BY ITS  ACQUISITION  HEREOF,  AGREES
THAT IT WILL NOT,  PRIOR TO THE DATE  WHICH IS TWO YEARS  AFTER THE LATER OF THE
ORIGINAL  ISSUE  DATE  HEREOF  AND THE LAST  DATE ON WHICH  THE  COMPANY  OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY  PREDECESSOR OF SUCH
SECURITY),  RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK  ISSUABLE UPON  CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY,  OR ANY
SUBSIDIARY  THEREOF,  (B) INSIDE THE UNITED STATES TO A QUALIFIED  INSTITUTIONAL
BUYER IN  COMPLIANCE  WITH RULE 144A UNDER THE  SECURITIES  ACT,  (C) INSIDE THE
UNITED  STATES  TO AN  INSTITUTIONAL  ACCREDITED  INVESTOR  THAT,  PRIOR TO SUCH
TRANSFER,  FURNISHES TO FIRST UNION  NATIONAL  BANK,  AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE),  A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE
                                       18
<PAGE>
EVIDENCED  HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR
SUCCESSOR TRUSTEE, AS APPLICABLE),  (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION  IN  COMPLIANCE  WITH  REGULATION  S UNDER THE  SECURITIES  ACT, (E)
PURSUANT  TO THE  EXEMPTION  FROM  REGISTRATION  PROVIDED  BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION  STATEMENT WHICH
HAS BEEN DECLARED  EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE NOTE EVIDENCED  HEREBY IS TRANSFERRED A NOTICE  SUBSTANTIALLY
TO THE  EFFECT OF THIS  LEGEND.  IN  CONNECTION  WITH ANY  TRANSFER  OF THE NOTE
EVIDENCED  HEREBY,  OR THE  SHARES  OF COMMON  STOCK  ISSUABLE  UPON  CONVERSION
THEREOF,  WITHIN TWO YEARS AFTER THE ORIGINAL  ISSUANCE OF SUCH NOTE, THE HOLDER
MUST CHECK THE  APPROPRIATE  BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH  TRANSFER  AND SUBMIT THIS  CERTIFICATE  TO FIRST UNION  NATIONAL
BANK,  AS TRUSTEE (OR A  SUCCESSOR  TRUSTEE,  AS  APPLICABLE).  IF THE  PROPOSED
TRANSFEREE IS AN INSTITUTIONAL  ACCREDITED  INVESTOR OR A PURCHASER WHO IS NOT A
U.S.  PERSON,  THE HOLDER MUST,  PRIOR TO SUCH TRANSFER,  FURNISH TO FIRST UNION
NATIONAL  BANK,  AS  TRUSTEE  (OR A  SUCCESSOR  TRUSTEE,  AS  APPLICABLE),  SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON ANY TRANSFER OF THE NOTE EVIDENCED HEREBY,
OR THE  SHARES  OF  COMMON  STOCK  ISSUED  UPON  CONVERSION  THEREOF,  AFTER THE
EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY.
AS USED HEREIN,  THE TERMS  "OFFSHORE  TRANSACTION,"  "UNITED  STATES" AND "U.S.
PERSON" HAVE THE  MEANINGS  GIVEN TO THEM BY  REGULATION S UNDER THE  SECURITIES
ACT.

                  Following the sale of the Securities by the Initial Purchasers
to Subsequent  Purchasers  pursuant to the terms hereof,  the Initial Purchasers
shall not be liable or  responsible  to the Company  for any losses,  damages or
liabilities suffered or incurred by the Company,  including any losses,  damages
or liabilities  under the Securities Act, arising from or relating to any resale
or transfer of any Security.

                  (e) Delivery of Offering  Memorandum.  Each Initial  Purchaser
will deliver to each purchaser of the Securities from such Initial Purchaser, in
connection  with its  original  distribution  of the  Securities,  a copy of the
Offering Memorandum, as amended and supplemented at the date of such delivery.

         Section 8. Indemnification.

