Document:

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                                                                    EXHIBIT 10.1

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                                CREDIT AGREEMENT

                           Dated as of October 3, 2003

                                      among

                      APPLIED EXTRUSION TECHNOLOGIES, INC.
                                  as Borrower,

                    THE OTHER CREDIT PARTIES SIGNATORY HERETO

                               FROM TIME TO TIME,

                               as Credit Parties,

                          THE LENDERS SIGNATORY HERETO

                               FROM TIME TO TIME,

                                   as Lenders,

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION,

                               as Agent and Lender

                        GECC CAPITAL MARKETS GROUP, INC.
                                as Lead Arranger

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                                Table of Contents
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1.  AMOUNT AND TERMS OF CREDIT..............................................................................1

    1.1      Credit Facilities..............................................................................1

    1.2      Letters of Credit..............................................................................7

    1.3      Prepayments....................................................................................7

    1.4      Use of Proceeds...............................................................................10

    1.5      Interest and Applicable Margins...............................................................10

    1.6      Eligible Accounts.............................................................................13

    1.7      Eligible Inventory............................................................................15

    1.8      Cash Management Systems.......................................................................17

    1.9      Fees..........................................................................................17

    1.10     Receipt of Payments...........................................................................18

    1.11     Application and Allocation of Payments........................................................18

    1.12     Loan Account and Accounting...................................................................20

    1.13     Indemnity.....................................................................................20

    1.14     Access........................................................................................21

    1.15     Taxes.........................................................................................22

    1.16     Capital Adequacy; Increased Costs; Illegality.................................................23

    1.17     Single Loan...................................................................................25

2.  CONDITIONS PRECEDENT...................................................................................25

    2.1      Conditions to the Initial Loans...............................................................25

    2.2      Further Conditions to Each Loan...............................................................26

    2.3      Further Conditions to Each Export-Related Advance.............................................27

3.  REPRESENTATIONS AND WARRANTIES.........................................................................28

    3.1      Corporate Existence; Compliance with Law......................................................28

    3.2      Executive Offices, Collateral Locations, FEIN.................................................28

    3.3      Corporate Power, Authorization, Enforceable Obligations.......................................28

    3.4      Financial Statements and Projections..........................................................29

    3.5      Material Adverse Effect.......................................................................30

    3.6      Ownership of Property; Liens..................................................................30

    3.7      Labor Matters.................................................................................30
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    3.8      Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.....................31

    3.9      Government Regulation.........................................................................31

    3.10     Margin Regulations............................................................................31

    3.11     Taxes.........................................................................................32

    3.12     ERISA and Canadian Plans......................................................................33

    3.13     No Litigation.................................................................................34

    3.14     Brokers.......................................................................................34

    3.15     Intellectual Property.........................................................................34

    3.16     Full Disclosure...............................................................................34

    3.17     Environmental Matters.........................................................................34

    3.18     Insurance.....................................................................................35

    3.19     Deposit and Disbursement Accounts.............................................................35

    3.20     Government Contracts..........................................................................36

    3.21     Customer and Trade Relations..................................................................36

    3.22     Agreements and Other Documents................................................................36

    3.23     Solvency......................................................................................37

    3.24     Senior Notes..................................................................................37

4.  FINANCIAL STATEMENTS AND INFORMATION...................................................................38

    4.1      Reports and Notices...........................................................................38

    4.2      Communication with Accountants................................................................38

5.  AFFIRMATIVE COVENANTS..................................................................................38

    5.1      Maintenance of Existence and Conduct of Business..............................................38

    5.2      Payment of Charges............................................................................38

    5.3      Books and Records.............................................................................39

    5.4      Insurance; Damage to or Destruction of Collateral.............................................39

    5.5      Compliance with Laws..........................................................................40

    5.6      [Intentionally Omitted].......................................................................41

    5.7      Intellectual Property.........................................................................41

    5.8      Environmental Matters.........................................................................41

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                                Table of Contents
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    5.9      Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases.........42

    5.10     ERISA.........................................................................................43

    5.11     Further Assurances............................................................................44

6.  NEGATIVE COVENANTS.....................................................................................44

    6.1      Mergers, Subsidiaries, Etc....................................................................44

    6.2      Investments; Loans and Advances...............................................................44

    6.3      Indebtedness..................................................................................44

    6.4      Employee Loans and Affiliate Transactions.....................................................45

    6.5      Capital Structure and Business................................................................46

    6.6      Guaranteed Indebtedness.......................................................................46

    6.7      Liens.........................................................................................46

    6.8      Sale of Stock and Assets......................................................................47

    6.9      ERISA.........................................................................................47

    6.10     Financial Covenants...........................................................................47

    6.11     Hazardous Materials...........................................................................47

    6.12     Sale-Leasebacks...............................................................................48

    6.13     Cancellation of Indebtedness..................................................................48

    6.14     Restricted Payments; Employee Benefit Plan Contributions......................................48

    6.15     Change of Corporate Name or Location; Change of Fiscal Year...................................48

    6.16     No Impairment of Intercompany Transfers.......................................................49

    6.17     No Speculative Transactions...................................................................49

    6.18     Changes Relating to Material Contracts........................................................49

    6.19     Credit Parties Other than Borrower............................................................49

7.  TERM...................................................................................................49

    7.1      Termination...................................................................................49

    7.2      Survival of Obligations Upon Termination of Financing Arrangements............................49

8.  EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................................................................50

    8.1      Events of Default.............................................................................50

    8.2      Remedies......................................................................................52
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    8.3      Waivers by Credit Parties.....................................................................53

9.  ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT....................................................53

    9.1      Assignment and Participations.................................................................53

    9.2      Appointment of Agent..........................................................................56

    9.3      Agent's Reliance, Etc.........................................................................57

    9.4      GE Capital and Affiliates.....................................................................57

    9.5      Lender Credit Decision........................................................................57

    9.6      Indemnification...............................................................................58

    9.7      Successor Agent...............................................................................58

    9.8      Setoff and Sharing of Payments................................................................59

    9.9      Advances; Payments; Non-Funding Lenders; Information; Actions in Concert......................59

10. SUCCESSORS AND ASSIGNS.................................................................................61

    10.1     Successors and Assigns........................................................................62

11. MISCELLANEOUS..........................................................................................62

    11.1     Complete Agreement; Modification of Agreement.................................................62

    11.2     Amendments and Waivers........................................................................62

    11.3     Fees and Expenses.............................................................................64

    11.4     No Waiver.....................................................................................65

    11.5     Remedies......................................................................................66

    11.6     Severability..................................................................................66

    11.7     Conflict of Terms.............................................................................66

    11.8     Confidentiality...............................................................................66

    11.9     GOVERNING LAW.................................................................................67

    11.10    Notices.......................................................................................67

    11.11    Section Titles................................................................................68

    11.12    Counterparts..................................................................................68

    11.13    WAIVER OF JURY TRIAL..........................................................................68

    11.14    Press Releases and Related Matters............................................................68

    11.15    Reinstatement.................................................................................69
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    11.16    Advice of Counsel.............................................................................69

    11.17     Judgment Currency............................................................................69

    11.18    Subordination.................................................................................70

    11.19    No Strict Construction........................................................................71
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                               INDEX OF APPENDICES

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<S>                                 <C>              <C>
Annex A (Recitals)                  -                Definitions
Annex B (Section 1.2)               -                Letters of Credit
Annex C (Section 1.8)               -                Cash Management System
Annex D (Section 2.1(a))            -                Closing Checklist
Annex E (Section 4.1(a))            -                Financial Statements and Projections --
                                                     Reporting
Annex F (Section 4.1(b))            -                Collateral Reports
Annex G (Section 6.10)              -                Financial Covenants
Annex H (Section 9.9(a))            -                Lenders' Wire Transfer Information
Annex I (Section 11.10)             -                Notice Addresses
Annex J (from Annex A -
   Commitments definition)                           Commitments as of Closing Date

Exhibit 1.1(a)(i)                   -                Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii)(A)               -                Form of Revolving Note
Exhibit 1.1(b)                      -                Form of Term Note
Exhibit 1.1(c)(ii)                  -                Form of Swing Line Note
Exhibit 1.1(d)(i)                   -                Form of Notice of Export-Related Advance
Exhibit 1.1(d)(ii)                  -                Form of Export-Related Loan Note
Exhibit 1.5(e)                      -                Form of Notice of Conversion/Continuation
Exhibit 4.1(b)                      -                Form of Borrowing Base Certificate
Exhibit 9.1(a)                      -                Form of Assignment Agreement
Exhibit A-1                         -                Master Standby Agreement
Exhibit A-2                         -                Master Documentary Agreement
Schedule 1.1                        -                Agent's Representatives
Disclosure Schedule 1.4             -                Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 3.1             -                Type of Entity; State of Organization
Disclosure Schedule 3.2             -                Executive Offices, Collateral Locations,
                                                     FEIN
Disclosure Schedule 3.4(a)          -                Financial Statements
Disclosure Schedule 3.4(b)          -                Projections
Disclosure Schedule 3.6             -                Ownership of Properties; Real Estate and
                                                     Leases; Purchase Options and similar rights
Disclosure Schedule 3.7             -                Labor Matters
Disclosure Schedule 3.8             -                Ventures, Subsidiaries and Affiliates;
                                                     Outstanding Stock; Indebtedness
Disclosure Schedule 3.8(a)          -                Former Subsidiaries
Disclosure Schedule 3.11            -                Tax Matters
Disclosure Schedule 3.12            -                ERISA Plans
Disclosure Schedule 3.12(c)         -                Canadian Plans
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<S>                                 <C>              <C>
Disclosure Schedule 3.13            -                Litigation
Disclosure Schedule 3.15            -                Intellectual Property
Disclosure Schedule 3.17            -                Hazardous Materials
Disclosure Schedule 3.18            -                Insurance
Disclosure Schedule 3.19            -                Deposit and Disbursement Accounts
Disclosure Schedule 3.20            -                Government Contracts
Disclosure Schedule 3.20            -                Customer Trade Relations
Disclosure Schedule 3.22            -                Material Agreements
Disclosure Schedule 3.22(b)         -                Customers and Clients
Disclosure Schedule 3.22(c)         -                Suppliers and Vendors
Disclosure Schedule 5.1             -                Trade Names
Disclosure Schedule 5.9                              Excluded Locations
Disclosure Schedule 6.3             -                Indebtedness
Disclosure Schedule 6.4(a)          -                Transactions with Affiliates
Disclosure Schedule 6.7             -                Existing Liens
Disclosure Schedule 6.8(d)          -                Streamwood, Illinois Equipment
Disclosure Schedule 6.8(e)          -                Covington, Virginia Property
Disclosure Schedule 6.8(f)          -                Terre Haute, Indiana Property
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          This CREDIT AGREEMENT (this "Agreement"), dated as of October 3, 2003
among APPLIED EXTRUSION TECHNOLOGIES, INC., a Delaware corporation (the
"Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Agent for Lenders, the other Lenders signatory
hereto from time to time and GECC CAPITAL MARKETS GROUP, INC., as Lead Arranger
("GECMG").

                                    RECITALS

          WHEREAS, Borrower has requested that Lenders extend revolving and term
credit facilities to Borrower of up to One Hundred Million Dollars
($100,000,000) in the aggregate for the purpose of refinancing certain
indebtedness of Borrower and to provide (a) working capital financing for
Borrower, (b) funds for other general corporate purposes of Borrower and (c)
funds for other purposes permitted hereunder; and for these purposes, Lenders
are willing to make certain loans and other extensions of credit to Borrower of
up to such amount upon the terms and conditions set forth herein;

          WHEREAS, Borrower has agreed to secure all of its obligations under
the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of its existing and after-acquired
personal and real property (other than leasehold interests in real property and
the owned real estate in Covington, Virginia, in each case, held as of the
Closing Date);

          WHEREAS, Applied Extrusion Technologies (Canada) Inc., a Delaware
corporation ("AET Canada"), is willing to guarantee all of the obligations of
Borrower to Agent and Lenders under the Loan Documents and to grant a security
interest in all of its assets in favor of Agent to secure such guaranty; and

          WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:

1.       AMOUNT AND TERMS OF CREDIT

          1.1  Credit Facilities.

          (a)  Revolving Credit Facility.

               (i) (A) Subject to the terms and conditions hereof, each
Revolving Lender agrees to make available to Borrower from time to time until
the Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). The

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Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any
time exceed its separate Revolving Loan Commitment (less its Pro Rata Share of
the Export-Related Loan Participations). The obligations of each Revolving
Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrower may borrow, repay and reborrow under this Section
1.1(a)(i)(A); provided that the amount of any Revolving Credit Advance to be
made at any time shall not exceed Borrowing Availability at such time. Borrowing
Availability may be reduced by Reserves imposed by Agent in its reasonable
credit judgment.

          (B) Each Revolving Credit Advance shall be made on notice by Borrower
to one of the representatives of Agent identified in Schedule 1.1 at the address
specified therein. Any such notice must be given no later than (1) 11:00 a.m.
(New York time) on the Business Day of the proposed Revolving Credit Advance, in
the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on the date
which is 3 Business Days prior to the proposed Revolving Credit Advance, in the
case of a LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance")
must be given in writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(a)(i), and shall include the information required in such
Exhibit and such other information as may be required by Agent. If Borrower
desires to have the Revolving Credit Advances bear interest by reference to a
LIBOR Rate, Borrower must comply with Section 1.5(e).

          (ii) Except as provided in Section 1.12, Borrower shall execute and
deliver to each Revolving Lender a note to evidence the Revolving Loan
Commitment of that Revolving Lender. Each note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of Borrower to pay the amount of the applicable
Revolving Lender's Revolving Loan Commitment or, if less, such Revolving
Lender's Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Credit Advances to Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the aggregate Revolving
Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.

          (iii) Anything in this Agreement to the contrary notwithstanding, at
the request of Borrower, Agent in its discretion may (but shall have absolutely
no obligation to), make Revolving Credit Advances to Borrower on behalf of
Revolving Lenders in amounts that cause the outstanding balance of the aggregate
Revolving Loan to exceed the Borrowing Base (less the Swing Line Loan) (any such
excess Revolving Credit Advances are herein referred to collectively as
"Overadvances"); provided that (A) no such event or occurrence shall cause or
constitute a waiver of Agent's, Swing Line Lender's or Revolving Lenders' right
to refuse to make any further Overadvances, Swing Line Advances or Revolving
Credit Advances, or incur any Letter of Credit Obligations, as the case may be,
at any time that an Overadvance exists, and (B) no Overadvance shall result in a
Default or Event of Default based on Borrower's failure to comply with Section
1.3(b)(i) for so long as Agent permits such Overadvance to be outstanding, but
solely with respect to the amount of such Overadvance. In addition, Overadvances
may be made even if the conditions to lending set forth in Section 2 have not
been met. All Overadvances shall constitute Index Rate Loans, shall bear
interest at the Default Rate and shall

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be payable on demand. Except as otherwise provided in Section 1.11(b), the
authority of Agent to make Overadvances is limited to an aggregate amount not to
exceed $1,000,000 at any time and shall not cause the aggregate Revolving Loan
to exceed the Maximum Amount less the principal amount of the Swing Line Loan
and the Export-Related Loan.

          (b)  Term Loan.

               (i)   Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan (collectively, the "Term Loan") on the Closing
Date to Borrower in the amount of the applicable Term Lender's Term Loan
Commitment. The obligations of each Term Lender hereunder shall be several and
not joint. Each such Term Loan shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(b) (each a "Term Note" and collectively
the "Term Notes"), and, except as provided in Section 1.12, Borrower shall
execute and deliver the Term Note to the applicable Term Lender. Each Term Note
shall represent the obligation of Borrower to pay the applicable Term Lender's
Term Loan Commitment, together with interest thereon as prescribed in Section
1.5.

               (ii)  Borrower shall repay the Term Loan in twenty (20)
consecutive quarterly installments of $1,562,500 each on the last day of March,
June, September and December of each year, commencing December 31, 2003,
together with a final installment due on October 3, 2008 in the amount of
$18,750,000 or, if different, the remaining principal balance of the Term Loan.

               (iii) Notwithstanding Section 1.1(b)(ii), the aggregate
outstanding principal balance of the Term Loan shall be due and payable in full
in immediately available funds on the Commitment Termination Date, if not sooner
paid in full. No payment with respect to the Term Loan may be reborrowed.

               (iv)  Each payment of principal with respect to the Term Loan
shall be paid to Agent for the ratable benefit of each Term Lender making a Term
Loan, ratably in proportion to each such Term Lender's respective Term Loan
Commitment.

          (c)  Swing Line Facility.

               (i)   Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Revolving Credit Advance. Subject to the terms and
conditions hereof, the Swing Line Lender may, in its discretion, make available
from time to time until the Commitment Termination Date advances (each, a "Swing
Line Advance") in accordance with any such notice. The provisions of this
Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make
Revolving Credit Advances under Section 1.1(a); provided that if the Swing Line
Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line
Advance shall be in lieu of any Revolving Credit Advance that otherwise may be
made by Revolving Credit Lenders pursuant to such notice. The aggregate amount
of Swing Line Advances outstanding shall not exceed at any time the lesser
("Swing Line Availability") of (A) the Swing Line Commitment, (B) the Maximum
Amount less the sum of the outstanding balance of the Revolving Loan and the
Export-Related Loan at such time and (C) the Borrowing Base less the aggregate
outstanding balance of the Revolving Loan (except for Overadvances) at such
time. Until the Commitment

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Termination Date, Borrower may from time to time borrow, repay and reborrow
under this Section 1.1(c). Each Swing Line Advance shall be made pursuant to a
Notice of Revolving Credit Advance delivered to Agent by Borrower in accordance
with Section 1.1(a). Any such notice must be given no later than 11:00 a.m. (New
York time) on the Business Day of the proposed Swing Line Advance. Unless the
Swing Line Lender has received at least one Business Day's prior written notice
from Requisite Revolving Lenders instructing it not to make a Swing Line
Advance, the Swing Line Lender shall, notwithstanding the failure of any
condition precedent set forth in Sections 2.2, be entitled to fund that Swing
Line Advance, and to have each Revolving Lender make Revolving Credit Advances
in accordance with Section 1.1(c)(iii) or purchase participating interests in
accordance with Section 1.1(c)(iv). Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. Swing Line Lender, subject to the terms hereof, shall make the
requested Swing Line Advance to Borrower not later than 3:00 p.m. (New York
time) on the requested funding date. Borrower shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.

               (ii)  Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Commitment. Such note shall be in
the principal amount of the Swing Line Commitment of the Swing Line Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (the
"Swing Line Note"). The Swing Line Note shall represent the obligation of
Borrower to pay the amount of the Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all Swing Line Advances made to Borrower
together with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the Swing Line Loan and all other noncontingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.

               (iii) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion, but not less frequently than weekly and upon
any demand by Agent to Borrower to repay the Swing Line Loan, shall on behalf of
Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to so
act on its behalf) request each Revolving Lender (including the Swing Line
Lender) to make a Revolving Credit Advance to Borrower (which shall be an Index
Rate Loan) in an amount equal to that Revolving Lender's Pro Rata Share of the
principal amount of Borrower's Swing Line Loan (the "Refunded Swing Line Loan")
outstanding on the date such notice is given. Unless any of the events described
in Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures of
Section 1.1(c)(iv) shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, each Revolving Lender shall disburse directly to
Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing
Line Lender prior to 3:00 p.m. (New York time) in immediately available funds on
the Business Day next succeeding the date that notice is given. The proceeds of
those Revolving Credit Advances shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan of Borrower.

               (iv)  If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in
Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of
Section 1.1(c)(v) below, each Revolving Lender

                                       4

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shall, on the date such Revolving Credit Advance was to have been made for the
benefit of Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan to Borrower in an amount equal to
its Pro Rata Share of such Swing Line Loan. Upon request, each Revolving Lender
shall promptly transfer to the Swing Line Lender, in immediately available
funds, the amount of its participation interest.

               (v)  Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) and to purchase participation
interests in accordance with Section 1.1(c)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, Borrower or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any Default or Event
of Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections 1.1(c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two Business Days and at the Index
Rate thereafter.

          (d)  Export-Related Loan.

