Mestek, Inc.
                                               260 North Elm Street
                                               Westfield, Massachusetts 01085


The Travelers Insurance Company
One Tower Square
Hartford, Connecticut  06183-2030

Re:      5.53% Senior Notes due March 1, 1998
         Dated as of March 1, 1996

Ladies and Gentlemen:

Mestek,  Inc., a Pennsylvania  corporation (the  "Company"),  agrees with you as
follows:

Section 1.        Authorization of Notes;.

The Company will authorize the issue and sale of $15,000,000 aggregate principal
amount of its 5.53%  Senior Notes due March 1, 1998 (the  "Notes",  such term to
include any such notes issued in substitution therefor pursuant to Section 13 of
this Agreement.  The Notes shall be substantially in the form set out in Exhibit
1,  with such  changes  therefrom,  if any,  as may be  approved  by you and the
Company.  Certain  capitalized  terms  used in this  Agreement  are  defined  in
Schedule B;  references to a "Schedule" or an "Exhibit"  are,  unless  otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.

Section 2.        Sale and Purchase of Notes;.

Subject to the terms and  conditions of this  Agreement,  the Company will issue
and sell to you and you will purchase from the Company,  at the Closing provided
for in Section 3, Notes in the principal amount specified  opposite your name in
Schedule A at the purchase price of 100% of the principal amount thereof.

Section 3.        Closing;.

The sale and  purchase  of the Notes to be  purchased  by you shall occur at the
offices of Chapman and Cutler, 111 West Monroe Street, Chicago,  Illinois 60603,
at 11:00 a.m., Chicago time, at a closing (the "Closing") on April 8, 1996 or on
such  other  Business  Day  thereafter  on or prior to April 15,  1996 as may be
agreed upon by the Company and you. At the Closing the Company  will  deliver to
you the  Notes to be  purchased  by you in the  form of a  single  Note (or such
greater  number  of  Notes in  denominations  of at  least  $100,000  as you may
request)  dated the date of the Closing and  registered  in your name (or in the
name of your  nominee),  against  delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer  of  immediately  available  funds for the  account  of the  Company to
account number 2131067 at BayBank,  1500 Main St.,  Springfield,  MA, ABA number
011001742.  If at the Closing the Company shall fail to tender such Notes to you
as  provided  above in this  Section 3, or any of the  conditions  specified  in
Section 4 shall not have been fulfilled to your  satisfaction  or waived by you,
you shall, at your election, be relieved of all further


<PAGE>



obligations  under this  Agreement,  without  thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.

Section 4.        Conditions to Closing;.

Your  obligation  to  purchase  and pay for the  Notes  to be sold to you at the
Closing is subject to the fulfillment to your  satisfaction,  prior to or at the
Closing, of the following conditions:

         Section 4.1.   Representations and Warranties;.  The 
representations and warranties of the Company in this Agreement shall be 
correct when made and at the time of the Closing.

         Section  4.2.  Performance;  No  Default.';  The  Company  shall  have
performed  and complied with all  agreements  and  conditions  contained in this
Agreement  required to be  performed  or complied  with by it prior to or at the
Closing  and after  giving  effect  to the issue and sale of the Notes  (and the
application of the proceeds thereof as contemplated by Schedule 5.14) no Default
or Event of Default shall have occurred and be  continuing.  Neither the Company
nor any Subsidiary  shall have entered into any transaction  since September 30,
1995 that would have been  prohibited by Sections 10.1,  10.3 or 10.4 hereof had
such Sections applied since such date.

         Section 4.3.      Compliance Certificates;.

         (a)      Officer's Certificate.  The Company shall have delivered to 
you an Officer's Certificate, dated the date of the Closing, certifying that 
the conditions specified in Sections 4.1, 4.2 and 4.8 have been fulfilled.

         (b)      Secretary's Certificate.  The Company shall have delivered to 
you a certificate certifying as to the resolutions attached thereto and other 
corporate proceedings relating to the authorization, execution and delivery of 
the Notes and the Agreement.

         Section 4.4. Opinions of Counsel;.  You shall have received opinions in
form and substance  satisfactory  to you, dated the date of the Closing (a) from
Baker & McKenzie,  counsel for the  Company,  covering  the matters set forth in
Exhibit  4.4(a) and covering  such other  matters  incident to the  transactions
contemplated  hereby as you or your  counsel  may  reasonably  request  (and the
Company  hereby  instructs  its counsel to deliver  such opinion to you) and (b)
from  Chapman  and  Cutler,   your  special  counsel  in  connection  with  such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as you may reasonably request.

         'Section 4.5. Purchase  Permitted By Applicable Law, Etc';. On the date
of the Closing  your  purchase of Notes shall (a) be  permitted  by the laws and
regulations of each  jurisdiction to which you are subject,  without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited  investments  by  insurance  companies  without  restriction  as to  the
character of the  particular  investment,  (b) not violate any applicable law or
regulation (including, without limitation,  Regulation G, T, U or X of the Board
of Governors of the Federal  Reserve System) and (c) not subject you to any tax,
penalty or  liability  under or pursuant to any  applicable  law or  regulation,
which law or  regulation  was not in effect on the date hereof.  If requested by
you, you shall have  received an  Officer's  Certificate  certifying  as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.


<PAGE>



         Section 4.6.  Payment of Special  Counsel Fees.;  Without  limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees,  charges and  disbursements  of your  special  counsel  referred to in
Section 4.4 to the extent  reflected in a statement of such counsel  rendered to
the Company at least one Business Day prior to the Closing.

         Section 4.7.  Private  Placement  Number;.  A Private  Placement Number
issued by  Standard  & Poor's  CUSIP  Service  Bureau (in  cooperation  with the
Securities   Valuation   Office  of  the  National   Association   of  Insurance
Commissioners) shall have been obtained for the Notes.

         Section 4.8.  Changes in Corporate  Structure;.  Except as specified in
Schedule  4.8,  the  Company  shall  not  have  changed  its   jurisdiction   of
incorporation or been a party to any merger or consolidation  and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent audited  financial  statements
referred to in Schedule 5.5.

         Section  4.9.  Proceedings  and  Documents;.  All  corporate  and other
proceedings in connection with the  transactions  contemplated by this Agreement
and all  documents  and  instruments  incident  to such  transactions  shall  be
satisfactory to you and your special  counsel,  and you and your special counsel
shall have received all such counterpart  originals or certified or other copies
of such documents as you or they may reasonably request.

Section 5.        Representations and Warranties of the Company;

The Company represents and warrants to you, as of the date of the Closing, that:

         'Section 5.1.  Organization;  Power and  Authority';.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its  jurisdiction  of  incorporation,  and is  duly  qualified  as a  foreign
corporation  and  is in  good  standing  in  each  jurisdiction  in  which  such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate  power and authority to own or hold under lease the properties
it purports to own or hold under  lease,  to transact  the business it transacts
and proposes to transact,  to execute and deliver this  Agreement  and the Notes
and to perform the provisions hereof and thereof.

         Section 5.2.  Authorization,  etc;.  This  Agreement and the Notes have
been  duly  authorized  by all  necessary  corporate  action  on the part of the
Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute,  a legal, valid and binding obligation of the Company
enforceable  against the Company in  accordance  with its terms,  except as such
enforceability  may  be  limited  by  (i)  applicable  bankruptcy,   insolvency,
reorganization,  moratorium or other similar laws  affecting the  enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

         Section 5.3.      Disclosure;.  The Company, through its agent for the 
transactions contemplated hereby, Bank of Boston, has delivered to you the 
financial statements listed in Schedule 5.5 relating to the transactions 
contemplated hereby.  The financial statements listed in Schedule 5.5 fairly 
describe, in all material respects, the general nature of the business and


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principal properties of the Company and its Subsidiaries. Except as disclosed in
Schedule 5.3, this  Agreement,  the  documents,  certificates  or other writings
delivered  to  you by or on  behalf  of  the  Company  in  connection  with  the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material  fact  necessary to make the  statements  therein not
misleading in light of the  circumstances  under which they were made. Except as
expressly described in Schedule 5.3, or in one of the documents, certificates or
other writings  identified  therein,  or in the financial  statements  listed in
Schedule 5.5, since December 31, 1995, there has been no change in the financial
condition,  operations,  business, properties or prospects of the Company or any
Subsidiary  except  changes  that  individually  or in the  aggregate  could not
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company  that could  reasonably  be  expected to have a Material  Adverse
Effect  that  has  not  been  set  forth  herein  or  in  the  other  documents,
certificates and other writings  delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.

         'Section 5.4.  Organization  and  Ownership of Shares of  Subsidiaries;
Affiliates';.  (a) Schedule 5.4 contains (except as noted therein)  complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the  correct  name  thereof,  the  jurisdiction  of its  organization,  and  the
percentage  of shares  of each  class of its  capital  stock or  similar  equity
interests  outstanding owned by the Company and each other  Subsidiary,  (ii) of
the Company's  Affiliates,  other than Subsidiaries,  and (iii) of the Company's
directors and senior officers.

         (b) All of the  outstanding  shares of capital stock or similar  equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued,  are fully paid and nonassessable
and are owned by the  Company or another  Subsidiary  free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).

         (c) Each  Subsidiary  identified  in Schedule 5.4 is a  corporation  or
other legal entity duly organized,  validly  existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation  or other legal entity and is in good standing in each  jurisdiction
in which such  qualification is required by law, other than those  jurisdictions
as to which the  failure  to be so  qualified  or in good  standing  could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse  Effect.  Each such  Subsidiary  has the  corporate  or other  power and
authority to own or hold under lease the  properties  it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

         (d) No  Subsidiary  is a party to, or  otherwise  subject  to any legal
restriction or any agreement (other than this Agreement,  the agreements  listed
on Schedule 5.4 and  customary  limitations  imposed by corporate  law statutes)
restricting  the ability of such  Subsidiary  to pay dividends out of profits or
make any other  similar  distributions  of profits to the  Company or any of its
Subsidiaries  that owns  outstanding  shares of capital stock or similar  equity
interests of such Subsidiary.

         Section 5.5.      Financial Statements;.  The Company has delivered to 
you copies of the financial statements of the Company and its Subsidiaries 
listed on Schedule 5.5. All of said financial statements (including in each 
case the related schedules and notes) fairly present in all material respects 
the consolidated financial position of the Company and its Subsidiaries as of 
the


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respective  dates  specified in such  Schedule and the  consolidated  results of
their operations and cash flows for the respective periods so specified and have
been  prepared in  accordance  with GAAP  consistently  applied  throughout  the
periods involved except as set forth in the notes thereto (subject,  in the case
of any interim financial statements, to normal year-end adjustments).

         Section  5.6.  Compliance  with  Laws,  Other  Instruments,  etc;.  The
execution,  delivery and  performance  by the Company of this  Agreement and the
Notes will not (i) contravene,  result in any breach of, or constitute a default
under,  or result in the  creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture,  mortgage,  deed of trust, loan,
purchase or credit agreement,  lease, corporate charter or by-laws, or any other
agreement or  instrument  to which the Company or any  Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.

         Section 5.7. Governmental Authorizations, etc;. No consent, approval or
authorization of, or registration,  filing or declaration with, any Governmental
Authority is required in connection with the execution,  delivery or performance
by the Company of this Agreement or the Notes.

         'Section  5.8.  Litigation;  Observance  of  Agreements,  Statutes  and
Orders';.  (a)  Except as  disclosed  in  Schedule  5.8 and  5.18,  there are no
actions,  suits or  proceedings  pending or, to the  knowledge  of the  Company,
threatened against or affecting the Company or any Subsidiary or any property of
the Company or any  Subsidiary in any court or before any arbitrator of any kind
or  before  or by  any  Governmental  Authority  that,  individually  or in  the
aggregate, could reasonably be expected to have a Material Adverse Effect.

         (b) Neither the Company nor any Subsidiary is in default under any term
of any  agreement or  instrument to which it is a party or by which it is bound,
or  any  order,  judgment,   decree  or  ruling  of  any  court,  arbitrator  or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or  regulation   (including  without  limitation   Environmental  Laws)  of  any
Governmental  Authority,  which  default or  violation,  individually  or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

         Section 5.9. Taxes;.  The Company and its  Subsidiaries  have filed all
tax returns that are required to have been filed in any  jurisdiction,  and have
paid all taxes shown to be due and  payable on such  returns and all other taxes
and  assessments  levied  upon  them or  their  properties,  assets,  income  or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (i)
the amount of which is not individually or in the aggregate Material or (ii) the
amount,  applicability or validity of which is currently being contested in good
faith by  appropriate  proceedings  and with  respect to which the  Company or a
Subsidiary,  as the case may be, has established adequate reserves in accordance
with GAAP.  The Company knows of no basis for any other tax or  assessment  that
could  reasonably be expected to have a Material  Adverse  Effect.  The charges,
accruals  and  reserves  on the books of the  Company  and its  Subsidiaries  in
respect of Federal,  state or other taxes for all fiscal  periods are  adequate.
The Federal income tax liabilities of the


<PAGE>



Company  and its  Subsidiaries  have been  determined  by the  Internal  Revenue
Service and paid for all fiscal years up to and  including the fiscal year ended
December 31, 1990.