                  (a)  Indemnification  of the Initial  Purchasers.  The Company
agrees to indemnify and hold harmless each Initial  Purchaser,  its officers and
employees,  and each person,  if any, who controls any Initial  Purchaser within
the meaning of the Securities Act and the Exchange Act against any loss,  claim,
damage,  liability or expense,  as incurred,  to which such Initial Purchaser or
such  controlling  person may become  subject,  under the  Securities  Act,  the
Exchange Act or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation,  if such settlement
is effected  with the  written  consent of the  Company),  insofar as such loss,
claim,  damage,   liability  or  expense  (or  actions  in  respect  thereof  as
contemplated  below)  arises  out of or is based upon any  untrue  statement  or
alleged  untrue  statement  of a  material  fact  contained  in the  Preliminary
Offering Memorandum or the Offering
                                       19
<PAGE>
Memorandum (or any amendment or supplement thereto),  or the omission or alleged
omission  therefrom of a material fact necessary in order to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading,  and to reimburse each Initial  Purchaser and each such  controlling
person for any and all expenses (including the fees and disbursements of counsel
chosen by NationsBanc Montgomery Securities LLC) as such expenses are reasonably
incurred by such Initial Purchaser or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage,  liability,  expense or action;  provided,  however,  that the foregoing
indemnity  agreement shall not apply to any loss,  claim,  damage,  liability or
expense to the extent, but only to the extent,  arising out of or based upon any
untrue  statement or alleged  untrue  statement or omission or alleged  omission
made in reliance upon and in conformity  with written  information  furnished to
the  Company by the  Initial  Purchasers  expressly  for use in any  Preliminary
Offering  Memorandum or the Offering  Memorandum (or any amendment or supplement
thereto);  and provided,  further, that with respect to any Preliminary Offering
Memorandum,  the foregoing indemnity agreement shall not inure to the benefit of
any Initial  Purchaser from whom the person asserting any loss,  claim,  damage,
liability  or  expense  purchased  Securities,  or any person  controlling  such
Initial Purchaser, if copies of the Offering Memorandum were timely delivered to
the  Initial  Purchaser  pursuant  to  Section  2 and a  copy  of  the  Offering
Memorandum (as then amended or  supplemented if the Company shall have furnished
any amendments or supplements  thereto) was not sent or given by or on behalf of
such Initial Purchaser to such person,  at or prior to the written  confirmation
of the sale of the Securities to such person, and if the Offering Memorandum (as
so amended or  supplemented)  would  have cured the defect  giving  rise to such
loss, claim, damage,  liability or expense. The indemnity agreement set forth in
this Section 8(a) shall be in addition to any  liabilities  that the Company may
otherwise have.

                  (b)   Indemnification  of  the  Company,   its  Directors  and
Officers. Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company and each of its directors and each person, if any,
who  controls  the  Company  within  the  meaning of the  Securities  Act or the
Exchange  Act,  against  any loss,  claim,  damage,  liability  or  expense,  as
incurred,  to which the Company or any such director or  controlling  person may
become subject,  under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation,  or at common law or otherwise  (including in
settlement of any  litigation,  if such  settlement is effected with the written
consent  of such  Initial  Purchaser),  insofar  as such  loss,  claim,  damage,
liability  or expense  (or  actions in respect  thereof as  contemplated  below)
arises  out of or is based  upon any untrue or  alleged  untrue  statement  of a
material fact contained in any Preliminary  Offering  Memorandum or the Offering
Memorandum  (or any  amendment or  supplement  thereto),  or arises out of or is
based upon the  omission or alleged  omission to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue  statement or omission or alleged  omission was made
in any  Preliminary  Offering  Memorandum  or the  Offering  Memorandum  (or any
amendment  or  supplement  thereto),  in reliance  upon and in  conformity  with
written information furnished to the Company by the Initial Purchasers expressly
for  use  therein;  and to  reimburse  the  Company,  or any  such  director  or
controlling person for any legal and other expenses  reasonably  incurred by the
Company,  or  any  such  director  or  controlling  person  in  connection  with
investigating, defending, settling, compromising or paying any such loss, claim,
damage,  liability,  expense or action. The Company hereby acknowledges that the
only  information  that the Initial  Purchasers  have  furnished  to the Company
expressly for use in any Preliminary  Offering  Memorandum or the Memorandum (or
any amendment or  supplement  thereto) are the  statements  set forth (A) in the
paragraph on the inside front cover page of the Offering  Memorandum  concerning
stabilization by the Initial Purchasers and (B) under the caption "Plan of
                                       20
<PAGE>
Distribution" in the Offering  Memorandum;  and the Initial  Purchasers  confirm
that such  statements  are correct.  The  indemnity  agreement set forth in this
Section 8(b) shall be in addition to any liabilities that each Initial Purchaser
may otherwise have.