               (i)  Subject to the terms and conditions hereof, the
Export-Related Loan Lender agrees to make available to Borrower from time to
time until the Commitment Termination Date export-related advances (each, an
"Export-Related Advance") in accordance with any such notice. Until the
Commitment Termination Date, Borrower may from time to time borrow, repay and
reborrow under this Section 1.1(d)(i); provided, that (A) the amount of any
Export-Related Advance to be made at any time shall not exceed Export-Related
Borrowing Availability at such time, and (B) the aggregate amount of
Export-Related Advances outstanding shall not exceed at any the Maximum Amount
less the outstanding balances of the Revolving Loan (except for Overadvances)
and the Swing Line Loan at such time. Export-Related Borrowing Availability may
be further reduced by Reserves imposed by Agent in its reasonable credit
judgment. Each Export-Related Advance shall be made on notice by Borrower to one
of the representatives of Agent identified in Schedule 1.1 at the address
specified therein. Any such notice must be given no later than (1) 11:00 a.m.
(New York time) on the Business Day of the proposed Export-Related Advance, in
the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on the date
which is 3 Business Days prior to the proposed Export-Related Advance, in the
case of a LIBOR Loan. Each such notice (a "Notice of Export-Related Advance")
must be given in writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(d)(i), and shall include the information required in such
Exhibit and such other information as may be required by Agent. If Borrower
desires to have the Export-Related Advances bear interest by reference to a
LIBOR Rate, Borrower must comply with Section 1.5(e). Agent shall notify the
Export-Related Loan Lender upon Agent's receipt of any Notice of Export-Related
Advance which requests an Export-Related Advance. Unless the Export-Related Loan
Lender has received at least one Business Day's prior written notice from
Requisite Revolving Lenders instructing it not to make a Export-Related Advance,
the Export-Related Loan Lender shall,

                                       5

<PAGE>

notwithstanding the failure of any condition precedent set forth in Sections
2.2, be entitled to fund that Export-Related Advance, and to have each Revolving
Lender purchase participating interests in accordance with Section 1.1(d)(iii).
The Export-Related Loan Lender, subject to the terms hereof, shall make the
requested Export-Related Advance to Borrower not later than 3:00 p.m. (New York
time) on the requested funding date.

               (ii)  Borrower shall execute and deliver to the Export-Related
Loan Lender a promissory note to evidence the Export-Related Loan Commitment.
Such note shall be in the principal amount of the Export-Related Loan Commitment
of the Export-Related Loan Lender, dated the Closing Date and substantially in
the form of Exhibit 1.1(d)(ii) (the "Export-Related Loan Note"). The
Export-Related Loan Note shall represent the obligation of Borrower to pay the
amount of the Export-Related Loan Commitment or, if less, the aggregate unpaid
principal amount of all Export-Related Advances made to Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
Export-Related Loan and all other noncontingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.

               (iii) Immediately upon the making of any Export-Related Advance
by the Export-Related Loan Lender, each Revolving Lender (including the
Export-Related Loan Lender) shall be deemed to have irrevocably and
unconditionally purchased from the Export-Related Loan Lender an undivided
interest and participation in such Export-Related Advance in an amount equal to
its Pro Rata Share of the principal amount of such Export-Related Advance (each
an "Export-Related Loan Participation" and collectively the "Export-Related Loan
Participations"). Each Revolving Lender shall fund its participation in such
Export-Related Advance in the same manner as provided in the Agreement with
respect to Revolving Credit Advances, regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, and as set forth in this Section 1.3(d). The
Export-Related Loan Lender, at any time and from time to time in its sole and
absolute discretion, but not less frequently than weekly, shall request each
Revolving Lender (including the Export-Related Loan Lender) to fund its
participation in outstanding Export-Related Advances which have not been
previously funded in an amount equal to its Pro Rata Share of the principal
amount of such Export-Related Advances (a "Funded Export-Related Loan
Participation"), regardless of whether the conditions precedent set forth in
this Agreement to the making of a Revolving Credit Advance are then satisfied.
Each Revolving Lender shall disburse directly to the Agent such amount prior to
3:00 p.m. (New York time) in immediately available funds on the Business Day
next succeeding the date that notice is given, and the Agent shall be
immediately pay such amount to the Export-Related Loan Lender.

               (iv)  Each Revolving Lender's obligation to purchase
participation interests in accordance with Section 1.1(d)(iii) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Export-Related Loan Lender, Borrower or any other
Person for any reason whatsoever; (B) the occurrence or continuance of any
Default or Event of Default; (C) any inability of Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement at any time or (D)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. If any Revolving Lender does not make available to Agent
the amount required pursuant to Sections 1.1(d)(iii) the Export-

                                       6

<PAGE>

Related Loan Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate for the
first two Business Days and at the Index Rate thereafter.

               (v)   Any principal or interest received by the Agent in respect
of any Export-Related Advance shall be promptly paid by the Agent to the
Revolving Lenders which have a Funded Export-Related Loan Participation in such
Export-Related Advance in an amount equal to its Pro Rata Share of such
principal or interest (and to the Export-Related Loan Lender with respect to any
such Export-Related Advance as to which a Funded Export-Related Loan
Participation does not exist).

          (e) Reliance on Notices. Agent shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Export-Related Advance, Notice of Conversion/Continuation or
similar notice believed by Agent to be genuine. Agent may assume that each
Person executing and delivering any notice in accordance herewith was duly
authorized, unless the responsible individual acting thereon for Agent has
actual knowledge to the contrary.

          1.2  Letters of Credit. Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of Borrower.

          1.3  Prepayments.

          (a)  Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrower may at any time on at least 10 days' prior written notice to Agent (i)
voluntarily prepay all or part of the Term Loan and/or (ii) permanently reduce
(but not terminate) the Revolving Loan Commitment; provided that (A) any such
prepayments or reductions of the Term Loan shall be in a minimum amount of
$1,000,000 and integral multiples of $250,000 in excess of such amount and any
such prepayments or reductions of the Revolver Loan Commitment shall be in a
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
such amount, (B) the Revolving Loan Commitment shall not be reduced to an amount
less than the greater of (x) $30,000,000 and (y) the amount of the Revolving
Loan then outstanding, and (C) after giving effect to such reductions, Borrower
shall comply with Section 1.3(b)(i). In addition, Borrower may at any time on at
least 10 days' prior written notice to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and other Obligations
shall be immediately due and payable in full and all Letter of Credit
Obligations shall be cash collateralized or otherwise satisfied in accordance
with Annex B hereto. Any voluntary prepayment and any reduction or termination
of the Revolving Loan Commitment must be accompanied by payment of the Fee
required by Section 1.9(c), if any, plus the payment of any LIBOR funding
breakage costs in accordance with Section 1.13(b). Upon any termination of the
Revolving Loan Commitment, Borrower's right to request Revolving Credit
Advances, or request that Letter of Credit Obligations be incurred on its
behalf, or request Swing Line Advances or Export-Related Advances, shall
simultaneously be permanently terminated, and upon any such reduction of the
Revolving Loan Commitment, Borrower's right to request

                                       7

<PAGE>

Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances, shall simultaneously be
permanently reduced; provided that a permanent reduction of the Revolving Loan
Commitment shall not require a corresponding pro rata reduction in the L/C
Sublimit and/or the Export-Related Loan Commitment. Each notice of partial
prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied; provided that any partial prepayments of the Term
Loan made by or on behalf of Borrower shall be applied to prepay the scheduled
installments of Borrower's Term Loan in inverse order of maturity.

          (b) Mandatory Prepayments.

               (i)  If on any day the aggregate outstanding balances of the
Revolving Loan, the Swing Line Loan and the Export-Related Loan exceed the
Maximum Amount, Borrower shall on such day repay the aggregate outstanding
Revolving Loan to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding Revolving
Loan, Borrower shall provide cash collateral for the Letter of Credit
Obligations in the manner set forth in Annex B to the extent required to
eliminate such excess. If on any day the aggregate outstanding balances of the
Revolving Loan and the Swing Line Loan exceed the Borrowing Base. Borrower shall
on such day repay the aggregate outstanding Revolving Credit Advances to the
extent required to eliminate such excess; provided, that solely for purposes of
this sentence, any reduction in the Borrowing Base due to the establishment or
modification of Reserves (other than pursuant to Section 5.4(a)), or the
adjustment of any criteria in Section 1.6 or 1.7, or the establishment of any
new criteria for, or adjustment of advance rates with respect to, Eligible
Accounts or Eligible Inventory, shall be effective on the second Business Day
after receipt by Borrower of notice from the Agent of such reduction. If any
such excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for the Letter
of Credit Obligations in the manner set forth in Annex B to the extent required
to eliminate such excess. If on any day the outstanding balance of the
Export-Related Loan exceeds the lesser of (A) the Export-Related Loan Commitment
and (B) the Export-Related Borrowing Base, Borrower shall on such day repay the
aggregate outstanding Export-Related Advances to the extent required to
eliminate such excess. Notwithstanding the foregoing, any Overadvance made
pursuant to Section 1.1(a)(iii) shall be repaid only on demand.

               (ii) On the date of receipt by any Credit Party of proceeds of
any asset disposition (excluding proceeds of asset dispositions permitted by
Section 6.8 (a), (d) and (f), and proceeds of asset dispositions permitted by
Section 6.8(c) in an aggregate amount not exceeding $300,000 in any Fiscal Year)
or any sale of Stock of any Subsidiary of any Credit Party, Borrower shall
prepay the Loans in an amount equal to all such proceeds, net of (A) commissions
and other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in connection therewith
(in each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable
to holders of senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate reserve for income taxes
in accordance with GAAP in connection therewith. Any such prepayment shall be
applied in accordance with Section 1.3(c).

                                       8

<PAGE>

               (iii) If any Credit Party issues Stock (other than proceeds in an
aggregate amount not exceeding $1,000,000 received upon issuance or sale of
Stock to directors, management or employees of any Credit Party under any
employment or similar agreement or stock option, stock purchase or benefit plan)
or any debt securities (other then Indebtedness permitted under Section 6.3), no
later than the Business Day following the date of receipt of the proceeds
thereof, Borrower shall prepay the Loans in an amount equal to the product of
(x) 75% multiplied by (y) all such proceeds, net of underwriting discounts and
commissions and other reasonable costs, fees and expenses paid to non-Affiliates
in connection therewith. Any such prepayment shall be applied in accordance with
Section 1.3(c).

          (c) Application of Certain Mandatory Prepayments. Any prepayments made
by Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) above shall be applied
as follows: first, to prepay the scheduled principal installments of the Term
Loan in inverse order of maturity, until paid in full; second, to the principal
balance of the Swing Line Loan outstanding until the same has been repaid in
full; third, to the principal balance of Revolving Credit Advances outstanding
until the same has been paid in full; fourth, to the principal balance of
Export-Related Advances outstanding until the same has been paid in full; and
fifth, to any Letter of Credit Obligations to provide cash collateral therefor
in the manner set forth in Annex B, until all such Letter of Credit Obligations
have been fully cash collateralized in the manner set forth in Annex B. None of
the Revolving Loan Commitment, the Export-Related Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.

          (d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(c) and the Mortgage(s), respectively, shall be applied as follows:
insurance proceeds from casualties or losses to Inventory shall be applied,
first, to the Swing Line Loan, second, to Revolving Credit Advances, third, to
Export-Related Advances, fourth, to the Term Loan; and insurance or condemnation
proceeds from casualties or losses to Equipment, Fixtures and Real Estate shall
be applied first, to prepay the scheduled principal installments of the Term
Loan in inverse order of maturity, until paid in full; second, to the principal
balance of the Swing Line Loan outstanding until the same has been repaid in
full; third, to the principal balance of Revolving Credit Advances outstanding
until the same has been paid in full; fourth, to the principal balance of
Export-Related Advances outstanding until the same has been paid in full; and
fifth, to any Letter of Credit Obligations to provide cash collateral therefor
in the manner set forth in Annex B, until all such Letter of Credit Obligations
have been fully cash collateralized in the manner set forth in Annex B. Neither
the Revolving Loan Commitment, the Export-Related Loan Commitment nor the Swing
Line Loan Commitment shall be permanently reduced by the amount of any such
prepayments.

          (e) To the extent consistent with Sections 1.3(c) and (d), amounts to
be applied pursuant to Sections 1.3(b) and (d) to the prepayment of Loans shall
be applied, as applicable, first to prepay outstanding Index Rate Loans. Any
amounts remaining after each such application shall, at the option of Borrower,
be applied to prepay LIBOR Loans, and/or shall be deposited in the Prepayment
Account (as defined below). The Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Term Loans which are
LIBOR Loans and (ii) allocable to Revolving Loans to prepay Revolving Loans
which are LIBOR Loans in each case on the last day of their respective LIBOR
Periods (or, at the

                                       9

<PAGE>

direction of Borrower, on any earlier date) until all outstanding Term Loans or
Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been fully applied. For
purposes of this Agreement, the term "Prepayment Account" shall mean a cash
collateral account maintained at a bank or financial institution acceptable to
Agent. The Prepayment Account shall be in the name of Borrower and shall be
pledged to, and subject to the control of, Agent, for the benefit of Agent and
Lenders, in manner satisfactory to Agent. Borrower hereby pledges and grants to
Agent, on behalf of itself and Lenders, a security interest in all funds held in
the Prepayment Account from time to time and all proceeds thereof, as security
for the payment of all Obligations, whether or not then due. The Agreement,
including this Section 1.3(e), shall constitute a security agreement under
applicable law. After the occurrence of and during the continuance of an Event
of Default, Agent may apply funds then held in the Prepayment Account to the
payment, in such order as Agent may elect, of any Obligations then due and
payable. Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds held in the
Prepayment Account, except as provided above in this Section 1.3(e). Interest
earned on deposits in the Prepayment Account shall be for the account of Agent.

          (f) No Implied Consent. Nothing in this Section 1.3 shall be construed
to constitute Agent's or any Lender's consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.

          1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Term
Loan, the Revolving Loan, the Export-Related Loan and the Swing Line Advances
solely for the Refinancing (and to pay any related transaction expenses), for
the financing of Borrower's ordinary working capital and general corporate needs
and for the repurchase of Senior Notes in accordance with and subject to the
terms of Section 6.14. Disclosure Schedule (1.4) contains a description of
Borrower's sources and uses of funds as of the Closing Date, including Loans and
Letter of Credit Obligations to be made or incurred on that date, and a funds
flow memorandum detailing how funds from each source are to be transferred to
particular uses.

          1.5 Interest and Applicable Margins.

          (a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates: (i)
with respect to the Revolving Credit Advances, the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based
on the aggregate Revolving Credit Advances outstanding from time to time; (ii)
with respect to the Export-Related Advances, the Index Rate plus the Applicable
Revolver Index Margin per annum or, at the election of Borrower, the applicable
LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based on the
aggregate Export-Related Advances outstanding from time to time; (iii) with
respect to the Term Loan, the Index Rate plus the Applicable Term Loan Index
Margin per annum or, at the election of Borrower, the applicable LIBOR Rate plus
the Applicable Term Loan LIBOR Margin per annum; and (iv) with respect to the
Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per
annum.

                                       10

<PAGE>

          The Applicable Margins are as follows:

     Applicable Revolver Index Margin                  1.25%

     Applicable Revolver LIBOR Margin                  2.75%

     Applicable Term Loan Index Margin                 2.25%

     Applicable Term Loan LIBOR Margin                 3.75%

          (b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.

          (c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year (other than
interest on Index Rate Loans, which shall be on the basis of a 365-day year), in
each case for the actual number of days occurring in the period for which such
interest and Fees are payable. The Index Rate is a floating rate determined for
each day. Each determination by Agent of an interest rate and Fees hereunder
shall be final, binding and conclusive on Borrower, absent manifest error.

          (d) So long as an Event of Default has occurred and is continuing
under Section 8.1(a), (h) or (i) or so long as any other Event of Default has
occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum above the rates
of interest or the rate of such Fees otherwise applicable hereunder ("Default
Rate"), and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Event of Default (or,
with respect to any Event of Default under Section 8.1(d), from the earlier of
(i) the initial date any Credit Party has knowledge of the occurrence of such
Event of Default and (ii) the date the Borrower receives notice of such Event of
Default from the Agent or any Lender) until that Event of Default is cured or
waived and shall be payable upon demand.

          (e) Subject to the conditions precedent set forth in Section 2.2,
Borrower shall have the option to (i) request that any Revolving Credit Advance
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans,
(iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $2,000,000 and integral
multiples of $500,000 in excess of such amount. Any such election must be made
by 11:00 a.m. (New York time) on the 3rd Business Day prior to (1) the date of
any proposed Advance which

                                       11

<PAGE>

is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower in such election. If no election is received with
respect to a LIBOR Loan by 11:00 a.m. (New York time) on the 3rd Business Day
prior to the end of the LIBOR Period with respect thereto (or if a Default or an
Event of Default has occurred and is continuing or if the additional conditions
precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR
Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period.
Borrower must make such election by notice to Agent in writing, by telecopy or
overnight courier. In the case of any conversion or continuation, such election
must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 1.5(e).

          (f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.

          (g) If any provision of this Agreement or any of the other Loan
Documents would obligate Borrower to make any payment of interest or other
amount payable to the Agent or any Lender in an amount or calculated at a rate
which would be prohibited by law or would result in a receipt by the Agent or
any Lender of interest at a criminal rate (as such terms are construed under the
Criminal Code (Canada)) then, notwithstanding such provision, such amount or
rate shall be deemed to have been adjusted with retroactive effect to the
maximum amount or rate of interest, as the case may be, as would not be so
prohibited by law or so result in a receipt by the Agent or any Lender of
interest at a criminal rate, such adjustment to be effected, to the extent
necessary, as follows: (1) firstly, by reducing the amount or rate of interest
required to be paid to the Agent or any Lender under the Notes; and (2)
thereafter, by reducing any fees, commissions, premiums and other amounts
required to be paid to the Agent or any Lender which

                                       12

<PAGE>

would constitute interest for purposes of Section 347 of the Criminal Code
(Canada). Notwithstanding the foregoing, and after giving effect to all
adjustments contemplated thereby, if the Agent or any Lender shall have received
an amount in excess of the maximum permitted by that section of the Criminal
Code (Canada), then the Borrower shall be entitled, by notice in writing to the
Agent or such Lender, as applicable, to obtain reimbursement from the Agent or
such Lender, as applicable, in an amount equal to such excess, and pending such
reimbursement, such amount shall be deemed to be an amount payable by the Agent
or such Lender to the Borrower. Any amount or rate of interest referred to in
this Section 1.5 shall be determined in accordance with generally accepted
actuarial practices and principles as an effective annual rate of interest over
the term that any Loan remains outstanding on the assumption that any charges,
fees or expenses that fall within the meaning of "interest" (as defined in the
Criminal Code (Canada)) shall, if they relate to a specific period of time, be
pro-rated over that period of time and otherwise be pro-rated over the period
from the Closing Date to the Termination Date and, in the event of a dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by the
Agent shall be conclusive for the purposes of such determination.

          For purposes of disclosure pursuant to the Interest Act (Canada), the
annual rates of interest or fees to which the rates of interest or fees provided
in this Agreement and the other Loan Documents (and stated herein or therein, as
applicable, to be computed on the basis of a 360 day year or any other period of
time less than a calendar year) are equivalent are the rates so determined
multiplied by the actual number of days in the applicable calendar year and
divided by 360 or such other period of time, respectively

          1.6 Eligible Accounts. All of the Accounts (other than Export-Related
Accounts) owned by Borrower and AET Canada and reflected in the most recent
Borrowing Base Certificate delivered by Borrower to Agent shall be "Eligible
Accounts" for purposes of this Agreement, except any Account to which any of the
exclusionary criteria set forth below applies. Agent shall have the right (upon
prior or contemporaneous notice to Borrower) to establish, modify or eliminate
Reserves against Eligible Accounts from time to time in its reasonable credit
judgment. In addition, Agent reserves the right (upon prior or contemporaneous
notice to Borrower), at any time and from time to time after the Closing Date,
to adjust any of the criteria set forth below, to establish new criteria and to
adjust advance rates with respect to Eligible Accounts, in its reasonable credit
judgment. Eligible Accounts shall not include any Account of Borrower or AET
Canada:

          (a) that does not arise from the sale of goods or the performance of
services by such Credit Party in the ordinary course of its business;

          (b) (i) upon which such Credit Party's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which such Credit Party is not able to bring suit or otherwise
enforce its remedies against the Account Debtor through judicial process or
(iii) if the Account represents a progress billing consisting of an invoice for
goods sold or used or services rendered pursuant to a contract under which the
Account Debtor's obligation to pay that invoice is subject to such Credit
Party's completion of further performance under such contract or is subject to
the equitable lien of a surety bond issuer;

                                       13

<PAGE>

          (c) in the event that any defense, counterclaim, setoff or dispute is
asserted as to such Account other than as provided in clause (j);

          (d) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;

          (e) with respect to which an invoice, reasonably acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor;

          (f) that (i) is not owned by such Credit Party or (ii) is subject to
any Prior Claim, right, claim, security interest or other interest of any other
Person, other than Liens in favor of Agent, on behalf of itself and Lenders;

          (g) that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party;

          (h) that is the obligation of an Account Debtor that is (i) the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof (ii) the Canadian
government (Her Majesty the Queen in Right of Canada) or a political subdivision
thereof, or any province, territory, municipality or department, agency or
instrumentality thereof, unless Agent, in its sole discretion, has agreed to the
contrary in writing and Borrower, if necessary or desirable, has complied with
respect to such obligation with the Federal Assignment of Claims Act of 1940,
the Financial Administration Act (Canada) or any applicable provincial or state,
county or municipal law restricting assignment thereof;

          (i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the province of Newfoundland, the Northwest
Territories and the Territory of Nunavit) unless payment thereof is assured by a
letter of credit assigned and delivered to Agent, reasonably satisfactory to
Agent as to form, amount and issuer;

          (j) to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to Borrower or
any Subsidiary thereof but only to the extent of the potential offset;

          (k) that arises with respect to goods that are delivered on a
bill-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;

          (l) that is not eligible for any of the following reasons:

              (i)  the Account is not paid within the earlier of: 60 days
following its due date or 90 days following its original invoice date;

              (ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or

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<PAGE>

              (iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;

          (m) that is the obligation of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the other criteria set forth in this Section 1.6;

          (n) as to which Agent's Lien thereon, on behalf of itself and Lenders,
is not a first priority perfected Lien;

          (o) as to which any of the representations or warranties in Section
4(f) of the Security Agreement are untrue;

          (p) to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;

          (q) to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment;

          (r) to the extent that such Account, together with all other Accounts
owing by such Account Debtor and its Affiliates as of any date of determination,
exceed 15% of all Eligible Accounts (unless otherwise agreed to by Agent), it
being agreed that any such excess above 15% shall be excluded;

          (s) that is payable in any currency other than Dollars or Canadian
Dollars; or

          (t) that is otherwise unacceptable to Agent in its reasonable credit
judgment.