         'Section  5.10.  Title  to  Property;  Leases';.  The  Company  and its
Subsidiaries have good and sufficient title to their respective  properties that
individually  or in the aggregate are  Material,  including all such  properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise  disposed of in the ordinary course of business and
except for the  properties  reflected in items 3 and 4 of Schedule 5.3), in each
case free and clear of Liens  prohibited  by this  Agreement.  All  leases  that
individually  or in the aggregate are Material are valid and  subsisting and are
in full force and effect in all material respects.

         Section 5.11.     Licenses, Permits, etc;.  Except as disclosed in 
Schedule 5.11,

         (a) the  Company  and its  Subsidiaries  own or possess  all  licenses,
permits,  franchises,   authorizations,   patents,  copyrights,  service  marks,
trademarks  and trade names,  or rights  thereto,  that  individually  or in the
aggregate are Material, without known conflict with the rights of others;

         (b) to the best  knowledge  of the  Company,  no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright,  service mark, trademark,  trade name or other right owned by
any other Person; and

         (c)  to the  best  knowledge  of  the  Company,  there  is no  Material
violation  by any Person of any right of the Company or any of its  Subsidiaries
with respect to any patent,  copyright,  service mark, trademark,  trade name or
other right owned or used by the Company or any of its Subsidiaries.

         Section 5.12.  Compliance  with ERISA;.  (a) The Company and each ERISA
Affiliate  have operated and  administered  each Plan (other than  Multiemployer
Plans) in  compliance  with all  applicable  laws except for such  instances  of
noncompliance  as have not resulted in and could not  reasonably  be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability  pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA),  and no event,  transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA  Affiliate,  or in the  imposition  of any
Lien on any of the  rights,  properties  or assets of the  Company  or any ERISA
Affiliate,  in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such  liabilities  or Liens as would  not be  individually  or in the  aggregate
Material.

         (b)      The Company maintains no Plans (other than Multiemployer 
Plans).

         (c) The Company and its ERISA  Affiliates have not incurred  withdrawal
liabilities  (and are not subject to contingent  withdrawal  liabilities)  under
section  4201  or  4204  of  ERISA  in  respect  of  Multiemployer   Plans  that
individually or in the aggregate are Material and that remain unpaid.

         (d) The expected  post-retirement  benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial  Accounting  Standards  Board  Statement  No. 106,  without  regard to
liabilities attributable to continuation coverage


<PAGE>



mandated by section 4980B of the Code) of the Company and its Subsidiaries is 
not Material.

         (e) The execution  and delivery of this  Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction  that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed  pursuant  to section  4975(c)(1)(A)-(D)  of the Code and for which a
statutory or administrative  exception is not available.  The  representation by
the Company in the first  sentence of this  Section  5.12(e) is made in reliance
upon and subject to (i) the accuracy of your representation in Section 6.2 as to
the  sources  of the  funds  used to pay the  purchase  price of the Notes to be
purchased by you and (ii) the assumption,  made solely for the purpose of making
such  representation,  that Department of Labor Interpretive  Bulletin 75-2 with
respect to prohibited  transactions  remains valid in the  circumstances  of the
transactions contemplated herein.

         Section 5.13. Private Offering by the Company;. Neither the Company nor
anyone acting on its behalf has offered the Notes or any similar  securities for
sale to,  or  solicited  any  offer to buy any of the same  from,  or  otherwise
approached or negotiated in respect  thereof with, any person other than you and
not more than 4 other  Institutional  Investors,  each of which has been offered
the Notes at a private  sale for  investment.  Neither  the  Company  nor anyone
acting on its behalf has taken,  or will take, any action that would subject the
issuance or sale of the Notes to the  registration  requirements of Section 5 of
the Securities Act.

         'Section 5.14. Use of Proceeds; Margin Regulations';.  The Company will
apply the  proceeds of the sale of the Notes as set forth in Schedule  5.14.  No
part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal  Reserve System
(12 CFR 207),  or for the  purpose  of  buying or  carrying  or  trading  in any
securities under such  circumstances as to involve the Company in a violation of
Regulation  X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation  of  Regulation  T of said Board (12 CFR 220).  Margin  stock does not
constitute more than 10% of the value of the consolidated  assets of the Company
and its  Subsidiaries  and the Company does not have any present  intention that
margin stock will constitute more than 10% of the value of such assets.  As used
in this Section,  the terms  "margin  stock" and "purpose of buying or carrying"
shall have the meanings assigned to them in said Regulation G.

         'Section 5.15.  Existing  Indebtedness;  Future Liens';.  (a) Except as
described  therein,  Schedule 5.15 sets forth a complete and correct list of all
outstanding  Indebtedness of the Company and its Subsidiaries as of December 31,
1995,  since  which  date  there has been no  Material  change  in the  amounts,
interest  rates,  sinking  funds,  installment  payments  or  maturities  of the
Indebtedness  of the  Company or its  Subsidiaries.  Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any  Indebtedness of the Company or such
Subsidiary and no event or condition  exists with respect to any Indebtedness of
the  Company or any  Subsidiary  that would  permit (or that with  notice or the
lapse  of  time,  or both,  would  permit)  one or more  Persons  to cause  such
Indebtedness  to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

         (b)      Except as disclosed in Schedule 5.15, neither the Company nor 
any Subsidiary has agreed or consented to cause or permit in the future (upon 
the happening of a contingency or


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otherwise) any of its property,  whether now owned or hereafter acquired,  to be
subject to a Lien not otherwise permitted by Section 10.3.

         Section 5.16.  Foreign Assets Control  Regulations,  etc;.  Neither the
sale of the Notes by the Company  hereunder nor its use of the proceeds  thereof
will violate the Trading  with the Enemy Act, as amended,  or any of the foreign
assets  control  regulations of the United States  Treasury  Department (31 CFR,
Subtitle B,  Chapter V, as amended) or any  enabling  legislation  or  executive
order relating thereto.

         Section 5.17. Status under Certain  Statutes;.  Neither the Company nor
any  Subsidiary is subject to  regulation  under the  Investment  Company Act of
1940, as amended,  the Public Utility  Holding  Company Act of 1935, as amended,
the Interstate Commerce Act, as amended, or the Federal Power Act, as amended.

         Section  5.18.  Environmental  Matters;.  Neither  the  Company nor any
Subsidiary  has  knowledge of any claim or has received any notice of any claim,
and no proceeding has been  instituted  raising any claim against the Company or
any of its  Subsidiaries  or any of  their  respective  real  properties  now or
formerly owned, leased or operated by any of them or other assets,  alleging any
damage to the environment or violation of any  Environmental  Laws,  except,  in
each case,  such as could not  reasonably  be  expected  to result in a Material
Adverse Effect.
Except as otherwise disclosed to you in Schedule 5.18:

         (a) neither the Company nor any  Subsidiary  has knowledge of any facts
which  would  give  rise to any  claim,  public  or  private,  of  violation  of
Environmental Laws or damage to the environment  emanating from, occurring on or
in any way related to real properties now or formerly owned,  leased or operated
by any of them or to other assets or their use,  except,  in each case,  such as
could not reasonably be expected to result in a Material Adverse Effect;

         (b)  neither the  Company  nor any of its  Subsidiaries  has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them  and has not  disposed  of any  Hazardous  Materials  in a manner
contrary  to any  Environmental  Laws in  each  case in any  manner  that  could
reasonably be expected to result in a Material Adverse Effect; and

         (c) all buildings on all real properties now owned,  leased or operated
by the Company or any of its  Subsidiaries  are in  compliance  with  applicable
Environmental  Laws,  except  where  failure to comply could not  reasonably  be
expected to result in a Material Adverse Effect.

Section 6.        Representations of the Purchaser;.

         Section 6.1.  Purchase for Investment;.  You represent that (1) you are
purchasing  the Notes for your own account or for one or more separate  accounts
maintained  by you or for the account of one or more  pension or trust funds and
not with a view to the  distribution  thereof,  provided that the disposition of
your or their  property  shall at all times be within your or their  control and
(2)  you  are an  "accredited  investor"  within  the  meaning  of  Rule  501 of
Regulation D promulgated under the Securities Act. You understand that the Notes
have not been  registered  under the Securities Act or any state "Blue Sky" laws
and  may  be  resold  only  if  registered  pursuant  to the  provisions  of the
Securities Act and any applicable state "Blue Sky" laws, or if an exemption from
registration  is  available,  except  under  circumstances  where  neither  such
registration  nor such an  exemption is required by law, and that the Company is
not required to


<PAGE>



register the Notes. Without limiting the foregoing,  you agree that you will not
offer to reoffer or resell the Notes  purchased  by you under this  Agreement to
any Person unless, to your knowledge, such Person is not a Competitor.

         Section 6.2.  Source of Funds;.  You represent that at least one of the
following statements is an accurate representation as to each source of funds (a
"Source")  to be  used by you to pay  the  purchase  price  of the  Notes  to be
purchased by you hereunder:

         (a) the Source is an "insurance  company  general  account"  within the
meaning of Department of Labor Prohibited  Transaction  Exemption  ("PTE") 95-60
(issued  July 12,  1995) and there is no employee  benefit  plan,  treating as a
single plan,  all plans  maintained by the same employer (or affiliate  thereof,
within the meaning of Section  V(a)(1) of PTE 95-60) or  employee  organization,
with respect to which the amount of the general account reserves and liabilities
for all contracts held by or on behalf of such plan, exceed ten percent (10%) of
the total  reserves  and  liabilities  of such  general  account  (exclusive  of
separate  account  liabilities)  plus  surplus,  as set forth in the NAIC Annual
Statement filed with your state of domicile; or

         (b) the  Source is either  (i) an  insurance  company  pooled  separate
account,  within the meaning of PTE 90-1 (issued  January 29,  1990),  or (ii) a
bank  collective  investment  fund,  within the meaning of the PTE 91-38 (issued
July 12,  1991)  and,  except as you have  disclosed  to the  Company in writing
pursuant  to this  paragraph  (b), no  employee  benefit  plan or group of plans
maintained by the same employer or employee organization  beneficially owns more
than 10% of all assets  allocated to such pooled separate  account or collective
investment fund; or

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

         (d)      the Source is a governmental plan; or

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

         (f) the Source does not include  assets of any employee  benefit  plan,
other than a plan exempt from the coverage of ERISA.

If you or any  subsequent  transferee  of the Notes  indicates  that you or such
transferee are relying on any representation  contained in paragraph (b), (c) or
(e) above, the Company shall deliver on


<PAGE>



the date of Closing and on the date of any  applicable  transfer a  certificate,
which  shall  either  state  that (i) it is  neither a party in  interest  nor a
"disqualified  person" (as defined in Section 4975(e)(2) of the Internal Revenue
Code of 1986,  as  amended),  with  respect to any plan  identified  pursuant to
paragraphs  (b) or (e)  above,  or (ii) with  respect  to any  plan,  identified
pursuant to paragraph (c) above,  neither it nor any  "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of any plan identified in writing  pursuant to paragraph (c) above or to
negotiate  the terms of said QPAM's  management  agreement on behalf of any such
identified plan. As used in this Section 6.2, the terms "employee benefit plan",
"governmental  plan",  "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.

Section 7.        Information as to Company;.