                  (c)  Notifications  and  Other   Indemnification   Procedures.
Promptly after receipt by an indemnified party under this Section 8 of notice of
the  commencement  of any action,  such  indemnified  party will,  if a claim in
respect thereof is to be made against an  indemnifying  party under this Section
8, notify the indemnifying party in writing of the commencement thereof, but the
omission  so to notify  the  indemnifying  party  will not  relieve  it from any
liability  which  it may  have to any  indemnified  party  for  contribution  or
otherwise than under the indemnity  agreement  contained in this Section 8 or to
the extent it is not prejudiced as a proximate  result of such failure.  In case
any such action is brought  against any indemnified  party and such  indemnified
party  seeks or  intends  to seek  indemnity  from an  indemnifying  party,  the
indemnifying party will be entitled to participate in and, to the extent that it
shall elect, jointly with all other indemnifying parties similarly notified,  by
written notice  delivered to the indemnified  party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the  defendants in any such action  include both the  indemnified  party and the
indemnifying  party and the indemnified  party shall have  reasonably  concluded
that a conflict may arise  between the positions of the  indemnifying  party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the  indemnifying  party, the
indemnified  party or parties shall have the right to select separate counsel to
assume such legal  defenses and to otherwise  participate in the defense of such
action on behalf of such  indemnified  party or parties.  Upon receipt of notice
from the  indemnifying  party  to such  indemnified  party of such  indemnifying
party's  election so to assume the  defense of such  action and  approval by the
indemnified party of counsel,  the indemnifying party will not be liable to such
indemnified  party  under  this  Section  8 for  any  legal  or  other  expenses
subsequently  incurred by such indemnified  party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however,  that the  indemnifying  party shall not be liable for the  expenses of
more than one separate  counsel  (together with local counsel),  approved by the
indemnifying party (NationsBanc Montgomery Securities LLC in the case of Section
8(b) and Section 9),  representing  the  indemnified  parties who are parties to
such  action) or (ii) the  indemnifying  party shall not have  employed  counsel
satisfactory to the indemnified  party to represent the indemnified party within
a reasonable time after notice of  commencement of the action,  in each of which
cases  the  fees  and  expenses  of  counsel  shall  be at  the  expense  of the
indemnifying party.

                  (d) Settlements.  The indemnifying  party under this Section 8
shall not be liable for any  settlement of any proceeding  effected  without its
written  consent,  but if  settled  with  such  consent  or if  there be a final
judgment for the  plaintiff,  the  indemnifying  party  agrees to indemnify  the
indemnified  party  against any loss,  claim,  damage,  liability  or expense by
reason of such settlement or judgment.  Notwithstanding  the foregoing sentence,
if at any time an indemnified  party shall have requested an indemnifying  party
to  reimburse  the  indemnified  party  for  fees and  expenses  of  counsel  as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it shall
be liable for any  settlement  of any  proceeding  effected  without its written
consent if (i) such  settlement  is entered into more than 90 days after receipt
by such  indemnifying  party of the aforesaid request and (ii) such indemnifying
party shall not have  reimbursed the  indemnified  party in accordance with such
request  prior to the date of such  settlement.  No  indemnifying  party  shall,
without  the  prior  written  consent  of  the  indemnified  party,  effect  any
settlement, compromise or
                                       21
<PAGE>
consent to the entry of judgment in any pending or  threatened  action,  suit or
proceeding  in  respect of which any  indemnified  party is or could have been a
party and indemnity was or could have been sought  hereunder by such indemnified
party,  unless such settlement,  compromise or consent includes an unconditional
release of such  indemnified  party from all  liability  on claims  that are the
subject matter of such action, suit or proceeding.

         Section 9. Contribution.