              1.6A  Eligible Export-Related Accounts. All of the Export-Related
Accounts of Borrower reflected in the most recent Borrowing Base Certificate
delivered by Borrower to Agent shall be "Eligible Export-Related Accounts" for
purposes of this Agreement, except any Account to which any of the exclusionary
criteria set forth below apply. Agent shall have the right (upon prior or
contemporaneous notice to Borrower) to establish, modify or eliminate Reserves
against Eligible Export-Related Accounts from time to time in its reasonable
credit judgment. In addition, Agent reserves the right (upon prior or
contemporaneous notice to Borrower), at any time and from time to time after the
Closing Date, to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect to Eligible Export-Related
Accounts, in its reasonable credit judgment. Eligible Export-Related Accounts
shall not include any Export-Related Account of Borrower that does not satisfy
the criteria set forth in the definition of "Eligible Export-Related Account
Receivable" contained in the Ex-Im Borrower Agreement.

          1.7  Eligible Inventory. All of the Inventory owned by the Borrower
and AET Canada and reflected in the most recent Borrowing Base Certificate
delivered by Borrower to Agent shall be "Eligible Inventory" for purposes of
this Agreement, except any Inventory to which any of the exclusionary criteria
set forth below applies. Agent shall have the right (upon prior or
contemporaneous notice to Borrower) to establish, modify or eliminate Reserves
against

                                       15

<PAGE>

Eligible Inventory from time to time in its reasonable credit judgment. In
addition, Agent reserves the right (upon prior or contemporaneous notice to
Borrower), at any time and from time to time after the Closing Date, to adjust
any of the criteria set forth below, to establish new criteria and to adjust
advance rates with respect to Eligible Inventory, in its reasonable credit
judgment. Eligible Inventory shall not include any Inventory of Borrower or AET
Canada that:

          (a) is not owned by such Credit Party free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Credit Party's performance with respect to that Inventory), except the
Liens in favor of Agent, on behalf of itself and Lenders, and Permitted
Encumbrances in favor of landlords and bailees to the extent permitted in
Section 5.9 hereof (subject to Reserves established by Agent in accordance with
Section 5.9 hereof);

          (b) (i) is not located on premises owned, leased or rented by such
Credit Party and set forth in Disclosure Schedule (3.2), or (ii) is stored at a
leased location, unless either (x) a reasonably satisfactory landlord waiver has
been delivered to Agent, or (y) Reserves reasonably satisfactory to Agent have
been established with respect thereto or (iii) is stored with a processor,
toller or toll converter, warehouseman or other bailee, unless either (x) a
reasonably satisfactory, acknowledged bailee letter has been received by Agent,
or (y) Reserves reasonably satisfactory to Agent have been established with
respect thereto, or (iv) is located at an owned location subject to a mortgage
in favor of a lender other than Agent unless a reasonably satisfactory mortgagee
waiver has been delivered to Agent, or (v) is located at any site if the
aggregate book value of Inventory at any such location is less than $50,000;

          (c) is placed on consignment, unless (i) a reasonably satisfactory
consignment agreement among the Borrower, the Agent and the consignee has been
delivered to Agent, (ii) the Borrower's and Agent's interest in the consigned
inventory is fully perfected under the Code by the filing of appropriate
financing statements or other action required by Agent, (iii) prior to delivery
of such consigned Inventory to the consignee any Person holding a security
interest in Goods of such consignee has been properly notified of the Borrower's
and Agent's interest in the consigned Inventory in accordance with section
9-324(b) of the Code, and (iv) such Inventory is located in the United States at
a location of the consignee satisfactory to the Agent and as to which the
requirements of Section 1.7(b) have been satisfied;

          (d) is in transit (other than Inventory of Borrower or AET Canada
which is in transit in the ordinary course of business within or between the
United States and Canada between locations owned by the Borrower or AET Canada
or with respect to which Agent has received a satisfactory landlord waiver or
bailee letter, as applicable;

          (e) is covered by a negotiable document of title, unless such document
has been delivered to Agent with all necessary endorsements, free and clear of
all Liens except those in favor of Agent and Lenders;

          (f) is excess, obsolete, unsalable, shopworn, damaged or unfit for
sale;

          (g) consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts;

                                       16

<PAGE>

          (h) consists of goods which have been returned by the buyer unless
such Inventory is not excess, obsolete, unsalable, shopworn, damaged or unfit
for sale;

          (i) is not of a type held for sale in the ordinary course of such
Credit Party's business;

          (j) is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders, subject to Permitted Encumbrances;

          (k) as to which any of the representations or warranties in Section
4(g) of the Security Agreement are untrue;

          (l) consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;

          (m) is not covered by casualty insurance reasonably acceptable to
Agent; or

          (n) is otherwise unacceptable to Agent in its reasonable credit
judgment.

          1.8 Cash Management Systems. On or prior to the Closing Date, Borrower
and the other Credit Parties will establish and will maintain until the
Termination Date, the cash management systems described in Annex C (the "Cash
Management Systems").

          1.9 Fees.

          (a) Borrower shall pay to GE Capital, individually, the Fees specified
in that certain fee letter of even date herewith among Borrower and GE Capital
(the "GE Capital Fee Letter"), at the times specified for payment therein.

          (b) As additional compensation for the Revolving Lenders, Borrower
shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a Fee for Borrower's non-use of available funds
in an amount equal to one half of one percent (0.50%) per annum (calculated on
the basis of a 360 day year for actual days elapsed) multiplied by the
difference between (x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan, the Export-Related Loan and the Swing Line Loan
outstanding during the period for which such Fee is due.

          (c) If Borrower pays after acceleration or prepays all or any portion
of the Term Loan or prepays the Revolving Loan and reduces or terminates the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, or if any of the Commitments
are otherwise terminated, Borrower shall pay to Agent, for the benefit of
Lenders as liquidated damages and compensation for the costs of being prepared
to make funds available hereunder an amount equal to the Applicable Percentage
(as defined below) multiplied by the sum of (i) the principal amount of the Term
Loan paid after acceleration or prepaid, and (ii) the amount of the reduction of
the Revolving Loan Commitment. As used herein, the term "Applicable Percentage"
shall mean (x) two percent (2.0%), in the case

                                       17

<PAGE>

of a prepayment on or prior to the first anniversary of the Closing Date, (y)
one percent (1.0%), in the case of a prepayment after the first anniversary of
the Closing Date but on or prior to the second anniversary thereof, and (z) one
half of one percent (0.50%), in the case of a prepayment after the second
anniversary of the Closing Date but on or prior to the third anniversary
thereof. The Credit Parties agree that the Applicable Percentages are a
reasonable calculation of Lenders' lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early termination
of the Commitments. Notwithstanding the foregoing, no prepayment fee shall be
payable by Borrower upon a mandatory prepayment made pursuant to Sections
1.3(b)(ii), 1.3(d) or 1.16(c); provided that Borrower does not permanently
reduce or terminate the Revolving Loan Commitment upon any such prepayment and,
in the case of prepayments made pursuant to Section 1.3(b)(ii), the transaction
giving rise to the applicable prepayment is expressly permitted under Section 6.

          (d)  Borrower shall pay to Agent, for the ratable benefit of Revolving
Lenders, the Letter of Credit Fee as provided in Annex B.

          1.10 Receipt of Payments. Borrower shall make each payment of
principal of and interest on the Term Loan under this Agreement not later than
2:00 p.m. (New York time) on the day when due in immediately available funds in
Dollars to the Term Loan Payment Account. Borrower shall make each payment
(other than payments of principal of and interest on the Term Loan) under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and determining Borrowing Availability and Export-Related
Borrowing Availability as of any date, all payments shall be deemed received on
the first Business Day following the Business Day on which immediately available
funds therefor are received in the Collection Account or the Term Loan Payment
Account, as applicable, prior to 2:00 p.m. New York time. Payments received
after 2:00 p.m. (New York time) on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.

          1.11 Application and Allocation of Payments.

          (a)  So long as no Default or Event of Default has occurred and is
continuing, (i) payments consisting of proceeds of Accounts (other than
Export-Related Accounts) received in the ordinary course of business shall be
applied, first, to the Swing Line Loan, second, the Revolving Credit Advances,
and third, to the Export-Related Advances, (ii) payments consisting of proceeds
of Export-Related Accounts received in the ordinary course of business shall be
applied, first, to the Export-Related Advances, second, to the Swing Line Loan,
and third, to the Revolving Credit Advances; (iii) payments matching specific
scheduled payments then due shall be applied to those scheduled payments; (iv)
voluntary prepayments shall be applied as determined by Borrower, subject to the
provisions of Section 1.3(a); and (v) mandatory prepayments shall be applied as
set forth in Sections 1.3(c) and 1.3(d). All payments and prepayments applied to
a particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to any other payment, and as to
all payments made when a Default or Event of Default has occurred and is
continuing or following the Commitment Termination Date, Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply any and

                                       18

<PAGE>

all such payments against the Obligations of Borrower as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or any
other books and records. In the absence of a specific determination by Agent
with respect thereto and except as provided in Section 1.11(b), payments shall
be applied to amounts then due and payable in the following order: (1) to Fees
and Agent's expenses reimbursable hereunder; (2) to interest on the Swing Line
Loan; (3) to principal payments on the Swing Line Loan; (4) to interest on the
other Loans, ratably in proportion to the interest accrued as to each Loan; (5)
to principal payments on the other Loans and to provide cash collateral for
Letter of Credit Obligations in the manner described in Annex B, ratably to the
aggregate, combined principal balance of the other Loans and outstanding Letter
of Credit Obligations; and (6) to all other Obligations, including expenses of
Lenders to the extent reimbursable under Section 11.3.

          (b) The Lenders hereby agree that so long as any of the Loans have
been declared to be immediately due and payable, all proceeds of the Collateral
shall be applied first to Fees and Agent's expenses reimbursable hereunder; and
(i) with respect to proceeds of Term Loan Priority Collateral, second to
interest on the Term Loan, third to principal payments on the Term Loan, fourth
to all other Obligations of the Term Lenders, including expenses of Term Lenders
to the extent reimbursable under Section 11.3, fifth to interest on the Swing
Line Loan, sixth to principal payments on the Swing Line Loan, seventh to
interest on the other Loans, ratably in proportion to the interest accrued as to
each Loan, eighth to principal payments on the other Loans and to provide cash
collateral for Letter of Credit Obligations in the manner described in Annex B,
ratably to the aggregate, combined principal balance of the other Loans and
outstanding Letter of Credit Obligations, ninth to all other Obligations of the
Revolving Lenders, including expenses of Revolving Lenders to the extent
reimbursable under Section 11.3 and (ii) (A) with respect to proceeds of
Revolving Loan Priority Collateral which constitutes Export-Related Accounts,
second to interest on the Export-Related Loan, third to principal payments on
the Export-Related Loan, fourth to interest on the Swing Line Loan, fifth to
principal payments on the Swing Line Loan, sixth to interest on the Revolving
Loan, seventh to principal payments on the Revolving Loan and to provide cash
collateral for Letter of Credit Obligations in the manner described in Annex B,
eighth to all other Obligations of the Revolving Lenders, including expenses of
Revolving Lenders to the extent reimbursable under Section 11.3, ninth to
interest on the Term Loan, tenth to principal payments on the Term Loan,
eleventh to all other Obligations of the Term Lenders, including expenses of
Term Lenders to the extent reimbursable under Section 11.3; and (B) with respect
to proceeds of Revolving Loan Priority Collateral (other than Export-Related
Accounts), second to interest on the Revolving Loan, third to principal payments
on the Revolving Loan, fourth to interest on the Swing Line Loan, fifth to
principal payments on the Swing Line Loan, sixth to interest on the
Export-Related Loan, seventh to principal payments on the Export-Related Loan
and to provide cash collateral for Letter of Credit Obligations in the manner
described in Annex B, eighth to all other Obligations of the Revolving Lenders,
including expenses of Revolving Lenders to the extent reimbursable under Section
11.3, ninth to interest on the Term Loan, tenth to principal payments on the
Term Loan, eleventh to all other Obligations of the Term Lenders, including
expenses of Term Lenders to the extent reimbursable under Section 11.3. The
provisions of this clause (b) is for the benefit of the Lenders and Borrower
shall have no rights with respect hereto.

          (c) Agent is authorized to (and at its sole election may) charge to
the Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges,

                                       19

<PAGE>

costs (including insurance premiums in accordance with Section 5.4(a)), interest
and other Obligations (but not principal on the Revolving Loan), owing by
Borrower under this Agreement or any of the other Loan Documents if and to the
extent Borrower fails to pay promptly any such amounts as and when due, even if
the amount of such charges would exceed Borrowing Availability at such time.

          1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: all Advances and the Term Loan, all
payments made by Borrower, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent's most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and Lenders by Borrower; provided that any failure to so record or any
error in so recording shall not limit or otherwise affect Borrower's duty to pay
the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account as to Borrower for the immediately preceding month. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within 30 days after the date thereof,
each and every such accounting shall (absent manifest error) be deemed final,
binding and conclusive on Borrower in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrower. Notwithstanding any provision herein contained to
the contrary, any Lender may elect (which election may be revoked) to dispense
with the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.

          1.13 Indemnity.

          (a)  Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other out-of-pocket costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities, and any and all reasonable out-of-pocket legal costs
and expenses arising out of or incurred in connection with disputes between or
among any parties to any of the Loan Documents (collectively, "Indemnified
Liabilities"); provided, that no such Credit Party shall be liable for any
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from that
Indemnified Person's gross negligence or willful misconduct. NO INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT,
ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING

                                       20

<PAGE>

CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

          (b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall
request a termination of, any borrowing of, conversion into or continuation of,
LIBOR Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within 10 Business Days of receipt thereof, specifying the basis for such
objection in detail.

          1.14 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon one Business Day's prior notice as
frequently as Agent reasonably determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrower shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that Agent may reasonably request.
Each Credit Party shall deliver any

                                       21

<PAGE>

document or instrument necessary for Agent, as it may from time to time
reasonably request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by such Credit Party. Agent will give Lenders at least 5 days' prior
written notice of regularly scheduled audits. Representatives of other Lenders
may, at their own cost and expense) accompany Agent's representatives on
regularly scheduled audits at no charge to Borrower.

          1.15 Taxes.

          (a) Any and all payments by Borrower or any other Credit Party
hereunder or under the Notes or any other Loan Document shall be made, in
accordance with this Section 1.15, free and clear of and without deduction for
any and all present or future Taxes. If Borrower or any other Credit Party shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes or any other Loan Document, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (ii)
Borrower or such other Credit Party shall make such deductions, and (iii)
Borrower or such other Credit Party shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within 30
days after the date of any payment of Taxes, Borrower or such other Credit Party
shall furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Except as set forth in Section 1.15(e), Agent and Lenders shall
not be obligated to return or refund any amounts received pursuant to this
Section.

          (b) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within 10 days of demand therefor, pay Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.

          (c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent prior to
becoming a party to this Agreement a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to a complete exemption from U.S. withholding taxes (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender. In addition, each Foreign Lender shall deliver
such forms upon the obsolescence or invalidity of any form previously delivered
by such Foreign Lender. Notwithstanding any other provision of this Section
1.15(c), a Foreign Lender shall not be required to deliver any form pursuant to
this Section 1.15(c) (other than the

                                       22

<PAGE>

form required to be delivered pursuant to the first sentence of this clause)
that such Foreign Lender is not legally able to deliver.

          (d) The Borrower shall not be required to indemnify any Foreign
Lender, or to pay any additional amounts to any Foreign Lender, in respect of
United States federal, state or local withholding Tax pursuant to paragraph (a)
or (b) above to the extent that (i) the obligation to withhold amounts with
respect to United States federal, state or local withholding Tax existed on the
date such Foreign Lender became a party to this Agreement (or, in the case of a
transferee, on the effective date of the Assignment Agreement pursuant to which
such transferee becomes a Lender) or, with respect to payments to a new lending
office, the date such Foreign Lender designated such new lending office;
provided, however, that this clause (i) shall not apply to any Lender that
becomes a Lender or new lending office that becomes a new lending office as a
result of an assignment or designation made at the request of the Borrower; and
provided, further, that this clause (i) shall not apply to the extent that the
indemnity payment or additional amounts any Lender, the Agent or any Lender
through a new lending office would be entitled to receive (without regard to
this clause (i)) do not exceed the indemnity payment or additional amounts that
the person making the assignment or transfer to such Lender, the Agent or such
Lender making the designation of such new lending office would have been
entitled to receive in the absence of such assignment, transfer or designation
or (ii) the obligation to pay such additional amounts or such indemnity payments
would not have arisen but for a failure by such Foreign Lender to comply with
the provisions of 1.15(c) above.

          (e) If any of Agent or any Lender, as applicable, determines, in its
sole discretion, that it has received a refund of any Taxes as to which it has
been indemnified by the Borrower or a Credit Party or with respect to which the
Borrower or a Credit Party has paid additional amounts pursuant to this Section
1.15, it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower or Credit
Party under this Section 1.15 with respect to the Taxes giving rise to such
refund), net of all Charges imposed on such refund, out-of-pocket expenses of
such Agent or Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).

          1.16 Capital Adequacy; Increased Costs; Illegality.

          (a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate in
reasonable detail as to the amount of that reduction and showing the basis of
the computation thereof submitted by such Lender to Borrower and to Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.

                                       23

<PAGE>

          (b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate in reasonable detail as to the amount of such increased cost,
submitted to Borrower and to Agent by such Lender, shall be conclusive and
binding on Borrower for all purposes, absent manifest error. Each Lender agrees
that, as promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to change its
lending office or otherwise minimize costs and expenses incurred by it and
payable to it by Borrower pursuant to this Section 1.16(b).

          (c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender,
together with interest accrued thereon, unless Borrower, within 5 Business Days
after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans.

          (d) Within 15 days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
or increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b), or of
its inability to fund as provided in Section 1.16(c), Borrower may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower, with the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee), may
obtain, at Borrower's expense, a replacement Lender ("Replacement Lender") for
the Affected Lender. If Borrower obtain a Replacement Lender within 90 days
following notice of their intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale;
provided, that Borrower shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrower's notice of intention
to replace such Affected Lender. Furthermore, if Borrower give a notice of
intention to replace and do not so replace

                                       24

<PAGE>

such Affected Lender within 90 days thereafter, Borrower's rights under this
Section 1.16(d) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15(a), 1.16(a) and 1.16(b).

          1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.

2.   CONDITIONS PRECEDENT

          2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Lenders:

          (a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, each other
Credit Party, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance reasonably satisfactory to Agent.

          (b) Repayment of Prior Lender Obligations; Satisfaction of Outstanding
L/Cs. (i) Agent shall have received fully executed originals of pay-off letters
or other satisfaction agreements reasonably satisfactory to Agent confirming
that all of the Prior Lender Obligations have been paid in full or will be
repaid in full from the proceeds of the Term Loan and the initial Revolving
Credit Advance and all Liens upon any of the property of Borrower or any of its
Subsidiaries in favor of any Prior Lender with respect to the Prior Lender
Obligations shall be terminated by the applicable Prior Lender immediately upon
such payment; and (ii) all letters of credit issued or guaranteed by any Prior
Lender shall have been cash collateralized or supported by a Letter of Credit
issued pursuant to Annex B, as mutually agreed upon by Agent, Borrower and such
Prior Lender.

          (c) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance reasonably satisfactory to Agent affirming that no such
consents or approvals are required.

          (d) Opening Availability. The Eligible Accounts and Eligible Inventory
supporting the initial Revolving Credit Advance and the initial Letter of Credit
Obligations incurred and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by Agent, to provide
Borrower with Borrowing Availability, after giving effect to the initial
Revolving Credit Advance made to Borrower, the incurrence of any initial Letter
of Credit Obligations and the consummation of the Related Transactions (on a pro
forma

                                       25

<PAGE>

basis, with trade payables being paid currently, and expenses and liabilities
being paid in the ordinary course of business and without acceleration of sales)
of at least $13,000,000.