         Section 7.1.Financial and Business Information;.  The Company 
shall deliver to each holder of Notes that is an Institutional Investor:

         (a) Quarterly  Statements _ As soon as possible and in any event within
45 days after the end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly  fiscal period of each such fiscal year),
duplicate copies of:

         (i)  a consolidated balance sheet of the Company and its 
Subsidiaries as at the end of such quarter, and

         (ii) consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its  Subsidiaries for such quarter and (in the
case of the second and third quarters) for the portion of the fiscal year ending
with such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the  previous  fiscal year,  all in  reasonable  detail,  prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial  Officer as fairly  presenting,  in all material
respects,  the financial  position of the companies  being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments,  provided that delivery  within the time period  specified above of
copies of the  Company's  Quarterly  Report on Form 10-Q  prepared in compliance
with the  requirements  therefor  and filed  with the  Securities  and  Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1 (a);

         (b) Annual Statements _ As soon as possible and in any event within 105
days after the end of each fiscal year of the Company, duplicate copies of,

         (i)      a consolidated balance sheet of the Company and its 
Subsidiaries, as at the end of such year, and

         (ii)     consolidated statements of income, changes in shareholders' 
equity and cash flows of the Company and its Subsidiaries, for such year,

setting  forth in each case in  comparative  form the figures  for the  previous
fiscal year,  all in reasonable  detail,  prepared in accordance  with GAAP, and
accompanied

         (A)      by an opinion thereon of independent certified public 
accountants of recognized


<PAGE>



national  standing,  which  opinion shall state that such  financial  statements
present  fairly,  in  all  material  respects,  the  financial  position  of the
companies being reported upon and their results of operations and cash flows and
have been prepared in conformity  with GAAP,  and that the  examination  of such
accountants  in  connection  with  such  financial  statements  has been made in
accordance  with  generally  accepted  auditing  standards,  and that such audit
provides a reasonable basis for such opinion in the circumstances, and

         (B) a certificate of such  accountants  stating that they have reviewed
this Agreement and stating  further  whether,  in making their audit,  they have
become  aware of any  condition or event that then  constitutes  a Default or an
Event of Default,  and, if they are aware that any such  condition or event then
exists,  specifying  the nature and period of the  existence  thereof  (it being
understood that such  accountants  shall not be liable,  directly or indirectly,
for any failure to obtain  knowledge  of any Default or Event of Default  unless
such accountants  should have obtained  knowledge  thereof in making an audit in
accordance with generally  accepted  auditing  standards or did not make such an
audit),

provided  that the  delivery  within  the  time  period  specified  above of the
Company's  Annual  Report on Form 10-K for such fiscal year  (together  with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance  with the  requirements  therefor
and  filed  with the  Securities  and  Exchange  Commission,  together  with the
accountant's  certificate  described  in clause  (B)  above,  shall be deemed to
satisfy the requirements of this Section 7.1(b);

         (c) SEC and Other Reports _ promptly upon their becoming available, one
copy of (i) each financial statement,  report, notice or proxy statement sent by
the Company or any Subsidiary to public securities holders  generally,  and (ii)
each regular or periodic report,  each registration  statement (without exhibits
except as  expressly  requested by such  holder),  and each  prospectus  and all
amendments  thereto filed by the Company or any  Subsidiary  with the Securities
and Exchange  Commission  and of all press  releases and other  statements  made
available  generally by the Company or any  Subsidiary to the public  concerning
developments that are Material;

         (d) Notice of Default or Event of Default _ promptly,  and in any event
within five days after a Responsible  Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with  respect to a claimed  default  hereunder or that any Person has
given any notice or taken any action  with  respect to a claimed  default of the
type referred to in Section 11(f),  a written  notice  specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;

         (e) ERISA Matters _ promptly, and in any event within five days after a
Responsible  Officer  becoming aware of any of the  following,  a written notice
setting forth the nature thereof and the action,  if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:

         (i) with  respect  to any Plan,  any  reportable  event,  as defined in
section  4043(b)  of ERISA and the  regulations  thereunder,  for  which  notice
thereof has not been waived  pursuant  to such  regulations  as in effect on the
date hereof; or

         (ii)     the taking by the PBGC of steps to institute, or the 
threatening by the PBGC of the institution of, proceedings under section 4042 
of ERISA for the termination of, or the 

<PAGE>



appointment of a trustee to administer,  any Plan, or the receipt by the Company
or any ERISA  Affiliate of a notice from a  Multiemployer  Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan; or

         (iii) any event,  transaction  or  condition  that could  result in the
incurrence  of any liability by the Company or any ERISA  Affiliate  pursuant to
Title I or IV of ERISA or the  penalty  or  excise  tax  provisions  of the Code
relating to employee  benefit plans,  or in the imposition of any Lien on any of
the rights,  properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such  penalty  or excise  tax  provisions,  if such
liability or Lien,  taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;

         (f) Notices from  Governmental  Authority _ promptly,  and in any event
within 30 days of receipt  thereof,  copies of any notice to the  Company or any
Subsidiary  from any  Federal or state  Governmental  Authority  relating to any
order,  ruling,  statute or other law or  regulation  that could  reasonably  be
expected to have a Material Adverse Effect; and

         (g) Requested Information _ with reasonable promptness, such other data
and  information  relating  to  the  business,  operations,  affairs,  financial
condition,  assets or  properties of the Company or any of its  Subsidiaries  or
relating to the ability of the Company to perform its obligations  hereunder and
under  the Notes as from time to time may be  reasonably  requested  by any such
holder of Notes.

         Section 7.2.      Officer's Certificate;.  Each set of financial 
statements delivered to a holder of Notes pursuant to Section 7.1(a) or 
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior 
Financial Officer setting forth:

         (a)  Covenant   Compliance  _  the  information   (including   detailed
calculations)  required  in  order  to  establish  whether  the  Company  was in
compliance  with the  requirements  of Section 10.4 through Section 10.8 hereof,
inclusive,  during the quarterly or annual period covered by the statements then
being furnished (including with respect to each such Section,  where applicable,
the calculations of the maximum or minimum amount,  ratio or percentage,  as the
case may be,  permissible under the terms of such Sections,  and the calculation
of the amount, ratio or percentage then in existence); and

         (b) Event of Default _ a statement  that such  officer has reviewed the
relevant  terms  hereof  and has made,  or  caused to be made,  under his or her
supervision,  a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements  then being  furnished to the date of the  certificate  and that such
review  shall  not have  disclosed  the  existence  during  such  period  of any
condition or event that  constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including,  without  limitation,  any
such  event or  condition  resulting  from the  failure  of the  Company  or any
Subsidiary  to comply with any  Environmental  Law),  specifying  the nature and
period of  existence  thereof and what  action the  Company  shall have taken or
proposes to take with respect thereto.

         Section 7.3.      Inspection;.  The Company shall permit the 
representatives of each Holder that is an Institutional Investor:


<PAGE>



         (a) No Default _ if no Default or Event of Default then exists,  at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs,  finances
and accounts of the Company and its  Subsidiaries  with the Company's  officers,
and (with the consent of the Company,  which  consent  will not be  unreasonably
withheld)  its  independent  public  accountants,  and (with the  consent of the
Company,  which  consent will not be  unreasonably  withheld) to visit the other
offices  and  properties  of the  Company  and  each  Subsidiary,  all  at  such
reasonable times and as often as may be reasonably requested in writing; and

         (b)  Default _ if a Default or Event of  Default  then  exists,  at the
expense of the Company, to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their  respective  affairs,  finances and accounts with their respective
officers and independent  public  accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company  and  its  Subsidiaries),  all at  such  times  and as  often  as may be
requested.

Section 8.        Prepayment of the Notes;.

         Section 8.1.      Required Prepayments;.  No prepayments shall be 
required with respect to the Notes.

         Section 8.2. Optional  Prepayments with Make-Whole  Amount; The Company
may, at its option,  upon notice as provided  below,  prepay at any time all, or
from time to time any part of, the  Notes,  at 100% of the  principal  amount so
prepaid,  together with interest  accrued thereon to the date of such prepayment
plus the Make-Whole  Amount  determined for the prepayment  date with respect to
such principal amount. The Company will give each holder of Notes written notice
of each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment.  Each such notice
shall  specify  such date,  the  aggregate  principal  amount of the Notes to be
prepaid on such date,  the principal  amount of each Note held by such holder to
be prepaid  (determined in accordance  with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate  of a Senior  Financial  Officer as to
the  estimated   Make-Whole  Amount  due  in  connection  with  such  prepayment
(calculated  as if the date of such  notice  were  the date of the  prepayment),
setting forth the details of such  computation.  Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.

         Section 8.3.  Allocation of Partial  Prepayments;.  In the case of each
partial prepayment of the Notes, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes at the time outstanding in proportion,
as nearly as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.

         'Section 8.4.     Maturity; Surrender, Etc';.  In the case of each 
prepayment of Notes pursuant to this Section 8, the principal amount of each 
Note to be prepaid shall mature and become due and payable on the date fixed 
for such prepayment, together with interest on such principal amount accrued 
to such date and the applicable Make-Whole Amount, if any.  From and


<PAGE>



after such date, unless the Company shall fail to pay such principal amount when
so due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid,  interest on such  principal  amount shall cease to accrue.  Any Note
paid or prepaid in full shall be  surrendered  to the Company and  cancelled and
shall  not be  reissued,  and no Note  shall be  issued  in lieu of any  prepaid
principal amount of any Note.

         Section  8.5.  Purchase of Notes;.  The  Company  will not and will not
permit any Affiliate to purchase,  redeem, prepay or otherwise acquire, directly
or  indirectly,  any of  the  outstanding  Notes  except  upon  the  payment  or
prepayment of the Notes in accordance  with the terms of this  Agreement and the
Notes.  The  Company  will  promptly  cancel  all  Notes  acquired  by it or any
Affiliate  pursuant to any payment,  prepayment or purchase of Notes pursuant to
any provision of this  Agreement and no Notes may be issued in  substitution  or
exchange for any such Notes.

         Section 8.6.  Make-Whole  Amount;.  The term "Make-Whole Amount" means,
with  respect  to any  Note,  an  amount  equal to the  excess,  if any,  of the
Discounted  Value of the Called  Principal  of such Note over the amount of such
Called  Principal,  provided that the Make-Whole  Amount may in no event be less
than zero. For the purposes of determining the Make-Whole  Amount, the following
terms have the following meanings:

"Called  Principal"  means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

"Discounted  Value" means, with respect to the Called Principal of any Note, the
amount obtained by discounting such Called Principal from its scheduled due date
to the Settlement Date with respect to such Called Principal, in accordance with
accepted  financial  practice  and at a  discount  factor  (applied  on the same
periodic  basis as that on which  interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

"Reinvestment  Yield" means,  with respect to the Called  Principal of any Note,
the yield to maturity implied by (i) the yields reported,  as of 10:00 A.M. (New
York City time) on the second  Business Day preceding the  Settlement  Date with
respect to such Called Principal, on the display designated as "Page 678" on the
Telerate  Access  Service  (or such  other  display as may  replace  Page 678 on
Telerate Access Service) for actively traded U.S.  Treasury  securities having a
maturity  equal  to the  Remaining  Life of  such  Called  Principal  as of such
Settlement  Date, or (ii) if such yields are not reported as of such time or the
yields  reported as of such time are not  ascertainable,  the Treasury  Constant
Maturity Series Yields  reported,  for the latest day for which such yields have
been so reported as of the second  Business Day  preceding the  Settlement  Date
with respect to such Called Principal,  in Federal Reserve  Statistical  Release
H.15 (519) (or any comparable  successor  publication)  for actively traded U.S.
Treasury  securities  having a constant  maturity equal to the Remaining Life of
such Called  Principal as of such  Settlement  Date.  Such implied yield will be
determined,  if necessary,  by (a) converting  U.S.  Treasury bill quotations to
bond-equivalent  yields in accordance with accepted  financial  practice and (b)
interpolating  linearly between (1) the actively traded U.S.  Treasury  security
with the  duration  closest to and greater than the  Remaining  Life and (2) the
actively  traded U.S.  Treasury  security with the duration  closest to and less
than the Remaining Life.


<PAGE>



"Remaining  Life"  means,  with respect to any Called  Principal,  the number of
years (calculated to the nearest  one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Called Principal.

"Settlement  Date" means,  with respect to the Called Principal of any Note, the
date on which such Called  Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable  pursuant to Section
12.1, as the context requires.

Section 9.        Affirmative Covenants;.

So long as any of the Notes are outstanding the Company covenants that:

         Section 9.1. Compliance with Law;. The Company will and will cause each
of its Subsidiaries to comply with all laws, ordinances or governmental rules or
regulations  to which each of them is subject,  including,  without  limitation,
Environmental  Laws,  and will  obtain  and  maintain  in effect  all  licenses,
certificates,   permits,   franchises  and  other  governmental   authorizations
necessary to the ownership of their  respective  properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance  with such laws,  ordinances or governmental rules or regulations
or  failures  to  obtain or  maintain  in effect  such  licenses,  certificates,
permits,   franchises   and  other   governmental   authorizations   could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

         Section  9.2.  Insurance;.  The Company will and will cause each of its
Subsidiaries  to  maintain,  with  financially  sound  and  reputable  insurers,
insurance with respect to their  respective  properties  and businesses  against
such  casualties  and  contingencies,  of such types,  on such terms and in such
amounts (including  deductibles,  co-insurance and  self-insurance,  if adequate
reserves are  maintained  with  respect  thereto) as is customary in the case of
entities of established  reputations  engaged in the same or a similar  business
and similarly situated.