         If the indemnification provided for in Section 8 is for any reason held
to be unavailable to or otherwise  insufficient  to hold harmless an indemnified
party in  respect  of any  losses,  claims,  damages,  liabilities  or  expenses
referred to  therein,  then each  indemnifying  party  shall  contribute  to the
aggregate  amount paid or payable by such indemnified  party, as incurred,  as a
result of any losses,  claims,  damages,  liabilities  or  expenses  referred to
therein  (i) in such  proportion  as is  appropriate  to  reflect  the  relative
benefits received by the Company,  on the one hand, and the Initial  Purchasers,
on the  other  hand,  from  the  offering  of the  Securities  pursuant  to this
Agreement  or (ii)  if the  allocation  provided  by  clause  (i)  above  is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the Initial Purchasers,  on the other
hand, in connection  with the  statements  or omissions or  inaccuracies  in the
representations  and warranties  herein which  resulted in such losses,  claims,
damages,  liabilities  or  expenses,  as well as any  other  relevant  equitable
considerations.  The relative benefits received by the Company, on the one hand,
and the Initial  Purchasers,  on the other hand, in connection with the offering
of the Securities  pursuant to this Agreement  shall be deemed to be in the same
respective  proportions  as the  total net  proceeds  from the  offering  of the
Securities  pursuant to this Agreement (before deducting  expenses)  received by
the Company,  and the total discount received by the Initial  Purchasers bear to
the aggregate  initial  offering price of the Securities.  The relative fault of
the Company,  on the one hand,  and the Initial  Purchasers,  on the other hand,
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue  statement of a material fact or omission or alleged  omission
to  state  a  material  fact  or  any  such  inaccurate  or  alleged  inaccurate
representation  or warranty relates to information  supplied by the Company,  on
the one hand,  or the Initial  Purchasers,  on the other hand,  and the parties'
relative intent, knowledge,  access to information and opportunity to correct or
prevent such statement or omission.

         The  amount  paid or  payable  by a party  as a result  of the  losses,
claims,  damages,  liabilities and expenses referred to above shall be deemed to
include,  subject to the  limitations  set forth in Section  8(c),  any legal or
other fees or  expenses  reasonably  incurred by such party in  connection  with
investigating  or defending  any action or claim.  The  provisions  set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided,  however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.

         The Company and the Initial  Purchasers agree that it would not be just
and equitable if contribution  pursuant to this Section 9 were determined by pro
rata allocation  (even if the Initial  Purchasers were treated as one entity for
such purpose) or by any other method of  allocation  which does not take account
of the equitable considerations referred to in this Section 9.

         Notwithstanding  the provisions of this Section 9, no Initial Purchaser
shall be required to contribute any amount in excess of the discount received by
such Initial  Purchaser in connection with the Securities  distributed by it. No
person guilty of fraudulent misrepresentation (within the
                                       22
<PAGE>
meaning  of  Section  11(f)  of  the  Securities   Act)  shall  be  entitled  to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 9 are several,  and not joint,  in proportion  to their  respective
commitments  as set forth  opposite  their names in Schedule A. For  purposes of
this  Section 9, each  officer  and  employee of an Initial  Purchaser  and each
person,  if any,  who  controls an Initial  Purchaser  within the meaning of the
Securities  Act and the Exchange Act shall have the same rights to  contribution
as such Initial Purchaser, and each director of the Company, each officer of the
Company, and each person, if any, who controls the Company within the meaning of
the  Securities  Act  and the  Exchange  Act  shall  have  the  same  rights  to
contribution as the Company.