          (e) Payment of Fees. Borrower shall have paid the Fees required to be
paid on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all out-of-pocket fees, costs and expenses of closing
(including all reasonable attorneys' fees) presented as of the Closing Date.

          (f) Capital Structure; Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.

          (g) Due Diligence. Agent shall have completed its business and legal
due diligence, including a roll forward of its previous Collateral audit, with
results reasonably satisfactory to Agent.

          (h) Minimum EBITDA. Borrower shall have EBITDA for the twelve month
period ending August 31, 2003 of not less than $35,000,000.

          (i) Consummation of Related Transactions. Agent shall have received
fully executed copies of the Related Transactions Documents, each of which shall
be in form and substance reasonably satisfactory to Agent and its counsel. The
Related Transactions shall have been consummated in accordance with the terms of
the Related Transactions Documents.

          2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:

          (a) any representation or warranty by any Credit Party contained
herein or in any other Loan Document is untrue or incorrect as of such date,
except to the extent that such representation or warranty expressly relates to
an earlier date and except for changes therein expressly permitted or expressly
contemplated by this Agreement, and Agent or Requisite Revolving Lenders (or
Requisite Term Lenders, with respect to the making of any Term Loan or the
conversion or continuation of any Term Loan as a LIBOR Loan) have determined not
to make such Advance, convert or continue any Loan as LIBOR Loan or incur such
Letter of Credit Obligation as a result of the fact that such warranty or
representation is untrue or incorrect;

          (b) any event or circumstance having a Material Adverse Effect has
occurred since the date hereof as determined by the Requisite Revolving Lenders
and Agent or Requisite Revolving Lenders (or Requisite Term Lenders, with
respect to the making of any Term Loan or the conversion or continuation of any
Term Loan as a LIBOR Loan) have determined not to make such Advance, convert or
continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a
result of the fact that such event or circumstance has occurred;

          (c) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligation), and Agent or Requisite Revolving Lenders (or Requisite
Term Lenders, with respect to the

                                       26

<PAGE>

making of any Term Loan or the conversion or continuation of any Term Loan as a
LIBOR Loan) shall have determined not to make any Advance, convert or continue
any Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of
that Default or Event of Default; or

          (d) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the Maximum Amount less the then
outstanding principal amount of the Swing Line Loan and the Export-Related Loan,
(ii) the outstanding principal amount of the aggregate Revolving Credit Advances
would exceed the Borrowing Base less the then outstanding principal amount of
the Swing Line Loan, or (iii) the outstanding principal amount of the
Export-Related Loan would exceed the lesser of the Export-Related Borrowing
Availability and the Export-Related Loan Commitment.

The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.

          2.3 Further Conditions to Each Export-Related Advance. Except as
otherwise expressly provided herein, no Lender shall be obligated to fund any
Export-Related Advance, if, as of the date thereof:

          (a) Agent has not received satisfactory evidence that Borrower has
obtained all consents and approvals from Ex-Im Bank;

          (b) Agent has not received duly executed copies of all Ex-Im Bank
Documents, each in form and substance satisfactory to Agent and signed by each
party thereto;

          (c) Borrower has not duly executed any necessary application forms
required by Ex-Im Bank;

          (d) any Ex-Im Bank Document is not in full force and effect; or

          (e) with respect to any Export-Related Advance requested after the
date of any scheduled termination of any Ex-Im Bank Guarantee, Agent has not
received written notice at least 90 days prior to such scheduled termination (or
such lesser time as may be agreed to by Agent) that the Ex-Im Bank Guarantee has
been renewed.

The request and acceptance by Borrower of the proceeds of any Export-Related
Advance as of the date thereof, (i) a representation and warranty by Borrower
that the conditions in this Section 2.3 have been satisfied and (ii) a
reaffirmation by Borrower of the granting and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents. 3.

3.  REPRESENTATIONS AND WARRANTIES

                                       27

<PAGE>

          To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.

          3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
a corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $250,000; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct, except where the failure to
have such licenses, permits, consents or approvals, make such filings or give
such notices, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect; (e) is in compliance with its charter and
bylaws or partnership or operating agreement, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

          3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing
Date, the current location of each Credit Party's chief executive office and the
processor, toller or toll converter locations, warehouses, consignment, and
other premises at which any Collateral is located are set forth in Disclosure
Schedule (3.2). In addition, Disclosure Schedule (3.2) lists the federal
employer identification number of each Credit Party.

          3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any applicable law or
regulation, or any applicable order or decree of any court of competent
jurisdiction or Governmental Authority; (e) do not conflict with or result in
the breach or termination of, constitute a default under or accelerate or permit
the acceleration of any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which such Person is a party
or by which such Person or any of its property is bound; (f) do not result in
the creation or imposition of any Lien upon any of the property of such Person
other than those in favor of Agent, on behalf of itself and Lenders, pursuant to
the Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(c), all of which will have been duly obtained, made or complied with prior
to the Closing

                                       28

<PAGE>

Date. Each of the Loan Documents shall be duly executed and delivered by each
Credit Party that is a party thereto and each such Loan Document shall
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws relative to or affecting the
enforcement of creditors' rights generally in effect from time to time and by
general principles of equity.

          3.4 Financial Statements and Projections. Except for the Projections,
all Financial Statements concerning Borrower and its Subsidiaries that are
referred to below have been prepared in accordance with GAAP consistently
applied throughout the periods covered (except as disclosed therein and except,
with respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.

          (a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:

             (i)   The audited consolidated sheets at September 30, 2001 and
2002 and the related statements of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Years then ended, certified by Deloitte and Touche,
LLP.

             (ii)  The unaudited balance sheet at June 30, 2003 and the related
statement(s) of income and cash flows of Borrower and its Subsidiaries for the
nine-month period then ended.

             (iii) The unaudited balance sheet at August 31, 2003 and the
related statement(s) of income and cash flows of Borrower and its Subsidiaries
for the eleven-month period then ended.

          (b) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(b)) have been prepared by Borrower
in light of the past operations of its businesses, but including future payments
of known contingent liabilities, and reflect projections for the three-year
period beginning on October 1, 2003 on a month-by-month basis for the first year
and on a year-by-year basis thereafter. The Projections are based upon estimates
and assumptions stated therein, all of which Borrower believes to be reasonable
and fair in light of current conditions and current facts known to Borrower and,
as of the Closing Date, reflect Borrower's good faith and reasonable estimates
of the future financial performance of Borrower and of the other information
projected therein for the period set forth therein, it being understood by the
Lenders that such Projections relate to future events and not to present facts,
and that actual results during the period covered therein may differ from such
Projections by a material amount.

          3.5 Material Adverse Effect. Between September 30, 2002 and the
Closing Date: (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected

                                       29

<PAGE>

to have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted that has had or could reasonably be expected to have a
Material Adverse Effect, and (c) no Credit Party is in default and to Borrower's
knowledge no third party is in default under any material contract, lease or
other agreement or instrument, that alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect. Between September 30, 2002 and
the Closing Date no event has occurred, that alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.

             3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof reasonably satisfactory to Agent have been
delivered to Agent. Disclosure Schedule (3.6) further describes any Real Estate
with respect to which any Credit Party is a lessor, sublessor or assignor as of
the Closing Date. Each Credit Party also has good and marketable title to, or
valid leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title and
interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Credit Party's Real Estate has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.

             3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply in all material respects with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to
such matters; (c) all payments due from any Credit Party for employee health and
welfare insurance have been paid or accrued as a liability on the books of such
Credit Party; (d) except as set forth in Disclosure Schedule (3.7), no Credit
Party is a party to or bound by any collective bargaining agreement, management
agreement, consulting agreement, employment agreement, bonus, restricted stock,
stock option, or stock appreciation plan or agreement or any similar plan,
agreement or arrangement (and true and complete copies of any agreements
described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there
is no organizing activity involving any Credit Party pending or, to any Credit
Party's knowledge,

                                       30

<PAGE>

threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.

               3.8   Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Subsidiary of Borrower
is owned by the Borrower in the amounts set forth in Disclosure Schedule (3.8).
Except as set forth in Disclosure Schedule (3.8), there are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness and Guaranteed
Indebtedness of each Credit Party as of the Closing Date (except for the
Obligations) is described in Section 6.3 (including Disclosure Schedule (6.3)).
As of the Closing Date, AET Limited is an inactive Subsidiary and does not have
any assets (other than the bank account referred to in Annex C and cash on
deposit therein in an amount not exceeding $150,000) or any Indebtedness or
Guaranteed Indebtedness and does not conduct any business or operations. Except
as set forth in Disclosure Schedule (3.8(a)), Applied Extrusion Technologies
Holdings, Inc., Applied Extrusion Technologies Australia Holdings, Inc., Applied
Extrusion Technologies, Belgium, Inc., and Applied Extrusion Technologies,
Scotland, Inc., (collectively, the "Former Subsidiaries") each a corporation
organized in Delaware and prior to the date hereof merged into Borrower, did not
own any assets. At the time of the applicable merger of each Former Subsidiary
into Borrower, such Former Subsidiary did not have any liabilities or other
obligations to any Person.

               3.9   Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on behalf of
Borrower, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.

               3.10  Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the

                                       31

<PAGE>

proceeds of the Loans or other extensions of credit under this Agreement will be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.

               3.11  Taxes. All income tax returns and all other material
property tax returns, reports and statements, including information returns,
required by any Governmental Authority ("Tax Returns") to be filed by any Credit
Party have been filed with the appropriate Governmental Authority; all such Tax
Returns are true, correct and complete in all material respects; and all Charges
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other amounts
being contested in accordance with Section 5.2(b). There are no Liens for
Charges (other than for current Charges not yet due and payable or being
contested in good faith in accordance with Section 5.2(b)) upon the assets of
any Credit Party. No adjustment relating to such Tax Returns has been proposed
formally or informally by any Governmental Authority and, to the knowledge of
each Credit Party, no basis exists for any such adjustment. Proper and accurate
amounts have been withheld by each Credit Party from its respective employees,
independent contractors, creditors, members, partners and other third parties
for all periods in full and complete compliance with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Closing Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority, and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as indicated on Disclosure
Schedule (3.11), as of the Closing Date all, Charges that have been claimed,
proposed, asserted or assessed against any Credit Party (or with respect to any
of their assets) have been fully paid or finally settled or are being contested
in good faith in accordance with Section 5.2(b). Except as described in
Disclosure Schedule (3.11), as of the Closing Date, no Credit Party has executed
or filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including any
tax sharing agreements) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Material Adverse Effect.

               3.12  ERISA and Canadian Plans.

               (a)   Disclosure Schedule (3.12) lists (i) all ERISA Affiliates
and (ii) all Plans and separately identifies all Pension Plans, including Title
IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. As of the Closing Date, copies of all such listed Plans, together
with a copy of the latest IRS/DOL 5500-series form for each

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<PAGE>

such Plan, have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501 of the IRC, and nothing has
occurred that would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23. Neither any
Credit Party nor ERISA Affiliate has failed to make any contribution or pay any
amount due as required by either Section 412 of the IRC or Section 302 of ERISA
or the terms of any such Plan. Neither any Credit Party nor ERISA Affiliate has
engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan, that would subject any
Credit Party to a material tax on prohibited transactions imposed by Section
502(i) of ERISA or Section 4975 of the IRC.

               (b)   Except as set forth in Disclosure Schedule (3.12): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) except in the case of any ESOP, Stock of all Credit Parties and
their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any Plan measured on the basis of fair market
value as of the latest valuation date of any Plan; and (vii) no liability under
any Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that is not rated AAA by the Standard & Poor's Corporation or
an equivalent rating by another nationally recognized rating agency

               (c)   Disclosure Schedule 3.12(c) sets forth all Canadian Benefit
Plans (other than, for greater certainty, universal plans created by and to
which any Credit Party is obligated to contribute by statute) and Canadian
Pension Plans adopted by each Credit Party. The Canadian Pension Plans are duly
registered under the ITA and all other applicable laws which require
registration and no event has occurred which is reasonably likely to cause the
loss of such registered status. All material obligations of each Credit Party
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans and the
funding agreements therefor have been performed in a timely fashion. There have
been no improper withdrawals or applications of the assets of the Canadian
Pension Plans or the Canadian Benefit Plans. There are no outstanding disputes
concerning the assets of the Canadian Pension Plans or the Canadian Benefit
Plans. Each of the Canadian Pension Plans is fully funded on a solvency basis
(using actuarial methods and assumptions

                                       33

<PAGE>

which are consistent with the valuations last filed with the applicable
Governmental Bodies and which are consistent with generally accepted actuarial
principles).

               3.13  No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
that challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) that has a reasonable risk of being determined adversely to any Credit
Party and that , if so determined, could be reasonably be expected to have a
Material Adverse Effect. Except as set forth on Disclosure Schedule (3.13), as
of the Closing Date there is no Litigation pending or, to any Credit Party's
knowledge, threatened, that seeks damages in excess of $100,000 or injunctive
relief against, or alleges criminal misconduct of, any Credit Party.

               3.14  Brokers. No broker or finder brought about the obtaining,
making or closing of the Loans or the Related Transactions, and no Credit Party
or Affiliate thereof has any obligation to any Person in respect of any finder's
or brokerage fees in connection therewith.

               3.15  Intellectual Property. As of the Closing Date, each Credit
Party owns or has rights to use all Intellectual Property necessary to continue
to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15). Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect. Except as set forth in Disclosure Schedule
(3.15), as of the Closing Date, no Credit Party is aware of any infringement
claim by any other Person with respect to any Intellectual Property.

               3.16  Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other written reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Credit Party to Agent or any Lender pursuant to the terms of this Agreement
contains or will contain when made any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of itself and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances.

               3.17  Environmental Matters.

               (a)   Except as set forth in Disclosure Schedule (3.17), as of
the Closing Date: (i) the Real Estate is free of contamination from, or presence
of, any Hazardous Material except for such contamination that would not
adversely impact the value or marketability of such Real Estate and that would
not result in Environmental Liabilities that could reasonably be expected to
exceed $100,000; (ii) no Credit Party has caused or suffered to occur any
Release of Hazardous

                                       34

<PAGE>

Materials on, at, in, under, above, to, from or about any of its Real Estate and
that could reasonably be expected to result in Environmental Liabilities in
excess of $100,000; (iii) the Credit Parties are and have been in compliance
with all Environmental Laws, except for such noncompliance that would not result
in Environmental Liabilities which could reasonably be expected to exceed
$100,000; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
except where the failure to so obtain or comply with such Environmental Permits
would not result in Environmental Liabilities that could reasonably be expected
to exceed $100,000, and all such Environmental Permits are valid, uncontested
and in good standing; (v) no Credit Party is involved in operations or knows of
any facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party which could reasonably be expected to exceed $100,000, and no
Credit Party has permitted any current or former tenant or occupant of the Real
Estate to engage in any such operations; (vi) there is no Litigation arising
under or related to any Environmental Laws, Environmental Permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess of
$100,000 or injunctive relief against, that orders characterization or
rehabilitative work, or that alleges criminal misconduct by, any Credit Party;
(vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes or other Environmental Law, and to the knowledge of the
Credit Parties, there are no facts, circumstances or conditions that may result
in any Credit Party being identified as a "potentially responsible party" under
CERCLA or analogous state statutes or other Environmental Laws; and (viii) as of
the Closing Date, the Credit Parties have provided to Agent copies of all
existing environmental reports, studies, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Credit Party.

               (b)   Each Credit Party hereby acknowledges and agrees that Agent
is not now, and to Credit Party's knowledge, has not ever been, in control of
any of the Real Estate or any Credit Party's affairs.

               3.18  Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.

               3.19  Deposit and Disbursement Accounts. Disclosure Schedule
(3.19) lists all banks and other financial institutions at which any Credit
Party maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.

               3.20  Government Contracts. Except as set forth in Disclosure
Schedule (3.20), as of the Closing Date, no Credit Party is a party to any
contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.

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<PAGE>

               3.21  Customer and Trade Relations. Except as set forth in
Disclosure Schedule (3.21), as of the Closing Date, there exists no actual or,
to the knowledge of any Credit Party, threatened termination or cancellation of,
or any material adverse modification or change in: the business relationship of
any Credit Party with any customer or group of customers whose purchases during
the preceding 12 months caused them to be ranked among the ten largest customers
of such Credit Party; or the business relationship of any Credit Party with any
supplier material to its operations.

               3.22  Agreements and Other Documents.

               (a)   As of the Closing Date, each Credit Party has provided to
Agent or its counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to which it is
subject and each of which is listed in Disclosure Schedule (3.22): rebate
agreements with end users who annually purchase $15,000,000 or more of products
sold by any Credit Party or whose purchases account for 5% or more of the total
annual sales volume of the Credit Parties; supply agreements and purchase
agreements not terminable by such Credit Party within 60 days following written
notice issued by such Credit Party and involving transactions in excess of
$1,000,000 per annum; leases of Equipment having a remaining term of one year or
longer and requiring aggregate rental and other payments in excess of $500,000
per annum; licenses and permits held by the Credit Parties, the absence of which
could be reasonably likely to have a Material Adverse Effect; instruments and
documents evidencing any Indebtedness or Guaranteed Indebtedness of such Credit
Party and any Lien granted by such Credit Party with respect thereto; and
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party.

               (b)   Set forth in Disclosure Schedule (3.22(b)) is a list, as of
the Closing Date of the ten largest customers and clients of the Credit Parties,
taken as a whole as measured by gross revenues of the Credit Parties generated
by such customers and clients, for the two years ended as of September 30, 2001
and 2002. Except as disclosed in Disclosure Schedule 3.22(b), as of the Closing
Date, no significant customer or client (or group of related customers or
clients which in the aggregate is significant) of the Credit Parties, taken as a
whole, has given them notice or, to the knowledge of the Credit Parties, has
taken any other action which has given any Credit Party any reason to believe
that such customer or client (or group of related customers or clients) will
materially reduce the amount of its purchases or materially adversely change the
price or terms of such purchases. For such purposes, a customer or client (or
group of related customers or clients) shall be deemed "significant" if such
customer or client (or group of related customers or clients) has accounted for
more than 5% of the total gross revenues of the Credit Parties (taken as a
whole) during the past Fiscal Year.

               (c)   Set forth in Disclosure Schedule 3.22(c) is a list, as of
the Closing Date, of the ten largest suppliers and vendors of the Credit
Parties, taken as a whole, as measured by the cost of purchases made by the
Credit Parties for the two years ended as of September 30, 2001 and 2002. Except
as disclosed in Disclosure Schedule 3.22(c), as of the Closing Date, no
significant supplier or vendor (or group of related suppliers or vendors which
in the aggregate is significant) of the Credit Parties, taken as a whole, has
given them notice or, to the knowledge of the Credit Parties, has taken any
other action which has given any Credit Party any reason to

                                       36

<PAGE>

believe that such supplier or vendor (or group of related suppliers or vendors)
will cease to supply or materially restrict the amount supplied or materially
adversely change its price or terms to any Credit Party of any products or
services. For such purposes, a supplier or vendor (or group of related suppliers
or vendors) shall be deemed "significant" if such supplier or vendor (or group
of related suppliers or vendors) has accounted for more than 5% of such total
cost of purchases of the Credit Parties (taken as a whole) during the past
Fiscal Year.

               3.23  Solvency. Both before and after giving effect to (a) the
Loans and Letter of Credit Obligations to be made or incurred on the Closing
Date or such other date as Loans and Letter of Credit Obligations requested
hereunder are made or incurred, (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower; (c) the Refinancing and the
consummation of the other Related Transactions; and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party is
and will be Solvent.

               3.24  Senior Notes. As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Senior Note Documents
(including all schedules and exhibits thereto and all amendments, supplements or
modifications, as in effect on the Closing Date. No Default or Event of Default
under and as defined in the Senior Note Indenture has occurred and is
continuing. The execution, delivery and performance by the Credit Parties of the
Loan Documents do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
payment or performance required by the Senior Note Documents. Without limiting
the foregoing, (i) each borrowing of a Loan or incurrence of Letter of Credit
Obligations or other Obligations pursuant to the Loan Documents constitutes
"Permitted Indebtedness" under clauses (i), (vii) or (x) of the definition
"Permitted Indebtedness" in Section 101 of the Senior Note Indenture, (ii) the
Liens pursuant to the Loan Documents in favor of the Agent securing the
Obligations constitute "Permitted Liens" under clause (d) of the definition
"Permitted Liens" in Section 101 of the Senior Note Indenture, (iii) on the
Closing Date after giving effect to the Related Transactions, this Agreement
constitutes the "Bank Credit Agreement" as defined in Section 101 of the Senior
Note Indenture and no other agreement, indenture or other document or instrument
constitutes the "Bank Credit Agreement" as defined in Section 101 of the Senior
Note Indenture, (iv) the Guaranties are permitted under Section 1017 of the
Senior Note Indenture, and (v) the provisions of Section 6 of this Agreement do
not violate the provisions of Section 1018 of the Senior Note Indenture. The
request and acceptance by Borrower of the proceeds of any Advance or the
incurrence of any Letter of Credit Obligations or other Obligations pursuant to
the Loan Documents shall be deemed to constitute, as of the date thereof, a
representation and warranty by Borrower that as of such date and after giving
effect thereto Borrower is not in default or breach of Sections 1010 or 1014 of
the Senior Note Indenture.