         Section  9.3.  Maintenance  of  Properties;.  The Company will and will
cause each of its  Subsidiaries  to maintain and keep, or cause to be maintained
and  kept,  their  respective  properties  in good  repair,  working  order  and
condition  (other than ordinary wear and tear), so that the business  carried on
in connection  therewith may be properly  conducted at all times,  provided that
this Section shall not prevent the Company or any Subsidiary from  discontinuing
the  operation  and  the   maintenance   of  any  of  its   properties  if  such
discontinuance  is  desirable in the conduct of its business and the Company has
concluded that such discontinuance could not,  individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

         Section 9.4.  Payment of Taxes and  Claims;.  The Company will and will
cause each of its  Subsidiaries to file all tax returns  required to be filed in
any  jurisdiction and to pay and discharge all taxes shown to be due and payable
on such  returns and all other  taxes,  assessments,  governmental  charges,  or
levies imposed on them or any of their properties, assets, income or franchises,
to the extent such taxes and assessments  have become due and payable and before
they have  become  delinquent  and all claims for which sums have become due and
payable that have or might become a Lien on  properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary need pay
any such  tax or  assessment  or  claims  if (i) the  amount,  applicability  or
validity  thereof is  contested  by the Company or such  Subsidiary  on a timely
basis  in good  faith  and in  appropriate  proceedings,  and the  Company  or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or


<PAGE>



such  Subsidiary or (ii) the nonpayment of all such taxes and assessments in the
aggregate could not reasonably be expected to have a Material Adverse Effect.

         Section 9.5. Corporate  Existence,  etc;. The Company will at all times
preserve and keep in full force and effect its corporate  existence.  Subject to
Section 10.2,  the Company will at all times preserve and keep in full force and
effect the corporate  existence of each of its Subsidiaries  (unless merged into
the Company or a  Subsidiary)  and all rights and  franchises of the Company and
its  Subsidiaries  unless,  in the  good  faith  judgment  of the  Company,  the
termination  of or failure to  preserve  and keep in full force and effect  such
corporate  existence,  right or  franchise  could  not,  individually  or in the
aggregate, have a Material Adverse Effect.

         Section 9.6. Maintenance of Records;.  The Company will keep, and cause
to be kept with respect to the operation and results of each Subsidiary adequate
records and books of account,  in which complete entries on a consolidated basis
will be made in  accordance  with  GAAP  consistently  applied,  reflecting  all
financial transactions of the Company and any of its Subsidiaries.

         Section  9.7.  Conduct  of  Business;.  Except as  otherwise  permitted
herein,  continue to engage in the  existing  lines of business  and  businesses
ancillary  thereto of the same  general  type as  conducted by it on the date of
this Agreement.

         Section 9.8. Environment;.  Be and remain, and cause each Subsidiary to
be and remain,  in compliance  with the  provisions of all federal,  state,  and
local  environmental,  health,  and safety laws,  codes and ordinances,  and all
rules and regulations issued thereunder;  notify the Holders  immediately of any
notice of a hazardous  discharge or  environmental  complaint  received from any
governmental  agency or any other party;  notify the Holders  immediately of any
hazardous  discharge  from or affecting  its premises;  immediately  contain and
remove the same, in compliance with all applicable  laws;  promptly pay any fine
or penalty  assessed in connection  therewith,  except such  assessments  as are
being  contested  in good  faith,  against  which  adequate  reserves  have been
established;  permit the  Holders to inspect  the  premises,  and to inspect all
books, correspondence, and records pertaining thereto; and at the request of the
Required Holders,  and in the event a Default or Event of Default then exists at
the Company's expense,  provide a report of a qualified  environmental engineer,
satisfactory in scope, form, and content to the Required Holders, and such other
and further assurances reasonably  satisfactory to the Required Holders that the
condition has been corrected.

         Section 9.9. Place of Business;. Promptly notify the Holders in writing
of any addition to,  change in, or  discontinuance  of, its place of business as
shown in this  subsection.  The  Company  has its  chief  executive  office  and
principal   place  of  business  only  at  260  North  Elm  Street,   Westfield,
Massachusetts.

Section 10.       Negative Covenants;.

The Company covenants that so long as any of the Notes are outstanding:

         Section 10.1.  Transactions with Affiliates;.  The Company will not and
will not  permit  any  Subsidiary  to enter  into  directly  or  indirectly  any
transaction  or  Material  group  of  related  transactions  (including  without
limitation  the purchase,  lease,  sale or exchange of properties of any kind or
the  rendering of any  service)  with any  Affiliate  (other than the Company or
another


<PAGE>



Subsidiary),  except in the  ordinary  course  and  pursuant  to the  reasonable
requirements  of the Company's or such  Subsidiary's  business and upon fair and
reasonable  terms no less favorable to the Company or such Subsidiary than would
be  obtainable  in a comparable  arm's-length  transaction  with a Person not an
Affiliate.

         Section 10.2.  Mergers,  Consolidations  and Sales of Assets;.  (a) The
Company will not, and will not permit any Subsidiary to,  consolidate with or be
a party to a merger with any other Person,  or sell, lease or otherwise  dispose
of all or substantially all of its assets, provided that:

         (i) any Subsidiary may merge or consolidate with or into the Company or
any Wholly-Owned  Subsidiary so long as in any merger or consolidation involving
the Company, the Company shall be the surviving or continuing corporation;

         (ii)  the  Company  may  consolidate  or merge  with or into any  other
corporation  if (1) the  corporation  which results from such  consolidation  or
merger (the "surviving corporation") is organized under the laws of any state of
the United States or the District of Columbia,  (2) the due and punctual payment
of the  principal  of and  premium,  if any,  and  interest on all of the Notes,
according to their tenor,  and the due and punctual  performance and observation
of all of the  covenants  in the Notes and this  Agreement  to be  performed  or
observed  by the  Company  are  expressly  assumed in  writing by the  surviving
corporation, and (3) at the time of such consolidation or merger and immediately
after giving effect thereto, no Default or Event of Default would exist; and

         (iii) the Company may sell or otherwise dispose of all or substantially
all of its  assets to any  corporation  if (1) the  acquiring  corporation  is a
corporation  organized  under the laws of any state of the United  States or the
District of Columbia,  (2) the due and punctual  payment of the principal of and
premium,  if any, and interest on all the Notes,  according to their tenor,  and
the due and punctual  performance  and observance of all of the covenants in the
Notes and in this  Agreement  to be  performed  or  observed  by the Company are
expressly assumed in writing by the acquiring  corporation,  and (3) at the time
of such sale or disposition  and  immediately  after giving effect  thereto,  no
Default or Event of Default would exist.

         (b) The Company will not, and will not permit any  Subsidiary to, sell,
lease,  transfer,  abandon  or  otherwise  dispose  of (any  such  sale,  lease,
transfer,  abandonment  or  other  disposition  being  herein  referred  to as a
"Transfer") any assets  (including stock of any  Subsidiary);  provided that the
foregoing restrictions do not apply to:

         (i)      Transfers in the ordinary course of business for fair value 
and except as provided in Section 10.2(a); or

         (ii)     the Transfer of assets of a Subsidiary to the Company or a 
Wholly-Owned Subsidiary; or

         (iii) the issue of any options or warrants to purchase capital stock of
a Subsidiary or other Securities exchangeable for or convertible into stock of a
Subsidiary to any employee or employees of such  Subsidiary  pursuant to a stock
option  plan;  provided  that in any case other than in the case of Omega  Flex,
Inc.  after giving  effect to the exercise of any such option,  warrant or other
convertible Security, the holders of such options, warrants or other convertible
Securities do not hold in the aggregate more than 5% of the outstanding  capital
stock of such Subsidiary,


<PAGE>



provided  further  that  in  the  case  of  Omega  Flex,  Inc.,  a  Pennsylvania
corporation and a Wholly-Owned Subsidiary of the Company, after giving effect to
the exercise of such right, option, warrant, or other convertible Security, such
holders of rights,  options,  warrants or convertible  Securities do not hold in
the  aggregate  more than 20% of the  outstanding  capital  stock of Omega Flex,
Inc.; or

         (iv) the  Transfer of either (A) assets of MCS,  Inc.,  a  Pennsylvania
corporation  and  Subsidiary  of the Company,  or (B) capital stock of MCS, Inc.
held by the Company, in each such case, for cash or other property equivalent to
the fair  value of such  assets  or  capital  stock to a Person  or  Persons  if
immediately  after the  consummation  of the transaction and after giving effect
thereto, no Default or Event of Default would exist; or

         (v)      any Transfer of such assets for cash or other property to a 
Person or Persons if all of the following conditions are met:

         (1) the assets  (valued at net book  value) do not,  together  with all
other assets of the Company and its Subsidiaries  previously  Transferred during
the  immediately  preceding  four fiscal  quarter  period in reliance  upon this
Section  10.2(b),  exceed 15% of  Consolidated  Total  Assets,  and such  assets
(valued at net book value) do not, together with all other assets of the Company
and Subsidiaries  previously disposed of during the period from the date of this
Agreement  to and  including  the date of the sale of such assets  exceed 25% of
Consolidated  Total  Assets,  in each such case  determined as of the end of the
immediately preceding fiscal quarter;

         (2)      immediately after the consummation of the transaction and 
after giving effect thereto, no Default or Event of Default would exist;

provided,  however, that for purposes of the foregoing calculation,  there shall
not be  included  any  assets  (or  portions  of such  assets) to the extent the
proceeds are applied  within 12 months of the date of Transfer of such assets to
either (A) the acquisition of fixed assets useful and intended to be used in the
operation  of the Company and its  Subsidiaries  as described in Section 9.7 and
having  a fair  market  value  (as  determined  in good  faith  by the  Board of
Directors  of the  Company) at least equal to that of the assets so  Transferred
and/or (B) the prepayment at any applicable  prepayment premium of the Notes. It
is understood  and agreed by the Company that any such proceeds paid and applied
to the prepayment of the Notes as  hereinabove  provided shall be prepaid as and
to the extent provided in Section 8.2.

         Section 10.3.  Limitation on Liens;. The Company will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or to exist,
any Lien on its or their  property  or assets,  whether  now owned or  hereafter
acquired, or upon any income or profits therefrom,  or transfer any property for
the purpose of subjecting  the same to the payment of obligations in priority to
the payment of its or their general  creditors,  or acquire or agree to acquire,
or permit any  Subsidiary  to acquire,  any property or assets upon  conditional
sales agreements or other title retention devices, except:

         (a) Liens for property taxes and assessments or governmental charges or
levies  and Liens  securing  claims or  demands of  mechanics  and  materialmen,
provided that payment thereof is not at the time required by Section 9.4;

         (b)      Liens of or resulting from any judgment or award, the time 
for the appeal or


<PAGE>



petition for rehearing of which shall not have  expired,  or in respect of which
the Company or a Subsidiary  shall at any time in good faith be  prosecuting  an
appeal or  proceeding  for a review and in respect of which a stay of  execution
pending such appeal or proceeding for review shall have been secured;

         (c) Liens  incidental  to the conduct of business or the  ownership  of
properties and assets (including Liens in connection with worker's compensation,
unemployment insurance and other like laws,  warehousemen's and attorneys' liens
and statutory  landlords'  liens) and Liens to secure the  performance  of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general  nature,  in any such case  incurred in the
ordinary  course of business and not in connection  with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if overdue,  is
being contested in good faith by appropriate actions or proceedings;

         (d)  minor  survey  exceptions  or  minor  encumbrances,  easements  or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes,  or zoning  or other  restrictions  as to the use of real  properties,
which are  necessary  for the conduct of the  activities  of the Company and its
Subsidiaries or which customarily exist on properties of corporations engaged in
similar  activities  and  similarly  situated  and  which  do not  in any  event
materially  impair their use in the operation of the business of the Company and
its Subsidiaries;

         (e)      Liens securing Indebtedness of a Subsidiary to the Company or 
to another Wholly-Owned Subsidiary; and

         (f) Liens  created or incurred  after the date of the Closing  given to
secure  Indebtedness  of the Company or any  Subsidiary in addition to the Liens
permitted by the  preceding  clauses (a) through (e) hereof,  provided  that all
Indebtedness  secured  by  such  Liens  shall  have  been  incurred  within  the
limitations provided in Sections 10.4(a).