         Section 10.  Termination of this Agreement.  Prior to the Closing Date,
this Agreement maybe terminated by the Initial Purchasers by notice given to the
Company  if at any time (i)  trading  in or  quotation  of any of the  Company's
securities  shall have been  suspended  or limited by the  Commission  or by the
Nasdaq Stock  Market,  or trading in  securities  generally on either the Nasdaq
Stock  Market  or the New York  Stock  Exchange  shall  have been  suspended  or
limited,  or minimum or maximum prices shall have been generally  established on
any of such  stock  exchanges  by the  Commission  or the  NASD;  (ii) a general
banking  moratorium  shall  have  been  declared  by any of  federal,  New York,
Delaware or California authorities; (iii) there shall have occurred any outbreak
or  escalation  of  national  or  international  hostilities  or any  crisis  or
calamity, or any change in the United States or international financial markets,
or any  substantial  change or development  involving a prospective  substantial
change in United  States  or  international  political,  financial  or  economic
conditions, as in the judgment of the Initial Purchasers is material and adverse
and makes it  impracticable  to market the  Securities  in the manner and on the
terms described in the Offering  Memorandum or to enforce contracts for the sale
of securities;  (iv) in the judgment of the Initial  Purchasers there shall have
occurred any Material Adverse Change;  or (v) the Company shall have sustained a
loss by strike,  fire,  flood,  earthquake,  accident or other  calamity of such
character as in the judgment of the Initial Purchasers may interfere  materially
with the conduct of the business and  operations  of the Company  regardless  of
whether or not such loss shall have been insured.  Any  termination  pursuant to
this Section 10 shall be without liability on the part of (a) the Company to any
Initial  Purchaser,  except that the Company shall be obligated to reimburse the
expenses of the Initial Purchasers  pursuant to Sections 4 and 6 hereof, (b) any
Initial Purchaser to the Company,  or (c) of any party hereto to any other party
except  that the  provisions  of  Section 8 and  Section 9 shall at all times be
effective and shall survive such termination.

         Section 11.  Representations  and Indemnities to Survive Delivery.  The
respective  indemnities,  agreements,  representations,   warranties  and  other
statements of the Company, of its officers and of the several Initial Purchasers
set forth in or made  pursuant to this  Agreement  will remain in full force and
effect,  regardless  of any  investigation  made by or on behalf of any  Initial
Purchaser or the Company or any of its or their partners,  officers or directors
or any controlling  person, as the case may be, and will survive delivery of and
payment for the Securities sold hereunder and any termination of this Agreement.

         Section 12. Notices.  All communications  hereunder shall be in writing
and shall be mailed,  hand  delivered or telecopied and confirmed to the parties
hereto as follows:
                                       23
<PAGE>
If to the Initial Purchasers:

         NationsBanc Montgomery Securities LLC
         600 Montgomery Street
         San Francisco, California  94111
         Facsimile:  415-249-5558
         Attention:  Richard A. Smith

with a copy to:

         NationsBanc Montgomery Securities LLC
         600 Montgomery Street
         San Francisco, California  94111
         Facsimile:  (415) 249-5553
         Attention:  David A. Baylor, Esq.

If to the Company:

         Action Performance Companies, Inc.
         4707 East Baseline Road
         Phoenix, Arizona  85040
         Facsimile:  (602) 337-3780
         Attention:  Chief Financial Officer

with a copy to:

         O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A.
         One East Camelback Road, Suite 1100
         Phoenix, Arizona 85012-1656
         Facsimile:  (602) 263-2900
         Attention:  Robert S. Kant, Esq.

Any party hereto may change the address for receipt of  communications by giving
written notice to the others.

         Section 13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto,  including any substitute Initial Purchasers
pursuant to Section 16 hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective  successors,  and no other person will have any right
or obligation  hereunder.  The term "successors" shall not include any purchaser
of the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.

         Section   14.    Partial    Unenforceability.    The    invalidity   or
unenforceability of any Section,  paragraph or provision of this Agreement shall
not affect the validity or  enforceability  of any other  Section,  paragraph or
provision  hereof.  If any Section,  paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable,  there shall be deemed
to be made such minor changes (and only such minor  changes) as are necessary to
make it valid and enforceable.
                                       24
<PAGE>
         Section 15. Governing Law Provisions.  THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.