4.       FINANCIAL STATEMENTS AND INFORMATION

               4.1   Reports and Notices.

               (a)   Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in Annex E.

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<PAGE>

               (b)   Each Credit Party executing this Agreement hereby agrees
that, from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b) at
the times, to the Persons and in the manner set forth in Annex F.

               4.2   Communication with Accountants. Each Credit Party executing
this Agreement authorizes Agent to communicate directly with its independent
certified public accountants, including Deloitte and Touche, LLP (after such
prior notice to Borrower and provided Borrower may participate in any such
communications), and authorizes and, at Agent's request, shall instruct those
accountants and advisors to disclose and make available to Agent and each Lender
any and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including copies of any
issued management letters) with respect to the business, financial condition and
other affairs of any Credit Party.

5.       AFFIRMATIVE COVENANTS

               Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:

               5.1   Maintenance of Existence and Conduct of Business. Each
Credit Party shall: do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its material rights
and franchises; continue to conduct its business substantially as now conducted
or as otherwise permitted hereunder; at all times, in the exercise of its
reasonable business judgment, maintain, preserve and protect all of its assets
and properties used or useful in the conduct of its business, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear) and from time to time make, or cause
to be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).

               5.2   Payment of Charges.

               (a)   Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen or bailees, in each case,
before any thereof shall become past due.

               (b)   Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and

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<PAGE>

with diligence and operates to suspend collection or enforcement of such
Charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a
result of such contest; (iv) such Credit Party shall promptly pay or discharge
such contested Charges, Taxes or claims and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met; and (v) Agent has not advised
Borrower in writing that Agent reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect.

               5.3   Books and Records. Each Credit Party shall keep adequate
books and records with respect to its business activities in which proper
entries, reflecting in all material respects all financial transactions, are
made in accordance with GAAP and on a basis consistent with the Financial
Statements attached as Disclosure Schedule (3.4(a)).

               5.4   Insurance; Damage to or Destruction of Collateral.

               (a)   The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable in its reasonable
judgment. Agent shall have no obligation to obtain insurance for any Credit
Party or pay any premiums therefor. By doing so, Agent shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including reasonable attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral.

               (b)   Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix maintained
by any Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance to, in Agent's
reasonable opinion, adequately protect both Agent's and Lender's interests in
all or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If reasonably requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker, reasonably satisfactory
to Agent, with respect to its insurance policies.

               (c)   Each Credit Party (other than AET Limited) shall deliver to
Agent, in form and substance reasonably satisfactory to Agent, endorsements to
(i) all "All Risk" and business interruption insurance naming Agent, on behalf
of itself and Lenders, as loss payee, and (ii) all general liability and other
liability policies naming Agent, on behalf of itself and Lenders, as additional
insured. Each Credit Party irrevocably makes, constitutes and appoints Agent
(and

                                       39

<PAGE>

all officers, employees or agents designated by Agent), so long as any Event of
Default has occurred and is continuing, as such Credit Party's true and lawful
agent and attorney-in-fact for the purpose of making, settling and adjusting
claims under such "All Risk" policies of insurance, endorsing the name of such
Credit Party on any check or other item of payment for the proceeds of such "All
Risk" policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds the expenses, if any,
incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d), or permit or require the applicable Credit Party to use
such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $2,000,000 in the aggregate,
Agent shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property; provided that if such Credit Party shall not have
completed such replacement, restoration, repair or rebuilding within 360 days of
such casualty or entered into binding agreements within 180 days of such
casualty to complete, such replacement, restoration, repair or rebuilding within
360 days of such casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with Section 1.3(d). All insurance proceeds that are
to be made available to any Credit Party to replace, repair, restore or rebuild
the Collateral shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan (which application shall not result in a permanent
reduction of the Revolving Loan Commitment) and upon such application, Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. Thereafter, such funds shall be made
available to Borrower to provide funds to replace, repair, restore or rebuild
the Collateral as follows: (i) Borrower shall request a Revolving Credit Advance
be made to Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance; and (iii) in the case of insurance proceeds
applied against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(d).

               5.5   Compliance with Laws. Each Credit Party shall comply with
all federal, state, provincial, regional, municipal, local and foreign laws and
regulations applicable to it, including those relating to ERISA and labor
matters and Environmental Laws and Environmental Permits, except to the extent
that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

               5.6   [Intentionally Omitted].

               5.7   Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect. Within 120
days following the Closing Date each Credit Party executing

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<PAGE>

this Agreement agrees that it shall and shall cause each other Credit Party to,
at such Credit Party's expense and upon request of Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Agent such further
instruments and do and cause to be done such further acts (including by
effecting all necessary registrations and filings) as may be necessary or proper
in the reasonable opinion of Agent to ensure that the Credit Parties'
Intellectual Property is properly registered (including in foreign
jurisdictions) in such Credit Party's name and Agent's security interest therein
is properly created and granted and fully perfected under applicable law.

          5.8  Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, recovery, recycling,
disposal, transportation or Release of any Hazardous Material on, at, in, under,
above, to, from or about any of its Real Estate and shall at all times after
January 30, 2004 employ a qualified environmental manager to have primary
responsibility for compliance with the provisions of this Section 5.8; (c)
notify Agent promptly after such Credit Party becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in, under,
above, to, from or about any Real Estate that is reasonably likely to result in
Environmental Liabilities in excess of $100,000; and (d) promptly forward to
Agent a copy of any order, notice, request for information or any communication
or report received by such Credit Party in connection with any such violation or
Release or any other matter relating to any Environmental Laws or Environmental
Permits that could reasonably be expected to result in Environmental Liabilities
in excess of $100,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrower's
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrower
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.

          5.9  Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Except for the locations set forth in Disclosure Schedule
(5.9) as of the Closing Date, each Credit Party shall obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property

                                       41

<PAGE>

or bailee with respect to any warehouse, processor, toller or toll converter
facility or other location where Collateral is stored or located as of the
Closing Date, which agreement or letter shall contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee or bailee may assert against
the Collateral at that location, and shall otherwise be reasonably satisfactory
in form and substance to Agent. Within 30 days after the Closing Date, Borrower
shall obtain a landlord's agreement from the lessor of each of its leased
properties located in Naperville, Illinois and Newport, Delaware, which
agreement shall contain a waiver or subordination of all Liens or claims that
the landlord may assert against the Collateral at that location, and shall
otherwise be reasonably satisfactory in form and substance to Agent. With
respect to such locations set forth in Disclosure Schedule (5.9) as of the
Closing Date, so long as Agent has not received a satisfactory landlord or
mortgagee agreement or bailee letter, Borrower's Eligible Inventory at that
location shall, unless otherwise determined by Agent in its discretion, be
excluded from the Borrowing Base. After the Closing Date, no real property shall
be leased by any Credit Party (nor shall the Credit Parties conduct any business
or activities or store any material property at its leased locations in
Norcross, Georgia and Peabody, Massachusetts), without the prior written consent
of Agent (which consent, in Agent's reasonable credit judgment, may be
conditioned upon the exclusion from the Borrowing Base of Eligible Inventory at
that location or the establishment of Reserves acceptable to Agent) or, unless
and until a reasonably satisfactory landlord agreement shall first have been
obtained with respect to such location. After the Closing Date, no Inventory
shall be shipped to or located at any third party warehouse location for which
reasonably satisfactory bailee letters have not been obtained if the aggregate
amount of all such Inventory held at all such third party warehouse locations at
any time would exceed $250,000, without the prior written consent of Agent
(which consent, in Agent's reasonable credit judgment, may be conditioned upon
the exclusion from the Borrowing Base of Eligible Inventory at that location or
the establishment of Reserves acceptable to Agent). After the Closing Date, no
Inventory shall be shipped to a processor, toller or toll converter if the
aggregate amount of all such Inventory held by such processor, toller or toll
converter at any time would exceed $500,000 without the prior written consent of
Agent (which consent, in Agent's reasonable credit judgment, may be conditioned
upon the exclusion from the Borrowing Base of Eligible Inventory at that
location or the establishment of Reserves acceptable to Agent) or, unless and
until a reasonably satisfactory bailee letter shall first have been obtained
with respect to such location. Each Credit Party shall timely and fully pay and
perform in all material respects its obligations under all leases and other
agreements with respect to each leased location or public warehouse where any
Collateral is or may be located. To the extent otherwise permitted hereunder, if
any Credit Party proposes to acquire after the Closing Date a fee ownership
interest in Real Estate or a leasehold interest in the Terre Haute Property
pursuant to the Terre Haute Lease or any other material leasehold interest in
Real Estate, it shall first provide to Agent a Mortgage granting Agent a first
priority Lien on such Real Estate, together with environmental audits and
studies, mortgage title insurance commitment, real property survey, local
counsel opinion(s), and, if required by Agent, supplemental casualty insurance
and flood insurance, and, with respect to all of Borrowers' leasehold interests,
agreements from their landlords satisfactory to Agent and an acceptable
non-disturbance agreement from the landlords' fee mortgagees, and such other
documents, instruments or agreements reasonably requested by Agent, in each
case, in form and substance reasonably satisfactory to Agent.

          5.10 ERISA.

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<PAGE>

          (a)  Each Credit Party shall comply in all material respects with the
applicable provisions of ERISA and the IRC, except to the extent such failure to
company, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Affect. Each Credit Party shall furnish to the Agent
written notice as soon as possible, and in any event within 10 Business Days
after any Credit Party knows or has reason to know, of: (a) a material increase
in the benefits of any existing Plan, the establishment of any new Plan, or the
commencement of contributions to any Plan; or (b) an ERISA Event, together with
a statement of an officer setting forth the details of such ERISA Event and
action which the Credit Parties propose to take with respect thereto. The Credit
Parties shall furnish to the Agent, within 30 Business Days after the filing
thereof with the Department Of Labor, IRS or PBGC, copies of each annual report
(From 5500 series) filed for each Plan. The Credit Parties shall furnish to the
Agent, within 30 days after receipt by any Credit Party or ERISA Affiliate,
copies of each actuarial report for each Title IV Plan or Multiemployer Plan and
each annual report for any Multiemployer Plan.

          (b)  For each existing Canadian Pension Plan, each Credit Party shall
ensure that such plan retains its registered status under and is administered in
a timely manner in all respects in accordance with the applicable pension plan
text, funding agreement, the ITA and all other applicable laws.

          (c)  For each Canadian Pension Plan hereafter adopted by any Credit
Party which is required to be registered under the ITA or any other applicable
laws, that Credit Party shall use its best efforts to seek and receive
confirmation in writing from the applicable Governmental Authority to the effect
that such plan is unconditionally registered under the ITA and such other
applicable laws.

          (d)  For each existing Canadian Pension Plan and Canadian Benefit Plan
hereafter adopted, each Credit Party shall in a timely fashion perform in all
material respects all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with such
plan and the funding media therefor.

          (e)  Each Credit Party shall deliver to the Agent if requested by the
Agent promptly after the filing thereof by any Credit Party with any applicable
Governmental Authority, copies of each annual and other return, report or
valuation with respect to each Canadian Pension Plan; promptly after receipt
thereof, a copy of any direction, order, notice, ruling or opinion that any
Credit Party may receive from any applicable Governmental Authority with respect
to any Canadian Pension Plan; and notification within 30 days of any increases
having a cost to such Credit Party in excess of $100,000 per annum, in the
benefits of any existing Canadian Pension Plan or Canadian Benefit Plan, or the
establishment of any new Canadian Pension Plan or Canadian benefit Plan, or the
commencement of contributions to any such plan to which any Credit Party was not
previously contributing.

          5.11 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.

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<PAGE>

          5.12 Terre Haute Property. Borrower shall deliver to Agent, Agent's
counsel and Chicago Title Insurance Company (i) within twenty five (25) days
after the Closing Date, a draft current as-built ALTA survey for the Mortgaged
Property located in Terre Haute, Indiana which satisfies the survey requirements
provided by Agent to Borrower and within five (5) Business Days of receipt
thereof Agent shall provide to Borrower any comments on such draft survey, and
(ii) within thirty five (35) days after the Closing Date, a final current
as-built ALTA survey for such Mortgaged Property which satisfies the survey
requirements provided by Agent to Borrower and is otherwise reasonably
satisfactory to Agent and is certified to Agent and Chicago Title Insurance
Company in accordance with the survey certification previously provided by
Agent's counsel to Borrower. Within forty five (45) days after the Closing Date,
Borrower shall cause Chicago Title Insurance Company to deliver to Agent and
Agent's counsel an updated title insurance policy for such Mortgaged Property,
deleting any survey exceptions and containing all applicable endorsements
reasonably required by Agent in order to reflect such survey (including an
acceptable survey-same as- endorsement, zoning endorsement and an ALTA 9
endorsement) and otherwise reasonably satisfactory to Agent. If such updated
title insurance policy includes any exceptions or encumbrances not included in
the title insurance policy delivered to Agent on the Closing Date (other than
minor irregularities in title which do not impair the use, value, or
marketability of such Mortgaged Property), the Borrower at its expense shall
within forty five (45) days of receipt of such updated title insurance policy
take such action as the Agent may require in its discretion to cause such
exceptions or encumbrances to be removed from such updated title insurance
policy. At all times prior to the date on which all of the foregoing provisions
of this Section 5.12 have been satisfied, Borrower shall have Borrowing
Availability of at least (i) $9,000,000 for any date on or prior to June 30,
2004, and (ii) $4,000,000 for any date after June 30, 2004.

6.   NEGATIVE COVENANTS

          Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof until the
Termination Date:

          6.1  Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person.

          6.2  Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that: (a) Borrower and AET Canada may hold
investments comprised of notes payable, or stock or other securities issued by
Account Debtors to Borrower or AET Canada, as applicable pursuant to negotiated
agreements with respect to settlement of such Account Debtor's Accounts (which
are not Eligible Accounts) in the ordinary course of business, so long as the
aggregate amount of such Accounts so settled by Borrower and AET Canada do not
exceed $1,000,000 in any Fiscal Year; and (b) each Credit Party may maintain its
existing investments in its Subsidiaries as of the Closing Date; and (c) so long
as no Default or Event of Default has occurred and is continuing AET Canada may,
with respect to any amounts permitted to remain on deposit in the AET Canada
Account as set forth in

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<PAGE>

Annex C, make investments, subject to Control Letters in favor of Agent for the
benefit of Lenders or otherwise subject to a first priority perfected security
interest in favor of Agent for the benefit of Lenders, in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or Moody's Investors Service, Inc., (iii)
certificates of deposit maturing no more than one year from the date of creation
thereof issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and undivided profits
of not less than $300,000,000 and having a senior unsecured rating of "A" or
better by a nationally recognized rating agency (an "A Rated Bank"), (iv) time
deposits maturing no more than 30 days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above.

          6.3  Indebtedness.

          (a)  No Credit Party shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section
6.7(c), (ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) the Senior Notes,
(v) existing Indebtedness described in Disclosure Schedule (6.3) and
refinancings thereof or amendments or modifications thereto that do not have the
effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and that are otherwise on terms and
conditions no less favorable (taken as a whole) to any Credit Party, Agent or
any Lender, as reasonably determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified, (vi) Indebtedness consisting
of intercompany loans and advances made by Borrower to AET Canada and by AET
Canada to Borrower; provided, that: (A) each such Credit Party shall have
executed and delivered to each other such Credit Party, on the Closing Date, a
demand note (the "Intercompany Note") to evidence any such intercompany
Indebtedness owing at any time by each such Credit Party to such other Credit
Party which Intercompany Note shall be in form and substance reasonably
satisfactory to Agent and shall be pledged and delivered to Agent pursuant to
the applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) each such Credit Party shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of each such Credit Party under the
Intercompany Notes shall be subordinated to its Obligations hereunder in a
manner reasonably satisfactory to Agent; (D) at the time any such intercompany
loan or advance is made and after giving effect thereto, each such Credit Party
shall be Solvent; (E) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan; and (F)
with respect to intercompany loans and advances made by Borrower to AET Canada,
(1) Borrower shall have Borrowing Availability of at least $5,000,000 after
giving effect to any such loan or advance and (2) the aggregate amount of all
Indebtedness, together with all intercompany payables, owing by AET Canada to
Borrower shall not exceed $80,000,000 at any one time outstanding; (vii)
unsecured Indebtedness of AET Canada to the Government of Canada in an aggregate
principal amount not exceeding $2,000,000 at any one time outstanding, provided
that (x) such Indebtedness is unsecured and contains no covenant or event of
default the effect of which is

                                       45

<PAGE>

to impose a restriction, limitation or obligation in favor of the lender not
imposed in favor of the Lenders hereunder and (y) payments with respect to the
principal thereof or interest thereon are not required prior to the fourth
anniversary of the date of incurrence thereof; and (viii) Indebtedness permitted
under Section 6.17.

          (b)  No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c); (iii) Indebtedness permitted by Section 6.3(a)(v)
upon any refinancing thereof in accordance with Section 6.3(a)(v); (iv) the
Senior Notes to the extent permitted in Section 6.14; and (v) as otherwise
permitted in Section 6.14.

          6.4  Employee Loans and Affiliate Transactions.

          (a)  Except as set forth on Disclosure Schedule 6.4(a) and except as
expressly permitted in this Section 6 with respect to Affiliates, no Credit
Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except in the ordinary course of and pursuant to
the reasonable requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of such Credit Party. In addition, if any such transaction or series of related
transactions involves payments in excess of $1,000,000 in the aggregate, the
terms of these transactions must be disclosed in advance to Agent and Lenders.
All such transactions existing as of the date hereof are described in Disclosure
Schedule (6.4(a)).

          (b)  No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $250,000 to any employee and up to a maximum of
$1,000,000 in the aggregate at any one time outstanding.

          6.5  Capital Structure and Business. No Credit Party shall (a) make
any changes in any of its business objectives, purposes or operations that could
in any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described in
Disclosure Schedule (3.8), including the issuance or sale of any shares of
Stock, warrants or other securities convertible into Stock or any revision of
the terms of its outstanding Stock; provided that Borrower may issue or sell
shares of its Stock for cash so long as (i) the proceeds thereof are applied in
prepayment of the Obligations as required by Section 1.3(b)(iii), and (ii) no
Change of Control occurs after giving effect thereto, or (c) amend its charter
or bylaws in a manner that would adversely affect Agent or Lenders or such
Credit Party's duty or ability to repay the Obligations. No Credit Party shall
engage in any business other than the businesses currently engaged in by it and
those reasonably related thereto.

          6.6  Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items

                                       46

<PAGE>

of payment for deposit to the general account of any Credit Party, and (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party if
the primary Indebtedness or other obligation (other than Indebtedness permitted
under Sections 6.3(a)(vi) and (vii)) is expressly permitted by this Agreement.

          6.7  Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) securing the Indebtedness described on Disclosure
Schedule (6.3) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property; and (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $2,000,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within 20
days following such purchase and does not exceed 100% of the purchase price of
the subject assets). In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Agent, on behalf of itself and Lenders, as additional collateral for
the Obligations, except operating leases, purchase money Indebtedness, Capital
Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.

          6.8  Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business and the transfer of inventory in
the ordinary course of business between Borrower and AET Canada; (b) the sale,
transfer, conveyance or other disposition by a Credit Party of Equipment or
Fixtures that are obsolete or no longer used or useful in such Credit Party's
business and having a book value not exceeding $1,000,000 in any single
transaction or $2,000,000 in the aggregate in any Fiscal Year; (c) other
Equipment and Fixtures having a value not exceeding $1,000,000 in any single
transaction or $2,000,000 in the aggregate in any Fiscal Year; (d) so long as no
Default or Event of Default has occurred and is continuing or would result after
giving effect to thereto, the sale of the Equipment listed on Disclosure
Schedule 6.8(d) located in Streamwood, Illinois; (e) so long as no Default or
Event of Default has occurred and is continuing or would result after giving
effect to thereto, the sale of the land described on Disclosure Schedule 6.8(e)
located in Covington, Virginia for a cash at fair market value; (f) the Terre
Haute Sale/Leaseback; provided, (i) no Default or Event of Default has occurred
and is continuing or would result after giving effect to thereto, and (ii)
Borrower executes and delivers to Agent a Mortgage with respect to Borrower's
leasehold interest in the Terre Haute Property pursuant to the Terre Haute Lease
and otherwise complies with the requirements of Section 5.9 with respect
thereto; and (g) the making and repayment of intercompany loans and advances
permitted under Section 6.3(a)(vi). With respect to any disposition of assets or
other properties permitted pursuant to

                                       47

<PAGE>

clauses (b), (c), (d), (e) and (f) above, subject to Section 1.3(b), Agent
agrees on reasonable prior written notice to release its Lien on such assets or
other properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrower, at Borrower's expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrower.

          6.9  ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.

          6.10 Financial Covenants. Borrower shall not breach or fail to comply
with any of the Financial Covenants.

          6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.

          6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets, other than the Terre Haute Sale/Leaseback.

          6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's length basis and in the ordinary course of its business consistent with
past practices.