         Section 10.4.     Limitations on Indebtedness;.  (a) The Company will 
not, and will not permit any Subsidiary to, create, issue, assume, guarantee or 
otherwise incur or in any manner be or become liable in respect of any 
Indebtedness, except:

         (i)      Indebtedness evidenced by the Notes;

         (ii)     Indebtedness of the Company and its Subsidiaries outstanding 
as of the date of this Agreement and described on Schedule 5.12; and

         (iii)  additional  Indebtedness  of  the  Company  or  any  Subsidiary,
provided  that at the  time of  creation,  issuance,  assumption,  guarantee  or
incurrence thereof and after giving effect thereto and to the application of the
proceeds thereof:

         (1)      no Default or Event of Default would exist; and

         (2) in the case of the  issuance  of any  Indebtedness  of the  Company
secured  by  Liens  permitted  by  Section  10.3(f)  and any  Indebtedness  of a
Subsidiary,  the sum of (A) the aggregate amount of all such Indebtedness of the
Company  secured by Liens  permitted by Section  10.3(f) plus (B) the  aggregate
amount of all Indebtedness of Subsidiaries  shall not exceed 15% of Consolidated
Total Assets.

         (b)      Any Person which becomes a Subsidiary after the date hereof 
shall for all purposes


<PAGE>



of this Section 10.4 be deemed to have created,  assumed or incurred at the time
it becomes a Subsidiary all  Indebtedness  of such Person  existing  immediately
after it becomes a Subsidiary.

         Section 10.5.     Consolidated Net Worth;.  The Company will at all 
times keep and maintain Consolidated Net Worth at an amount not less than 
$57,000,000.

         Section  10.6.  Consolidated  Interest  Expense  Coverage  Ratio;.  The
Company will at all times keep and maintain the ratio of Consolidated EBITDA for
the  immediately  preceding  four  fiscal  quarter  period  (treated as a single
accounting period) to Consolidated Interest Expense for such four fiscal quarter
period at not less than 3.0 to 1.0.

         Section 10.7. Debt to Net Worth;  Leverage  Ratio;.  The Company at all
times will maintain the ratio of the Company's total  Indebtedness and all other
liabilities to its Consolidated Net Worth at or less than 3.00 to 1.00.

         Section 10.8. Dividends, Stock Purchases,  Restricted Investments;. (a)
The Company will not and the Company will not permit any of its Subsidiaries to,
directly or indirectly,  or through any Affiliate,  declare or make or incur any
liability to declare or make any Distribution and neither the Company nor any of
its  Subsidiaries  will declare,  make or authorize any  Restricted  Investment,
unless,  immediately  after  giving  effect  to  the  proposed  Distribution  or
Restricted  Investment,  the aggregate amount of  Distributions  declared in the
case of dividends or made in the case of other  Distributions plus the aggregate
amount of Restricted  Investments  then held by the Company and its Subsidiaries
(valued  immediately after the making of such Restricted  Investment as provided
in the  definition  thereof)  during the period  from and after the date of this
Agreement to and  including the date of  declaration  in the case of a dividend,
the date of  payment  in the case of any  other  Distribution  and the date such
Investment  is committed to in the case of a  Restricted  Investment,  would not
exceed the sum of:

         (1)      $15,000,000; plus

         (2) 50% of Consolidated Net Income (or if such  Consolidated Net Income
is a deficit figure, then minus 100% of such deficit) for such period determined
on a cumulative basis commencing on December 31, 1995, to and including the date
of such declaration, payment or commitment.

         (b) For the purposes of making computations under paragraph (a) of this
Section 10.8, the amount of any  Distribution  declared,  paid or distributed or
Restricted  Investment made in property or assets of the Company or a Subsidiary
shall be deemed to be the  greater  of the book value or fair  market  value (as
determined in good faith by the  Company's  Board of Directors) of such property
or assets as of the date of declaration  in the case of a dividend,  the date of
payment in the case of any other  Distribution  and the date the  Investment  is
committed to in the case of any Restricted Investment.

Any  corporation  which  becomes a Subsidiary  after the date of this  Agreement
shall  be  deemed  to have  made,  at the  time it  becomes  a  Subsidiary,  all
Restricted Investments of such corporation existing immediately after it becomes
a Subsidiary.

         (c) The Company will not authorize a Distribution  on its capital stock
which is not payable within 60 days of authorization.


<PAGE>



         (d) The  Company  will  not  authorize  or make a  Distribution  on its
capital  stock  and  neither  the  Company  nor any  Subsidiary  will  make  any
Restricted  Investment  if after giving effect to the proposed  Distribution  or
Restricted Investment a Default or an Event of Default would exist.

Section 11.       Events of Default;.

An "Event of Default"  shall exist if any of the following  conditions or events
shall occur and be continuing:

         (a) The Company  defaults in the payment of any principal or Make-Whole
Amount,  if any, on any Note when the same becomes due and  payable,  whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

         (b)      The Company defaults in the payment of any interest on any 
Note for more than five Business Days after the same becomes due and payable; or

         (c) Any  representation  or warranty made or deemed made by the Company
in this Agreement or which is contained in any certificate,  document,  opinion,
or financial  or other  statement  furnished at any time under or in  connection
with  this  Agreement  shall  prove  to  have  been  incorrect,  incomplete,  or
misleading in any Material respect on or as of the date made or deemed made;

         (d) The Company shall fail,  after thirty (30) days of notice  thereof,
to perform or observe any term,  covenant,  or agreement contained herein (other
than failure under (a) or (b) above for which no notice is required);

         (e)      Dissolution, merger or consolidation of the Company (other 
than as permitted in this Agreement);

         (f) The Company or any of its Subsidiaries  shall, after the expiration
of any applicable notice or grace periods,  (a) fail to pay any Indebtedness for
borrowed money, in excess of $1,000,000,  to Persons other than the Holders,  or
any  interest  or premium  thereon,  when due  (whether by  scheduled  maturity,
required prepayment, acceleration, demand, or otherwise), or (b) fail to perform
or observe any term,  covenant,  or  condition  on its part to be  performed  or
observed  under any agreement or instrument  relating to any such  Indebtedness,
when  required to be  performed  or  observed,  if the effect of such failure to
perform or observe is to accelerate,  or to permit the acceleration of after the
giving of notice or passage of time, or both, the maturity of such Indebtedness,
whether or not such failure to perform or observe  shall be waived by the holder
of such  Indebtedness;  or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;

         (g)      The Company or any of its Subsidiaries shall become Insolvent;

         (h) One or more judgments,  decrees, or orders for the payment of money
in excess of One Million Dollars ($1,000,000) in the aggregate shall be rendered
against the Company or any of its Subsidiaries,  and such judgments, decrees, or
orders  shall  continue  unsatisfied  and in effect for a period of ninety  (90)
consecutive  days without being  vacated,  discharged,  satisfied,  or stayed or
bonded pending appeal;


<PAGE>



         (i) This  Agreement  shall at any time after its execution and delivery
and for any reason  cease to be in full  force and  effect or shall be  declared
null and void, or the validity or  enforceability  thereof shall be contested by
the  Company,  or the  Company  shall  deny  it has  any  further  liability  or
obligation under this Agreement; or

         (j) Any of the  following  events  shall occur or exist with respect to
the Company and any Commonly Controlled Entity under ERISA: any Reportable Event
shall occur;  complete or partial  withdrawal from any Multiemployer  Plan shall
take  place;  any  Prohibited  Transaction  shall  occur;  a notice of intent to
terminate a Plan shall be filed, or a Plan shall be terminated; or circumstances
shall exist which constitute grounds entitling the PBGC to institute proceedings
to terminate a Plan, or the PBGC shall institute such  proceedings;  and in each
case  above,  such  event or  condition,  together  with  all  other  events  or
conditions,  if any,  could  subject the Company to any tax,  penalty,  or other
liability  which in the  aggregate  may exceed  Five  Hundred  Thousand  Dollars
($500,000.00).

Section 12.       Remedies on Default, Etc;.

         Section 12.1.     Acceleration;.  (a) If an Event of Default with 
respect to the Company described in paragraph (g) of Section 11 has occurred, 
all the Notes then outstanding shall automatically become immediately due and 
payable.

         (b) If any other Event of Default has occurred and is  continuing,  any
holder or holders of more than 50% in principal  amount of the Notes at the time
outstanding may at any time at its or their option,  by notice or notices to the
Company,  declare  all the Notes  then  outstanding  to be  immediately  due and
payable.

         (c) If any  Event  of  Default  described  in  paragraph  (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time  outstanding  affected by such Event of Default may at any time,  at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.

Upon any Notes  becoming  due and  payable  under  this  Section  12.1,  whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes,  plus (i) all accrued and unpaid interest
thereon and (ii) the Make-Whole  Amount  determined in respect of such principal
amount  (to  the  full  extent  permitted  by  applicable  law),  shall  all  be
immediately due and payable, in each and every case without presentment, demand,
protest  or  further  notice,  all of  which  are  hereby  waived.  The  Company
acknowledges,  and the parties hereto agree,  that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are  accelerated  as a result of an Event of  Default,  is  intended  to provide
compensation for the deprivation of such right under such circumstances.

         Section 12.2. Other  Remedies;.  If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time  outstanding  may proceed to protect and enforce the rights
of such  holder  by an  action  at law,  suit in  equity  or  other  appropriate
proceeding,  whether for the specific  performance  of any  agreement  contained
herein or in any Note,  or for an  injunction  against a violation of any of the
terms hereof or thereof,


<PAGE>



or in aid of the exercise of any power granted hereby or thereby or by law or 
otherwise.

         Section  12.3.  Rescission;.  At any time  after  any  Notes  have been
declared  due and  payable  pursuant to clause (b) or (c) of Section  12.1,  the
holders of not less than 76% in principal amount of the Notes then  outstanding,
by written notice to the Company, may rescind and annul any such declaration and
its  consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and  Make-Whole  Amount,  if any, on any Notes that are due and
payable  and are  unpaid  other  than by  reason  of such  declaration,  and all
interest on such overdue  principal and Make-Whole  Amount,  if any, and (to the
extent  permitted  by  applicable  law) any  overdue  interest in respect of the
Notes,  at the Default Rate, (b) all Events of Default and Defaults,  other than
non-payment   of  amounts  that  have  become  due  solely  by  reason  of  such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no  judgment  or decree  has been  entered  for the  payment  of any  monies due
pursuant  hereto or to the Notes. No rescission and annulment under this Section
12.3 will  extend to or affect  any  subsequent  Event of  Default or Default or
impair any right consequent thereon.

         Section  12.4. No Waivers or Election of Remedies,  Expenses,  Etc;. No
course  of  dealing  and no  delay  on the  part of any  holder  of any  Note in
exercising  any right,  power or remedy  shall  operate  as a waiver  thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy  conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right,  power or remedy  referred to herein or therein
or now or  hereafter  available  at law,  in equity,  by  statute or  otherwise.
Without  limiting the  obligations  of the Company under Section 15, the Company
will pay to the holder of each Note on demand  such  further  amount as shall be
sufficient  to cover all costs  and  expenses  of such  holder  incurred  in any
enforcement or collection under this Section 12, including,  without limitation,
reasonable attorneys' fees, expenses and disbursements.

'Section 13.      Registration; Exchange; Substitution of Notes';.

         Section  13.1.  Registration  of Notes;.  The Company shall keep at its
principal  executive  office a register for the registration and registration of
transfers  of Notes.  The name and  address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes  shall  be  registered  in such  register.  Prior to due  presentment  for
registration of transfer,  the Person in whose name any Note shall be registered
shall be deemed and  treated as the owner and holder  thereof  for all  purposes
hereof,  and the Company shall not be affected by any notice or knowledge to the
contrary.  The  Company  shall  give  to  any  holder  of  a  Note  that  is  an
Institutional  Investor promptly upon request  therefor,  a complete and correct
copy of the names and addresses of all registered holders of Notes.