         Section 16. Default of One or More of the Several  Initial  Purchasers.
If any one or more of the  several  Initial  Purchasers  shall fail or refuse to
purchase  Securities  that it or they have agreed to purchase  hereunder  on the
Closing Date or the Second Closing Date, and the aggregate  number of Securities
which such defaulting  Initial Purchaser or Initial Purchasers agreed but failed
or  refused to  purchase  does not  exceed  10% of the  aggregate  number of the
Securities to be purchased on such date, the other Initial  Purchasers  shall be
obligated, severally, in the proportions that the number of Securities set forth
opposite their  respective  names on Schedule A bears to the aggregate number of
Securities  set  forth  opposite  the names of all such  non-defaulting  Initial
Purchasers,  or in such other  proportions  as may be  specified  by the Initial
Purchasers  with  the  consent  of the  non-defaulting  Initial  Purchasers,  to
purchase  the  Securities  which such  defaulting  Initial  Purchaser or Initial
Purchasers  agreed but failed or refused to purchase on such date. If any one or
more of the Initial  Purchasers shall fail or refuse to purchase  Securities and
the  aggregate  number of Securities  with respect to which such default  occurs
exceeds 10% of the aggregate number of Securities to be purchased on the Closing
Date, and arrangements  satisfactory to the Initial  Purchasers and the Company,
including the substitution of a new Initial Purchaser for the defaulting Initial
Purchaser,  for the  purchase  of such  Securities  are not made within 48 hours
after such default,  this Agreement  shall  terminate  without  liability of any
party to any other party  except that the  provisions  of Section 4,  Section 6,
Section 8 and Section 9 shall at all times be effective  and shall  survive such
termination. In any such case either the Initial Purchasers or the Company shall
have the right to postpone the Closing Date or the Second  Closing  Date, as the
case may be,  but in no event  for  longer  than  seven  days in order  that the
required changes,  if any, to the Offering  Memorandum or any other documents or
arrangements may be effected.

         As used in this Agreement, the term "Initial Purchaser" shall be deemed
to include any person  substituted for a defaulting Initial Purchaser under this
Section  16.  Any action  taken  under this  Section  16 shall not  relieve  any
defaulting  Initial  Purchaser  from liability in respect of any default of such
Initial Purchaser under this Agreement.

         Section 17. General Provisions.  This Agreement  constitutes the entire
agreement of the parties to this  Agreement and  supersedes all prior written or
oral and all  contemporaneous  oral agreements,  understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more  counterparts,  each one of which  shall be an  original,  with the same
effect as if the  signatures  thereto and hereto were upon the same  instrument.
This  Agreement  may not be amended or modified  unless in writing by all of the
parties  hereto,  and no  condition  herein  (express or implied)  may be waived
unless  waived in writing by each party whom the  condition is meant to benefit.
The Table of Contents and the section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.

         Each of the  parties  hereto  acknowledges  that it is a  sophisticated
business person that was adequately  represented by counsel during  negotiations
regarding  the   provisions   hereof,   including,   without   limitation,   the
indemnification  provisions  of  Section 8 and the  contribution  provisions  of
Section 9, and is fully informed regarding said provisions.  Each of the parties
hereto  further  acknowledges  that the  provisions  of  Sections 8 and 9 hereto
fairly allocate the risks in light of the
                                       25
<PAGE>
ability of the parties to investigate the Company,  its affairs and its business
in order to assure that adequate  disclosure  has been made in any  registration
statement,  any preliminary Offering Memorandum and the Offering Memorandum (and
any amendments and supplements  thereto),  as required by the Securities Act and
the Exchange Act.

         If the  foregoing  is in  accordance  with  your  understanding  of our
agreement,  kindly sign and return to the Company the  enclosed  copies  hereof,
whereupon this instrument,  along with all counterparts  hereof,  shall become a
binding agreement in accordance with its terms.

Very truly yours,

ACTION PERFORMANCE COMPANIES, INC.


By:  /s/ Fred W. Wagenhals
     ------------------------------
     Name:  Fred W. Wagenhals
     Title: Chairman of the Board, President
            and Chief Executive Officer


The foregoing Purchase Agreement is hereby confirmed and accepted by the Initial
Purchasers in San Francisco, California as of the date first above written.

NATIONSBANC MONTGOMERY SECURITIES LLC
CIBC OPPENHEIMER CORP.
EVEREN SECURITIES, INC.
PIPER JAFFRAY INC.

As the several Initial Purchasers

By NATIONSBANC MONTGOMERY SECURITIES LLC


By:  /s/ Lew Coleman
     ------------------------------
     Name:  Lew Coleman
     Title: Sr. Managing Director
                                       26