          6.14 Restricted Payments; Employee Benefit Plan Contributions. No
Credit Party shall make any Restricted Payment, except (a) intercompany loans
and advances between Credit Parties to the extent permitted by Section 6.3 and
any payments in respect thereof; (b) dividends and distributions by Subsidiaries
of Borrower paid to Borrower, (c) employee loans permitted under Section 6.4(b);
(d) payments of principal and interest of Intercompany Notes issued in
accordance with Section 6.3; (e) repurchase or redemption of Borrower Stock from
employees upon termination of employment, death, disability or otherwise in an
aggregate amount after the Closing Date not exceeding $500,000; (f) scheduled
payments of interest on the Senior Notes, provided, that no Default or Event of
Default has occurred and is continuing or would result after giving effect to
any such Restricted Payment pursuant to this clauses (f); (g) redemptions,
repurchases or other prepayments of principal on the Senior Notes, provided,
that with respect to this clause (g) (i) no Default or Event of Default has
occurred and is continuing or would result after giving effect to any such
Restricted Payment, (ii) Borrower shall have Borrowing Availability of at least
$20,000,000 after giving effect to any such Restricted Payment, (iii) the timing
of such Restricted Payments shall be set at dates that permit the delivery of
Financial Statements necessary to determine current compliance with the
Financial

                                       48

<PAGE>

Covenants prior to each such payment, (iv) the maximum aggregate amount of such
Restricted Payments made after the Closing Date shall not exceed $6,000,000, and
(v) Borrower and its Subsidiaries shall have on a consolidated bases for the
most recent twelve month period then ended a Fixed Charge Coverage Ratio of not
less than 1.1 on a pro forma basis, after giving effect to any such Restricted
Payment (as if such Restricted Payment were a Fixed Charge for purposes of
calculating such ratio). No Credit Party shall make any payments or other
contributions to any grantor trusts (also known as rabbi trusts) associated with
any Nonqualified Benefit Plans (or directly to participants in such Plans) to
the extent the amount of such payment or other contribution would exceed the
expense that such Credit Party recognizes with respect to a Nonqualified Benefit
Plan or Plans and deducts as a current expense in determining net income of such
Credit Party in accordance with GAAP for the period in which such payment or
other contribution is made; provided that nothing in this sentence shall prevent
an existing grantor trust associated with one or more Nonqualified Plans from
making benefit payments to beneficiaries in accordance with the terms of such
trust, as in effect on the Closing Date.

          6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations (other than third party converter or processor locations) at which
Collateral is held or stored, or the location of its records concerning the
Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or other organization, or (e) change its state of incorporation or organization,
in each case, without at least 30 days prior written notice to Agent and after
Agent's written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in favor
of Agent, on behalf of Lenders, in any Collateral, has been completed or taken,
and provided that any such new location shall be in the continental United
States. No Credit Party shall change its Fiscal Year.

          6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.

          6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.

          6.18 Changes Relating to Material Contracts. No Credit Party shall
change or amend the terms of the Senior Note Documents (other than immaterial
amendments and waivers consented to by the Agent). No Credit Party shall change
or amend the terms of any early payment provisions of any Nonqualified Benefit
Plans without the prior written consent of the Agent.

                                       49

<PAGE>

          6.19 Credit Parties Other than Borrower. AET Limited shall not engage
in any trade or business, or own any assets (other than, for a period of 120
days following the Closing Date, the bank account referred to in Annex C and
cash on deposit therein in an amount not exceeding $150,000 at any time) or
incur any Indebtedness or Guaranteed Indebtedness (other than the Obligations).

7.   TERM

          7.1  Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.

          7.2  Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.

8.   EVENTS OF DEFAULT; RIGHTS AND REMEDIES

          8.1  Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:

          (a)  Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within 10 days following Agent's demand for such reimbursement or payment of
expenses.

          (b)  Any Credit Party fails or neglects to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 5.12, 5.4(a) or 6, or any of the
provisions set forth in Annexes C or G, respectively.

          (c)  Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for 5 days or more.

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          (d) Any Credit Party or any Guarantor fails or neglects to perform,
keep or observe any other provision of this Agreement or of any of the other
Loan Documents (other than any provision embodied in or covered by any other
clause of this Section 8.1) and the same shall remain unremedied for 30 days or
more.

          (e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party or any Guarantor is a party that is not
cured within any applicable grace period therefor, and such default or breach
(i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any
Credit Party or any Guarantor in excess of $500,000 in aggregate principal
amount (including (x) undrawn committed or available amounts and (y) amounts
owing to all creditors under any combined or syndicated credit arrangements), or
(ii) causes, or permits any holder of such Indebtedness or Guaranteed
Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a
portion thereof in excess of $500,000 in the aggregate to become due prior to
its stated maturity or prior to its regularly scheduled dates of payment, or
cash collateral in respect thereof to be demanded, in each case, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.

          (f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect (other than inadvertent, immaterial errors
not exceeding $100,000 in the aggregate in any Borrowing Base Certificate), or
any representation or warranty herein or in any Loan Document is untrue or
incorrect in any material respect when made or any representation or warranty in
any written statement, report, financial statement or certificate (other than a
Borrowing Base Certificate) made or delivered to Agent or any Lender by any
Credit Party or any Guarantor is untrue or incorrect in any material respect as
of the date when made or deemed made.

          (g) Assets of any Credit Party or any Guarantor with a fair market
value of $250,000 or more are attached, seized, levied upon or subjected to a
writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of any Credit Party
or any Guarantor and such condition continues for 30 days or more.

          (h) A case or proceeding is commenced against any Credit Party or any
Guarantor seeking a decree or order in respect of such Credit Party or Guarantor
(i) under the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver, interim
receiver, receiver and manager, liquidator, assignee, trustee or sequestrator
(or similar official) for such Credit Party or Guarantor or for any substantial
part of any such Credit Party's or Guarantor's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party or Guarantor, and
such case or proceeding shall remain undismissed or unstayed for 60 days or more
or a decree or order granting the relief sought in such case or proceeding shall
be entered by a court of competent jurisdiction.

          (i) Any Credit Party or any Guarantor (i) files a petition seeking
relief under the Bankruptcy Code, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consents to or fails to contest in
a timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession by a
custodian, receiver, interim receiver, receiver and manager, liquidator,
assignee,

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trustee or sequestrator (or similar official) for such Credit Party or
Guarantor or for any substantial part of any such Credit Party's or Guarantor's
assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any
action in furtherance of any of the foregoing; or (v) admits in writing its
inability to, or is generally unable to, pay its debts as such debts become due.

          (j) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time are outstanding against one or more of
the Credit Parties and the same are not, within 30 days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.

          (k) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws relative to or affecting the
enforcement of creditors' rights generally in effect from time to time and by
general principles of equity) or any Credit Party or any Guarantor shall
challenge the enforceability of any Loan Document or shall assert in writing, or
engage in any action or inaction based on any such assertion, that any provision
of any of the Loan Documents has ceased to be or otherwise is not valid, binding
and enforceable in accordance with its terms, or any Lien created under any Loan
Document ceases to be a valid and perfected first priority Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby, other than Collateral having a fair market value of less than
$100,000 in the aggregate.

          (l) Any Change of Control occurs.

          (m) Any event occurs, whether or not insured or insurable, as a result
of which revenue-producing activities cease or are substantially curtailed at
any facility of any Credit Party generating more than 7.5% of Borrower's
consolidated revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than 20 days.

          (n) (i) The Ex-Im Bank Guarantee is terminated (other than as a result
of the scheduled maturity of the Ex-Im Bank Guarantee) or any material provision
of the Ex-Im Bank Guarantee for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or Ex-Im Bank shall challenge the
enforceability of the Ex-Im Bank Guarantee or shall assert in writing, or engage
in any action or inaction based on any such assertion, that any provision of the
Ex-Im Bank Guarantee has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms) and (ii) any Export Related Advances
remain outstanding as of 5:00 p.m. (New York time) on the first Business Day
following any event referred to in the foregoing clause (i).

          (o) Any Event of Default under and as defined in any Mortgage shall
occur and be continuing.

          8.2 Remedies.

          (a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Revolving Lenders shall),
without notice, suspend the Revolving Loan facility with respect to additional
Advances and/or the incurrence of

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<PAGE>

additional Letter of Credit Obligations, whereupon any additional Advances and
additional Letter of Credit Obligations shall be made or incurred in Agent's
sole discretion (or in the sole discretion of the Requisite Revolving Lenders,
if such suspension occurred at their direction) so long as such Default or Event
of Default is continuing. If any Default or Event of Default has occurred and is
continuing, Agent may (i) (and at the written request of Requisite Revolving
Lenders shall), without notice except as otherwise expressly provided herein,
increase the rate of interest applicable to the Revolving Loans and the Letter
of Credit Fees to the Default Rate and (ii) (and at the written request of
Requisite Term Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Term Loans to
the Default Rate.

          (b) If any Event of Default has occurred and is continuing, (i) Agent
may (and at the written request of the Requisite Revolving Lenders shall),
without notice terminate the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations; and (ii)
Agent may (and at the written request of the Requisite Lenders (or at the
request of the Requisite Term Lenders or Requisite Revolving Lenders as provided
in clause (c)(i) below) shall), (x) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by Borrower and
each other Credit Party; and/or (y) exercise any rights and remedies provided to
Agent under the Loan Documents or at law or equity, including all remedies
provided under the Code; provided, that upon the occurrence of an Event of
Default specified in Sections 8.1(h) or (i), the Revolving Loan facility shall
be immediately terminated and all of the Obligations, including the aggregate
Revolving Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.

          (c) Notwithstanding anything herein or in the other Loan Documents to
the contrary, Agent and Lenders hereby agree that, (i) at any time after the
occurrence of any Event of Default which is continuing, (x) Requisite Term
Lenders (without consent of any Revolving Lender and without regard to the vote
of the Requisite Lenders) shall be permitted to declare the Term Loan to be
forthwith due and payable and (y) Requisite Revolving Lenders (without consent
of any Term Lender and without regard to the vote of the Requisite Lenders)
shall be permitted to declare the Revolving Loan and the Export-Related Loan to
be forthwith due and payable and require that the Letter of Credit Obligations
be cash collateralized as provided in Annex B, and (ii) if any of the Loans
become or are declared to be immediately due and payable in accordance with this
Section 8.2, (x) Requisite Term Lenders (without consent of any Revolving Lender
and without regard to the vote of the Requisite Lenders) shall have the
exclusive right to (and to direct the Agent to) enforce rights and remedies with
respect to the Term Loan Priority Collateral pursuant to the Loan Documents and
no Revolving Lender shall take any Collateral Enforcement Action and (y)
Requisite Revolving Lenders (without consent of any Term Lender and without
regard to the vote of the Requisite Lenders) shall have the exclusive right to
(and to direct the Agent to) enforce rights and remedies with respect to the
Revolving Loan Priority Collateral pursuant to the Loan Documents and no Term
Lender shall take any Collateral Enforcement Action.

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<PAGE>

          8.3 Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.

9.   ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

          9.1 Assignment and Participations.

          (a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sell participations in, at any time or
times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the form attached hereto as Exhibit 9.1(a) and otherwise in form and
substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$10,000,000; (iv) include a payment to Agent of an assignment fee of $3,500; and
(v) so long as no Event of Default has occurred and is continuing, require the
consent of Borrower, which shall not be unreasonably withheld or delayed. In the
case of an assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the applicable Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned, which shall be cancelled upon return. Notwithstanding the foregoing
provisions of this Section 9.1(a), any Lender may at any time pledge the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any Lender that is an
investment fund may assign the Obligations held by it and such Lender's rights
under this Agreement and the other

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<PAGE>

Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.

          (b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the
participant shall be considered to be a "Lender" provided that no participant
shall be entitled to receive any greater amount pursuant to Sections 1.13, 1.15
and 1.16 than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such transfer occurred. Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent nor any Lender (other than the Lender selling
a participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.

          (c) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrower and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.

          (d) Each Credit Party executing this Agreement shall assist Agent to
sell assignments or participations under this Section 9.1 as reasonably required
to enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and, if
requested by Agent, the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrower shall only be certified by
Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4(b).

          (e) Any Lender may furnish any information concerning Credit Parties
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.

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<PAGE>

          (f) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrower pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrower and Agent assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by
Borrower and Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(g)
may not be amended without the prior written consent of each Granting Lender,
all or any of whose Loans are being funded by an SPC at the time of such
amendment. For the avoidance of doubt, the Granting Lender shall for all
purposes, including without limitation, the approval of any amendment or waiver
of any provision of any Loan Document or the obligation to pay any amount
otherwise payable by the Granting Lender under the Loan Documents, continue to
be the Lender of record hereunder.

          (g) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.16(a), increased
costs under Section 1.16(b), an inability to fund LIBOR Loans under Section
1.16(c), or withholding taxes in accordance with Section 1.15(a).

          9.2 Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or

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<PAGE>

representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages caused by its or their own gross
negligence or willful misconduct. The Agent is authorized to hold any Collateral
on behalf of the Lenders and to execute in their name any Loan Document. For
greater certainty, the Agent is authorized to act as representative (fonde de
pouvoir) of the Lenders (notwithstanding that the Agent is also a Lender) for
the purposes of any hypothec granted by any Credit Party pursuant to article
2692 of the Civil Code of Quebec to secure debentures or similar instruments
issued for the benefit of the Lenders pursuant to the Quebec Hypothec.

          If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders, Requisite Term Lenders or all affected Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Requisite Revolving Lenders, Requisite Term
Lenders or all affected Lenders, as the case may be, and Agent shall not incur
liability to any Person by reason of so refraining. Agent shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, be contrary to
law or the terms of this Agreement or any other Loan Document, (b) if such
action would, in the opinion of Agent, expose Agent to Environmental Liabilities
or (c) if Agent shall not first be indemnified to its satisfaction against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders, Requisite Revolving
Lenders, Requisite Term Lenders or all affected Lenders, as applicable.

          9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any

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<PAGE>

notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.

          9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.

          9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

          9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever, including Environmental Liability that may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted to be
taken by Agent in connection therewith; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or willful misconduct. Without limiting the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel and consultants'
fees) incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Credit Parties.

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          9.7 Successor Agent. Agent may resign at any time by giving not less
than 30 days' prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent, with, so long as no Event of Default has occurred and is
continuing, the consent of Borrower, which shall not be unreasonably withheld or
delayed. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the
resigning Agent's giving notice of resignation, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a
Lender is willing to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent has
been appointed pursuant to the foregoing, within 30 days after the date such
notice of resignation was given by the resigning Agent, such resignation shall
become effective and the Requisite Lenders shall thereafter perform all the
duties of Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower, such
approval not to be unreasonably withheld or delayed; provided that such approval
shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Loan Documents.

          9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of Borrower or any Guarantor (regardless of whether such balances are then due
to Borrower or Guarantor) and any other properties or assets at any time held or
owing by that Lender or that holder to or for the credit or for the account of
Borrower or any Guarantor against and on account of any of the Obligations that
are not paid when due. Any Lender exercising a right of setoff or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender's or holder's Pro Rata Share
of the Obligations as would be necessary to cause such Lender to share the
amount so offset or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares (other than offset rights
exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16). Each
Lender's obligation under this Section 9.8 shall be in addition to and not in
limitation of its obligations to purchase a participation in an amount equal to
its Pro Rata Share of the Swing Line Loans under

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Section 1.1(c) and to purchase a participation in an amount equal to its Pro
Rata Share (based on Revolving Loan Commitments) of the Export-Related Loan
under Section 1.1(d). Each Credit Party that is a Borrower or Guarantor agrees,
to the fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers' lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.

          9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.

          (a) Advances; Payments.

              (i)  Revolving Lenders shall refund or participate in the Swing
Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c). If the
Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of Revolving Advance is received,
by telecopy, telephone or other similar form of transmission. Each Revolving
Lender shall make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire transfer to Agent's
account as set forth in Annex H not later than 2:00 p.m. (New York time) on the
requested funding date, in the case of an Index Rate Loan, and not later than
11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR
Loan. After receipt of such wire transfers (or, in the Agent's sole discretion,
before receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to Borrower not later than 3:00 p.m.
(New York time) on the requested funding date. All payments by each Revolving
Lender shall be made without setoff, counterclaim or deduction of any kind.

              (ii) On the 2nd Business Day of each calendar week or more
frequently at Agent's election (each, a "Settlement Date"), Agent shall advise
each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrower since
the previous Settlement Date for the benefit of such Lender on the Loans held by
it. To the extent that any Lender (a "Non-Funding Lender") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments

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shall be made by wire transfer to such Lender's account (as specified
by such Lender in Annex H or the applicable Assignment Agreement) not later than
2:00 p.m. (New York time) on the next Business Day following each Settlement
Date.

          (b) Availability of Lender's Pro Rata Share. Agent may assume that
each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Agent advances funds to Borrower on behalf
of any Revolving Lender and is not reimbursed therefor on the same Business Day
as such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.

          (c) Return of Payments.

              (i)   If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

              (ii)  If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.

          (d) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Revolving Credit Advance or any payment required by it hereunder or to
purchase any participation in any Swing Line Loan or Export-Related Loan to be
made or purchased by it on the date specified therefor shall not relieve any
other Lender (each such other Revolving Lender, an "Other Lender") of its
obligations to make such Advance or purchase such participation on such date,
but neither any Other Lender nor Agent shall be responsible for the failure of
any Non-Funding Lender to make an Advance, purchase a participation or make any
other payment required hereunder. Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a "Lender" or a
"Revolving Lender" (or be included in the calculation of "Requisite Lenders",
"Requisite Revolving Lenders" or "Requisite Term Lenders" hereunder) for any

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voting or consent rights under or with respect to any Loan Document. At
Borrower's request, Agent or a Person reasonably acceptable to Agent shall have
the right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender
agrees that it shall, at Agent's request, sell and assign to Agent or such
Person, all of the Commitments of that Non-Funding Lender for an amount equal to
the principal balance of all Loans held by such Non-Funding Lender and all
accrued interest and fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.

          (e)  Dissemination of Information. Agent shall use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to, any Credit Party, with notice of any Event
of Default of which Agent has actually become aware and with notice of any
action taken by Agent following any Event of Default; provided, that Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrower are required to provide Financial Statements
and Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that Agent shall have no duty to provide the same to Lenders.

          (f)  Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders.

          9.10 Acknowledgements Regarding Collateral Bonds. For greater
certainty, and without limiting the powers of the Agent hereunder or under any
of the other Loan Documents, it is hereby acknowledged and agreed that each of
the Credit Parties may issue and pledge to the Agent, as security for any of its
indebtedness and liabilities under any of the Loan Documents, bonds or
debentures (any such bond or debenture so issued and pledged, individually, a
"Collateral Bond" and, collectively, the "Collateral Bonds") secured by a
hypothec charging any and all of their property and assets and granted pursuant
to the laws of the Province of Quebec to a fonde de pouvoir (holder of the power
of attorney) of the holder(s) of the related Collateral Bonds. In that respect,
each Lender acknowledges and agrees that the Agent shall hold each of the
Collateral Bonds so issued to it in pledge for its benefit and for the benefit
of each of the Lenders, and to the full extent necessary, each Lender, acting in
the aforesaid manner, hereby appoints the Agent for such purposes. Each assignee
of any Lender shall be deemed to have confirmed and ratified the constitution of
the Agent to act in the manner set out in this Section 9.10 upon becoming a
Lender under this Agreement. Notwithstanding the provisions of Section 32 of An
Act Respecting the Special Powers of Legal Persons (Quebec), the fonde de
pouvoir (person holding the power of attorney) of the holder(s) of any of the
Collateral Bonds in whose favor a hypothec securing any such Collateral Bond is
granted may (but need not) be the Agent to whom such Collateral Bond has been
issued and pledged. Each Lender (by accepting the benefits of each Loan
Document) acknowledges that each Collateral

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Bond constitutes a title of indebtedness, as such term is used in Article 2692
of the Civil Code of Quebec, as amended.

10.  SUCCESSORS AND ASSIGNS

          10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.

11.  MISCELLANEOUS

          11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
(other than the GE Capital Fee Letter and other than terms under any commitment
letter which expressly survive the execution of this Agreement) or
confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.

          11.2 Amendments and Waivers.

          (a)  Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders, Requisite
Revolving Lenders, Requisite Term Lenders or all affected Lenders, as
applicable. Except as set forth in clauses (b) and (c) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.

          (b)  No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that waives compliance with the
conditions precedent set forth in Section 2.2 to the making of any Revolving
Credit Advance, the incurrence of any Letter of Credit Obligations or the
continuation or conversion of any Loan as a LIBOR Loan shall be effective unless
the same shall be in writing and signed by Agent, Requisite Revolving Lenders
(or with respect to the making of any Term Loan or the continuation or
conversion of a

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Term Loan as a LIBOR Loan, the Requisite Term Lenders) and Borrower.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Term Loans,
Revolving Credit Advances or the incurrence of Letter of Credit Obligations set
forth in Section 2.2 unless the same shall be in writing and signed by Agent,
Requisite Term Lenders or Requisite Revolving Lenders, as applicable, and
Borrower.