         Section 13.2.  Transfer and Exchange of Notes;.  Upon  surrender of any
Note at the  principal  executive  office of the  Company  for  registration  of
transfer  or  exchange  (and in the  case of a  surrender  for  registration  of
transfer,  duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered  holder of such Note or his attorney duly  authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof),  the Company shall execute and deliver,  at the Company's
expense (except as provided  below),  one or more new Notes (as requested by the
holder thereof) in exchange therefor,  in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be


<PAGE>



substantially  in the form of  Exhibit  1. Each such new Note shall be dated and
bear  interest  from the date to which  interest  shall  have  been  paid on the
surrendered  Note or dated the date of the surrendered Note if no interest shall
have been paid thereon.  The Company may require  payment of a sum sufficient to
cover  any stamp tax or  governmental  charge  imposed  in  respect  of any such
transfer of Notes.  Notes shall not be transferred in denominations of less than
$500,000, provided that if necessary to enable the registration of transfer by a
holder of its entire holding of Notes, one Note may be in a denomination of less
than $500,000.  Any  transferee,  by its acceptance of a Note  registered in its
name  (or  the  name  of  its  nominee),  shall  be  deemed  to  have  made  the
representation set forth in Section 6.2.

         Section  13.3.  Replacement  of Notes;.  Upon receipt by the Company of
evidence reasonably  satisfactory to it of the ownership of and the loss, theft,
destruction  or mutilation of any Note (which  evidence shall be, in the case of
an  Institutional  Investor,  notice  from such  Institutional  Investor of such
ownership and such loss, theft, destruction or mutilation), and

         (a) in the case of loss, theft or destruction,  of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original  Purchaser or another holder of a Note with a minimum net worth
of at least $5,000,000, such Person's own unsecured agreement of indemnity shall
be deemed to be satisfactory), or

         (b) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost,  stolen,  destroyed or mutilated  Note if no interest shall have been paid
thereon.

Section 14.       Payments on Notes;.

         Section 14.1. Place of Payment;.  Subject to Section 14.2,  payments of
principal,  Make-Whole  Amount, if any, and interest becoming due and payable on
the Notes shall be made in Westfield,  Massachusetts  at the principal office of
the Company in such  jurisdiction.  The Company may at any time  thereafter,  by
notice to each  holder of a Note,  change  the place of  payment of the Notes so
long as such  place of  payment  shall be  either  the  principal  office of the
Company in the United States or a principal office of a bank or trust company in
the United States.

         Section  14.2.  Home Office  Payment;.  So long as you or your  nominee
shall be the  holder of any Note,  and  notwithstanding  anything  contained  in
Section  14.1 or in such Note to the  contrary,  the  Company  will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address  specified  for such purpose below your name in
Schedule A, or by such other  method or at such other  address as you shall have
from time to time specified to the Company in writing for such purpose,  without
the  presentation  or  surrender  of such  Note or the  making  of any  notation
thereon,  except that upon written request of the Company made concurrently with
or reasonably  promptly  after  payment or  prepayment in full of any Note,  you
shall surrender such Note for cancellation,  reasonably  promptly after any such
request,  to the Company at its  principal  executive  office or at the place of
payment most recently  designated by the Company pursuant to Section 14.1. Prior
to any sale or other  disposition  of any Note held by you or your  nominee  you
will, at your election, either endorse


<PAGE>



thereon the amount of principal paid thereon and the last date to which interest
has been paid  thereon or  surrender  such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company will afford the benefits
of this  Section  14.2 to any  Institutional  Investor  that  is the  direct  or
indirect  transferee of any Note  purchased by you under this Agreement and that
has made the  same  agreement  relating  to such  Note as you have  made in this
Section 14.2.

Section 15.       Expenses, Etc;.

         Section 15.1.  Transaction  Expenses;.  Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including  reasonable  attorneys'  fees of a special counsel and, if reasonably
required,  local  or  other  counsel)  incurred  by you or  holder  of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents  under or in respect of this  Agreement or the Notes (whether or not
such  amendment,  waiver  or  consent  becomes  effective),  including,  without
limitation:  (a) the costs and expenses  incurred in enforcing or defending  (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative  demand issued in connection  with this Agreement or the Notes, or
by  reason  of being a holder  of any  Note,  and (b) the  costs  and  expenses,
including  financial  advisors' fees, incurred in connection with the insolvency
or  bankruptcy  of the  Company  or any  Subsidiary  or in  connection  with any
work-out or  restructuring of the  transactions  contemplated  hereby and by the
Notes.  The Company  will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses,  if any, of
brokers and finders (other than those retained by you).

         Section  15.2.  Survival;.  The  obligations  of the Company under this
Section 15 will  survive the payment or transfer of any Note,  the  enforcement,
amendment  or waiver of any  provision of this  Agreement or the Notes,  and the
termination of this Agreement.

'Section 16.      Survival of Representations and Warranties; Entire 
Agreement';.

All representations and warranties  contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by you of
any Note or portion thereof or interest therein and the payment of any Note, and
may be  relied  upon  by any  subsequent  holder  of a Note,  regardless  of any
investigation  made at any time by or on behalf of you or any other  holder of a
Note. All statements  contained in any certificate or other instrument delivered
by or on  behalf  of the  Company  pursuant  to this  Agreement  shall be deemed
representations  and warranties of the Company under this Agreement.  Subject to
the preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between you and the Company and supersede all prior agreements
and understandings relating to the subject matter hereof.

         Section 17.       Amendment and Waiver;.

         Section  17.1.  Requirements;.  This  Agreement  and the  Notes  may be
amended,  and the  observance  of any term  hereof or of the Notes may be waived
(either  retroactively  or  prospectively),  with  (and only  with) the  written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to you unless


<PAGE>



consented to by you in writing, and (b) no such amendment or waiver may, without
the written consent of the holder of each Note at the time outstanding  affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission,  change the amount or time of any prepayment or payment of principal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole  Amount on, the Notes,  (ii) change the percentage
of the  principal  amount of the  Notes the  holders  of which are  required  to
consent to any such  amendment  or waiver,  or (iii)  amend any of  Sections  8,
11(a), 11(b), 12, 17 or 20.

         Section 17.2.     Solicitation of Holders of Notes;.

         (a)  Solicitation.  The Company  will  provide each holder of the Notes
(irrespective  of  the  amount  of  Notes  then  owned  by it)  with  sufficient
information,  sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and  considered  decision with respect to
any proposed  amendment,  waiver or consent in respect of any of the  provisions
hereof or of the Notes.  The Company will  deliver  executed or true and correct
copies of each amendment,  waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding  Notes  promptly  following the
date on which it is  executed  and  delivered  by, or  receives  the  consent or
approval of, the requisite holders of Notes.

         (b) Payment.  The Company will not directly or indirectly  pay or cause
to be paid  any  remuneration,  whether  by way of  supplemental  or  additional
interest,  fee or otherwise,  or grant any  security,  to any holder of Notes as
consideration  for or as an  inducement  to the  entering  into by any holder of
Notes of any  waiver or  amendment  of any of the terms  and  provisions  hereof
unless such  remuneration  is  concurrently  paid,  or security is  concurrently
granted,  on the same terms,  ratably to each  holder of Notes then  outstanding
even if such holder did not consent to such waiver or amendment.

         Section 17.3.  Binding Effect,  Etc;. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes and is
binding  upon them and upon each future  holder of any Note and upon the Company
without  regard to whether such Note has been marked to indicate such  amendment
or waiver.  No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising  any rights  hereunder or
under any Note  shall  operate  as a waiver of any  rights of any holder of such
Note. As used herein,  the term "this  Agreement" and  references  thereto shall
mean this Agreement as it may from time to time be amended or supplemented.

         Section 17.4.  Notes Held by Company,  Etc;.  Solely for the purpose of
determining  whether the holders of the  requisite  percentage  of the aggregate
principal  amount  of  Notes  then  outstanding  approved  or  consented  to any
amendment,  waiver or consent to be given under this Agreement or the Notes,  or
have  directed  the taking of any action  provided  herein or in the Notes to be
taken  upon the  direction  of the  holders  of a  specified  percentage  of the
aggregate  principal  amount  of  Notes  then  outstanding,  Notes  directly  or
indirectly  owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

Section 18.       Notices;.

All notices and communications provided for hereunder shall be in writing and 
sent (a) by


<PAGE>



telecopy if the sender on the same day sends a confirming copy of such notice by
a  recognized  overnight  delivery  service  (charges  prepaid),  or  (b)  by  a
recognized  overnight  delivery service (with charges prepaid).  Any such notice
must be sent:

         (i)      if to you or your nominee, to you or it at the address 
specified for such communications in Schedule A, or at such other address as you
or it shall have specified to the Company in writing,

         (ii)     if to any other holder of any Note, to such holder at such 
address as such other holder shall have specified to the Company in writing, or

         (iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of John E. Reed, Chairman, and R. Bruce Dewey,
General Counsel, or at such other address as the Company shall have specified to
the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

Section 19.       Reproduction of Documents;.

This  Agreement  and  all  documents   relating  thereto,   including,   without
limitation,  (a)  consents,  waivers and  modifications  that may  hereafter  be
executed,  (b)  documents  received  by you at the  Closing  (except  the  Notes
themselves),  and (c) financial  statements,  certificates and other information
previously  or  hereafter  furnished  to you,  may be  reproduced  by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar  process and you may destroy any original  document so  reproduced.  The
Company agrees and stipulates  that, to the extent  permitted by applicable law,
any such reproduction  shall be admissible in evidence as the original itself in
any  judicial or  administrative  proceeding  (whether or not the original is in
existence  and whether or not such  reproduction  was made by you in the regular
course of business) and any  enlargement,  facsimile or further  reproduction of
such  reproduction  shall  likewise be admissible  in evidence.  This Section 19
shall not prohibit the Company or any other holder of Notes from  contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

Section 20.       Confidential Information;.

For  the  purposes  of  this  Section  20,   "Confidential   Information"  means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions  contemplated by or otherwise  pursuant to this
Agreement  that is  proprietary in nature and that was clearly marked or labeled
or otherwise  adequately  identified when received by you as being  confidential
information of the Company or such Subsidiary,  provided that such term does not
include  information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure,  (b) subsequently becomes publicly known through
no act or omission by you or any Person  acting on your  behalf,  (c)  otherwise
becomes  known to you  other  than  through  disclosure  by the  Company  or any
Subsidiary  or (d)  constitutes  financial  statements  delivered  to you  under
Section  7.1 that are  otherwise  publicly  available.  You  will  maintain  the
confidentiality  of such Confidential  Information in accordance with procedures
adopted  by you in good  faith  to  protect  confidential  information  of third
parties delivered to you, provided that you may deliver or disclose Confidential
Information to (i) your directors, trustees, officers, employees, agents,


<PAGE>



attorneys and affiliates (to the extent such  disclosure  reasonably  relates to
the  administration  of the  investment  represented  by your Notes),  (ii) your
financial   advisors  and  other   professional   advisors  who  agree  to  hold
confidential the Confidential  Information  substantially in accordance with the
terms  of this  Section  20,  (iii)  any  other  holder  of any  Note,  (iv) any
Institutional  Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this  Section  20), (v) any Person from which you offer to purchase any security
of the  Company  (if such  Person has agreed in writing  prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state  regulatory  authority having  jurisdiction  over you,
(vii)  the  National  Association  of  Insurance  Commissioners  or any  similar
organization, or any nationally recognized rating agency that requires access to
information about your investment  portfolio or (viii) any other Person to which
such  delivery or  disclosure  may be  necessary  or  appropriate  (w) to effect
compliance  with any law,  rule,  regulation or order  applicable to you, (x) in
response to any  subpoena or other legal  process,  (y) in  connection  with any
litigation  to which you are a party or (z) if an Event of Default has  occurred
and is continuing,  to the extent you may reasonably determine such delivery and
disclosure  to be  necessary  or  appropriate  in the  enforcement  or  for  the
protection of the rights and remedies under your Notes and this Agreement.  Each
holder of a Note, by its acceptance of a Note,  will be deemed to have agreed to
be bound by and to be entitled to the  benefits of this  Section 20 as though it
were a party  to  this  Agreement.  On  reasonable  request  by the  Company  in
connection with the delivery to any holder of a Note of information  required to
be  delivered  to such holder  under this  Agreement or requested by such holder
(other than a holder that is a party to this  Agreement  or its  nominee),  such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.

Section 21.       Substitution of Purchaser;.

You  shall  have  the  right to  substitute  any one of your  Affiliates  as the
purchaser  of the Notes that you have agreed to purchase  hereunder,  by written
notice  to the  Company,  which  notice  shall  be  signed  by both you and such
Affiliate,  shall  contain  such  Affiliate's  agreement  to be  bound  by  this
Agreement and shall  contain a  confirmation  by such  Affiliate of the accuracy
with respect to it of the  representations  set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21),  such word shall be deemed to refer to such  Affiliate in lieu
of you.  In the event  that such  Affiliate  is so  substituted  as a  purchaser
hereunder and such Affiliate  thereafter  transfers to you all of the Notes then
held by such Affiliate,  upon receipt by the Company of notice of such transfer,
wherever  the word "you" is used in this  Agreement  (other than in this Section
21), such word shall no longer be deemed to refer to such  Affiliate,  but shall
refer to you,  and you shall  have all the rights of an  original  holder of the
Notes under this Agreement.

Section 22.       Miscellaneous;.

         Section  22.1.  Successors  and  Assigns;.   All  covenants  and  other
agreements  contained  in this  Agreement  by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective  successors and assigns
(including,  without  limitation,  any  subsequent  holder of a Note) whether so
expressed or not.

         Section 22.2.  Payments Due on Non-Business Days;.  Anything in this 
Agreement or the


<PAGE>



Notes to the contrary notwithstanding, any payment of principal of or Make-Whole
Amount or interest  on any Note that is due on a date other than a Business  Day
shall  be made  on the  next  succeeding  Business  Day  without  including  the
additional days elapsed in the computation of the interest  payable on such next
succeeding Business Day.

         Section 22.3.  Severability;.  Any provision of this  Agreement that is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

         Section 22.4.  Construction;.  Each covenant  contained herein shall be
construed  (absent  express  provision to the contrary) as being  independent of
each other covenant  contained  herein, so that compliance with any one covenant
shall  not  (absent  such an  express  contrary  provision)  be deemed to excuse
compliance with any other covenant.  Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking,  such
provision  shall  be  applicable  whether  such  action  is  taken  directly  or
indirectly by such Person.

         Section  22.5.  Counterparts;.  This  Agreement  may be executed in any
number of  counterparts,  each of which  shall be an  original  but all of which
together shall  constitute one  instrument.  Each  counterpart  may consist of a
number of copies  hereof,  each signed by less than all, but together  signed by
all, of the parties hereto.

         Section 22.6.  Governing  Law;.  This Agreement  shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the Commonwealth of Massachusetts excluding choice-of-law  principles
of the law of such  Commonwealth  that would require the application of the laws
of a jurisdiction other than such Commonwealth.

*     *     *     *     *

If you are in agreement with the foregoing, please sign the form of agreement on
the  accompanying  counterpart  of this  Agreement and return it to the Company,
whereupon the  foregoing  shall become a binding  agreement  between you and the
Company.

Signature;

Very truly yours,
Mestek, Inc.
By /s/ Stephen M. Shea
Title: Senior Vice President - Finance
By /s/ R. Bruce Dewey
Its Secretary

The foregoing is hereby agreed
to as of the date thereof.
The Travelers Insurance Company
By /S/ JOHN W. PETCHLER
John W. Petchler
Its Second Vice President



<PAGE>



                     Schedule A (to Note Purchase Agreement)

                      Information Relating to the Purchaser


                                                   Principal Amount of
                                                   Notes to Be Purchased
                                                   $10,000,000
                                                   $ 5,000,000
Name and Address of Purchaser                      
The Travelers Insurance Company                    
One Tower Square
Hartford, Connecticut  06183-2030
Attention:  Securities Department-Private Placements
Telecopier Number: 860-954-5243


The Chase Manhattan Bank, N.A. (ABA #021000021)                          
One Chase Manhattan Plaza
New York, New York  10004

Payments
All payments on or in respect of the Notes to be by bank wire transfer of 
Federal or other immediately available funds (identifying each payment as 
"Mestek, Inc., 5.53% Senior Notes due 1998, PPN 590829 A@6, principal, premium 
or interest") to:for credit to:  The Travelers Insurance Company-
Consolidated Private Placement Account Number 910-2-587434

Notices
All notices and  communications to be addressed as first provided above,  except
notices with respect to payment and written  confirmation  of each such payment,
to be addressed Attention:
Securities Department-Cashier 10PB.
Name of Nominee in which Notes are to be issued:  TRAL & Co
Taxpayer I.D. Number:  06-0566090




<PAGE>



                     Schedule B (to Note Purchase Agreement)
                                  Defined Terms

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

"Affiliate"  means any Person (1) which directly or indirectly  controls,  or is
controlled by, or is under common control with the Company or a Subsidiary;  (2)
which  directly or  indirectly  beneficially  owns or holds five percent (5%) or
more of any class of voting stock of the Company or any Subsidiary;  or (3) five
percent  (5%) or more of the voting  stock of which is  directly  or  indirectly
beneficially  owned or held by the Company or a Subsidiary.  The term  "control"
means the  possession,  directly or indirectly,  of the power to direct or cause
the direction of the  management and policies of a Person,  whether  through the
ownership of voting securities, by contract, or otherwise.

"Business  Day" means (a) for the  purposes of Section  8.6 only,  any day other
than a Saturday,  a Sunday or a day on which  commercial  banks in New York City
are required or authorized  to be closed,  and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which  commercial banks in Boston,  Massachusetts  or Hartford,  Connecticut are
required or authorized to be closed.

"Capital  Lease" or  "Capitalized  Lease"  means any  lease the  obligation  for
rentals with respect to which have been or should be  capitalized on the balance
sheet of the lessee in accordance with GAAP.

"Capitalized Rentals" means, as of the date of any determination,  the amount at
which the aggregate  Rentals due and to become due under all Capitalized  Leases
of which the  Company or any  Subsidiary  is a lessee  would be  reflected  as a
liability on the consolidated balance sheet of the Company and its Subsidiaries.

"Closing" is defined in Section 3.

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

"Commonly Controlled Entity" means an entity, whether or not incorporated, which
is under common control with the Company within the meaning of Section 414(b) or
414(c) of the Code.

"Company" means Mestek, Inc., a Pennsylvania corporation.

"Competitor" means the Persons identified on Schedule D hereto.

"Confidential Information" is defined in Section 20.

"Consolidated  Current Assets" and "Consolidated Current Liabilities" means such
assets and  liabilities  of the Company and its  Subsidiaries  on a consolidated
basis as shall be  determined  in  accordance  with GAAP to  constitute  current
assets and current liabilities respectively.

"Consolidated  EBITDA"  for any  period  means the sum of (a)  Consolidated  Net
Income  during  such  period  plus  (to  the  extent   deducted  in  determining
Consolidated  Net Income) (b) all  provisions  for any  Federal,  state or local
income taxes made by the Company and its Subsidiaries


<PAGE>



during such period, (d) all provisions for depreciation and amortization  (other
than  amortization  of debt discount)  made by the Company and its  Subsidiaries
during such period, and (e) Consolidated Interest Expense during such period.

"Consolidated  Funded  Debt"  means  all  Funded  Debt  of the  Company  and its
Subsidiaries, determined on a consolidated basis eliminating intercompany items.

"Consolidated  Interest  Expense" for any period means on a  consolidated  basis
determined  in  accordance  with  GAAP  all  interest  (including  the  interest
component  of  Rentals  on  Capitalized  Leases)  and all  amortization  of debt
discount and expense on  Indebtedness  payable during such period by the Company
and its  Subsidiaries  (including,  without  limitation,  payment-in-kind,  zero
coupon and other like Securities).

"Consolidated Net Income" for any period means the gross revenues of the Company
and its  Subsidiaries for such period less all expenses and other proper charges
(including  taxes on income),  determined on a consolidated  basis in accordance
with  GAAP  consistently  applied  and  after  eliminating  earnings  or  losses
attributable to outstanding Minority Interests, but excluding in any event:

         (a) any gains or losses on the sale or other disposition of investments
or fixed or capital  assets,  and any taxes on such  excluded  gains and any tax
deductions or credits on account of such excluded losses;

         (b)      the proceeds of any life insurance policy;

         (c)      net earnings and losses of any Subsidiary accrued prior to 
the date it became a Subsidiary;

         (d)  net  earnings  and  losses  of  any  corporation   (other  than  a
Subsidiary),  substantially  all the assets of which have been  acquired  in any
manner,   realized  by  such  other  corporation  prior  to  the  date  of  such
acquisition;

         (e)  net  earnings  and  losses  of  any  corporation   (other  than  a
Subsidiary)  with which the Company or a Subsidiary  shall have  consolidated or
which shall have merged  into or with the Company or a  Subsidiary  prior to the
date of such consolidation or merger;

         (f) net earnings of any business  entity (other than a  Subsidiary)  in
which the Company or any  Subsidiary has an ownership  interest  unless such net
earnings  have been  actually  received by the Company or the  Subsidiary in the
form of cash distributions;

         (g)      any portion of the net earnings of any Subsidiary which for 
any reason is unavailable for payment of dividends to the Company or any other 
Subsidiary;

         (h)      earnings resulting from any reappraisal, revaluation or 
write-up of assets;

         (i)      any deferred or other credit representing any excess of the 
equity in any Subsidiary at the date of acquisition thereof over the amount 
invested in such Subsidiary;

         (j)      any gain arising from the acquisition of any Securities 
of the Company or any Subsidiary; and

         (k)      any reversal of any contingency reserve, except to the extent 
that provision for


<PAGE>



such  contingency  reserve shall have been made from income  arising during such
period.

"Consolidated Net Worth" means, as of the date of any determination thereof, the
aggregate  amount of the  capital  stock  (less  treasury  stock),  surplus  and
retained earnings of the Company and its Subsidiaries  after deducting  Minority
Interests to the extent  included in the capital stock  accounts of the Company,
all as determined on a consolidated basis by the Company and its Subsidiaries.

"Consolidated  Total Assets" means as of the date of any  determination  thereof
the  total  amount of all  assets of the  Company  and its  Subsidiaries  as are
properly  classified  as  "assets"  in  accordance  with GAAP,  determined  on a
consolidated basis in accordance with GAAP.

"Consolidated  Total Indebtedness" means all Indebtedness of the Company and its
Subsidiaries,  determined on a consolidated basis eliminating intercompany items
in accordance with GAAP.

"Consolidated Working Capital" means the excess of Consolidated Current Assets 
over Consolidated Current Liabilities.

"Default"  means an event or  condition  the  occurrence  or  existence of which
would,  with the lapse of time or the giving of notice or both,  become an Event
of Default.

"Default  Rate" means that rate of interest  that is 2% per annum above the rate
of interest stated in clause (a) of the first paragraph of the Notes.

"Distribution" in respect of the Company and its Subsidiaries means:

         (a)  dividends  or other  distributions  on capital  stock  (including,
without limitation, preferred stock) of a corporation (except dividends or other
distributions payable solely in shares of common stock of such corporation); and

         (b) redemption,  acquisition or retirement of any shares of its capital
stock or warrants, rights or other options to purchase any shares of its capital
stock (other than in exchange for or out of the net proceeds to the Company from
the concurrent issue or sale of shares of common stock of the Company).

"Environmental  Laws"  means any and all  Federal,  state,  local,  and  foreign
statutes,  laws, regulations,  ordinances,  rules,  judgments,  orders, decrees,
permits, concessions,  grants, franchises,  licenses, agreements or governmental
restrictions  relating to pollution and the protection of the environment or the
release of any  materials  into the  environment,  including  but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

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

"ERISA Affiliate" means any trade or business (whether or not incorporated) that
is treated as a single  employer  together with the Company under section 414 of
the Code.

"Event of Default" is defined in Section 11.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Funded Debt" of any Person means (a) all Indebtedness for borrowed money or 
which has been


<PAGE>



incurred  in  connection  with the  acquisition  of assets in each case having a
final  maturity of one or more than one year from the date of origin thereof (or
which is  renewable or  extendable  at the option of the obligor for a period or
periods of more than one year from the date of origin),  excluding  all payments
in respect thereof that are required to be made within one year from the date of
any  determination  of Funded  Debt,  whether or not  included  in  Consolidated
Current Liabilities; and (b) all Capitalized Rentals;.

"GAAP" means generally accepted accounting  principles as in effect from time to
time in the United States of America.

"Governmental Authority" means

         (a)      the government of

         (i)      the United States of America or any State or other political 
subdivision thereof, or

         (ii)     any jurisdiction in which the Company or any Subsidiary 
conducts all or any part of its business, or which asserts jurisdiction over 
any properties of the Company or any Subsidiary, or

         (b)      any entity exercising executive, legislative, judicial, 
regulatory or administrative
functions of, or pertaining to, any such government.