          (c)  No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment, which action shall be
deemed only to affect those Lenders whose Commitments are increased and may be
approved by Requisite Lenders, including those Lenders whose Commitments are
increased, provided that, notwithstanding the foregoing, (x) the principal
amount of the Revolving Loan Commitments may be increased (and additional
Revolving Credit Advances made) by up to $5,000,000 with the approval of the
Requisite Revolving Lenders, including the Revolving Lenders whose Revolving
Loan Commitments are increased, and (y) the principal amount of the Term Loan
Commitments may be increased (and additional Term Loans made) by up to
$5,000,000 with the approval of the Requisite Term Lenders, including the Term
Lenders whose Term Loan Commitments are increased; (ii) reduce the principal of,
rate of interest on or Fees payable with respect to any Loan or Letter of Credit
Obligations of any affected Lender; (iii) extend any scheduled payment date
(other than payment dates of mandatory prepayments under Section
1.3(b)(ii)-(iv)) or final maturity date of the principal amount of any Loan of
any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment
of interest or Fees as to any affected Lender; (v) release all or substantially
all of the Collateral (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans that shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section 11.2
or the definitions of the terms "Requisite Lenders", "Requisite Revolving
Lenders" or "Requisite Term Lenders" insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuer
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuer, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.

          (d)  If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):

               (i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent is
required is not

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obtained (any such Lender whose consent is not obtained as described in this
clause (i) and in clauses (ii), and (iii) below being referred to as a
"Non-Consenting Lender"),

               (ii)  requiring the consent of Requisite Term Lenders (including
any vote of the Required Lenders), the consent of Term Lenders holding 51% or
more of the outstanding principal amount of the Term Loan is obtained, but the
consent of Requisite Term Lenders is not obtained, or

               (iii) requiring the consent of Requisite Revolving Lenders
(including any vote of the Required Lenders), the consent of Revolving Lenders
holding 51% or more of the aggregate Revolving Loan Commitments is obtained, but
the consent of Requisite Revolving Lenders is not obtained,

then, so long as Agent is not a Non-Consenting Lender, at Borrower's request,
Agent or a Person reasonably acceptable to Agent shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.

          (e)  Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments, and so long as no suits, actions, proceedings or claims are pending
or threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrower
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.

          11.3 Fees and Expenses. Borrower shall reimburse Agent (and, with
respect to clauses (c) and (d) below, all Lenders) for all out-of-pocket fees,
costs and expenses, including the reasonable fees, costs and expenses of
counsel, consultants, auditors or other advisors (including environmental and
management consultants and appraisers), incurred in connection with the
negotiation and preparation of the Loan Documents and incurred in connection
with:

          (a)  the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of any Loan (including a wire transfer fee of
$25 per wire transfer);

          (b)  any amendment, modification or waiver of, consent with respect
to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Loans made pursuant hereto or its rights hereunder or thereunder;

          (c)  any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in

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connection with a case commenced by or against any or all of the Borrower or any
other Person that may be obligated to Agent by virtue of the Loan Documents;
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; provided that in the case of
reimbursement of counsel for Lenders other than Agent, such reimbursement shall
be limited to one counsel for all such Lenders; provided, further, that no
Person shall be entitled to reimbursement under this clause (c) in respect of
any litigation, contest, dispute, suit, proceeding or action to the extent any
of the foregoing results from such Person's gross negligence or willful
misconduct;

          (d)  any attempt to enforce any remedies of Agent against any or all
of the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents, including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided, that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;

          (e)  any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and

          (f)  efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;

including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such out-of-pocket fees expenses, costs, charges
and fees may include: fees, costs and expenses of accountants, environmental
consultants and advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.

          11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan

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Documents and no Default or Event of Default by any Credit Party shall be deemed
to have been suspended or waived by Agent or any Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer of or other
authorized employee of Agent and the applicable required Lenders, and directed
to Borrower specifying such suspension or waiver.

          11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.

          11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.

          11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.

          11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all information provided to them by the Credit Parties for a
period of 2 years following receipt thereof, except that Agent and any Lender
may disclose such information (a) to Persons employed or engaged by Agent or
such Lender; (b) to any bona fide assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by Agent or such Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent's or such Lender's counsel, is required
by law; (e) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any Litigation to which Agent or such
Lender is a party; or (f) which is information already in its possession prior
to delivery in accordance herewith or which is available to the public other
than as a result of the failure of Agent or any Lender to comply with the
covenant contained in this Section 11.8, or which otherwise ceases to be
confidential through no fault of Agent or any Lender.

          Notwithstanding anything to the contrary set forth herein or in any
other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions contemplated by the Credit Agreement and the other
loan documents (the "Transaction"), shall not apply to the federal tax structure
or federal tax treatment of the Transaction, and each party hereto (and any
employee, representative, agent of any party hereto) may disclose to any and all
persons, without

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limitation of any kind, the federal tax structure and federal tax treatment of
the Transaction. The preceding sentence is intended to cause the Transaction to
be treated as not having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury
Regulations promulgated under Section 6011 of the Internal Revenue Code of 1986,
as amended, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the federal tax structure of the Transaction or any federal tax matter
or federal tax idea related to the Transaction.

          11.9  GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH PARTY HERETO
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO PERTAINING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED,
THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDED FURTHER,
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH PARTY HERETO EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH PARTY HEREBY WAIVES ANY OBJECTION THAT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS
SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS
AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

          11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication

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<PAGE>

shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered: (a) upon the earlier of actual receipt and 3 Business Days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10); (c) 1 Business
Day after deposit with a reputable overnight courier with all charges prepaid or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in Annex I or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower or Agent) designated in Annex I to receive copies shall in
no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.

          11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.

          11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.

          11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.

          11.14 Press Releases and Related Matters. Each Credit Party executing
this Agreement agrees that neither it nor its Subsidiaries will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates without at least 2 Business Days' prior notice to GE Capital
and without the prior written consent of GE Capital unless (and only to the
extent that) such Credit Party or Subsidiary is required to do so under law and
then, in any event, such Credit Party or Subsidiary will consult with GE Capital
before issuing such press

                                       69

<PAGE>

release or other public disclosure (other than disclosure of the fact that GE
Capital is the Agent under this Agreement and the filing of Loan Documents with
the Securities and Exchange Commission, in each case, to the extent required
under applicable law). Each Credit Party consents to the publication by Agent or
any Lender of a tombstone or similar advertising material relating to the
financing transactions contemplated by this Agreement. Agent or such Lender
shall provide a draft of any such tombstone or similar advertising material to
each Credit Party for review and comment prior to the publication thereof. Agent
reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.

          11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

          11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.

          11.17 Judgment Currency.

          (a)   If, for the purpose of obtaining or enforcing judgment against
any Credit Party in any court in any jurisdiction, it becomes necessary to
convert into any other currency (such other currency being hereinafter in this
Section 11.17 referred to as the "Judgment Currency") an amount due under any
Loan Document in any currency (the "Obligation Currency") other than the
Judgment Currency, the conversion shall be made at the rate of exchange
prevailing on the Business Day immediately preceding (a) the date of actual
payment of the amount due, in the case of any proceeding in the courts of the
Province of Quebec or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date, or (b) the date on which the
judgment is given, in the case of any proceeding in the courts of any other
jurisdiction (the applicable date as of which such conversion is made pursuant
to this Section 11.17 being hereinafter in this Section 11.17 referred to as the
"Judgment Conversion Date").

          (b)   If, in the case of any proceeding in the court of any
jurisdiction referred to in Section 11.17 (a), there is a change in the rate of
exchange prevailing between the Judgment Conversion Date and the date of actual
receipt of the amount due in immediately available funds, the applicable Credit
Party shall pay such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount actually received in the
Judgment

                                       70

<PAGE>

Currency, when converted at the rate of exchange prevailing on the date
of payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of the Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date. Any amount due from a Credit Party under the Section 11.17(b)
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of any of the Loan
Documents.

               (c)   The term "rate of exchange" in this Section 11.17 means the
rate of exchange at which the Agent would, on the relevant date at or about
11:00 a.m. (New York time), be prepared to sell the Obligation Currency against
the Judgment Currency.

               11.18 Subordination.

               (a)   Each Credit Party executing this Agreement covenants and
agrees that the payment of all indebtedness, principal, interest (including
interest which accrues after the commencement of any case or proceeding in
bankruptcy, or for the reorganization of any Credit Party), fees, charges,
expenses, attorneys' fees and any other sum, obligation or liability owing by
any other Credit Party to such Credit Party, including any intercompany trade
payables or royalty or licensing fees (collectively, the "Intercompany
Obligations"), is subordinated, to the extent and in the manner provided in this
Section 11.18, to the prior payment in full of all Obligations (herein, the
"Senior Obligations") and that the subordination is for the benefit of the Agent
and Lenders, and Agent may enforce such provisions directly.

               (b)   Each Credit Party executing this Agreement hereby (i)
authorizes Agent to demand specific performance of the terms of this Section
11.18, whether or not any other Credit Party shall have complied with any of the
provisions hereof applicable to it, at any time when such Credit Party shall
have failed to comply with any provisions of this Section 11.18 which are
applicable to it and (ii) irrevocably waives any defense based on the adequacy
of a remedy at law, which might be asserted as a bar to such remedy of specific
performance.

               (c)   Upon any distribution of assets of any Credit Party in any
dissolution, winding up, liquidation or reorganization (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):

                     (i)    The Agent and Lenders shall first be entitled to
receive payment in full in cash of the Senior Obligations before any Credit
Party is entitled to receive any payment on account of the Intercompany
Obligations.

                     (ii)   Any payment or distribution of assets of any Credit
Party of any kind or character, whether in cash, property or securities, to
which any other Credit Party would be entitled except for the provisions of this
Section 11.18(c), shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution directly to the Agent, to the extent
necessary to make payment in full of all Senior Obligations remaining unpaid
after giving effect to any concurrent payment or distribution or provisions
therefor to the Agent and Lenders.

                     (iii)  In the event that notwithstanding the foregoing
provisions of this Section 11.18(c), any payment or distribution of assets of
any Credit Party of any kind or character, whether in cash, property or
securities, shall be received by any other Credit Party on

                                       71

<PAGE>

account of the Intercompany Obligations before all Senior Obligations are paid
in full, such payment or distribution shall be received and held in trust for
and shall be paid over to the Agent for application to the payment of the Senior
Obligations until all of the Senior Obligations shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
therefor to the Agent and Lenders.

               (d)   No right of the Agent and Lenders or any other present or
future holders of any Senior Obligations to enforce the subordination provisions
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of any Credit Party or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by any Credit Party
with the terms hereof, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with.

               (e)   The Intercompany Obligations shall also be subordinated in
right of payment to the Senior Notes (and the Credit Parties' obligations under
the Senior Note Documents) to the same extent, mutatis, mutandis as the Senior
Obligations hereunder.

               11.19 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

                                       72

<PAGE>

               IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first written above.

                                        BORROWER

                                        APPLIED EXTRUSION TECHNOLOGIES, INC.

                                        By: /s/ Brian P. Crescenzo
                                            ------------------------------------
                                        Name:  Brian P. Crescenzo
                                        Title: Vice President and Treasurer

                                        GENERAL ELECTRIC CAPITAL CORPORATION,
                                        as Agent and Lender

                                        By: /s/ Nitin Sharma
                                            ------------------------------------
                                                Duly Authorized Signatory

                                        By: /s/ Christopher Cox
                                            ------------------------------------
                                                Duly Authorized Signatory

<PAGE>

                  The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrower.

                                         APPLIED EXTRUSION TECHNOLOGIES CANADA
                                         INC.

                                         By: /s/ Brian P. Crescenzo
                                             -----------------------------------
                                             Name:  Brian P. Crescenzo
                                             Title: Vice President and Treasurer

                                         APPLIED EXTRUSION TECHNOLOGIES LIMITED

                                         By: /s/ Brian P. Crescenzo
                                             -----------------------------------
                                             Name:  Brian P. Crescenzo
                                             Title: Vice President and Treasurer

<PAGE>

                               ANNEX A (RECITALS)
                                       TO
                                CREDIT AGREEMENT
                                   DEFINITIONS

               Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings, and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:

               "Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).

               "Accounting Changes" has the meaning ascribed thereto in Annex G.

               "Accounts" means all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all health care insurance receivables and (f) all
collateral security of any kind, given by any Account Debtor or any other Person
with respect to any of the foregoing.

               "Advance" means any Revolving Credit Advance, Export-Related
Advance or Swing Line Advance, as the context may require.

               "AET Canada" has the meaning ascribed thereto in the Recitals to
the Agreement.

               "AET Limited" means Applied Extrusion Technologies Limited, a
company organized under the laws of the United Kingdom.

               "Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower,

                                      A-1

<PAGE>

the immediate family members, spouses and lineal descendants of individuals who
are Affiliates of Borrower. For the purposes of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the term "Affiliate" shall specifically exclude Agent and each Lender.

               "Agent" means GE Capital in its capacity as Agent for Lenders or
its successor appointed pursuant to Section 9.7.

               "Agreement" means the Credit Agreement by and among Borrower, the
other Credit Parties party thereto, GE Capital, as Agent and Lender and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

               "Appendices" has the meaning ascribed to it in the recitals to
the Agreement.

               "Applicable Margins" means collectively the Applicable Revolver
Index Margin, the Applicable Term Loan Index Margin, the Applicable Revolver
LIBOR Margin and the Applicable Term Loan LIBOR Margin.

               "Applicable Revolver Index Margin" means the per annum interest
rate margin from time to time in effect and payable in addition to the Index
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a).

               "Applicable Revolver LIBOR Margin" means the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).

               "Applicable Term Loan Index Margin" means the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to the Term Loan, as determined by reference to Section 1.5(a).

               "Applicable Term Loan LIBOR Margin" means the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Term Loan, as determined by reference to Section 1.5(a).

               "Assignment Agreement" has the meaning ascribed to it in Section
9.1(a).

               "Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C. 101 (S)(S) et seq.

               "Blocked Accounts" has the meaning ascribed to it in Annex C.

               "Borrower" has the meaning ascribed thereto in the preamble to
the Agreement.

               "Borrowing Availability" means as of any date of determination
the lesser of (i) the Maximum Amount less the sum of the aggregate Revolving
Loan, the Export-Related

                                      A-2

<PAGE>

Loan and Swing Line Loan then outstanding; and (ii) the Borrowing Base less the
sum of the aggregate Revolving Loan and Swing Line Loan then outstanding,
provided that an Overadvance in accordance with Section 1.1(a)(iii) may cause
the Revolving Loan and the Swing Line Loan to exceed the Borrowing Base by the
amount of such permitted Overadvance.

               "Borrowing Base" means, as of any date of determination by Agent,
from time to time, an amount equal to the sum at such time of:

               (a)   85% of the book value of Borrower's and AET Canada's
Eligible Accounts; and

               (b)   the lesser of (i) 60% of the book value of Borrower's and
AET Canada's Eligible Inventory valued at the lower of average cost or market or
(ii) 85% of the appraised net orderly liquidation value of Borrower's and AET
Canada's Eligible Inventory;

in each case, less any Reserves established by Agent at such time in its
reasonable credit judgment upon prior or contemporaneous notice to Borrower.

               "Borrowing Base Certificate" means any certificate to be executed
and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).

               "Business Day" means any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in the State of New
York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.

               "Canadian Benefit Plans" shall mean all material employee benefit
plans of any nature or kind whatsoever that are not Canadian Pension Plans and
are maintained or contributed to by any Credit Party having employees in Canada.

               "Canadian Collateral Documents" means the Quebec Hypothec and the
AET Canada Blocked Account Agreement and any other document relating thereto.

               "Canadian Pension Plans" shall mean each plan which is considered
to be a pension plan for the purposes of any applicable pension benefits
standards statute and/or regulation in Canada established, maintained or
contributed to by any Credit Party for its employees or former employees.

               "Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP (excluding
any capitalized Interest Expense and excluding expenditures made with proceeds
of any casualty or condemnation in accordance with Section 5.4(c)).

               "Capital Lease" means, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP,

                                      A-3

<PAGE>

would be required to be classified and accounted for as a capital lease on a
balance sheet of such Person.

               "Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.

               "Cash Collateral Account" has the meaning ascribed to it Annex B.

               "Cash Equivalents" has the meaning ascribed to it in Annex B.

               "Cash Management Systems" has the meaning ascribed to it in
Section 1.8.

               "Change of Control" means any of the following: (a) any person or
group of persons (within the meaning of the Securities Exchange Act of 1934,)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934,) of 25% or more of the issued and outstanding shares of
capital Stock of Borrower having the right to vote for the election of directors
of Borrower under ordinary circumstances; (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose nomination for
election by the Stockholders of Borrower was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; (c) Borrower ceases to
own and control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries; or (d) the occurrence of a
Change of Control under and as defined in the Senior Note Indenture.

               "Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.

               "Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party.

               "Closing Date" means October 3, 2003.

               "Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.

                                      A-4

<PAGE>

               "Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.

               "Collateral" means the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.

               "Collateral Documents" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Intellectual Property Security
Agreement, the Canadian Collateral Documents and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.

               "Collateral Enforcement Action" means (a) with respect to any
Revolving Lender, any action by any Revolving Lender to (i) exercise or seek to
exercise any rights or exercise any remedies with respect to any Term Loan
Priority Collateral, (ii) institute any action or proceeding with respect to
such rights or remedies, including any action of foreclosure or (iii) contest,
protest or object to any foreclosure proceeding, postpetition financing, use of
cash collateral or action brought by the Agent or any Term Lender or to any
other exercise by the Agent or any Term Lender of any rights and remedies under
any Loan Documents with respect to the Term Loan Priority Collateral or (b) with
respect to any Term Lender, any action by any Term Lender to (i) exercise or
seek to exercise any rights or exercise any remedies with respect to any
Revolving Loan Priority Collateral, (ii) institute any action or proceeding with
respect to such rights or remedies, including any action of foreclosure or (iii)
contest, protest or object to any foreclosure proceeding, postpetition
financing, use of cash collateral or action brought by the Agent or any
Revolving Lender or to any other exercise by the Agent or any Revolving Lender
of any rights and remedies under any Loan Documents with respect to the
Revolving Loan Priority Collateral.

               "Collateral Reports" means the reports with respect to the
Collateral referred to in Annex F.

               "Collection Account" means that certain account of Agent, account
number 502-328-54 in the name of Agent at Deutsche Bank Trust Company Americas
in New York, New York ABA No. 021 001 033, or such other account as may be
specified in writing by Agent as the "Collection Account."

                                      A-5

<PAGE>

               "Commitment Termination Date" means the earliest of (a) October
3, 2008, (b) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of all Commitments to zero dollars ($0).

               "Commitments" means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment),
and Term Loan Commitment as set forth on Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Lender, (b) as to all Lenders, the
aggregate of all Lenders' Revolving Loan Commitments (including without
duplication the Swing Line Lender's Swing Line Commitment as a subset of its
Revolving Loan Commitment) and Term Loan Commitments, which aggregate commitment
shall be on One Hundred Million Dollars ($100,000,000) on the Closing Date, and
(c) the Export-Related Loan Lender's Export-Related Loan Commitment, as to each
of clauses (a), (b) and (c), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.

               "Compliance Certificate" has the meaning ascribed to it in Annex
E.

               "Concentration Account" has the meaning ascribed to it in Annex
C.

               "Contracts" means all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.

               "Control Letter" means a letter agreement between Agent and (i)
the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house, as
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.

               "Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.

                                      A-6

<PAGE>

          "Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

          "Credit Party Pledge Agreement" means the Pledge Agreement of even
date herewith executed by each of the Credit Parties in favor of Agent, on
behalf of itself and Lenders, pledging all Stock of its Subsidiaries, if any,
and all Intercompany Notes owing to or held by it.

          "Credit Parties" means Borrower, AET Canada and each other Subsidiary
of Borrower.

          "Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.

          "Default Rate" has the meaning ascribed to it in Section 1.5(d).

          "Deposit Accounts" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any Credit Party.

          "Disbursement Accounts" has the meaning ascribed to it in Annex C.

          "Disclosure Schedules" means the Schedules prepared by Borrower and
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.

          "Documents" means all "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.

          "Dollars" or "$" means lawful currency of the United States of
America.

          "EBITDA" means, for any fiscal period, the sum (determined on a
consolidated basis for the Borrower and its Subsidiaries) of (a) the net income
of the Borrower and its Subsidiaries for such period computed in accordance with
GAAP, plus (b) Interest Expense for such period as reported on the Borrower's
consolidated financial statements for such period, plus (c) the income tax
expense of the Borrower and its Subsidiaries for such period as reported on the
Borrower's consolidated financial statements for such period, plus (d) the
amount reported on the Borrower's consolidated financial statements as the
depreciation of the assets of the Borrower and its Subsidiaries for such period
computed in accordance with GAAP, plus (e) the amount reported on the Borrower's
consolidated financial statements as the amortization of intangibles assets of
the Borrower and its Subsidiaries for such period computed in accordance with
GAAP, plus (f) the amount reported on the Borrower's consolidated financial
statements as the write-down of intangible assets of the Borrower and its
Subsidiaries that consist of goodwill for such period computed in accordance
with GAAP, and plus (g) all cash and non-cash extraordinary

                                      A-7

<PAGE>

expenses and losses of the Borrower and its Subsidiaries for such period
computed in accordance with GAAP, minus (h) all cash and non-cash extraordinary
income and gains of the Borrower and its Subsidiaries for such period, in each
case as such item is used in the computation of net income of the Borrower and
its Subsidiaries for such period.