"Guaranty"  means,  with  respect to any  Person,  any  obligation  (except  the
endorsement  in the ordinary  course of business of negotiable  instruments  for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness,  dividend or other  obligation  of any other Person in any manner,
whether  directly or  indirectly,  including  (without  limitation)  obligations
incurred through an agreement, contingent or otherwise, by such Person:

         (a)      to purchase such Indebtedness or obligation or any property 
constituting security therefor;

         (b) to advance or supply  funds (i) for the purchase or payment of such
Indebtedness  or  obligation,  or (ii) to maintain any working  capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
Indebtedness or obligation;

         (c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such  Indebtedness or obligation of the
ability of any other Person to make payment of the  Indebtedness  or obligation;
or

         (d)      otherwise to assure the owner of such Indebtedness or 
obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

"Hazardous Material" means any and all pollutants,  toxic or hazardous wastes or
any other  substances that might pose a hazard to health or safety,  the removal
of which may be required or the generation,  manufacture,  refining, production,
processing,  treatment,  storage,  handling,   transportation,   transfer,  use,
disposal, release, discharge, spillage, seepage, or filtration of which is


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or  shall  be  restricted,   prohibited  or  penalized  by  any  applicable  law
(including, without limitation,  asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

"Holder"  means any Person in whose name a Note is  registered  in the  register
maintained by the Company pursuant to Section 13.1.

"Indebtedness"  of any Person means and includes all  obligations of such Person
which in  accordance  with GAAP shall be  classified  on a balance sheet of such
Person as  liabilities  of such Person,  and in any event shall  include all (i)
obligations  of such  Person for  borrowed  money or which has been  incurred in
connection with the acquisition of property or assets,  (ii) obligations secured
by any lien or other charge upon  property or assets owned by such Person,  even
though  such  Person has not  assumed or become  liable for the  payment of such
obligations,  (iii) obligations created or arising under any conditional sale or
other  title  retention  agreement  with  respect to  property  acquired by such
Person,  notwithstanding  the fact that the rights and  remedies  of the seller,
lender,  or lessor  under such  agreement in the event of default are limited to
repossession  or sale of  property,  (iv) all  Guaranties,  and (v)  Capitalized
Rentals under any Capitalized Lease. For purpose of computing the "Indebtedness"
of any Person there shall be excluded any particular  Indebtedness to the extent
that,  upon or prior to the maturity  thereof,  there shall have been  deposited
with the proper  depository in trust the  necessary  funds (or evidences of such
Indebtedness, if permitted by the instrument creating such Indebtedness) for the
payment,  redemption or satisfaction of such  Indebtedness;  and thereafter such
funds and evidences of  Indebtedness  so deposited  shall not be included in any
computation of the assets of such Person.

"Insolvent"  _ The  Company,  its  Subsidiaries  or any  other  Person  shall be
considered  to be  "Insolvent"  when  any of the  following  events  shall  have
occurred  whereby the Company or any of its Subsidiaries (a) shall generally not
pay, or shall be unable to pay, or shall admit in writing its  inability  to pay
its debts as such debts  become  due;  or (b) shall make an  assignment  for the
benefit of creditors,  or petition or apply to any tribunal for the  appointment
of a custodian, receiver, or trustee for it or a substantial part of its assets;
or (c) shall  commence  any  proceeding  under any  bankruptcy,  reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction,  whether now or hereafter in effect; or (d) shall have had any
such petition or application  filed or any such proceeding  commenced against it
in which an order for relief is entered or an  adjudication  or  appointment  is
made, and which remains undismissed for a period of ninety (90) days or more; or
(e) shall take any corporate  action  indicating its consent to, approval of, or
acquiescence in any such petition, application,  proceeding, or order for relief
or  the  appointment  of a  custodian,  receiver,  or  trustee  for  all  or any
substantial part of its properties;  or (f) shall suffer any such custodianship,
receivership,  or  trusteeship to continue  undischarged  for a period of ninety
(90) days or more.

"Institutional  Investor"  means (a) any original  purchaser of a Note,  (b) any
holder of a Note holding more than 10% of the aggregate  principal amount of the
Notes  then  outstanding,  and (c) any bank,  trust  company,  savings  and loan
association  or other  financial  institution,  any pension plan, any investment
company,  any  insurance  company,  any broker or dealer,  or any other  similar
financial institution or entity, regardless of legal form.

"Interest  Charges"  for any period means all  interest  (including  the imputed
interest factor in respect of Capitalized  Leases) and all  amortization of debt
discount and expense on any particular


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Indebtedness  for which  such  calculations  are  being  made.  Computations  of
Interest Charges on a proforma basis for Indebtedness having a variable interest
rate shall be calculated at the rate in effect on the day of any determination.

"Investments"  means all investments,  in cash or by delivery of property,  made
directly or  indirectly  in any property or assets or in any Person,  whether by
acquisition of shares of capital  stock,  Indebtedness  or other  obligations or
Securities or by loan, advance, capital contribution or otherwise; provided that
"Investments"  shall not mean or include  routine  investments in property to be
used or consumed in the ordinary course of business.

"Lien"  means  any  mortgage,   deed  of  trust,   pledge,   security  interest,
hypothecation,  assignment, deposit arrangement, encumbrance, lien (statutory or
other),  or preference,  priority,  or other security  agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing,  and  the  filing  of  any  financing  statement  under  the  uniform
commercial  code or comparable  law of any  jurisdiction  to evidence any of the
foregoing).

"Long-Term  Lease"  means any lease of real or personal  property  (other than a
Capitalized  Lease) having an original term,  including any period for which the
lease may be renewed or extended at the option of the lessor, of more than three
years.

"Make-Whole Amount" is defined in Section 8.6.

"Material"  means  material in relation to the  business,  operations,  affairs,
financial  condition,  assets,  properties,  or prospects of the Company and its
Subsidiaries taken as a whole.

"Material  Adverse Effect" means a material  adverse effect on (a) the business,
operations,  affairs,  financial condition,  assets or properties of the Company
and its  Subsidiaries  taken as a whole,  or (b) the  ability of the  Company to
perform its obligations  under this Agreement and the Notes, or (c) the validity
or enforceability of this Agreement or the Notes.

"Minority  Interests"  means any  shares  of stock of any class of a  Subsidiary
(other than directors' qualifying, shares as required by law) that are not owned
by the Company and or one or more of its Subsidiaries.  Minority Interests shall
be valued by valuing  Minority  Interests  constituting  preferred  stock at the
voluntary or involuntary  value of such preferred  stock,  whichever is greater,
and by valuing Minority Interests constituting common stock at the book value of
capital and surplus  applicable thereto adjusted,  if necessary,  to reflect any
changes  from the book value of such  common  stock  required  by the  foregoing
method of valuing minority interests in preferred stock.

"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of ERISA.

"Net  Income  Available  for  Fixed  Charges"  means,  as of  the  date  of  any
determination  thereof,  the sum of the  following  for  the  twelve  (12)  full
consecutive calendar months immediately preceding such date of determination:

         (a)      Consolidated Net Income for such period;

Plus


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         (b) Income taxes and excess profit taxes paid or accrued by the Company
and its  Subsidiaries  on account of such  Consolidated  Net Income  during such
periods;

Plus

         (c) The sum of (i) Interest  Charges in respect of Consolidated  Funded
Debt during  said period  (whether or not paid or payable but only to the extent
deducted  in  computing  Consolidated  Net Income for such  period) and (ii) the
aggregate  rentals  paid by the  Company and its  Subsidiaries  under all leases
(other than Capitalized Leases) during such period.

"Notes" is defined in Section 1.

"Officer's  Certificate" means a certificate of a Senior Financial Officer or of
any other  officer of the Company whose  responsibilities  extend to the subject
matter of such certificate.

"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

"Person" means an individual,  partnership,  corporation,  business trust, joint
stock company, trust,  unincorporated association,  joint venture,  governmental
authority, or other entity of whatever nature.

"Plan"  means any  pension  plan  which is  covered  by Title IV of ERISA and in
respect of which the Company or a Commonly Controlled Entity is an "employer" as
defined in Section 3(5) of ERISA.

"Preferred  Stock"  means any class of capital  stock of a  corporation  that is
preferred  over any other class of capital stock of such  corporation  as to the
payment  of  dividends  or  the  payment  of  any  amount  upon  liquidation  or
dissolution of such corporation.

"Pro Forma Fixed Charges" means as of the date of any determination  thereof the
sum of (a) Interest  Charges in respect of Consolidated  Funded Debt (other than
Funded  Debt then  proposed  to be  retired)  for the  twelve  full  consecutive
calendar months period  immediately  preceding such date of determination,  plus
(b)  Interest  Charges on all  Funded  Debt then  proposed  to be issued for the
twelve full consecutive  calendar months after such date of determination,  plus
(c) the  maximum  aggregate  Rentals  payable  during any period of twelve  full
consecutive  calendar months after such date of determination and prior to March
1, 1998 under all  Long-Term  Leases under which the Company or a Subsidiary  is
then lessee.

"Prohibited Transaction" means any transaction set forth in Section 406 of ERISA
or Section 4975 of the Code.

"property" or "properties" means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by 
the United States Department of Labor.

"Rentals"  means and  includes all fixed rents  (including  as such all payments
which the lessee is obligated to make to the lessor on  termination of the lease
or surrender the property) payable by the Company or a Subsidiary,  as lessee or
sublessee  under lease of real or personal  property,  but shall be exclusive of
any amounts required to be paid by the Company or a Subsidiary (whether or


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not designated as rents or additional rents) on account of maintenance, repairs,
insurance,   taxes  and  similar  charges.   Fixed  rents  under  any  so-called
"percentage lease",  shall be computed solely on the basis of the minimum rents,
if any,  required to be paid by the lessee  regardless  of sales volume or gross
revenues.

"Reportable Event" means any of the events set forth in Section 4043 of ERISA.

"Required  Holders" means, at any time, the holders of at least 51% in principal
amount of the Notes at the time  outstanding  (exclusive  of Notes then owned by
the Company or any of its Affiliates).

"Responsible  Officer" means any Senior Financial  Officer and any other officer
of the  Company  with  responsibility  for the  administration  of the  relevant
portion of this agreement.

"Restricted Investments" means all Investments, other than:

         (a)   Investments by the Company and its Subsidiaries in and to 
Subsidiaries, including any Investment in a corporation which, after giving 
effect to such Investment, will become a Subsidiary;

         (b)  Investments  representing  loans  or  advances  in the  usual  and
ordinary  course of business to officers,  directors  and employees for expenses
(including moving expenses related to a transfer)  incidental to carrying on the
business of the Company or any Subsidiary;

         (c)  Investments in property or assets to be used in the ordinary 
course of the business of the Company and its Subsidiaries as described in 
Section 9.7 of this Agreement;

         (d) Investments  representing travel advances in the usual and ordinary
course of business to officers and employees of the Company and its Subsidiaries
incidental to carrying-on the business of the Company or any Subsidiaries;

         (e) Investments of the Company existing as of the Closing Date and 
described on Schedule C hereto;

         (f) receivables arising from the sale of goods and services in the 
ordinary course of business of the Company and its Restricted Subsidiaries;

         (g)  Investments in direct  obligations of the United States of America
or any agency or instrumentality of the United States of America, the payment or
guarantee of which  constitutes a full faith and credit obligation of the United
States of America,  in either case,  maturing within twelve months from the date
of acquisition thereof; and

         (h)  Investments  in any money  market  fund which is  classified  as a
current  asset in  accordance  with GAAP,  the  aggregate  asset  value of which
"marked to market" is at least  $100,000,000,000  and which is managed by a fund
manager of recognized national standing,  and which invests substantially all of
its assets in obligations described in clause (g) above.

In valuing any Investments for the purpose of applying the limitations set forth
in  Section  10.8,  Investments  shall be taken at the  original  cost  thereof,
without allowance for any subsequent  write-offs or appreciation or depreciation
therein,  but less any amount  repaid or recovered in cash on account of capital
or principal.


<PAGE>


"Securities Act" means the Securities Act of 1933, as amended from time to time.

"Security"  shall have the same meaning as in Section 2(1) of the Securities Act
of 1933, as amended.

"Senior  Financial  Officer"  means  the  chief  financial  officer,   principal
accounting officer, treasurer or comptroller of the Company.

"Subsidiary(ies)" means, as to the Company, a corporation of which more than 80%
(by number of votes) of shares of stock having ordinary voting power (other than
stock  having such power only by reason of the  happening of a  contingency)  to
elect a majority of the board of directors or other managers of such corporation
are at the time  owned,  or the  management  of which is  otherwise  controlled,
directly or  indirectly  through  one or more  intermediaries,  or both,  by the
Company and/or by one or more Subsidiaries.

"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors'  qualifying shares) and
voting  interests  of which are owned by any one or more of the  Company and the
Company's other Wholly-Owned Subsidiaries at such time.




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