          "Eligible Accounts" has the meaning ascribed to it in Section 1.6.

          "Eligible Export-Related Accounts" has the meaning ascribed to it in
Section 1.6A of the Agreement.

          "Eligible Inventory" has the meaning ascribed to it in Section 1.7.

          "Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards, policies,
guidelines, directives and regulations, now or hereafter in effect, and any
applicable judicial or administrative interpretation thereof, including any
applicable judicial or administrative order, consent decree, order or judgment,
imposing liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C.(S)(S)9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C(S)(S) 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.(S)(S)136 et seq.);
the Solid Waste Disposal Act (42 U.S.C.(S)(S) 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C.(S)(S)2601 et seq.); the Clean Air Act (42
U.S.C.(S)(S)7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C.(S)(S)1251 et seq.); the Occupational Safety and Health Act (29
U.S.C.(S)(S)651 et seq.); and the Safe Drinking Water Act (42 U.S.C.(S)(S)
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, provincial, regional, municipal, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval statutes.

          "Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, characterization,
rehabilitation, remedial and removal costs, investigation and feasibility study
costs, capital costs, operation and maintenance costs, losses, damages, punitive
damages, property damages, natural resource damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts and consultants), fines, penalties, sanctions,
charges, debts and interest incurred as a result of or related to any claim,
suit, action, investigation, proceeding or demand by any Person, whether based
in contract, tort, implied or express warranty, strict liability, criminal or
civil statute or common law, including any arising under or related to any
Environmental Laws, Environmental Permits, or in connection with any Release or
threatened Release or presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.

                                      A-8

<PAGE>

          "Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.

          "Equipment" means all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.

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

          "ERISA Affiliate" means, with respect to any Credit Party, any trade
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.

          "ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the revocation or threatened revocation of a Qualified Plan's qualification or
tax exempt status; or (j) the termination of a Plan described in Section 4064 of
ERISA.

          "ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.

          "Event of Default" has the meaning ascribed to it in Section 8.1.

                                      A-9

<PAGE>

          "Ex-Im Bank" shall mean the Export-Import Bank of the United States.

          "Ex-Im Bank Borrower Agreement" means any Borrower Agreement executed
by Borrower in favor of Ex-Im Bank and Lender.

          "Ex-Im Bank Documents" shall mean the Ex-Im Bank Guaranty, any Loan
Authorization Agreement between Agent and Ex-Im Bank and the Ex-Im Bank Borrower
Agreement.

          "Ex-Im Bank Guarantee" shall mean any Guarantee executed by Ex-Im Bank
in favor of GE Capital in form and substance satisfactory to, Agent, together
with all amendments, modifications and supplements thereto.

          "Export-Related Accounts" shall mean those Accounts of Borrower that
are an obligation of an Account Debtor located in a foreign country (other than
Canada) which arise from the sale of goods or services which are intended for
export pursuant to written export orders or contracts for the purchase by the
Account Debtor of such goods or services.

          "Export-Related Advance" has the meaning ascribed to it in Section
1.1(d).

          "Export-Related Borrowing Availability" means as of the date of
determination the lesser of (i) the Export-Related Loan Commitment and (ii) the
Export-Related Borrowing Base, in each case, less the aggregate Export-Related
Loan then outstanding.

          "Export-Related Borrowing Base" means, as of any date of determination
by Agent, from time to time, an amount equal to 90% of the book value of
Borrower's Eligible Export-Related Accounts at such time, less any Reserves
established by Agent at such time with respect to the Export-Related Borrowing
Base.

          "Export-Related Loan Lender" means GE Capital.

          "Export-Related Loan" means, at any time, the aggregate amount of
Export-Related Advances outstanding to Borrower.

          "Export-Related Loan Commitment" means Five Million Dollars
($5,000,000).

          "Export-Related Loan Note" has the meaning ascribed to it in Section
1.1(d)(ii).

          "Export-Related Loan Participation" and "Export-Related Loan
Participations" has the meaning ascribed to it in Section 1.1(d)(iii).

          "Export-Related Revolving Loan Reserve" means a reserve established by
Agent against the Borrowing Base in an amount equal to ten percent (10%) of the
amount of the Export-Related Loan.

          "Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C.(S)201 et seq.

                                      A-10

<PAGE>

          "Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day, provided that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day, and (b) if no
such rate is so published on the next succeeding Business Day, the Federal Funds
Rate for such day shall be the average of the rate quotations for such day for
such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.

          "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.

          "Fees" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.

          "Financial Covenants" means the financial covenants set forth in Annex
G.

          "Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4 and Annex E.

          "Fiscal Month" means any of the monthly accounting periods of
Borrower.

          "Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.

          "Fiscal Year" means any of the annual accounting periods of Borrower
ending on September 30 of each year.

          "Fixed Charges" means, with respect to any Person for any fiscal
period, (a) the aggregate of all Interest Expense paid or payable in cash during
such period plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) all Taxes, paid or payable in cash
during such period.

          "Fixed Charge Coverage Ratio" means, with respect to any Person for
any fiscal period, the ratio of (a) EBITDA minus Capital Expenditures to (b)
Fixed Charges.

          "Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.

          "Funded Debt" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's sole
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at

                                      A-11

<PAGE>

the option of the debtor, and also including, in the case of Borrower, the Loans
and, without duplication, Guaranteed Indebtedness consisting of guaranties of
Funded Debt of other Persons.

          "Funded Export-Related Loan Participation" has the meaning ascribed to
it in Section 1.1(d)(iii).

          "GAAP" means generally accepted accounting principles in the United
States of America consistently applied, as such term is further defined in Annex
G to the Agreement.

          "GE Capital" means General Electric Capital Corporation, a Delaware
corporation.

          "GE Capital Fee Letter" means that certain letter, dated as of the
date hereof, between GE Capital and Borrower with respect to certain Fees to be
paid from time to time by Borrower to GE Capital.

          "General Intangibles" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefore
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.

          "Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.

          "Governmental Authority" means any nation or government, any state or
province or other political subdivision thereof, and any agency, tribunal,
commission, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

                                      A-12

<PAGE>

          "Guaranteed Indebtedness" means as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.

          "Guaranties" means, collectively, each Subsidiary Guaranty and any
other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.

          "Guarantors" means each Subsidiary of Borrower (other than AET
Limited) and each other Person, if any, that executes a guaranty or other
similar agreement in favor of Agent, for itself and the ratable benefit of
Lenders, in connection with the transactions contemplated by the Agreement and
the other Loan Documents.

          "Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "residual hazardous
material," "hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "pollutant," "contaminant," "hazardous constituent," "special
waste," "toxic substance" or other similar term or phrase under any
Environmental Laws, or (b) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls (PCB's), or any radioactive substance.

          "Indebtedness" means, with respect to any Person, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred 6 months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than 6 months from the due
date unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of

                                      A-13

<PAGE>

such property), (e) all Capital Lease Obligations and the present value
(discounted at the Index Rate as in effect on the Closing Date) of future rental
payments under all synthetic leases, (f) all net liabilities of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all net
liabilities of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.

          "Indemnified Liabilities" has the meaning ascribed to it in Section
1.13.

          "Indemnified Person" has the meaning ascribed to in Section 1.13.

          "Index Rate" means, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal in
the Money Rate section as the "Prime Rate" (or, if The Wall Street Journal
ceases quoting a base rate of the type described, the highest per annum rate of
interest published by the Federal Reserve Board in Federal Reserve statistical
release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan
rate or its equivalent), and (ii) the Federal Funds Rate plus 50 basis points
per annum. Each change in any interest rate provided for in the Agreement based
upon the Index Rate shall take effect at the time of such change in the Index
Rate.

          "Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.

          "Industrial Revenue Bonds" means The City of Salem, Massachusetts
Flexible Mode Industrial Development Revenue Bonds in the original principal
amount of $6,500,000.

          "Insolvency Law" shall mean any of the Bankruptcy and Insolvency Act
(Canada), the Companies' creditors Arrangement Act (Canada) and titles 7 and 11
of the United States Code entitled "Bankruptcy," each as now and hereafter in
effect, any successors to such statutes and any other applicable insolvency or
other similar law of any jurisdiction.

          "Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.

          "ITA" shall mean the Income Tax Act (Canada), as the same may, from
time to time, be in effect.

                                      A-14

<PAGE>

          "Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.

          "Intellectual Property Security Agreements" means the Intellectual
Property Security Agreements made in favor of Agent, on behalf of itself and
Lenders, by each applicable Credit Party.

          "Intercompany Notes" has the meaning ascribed to it in Section 6.3.

          "Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including,
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.

          "Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided that,
in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest that has then accrued under the Agreement.

          "Inventory" means all "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.

          "Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.

          "IRC" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder.

          "IRS" means the Internal Revenue Service.

                                      A-15

<PAGE>

          "L/C Issuer" has the meaning ascribed to it in Annex B.

          "L/C Sublimit" has the meaning ascribed to it in Annex B.

          "Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.

          "Letter of Credit Fee" has the meaning ascribed to it in Annex B.

          "Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of
a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable at such time or at any time thereafter by Agent or Lenders
thereupon or pursuant thereto.

          "Letters of Credit" means documentary or standby letters of credit
issued for the account of Borrower by any L/C Issuer, and bankers' acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.

          "Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.

          "LIBOR Business Day" means a Business Day on which banks in the City
of London are generally open for interbank or foreign exchange transactions.

          "LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.

          "LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:

          (a) if any LIBOR Period would otherwise end on a day that is not a
     LIBOR Business Day, such LIBOR Period shall be extended to the next
     succeeding LIBOR Business Day unless the result of such extension would be
     to carry such LIBOR Period into another calendar month in which event such
     LIBOR Period shall end on the immediately preceding LIBOR Business Day;

          (b) any LIBOR Period that would otherwise extend beyond the Commitment
     Termination Date shall end 2 LIBOR Business Days prior to such date;

                                      A-15

<PAGE>

              (c) any LIBOR Period that begins on the last LIBOR Business Day of
         a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such LIBOR
         Period) shall end on the last LIBOR Business Day of a calendar month;

              (d) Borrower shall use reasonable efforts to select LIBOR Periods
         so as not to require a payment or prepayment of any LIBOR Loan during a
         LIBOR Period for such Loan; and

              (e) Borrower shall select LIBOR Periods so that there shall be no
         more than 7 separate LIBOR Loans in existence at any one time.

              "LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:

              (a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by

              (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.

              If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower.

              "License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.

              "Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).

              "Litigation" has the meaning ascribed to it in Section 3.13.

              "Loan Account" has the meaning ascribed to it in Section 1.12.

                                      A-17

<PAGE>

              "Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the Master Standby Agreement, the Master Documentary Agreement, and
all other agreements, instruments, documents and certificates identified in the
Closing Checklist executed and delivered to, or in favor of, Agent or any
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby
(including the terms of any commitment letter which expressly survive the
execution of this Agreement). Any reference in the Agreement or any other Loan
Document to a Loan Document shall include all appendices, exhibits or schedules
thereto, and all amendments, restatements, supplements or other modifications
thereto, and shall refer to the Agreement or such Loan Document as the same may
be in effect at any and all times such reference becomes operative.

              "Loans" means the Revolving Loan, the Swing Line Loan, the
Export-Related Loan and the Term Loan.

              "Lock Boxes" has the meaning ascribed to it in Annex C.

              "Margin Stock" has the meaning ascribed to in Section 3.10.

              "Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit dated as of the Closing Date among Borrower, as
Applicant(s), and GE Capital attached as Exhibit A-1 hereto.

              "Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit dated as of the Closing Date among Borrower, as Applicant(s),
and GE Capital, as issuer attached as Exhibit A-2 hereto.

              "Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
the Credit Parties considered as a whole, (b) any Credit Party's ability to pay
any of the Loans or any of the other Obligations in accordance with the terms of
the Agreement, (c) the Collateral (taken as a whole) or Agent's Liens, on behalf
of itself and Lenders, on the Collateral (taken as a whole) or the priority of
such Liens, or (d) Agent's or any Lender's rights and remedies under the
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, any event or occurrence adverse to one or more Credit Parties which
results or could reasonably be expected to result in costs and/or liabilities or
loss of revenues, individually or in the aggregate, to any Credit Party in any
30-day period in excess of the lesser of $ 10,000,000 and 20% of the lesser of
the Maximum Amount and the Borrowing Base at any date of determination shall
constitute a Material Adverse Effect.

              "Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.

              "Mortgaged Properties" has the meaning assigned to it in Annex D.

                                      A-18

<PAGE>

              "Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Mortgaged Properties or other Real
Estate pursuant to Section 5.9, all in form and substance reasonably
satisfactory to Agent.

              "Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.

              "Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).

              "Nonqualified Benefit Plans" means, collectively, Borrower's
Supplemental Executive Retirement Plan, Executive Deferred Compensation Plan,
1999 Deferred Compensation Plan Trust, and any other Plan described in Section
201(2) of ERISA.

              "Notes" means, collectively, the Revolving Notes, the
Export-Related Loan Note, Swing Line Notes and the Term Notes.

              "Notice of Conversion/Continuation" has the meaning ascribed to it
in Section 1.5(e).

              "Notice of Export-Related Advance" has the meaning ascribed to it
in Section 1.1(d).

              "Notice of Revolving Credit Advance" has the meaning ascribed to
it in Section 1.1(a).

              "Obligations" means all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, accrued and unpaid
interest (including all interest that accrues after the commencement of any case
or proceeding by or against any Credit Party in bankruptcy, whether or not
allowed in such case or proceeding), Fees, Charges, expenses, attorneys' fees
and any other sum chargeable to any Credit Party under the Agreement or any of
the other Loan Documents.

              "Overadvance" has the meaning ascribed to it in Section
1.1(a)(iii).

              "Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.

                                      A-19

<PAGE>

              "Patent Security Agreements" means the Patent Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.

              "Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or of any other country, all registrations and recordings thereof, and
all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.

              "PBGC" means the Pension Benefit Guaranty Corporation.

              "Pension Plan" means a Plan described in Section 3(2) of ERISA.

              "Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) workers', mechanics' or similar liens arising
in the ordinary course of business which attach only to Equipment, Fixtures
and/or Real Estate and which are either inchoate and unperfected or payment of
which is being contested in accordance with Section 5.2(b); (e) carriers',
warehousemen's, suppliers', custom's brokers', or other similar possessory liens
arising in the ordinary course of business and securing liabilities in an
outstanding aggregate amount not in excess of $100,000 at any time, so long as
such Liens attach only to Inventory; (f) deposits securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an Event of Default
under Section 8.1(j); (h) zoning restrictions, servitudes, easements, licenses,
or other restrictions on the use of any Real Estate or other minor
irregularities in title (including leasehold title) thereto, including, those
matters set forth on the title insurance policies insuring the Mortgages, so
long as the same do not materially impair the use, value, or marketability of
such Real Estate; (i) Liens arising from precautionary UCC-1 financing statement
filings regarding operating leases entered into by the Credit Parties in the
ordinary course of business; (j) presently existing or hereafter created Liens
in favor of Agent, on behalf of Lenders; and (k) Liens expressly permitted under
clauses (b) and (c) of Section 6.7 of the Agreement.

              "Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).

              "Plan" means, at any time, an "employee benefit plan", as defined
in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation

                                      A-20

<PAGE>

to contribute to or has maintained, contributed to or had an obligation to
contribute to at any time within the past 7 years on behalf of participants who
are or were employed by any Credit Party or ERISA Affiliate.

              "Pledge Agreements" means, collectively, the Credit Party Pledge
Agreement and any pledge agreements entered into after the Closing Date by any
Credit Party (as required by the Agreement or any other Loan Document).

              "Principal Financial Officer" means at any time the chief
financial officer, treasurer or other officer of Borrower then primarily
responsible for the Borrower's finance and treasury matters.

              "Prior Claims" means all Liens created by applicable law (in
contrast with Liens voluntarily granted) which rank or are capable of ranking
prior to or pari passu with Agent's and Lenders' security interest (or the
applicable equivalent thereof) against all or part of the Collateral, including
for amounts owing for wages employee deductions, goods and services taxes, sales
taxes, employer health taxes, municipal taxes, workers' compensation, pension
fund obligations and overdue rents.

              "Prior Lenders" means each of (i) LaSalle National Leasing
Corporation, Banc of America Leasing & Capital, LLC, The CIT Group / Equipment
Finance Inc., Fifth Third Leasing Company, First Union Commercial Corporation,
Key Equipment Finance, and PNC Leasing, LLC, (ii) GE Capital, (iii) the trustee
for the holders of the Industrial Revenue Bonds, and (iv) JP Morgan Chase Bank,
in each case, as a creditor and/or as agent or trustee for creditors under the
applicable Prior Lender Obligations.

              "Prior Lender Obligations" means, individually and collectively as
applicable, the obligations under each of (i) those certain leases each dated
December 29, 1997 between each of LaSalle National Leasing Corporation, Banc of
America Leasing & Capital, LLC, The CIT Group / Equipment Finance Inc., Fifth
Third Leasing Company, First Union Commercial Corporation, Key Equipment
Finance, and PNC Leasing, LLC and Borrower, (ii) that certain lease dated March
27, 2002 between GE Capital and Borrower, (iii) the Borrower's obligations in
respect of its Industrial Revenue Bonds, and (iv) the Borrower's existing
revolving credit facility with JP Morgan Chase Bank.

              "Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the

                                      A-21

<PAGE>

Collateral including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock, and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.

              "Pro Forma" means the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of August 31, 2003 after giving pro forma
effect to the Related Transactions.

              "Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division-by-division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.

              "Pro Rata Share" means with respect to all matters relating to any
Lender, (a) with respect to the Revolving Loan and the Export Related Loan
Participation, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of
all Lenders, (b) with respect to the Term Loan(s), the percentage obtained by
dividing (i) the Term Loan Commitment of that Lender by (ii) the aggregate Term
Loan Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1, (c) with respect to all Loans,
the percentage obtained by dividing (i) the aggregate Commitments of that Lender
by (ii) the aggregate Commitments of all Lenders, and (d) with respect to all
Loans on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.

              "Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.

              "Qualified Assignee" means (a) any Lender, any Affiliate of any
Lender and, with respect to any Lender that is an investment fund that invests
in commercial loans, any other investment fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Moody's at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee, and no Person or
Affiliate of such Person (other than a Person that

                                      A-22

<PAGE>

is already a Lender) holding Subordinated Debt or Stock issued by any Credit
Party shall be a Qualified Assignee.

              "Quebec Hypothec" means (i) the Deed of Movable and Immovable
Hypothec dated the Closing Date granted by AET Canada in favor of the Agent,
(ii) the Collateral Mortgage Demand Bond issued thereunder in the principal
amount of CDN$200,000,000 made by AET Canada and registered in the name of the
Agent, and (iii) the Bond Pledge Agreement dated the Closing Date granted by AET
Canada in favor of the Agent.

              "Real Estate" has the meaning ascribed to it in Section 3.6.

              "Refinancing" means the repayment in full by Borrower of the Prior
Lender Obligations on the Closing Date.

              "Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(c)(iii).

              "Related Transactions" means the initial borrowing under the
Revolving Loan and the Term Loan on the Closing Date, the Refinancing, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.

              "Related Transactions Documents" means the Loan Documents and all
other agreements or instruments executed in connection with the Related
Transactions.

              "Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.

              "Requisite Lenders" means (a) the Requisite Revolving Lenders and
(b) the Requisite Term Lenders.

              "Requisite Revolving Lenders" means Lenders having (a) more than
51% of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving
Loan Commitments have been terminated, more than 51% of the aggregate
outstanding amount of the Revolving Loan.

              "Requisite Term Lenders" means Lenders having more than 66 2/3% of
the aggregate outstanding amount of the Term Loan.

              "Reserves" means (a) reserves established by Agent from time to
time against Eligible Inventory pursuant to Section 5.9, (b) reserves
established pursuant to Section 5.4(c), (c) the Export-Related Loan Reserve, and
(d) such other reserves against Eligible Accounts, Eligible Export-Related
Accounts, Eligible Inventory, Borrowing Availability or Export-Related Borrowing
Availability of Borrower that Agent may, in its reasonable credit judgment and
upon prior or contemporaneous notice to Borrower, establish from time to time.

                                      A-23

<PAGE>

              "Restricted Payment" means, with respect to any Credit Party (a)
the declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt or the Senior Notes; (d)
any payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the ordinary course of
business to Stockholders who are employees of such Person; and (g) any payment
of management fees (or other fees of a similar nature) by such Credit Party to
any Stockholder of such Credit Party or its Affiliates.

              "Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.

              "Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a)(i).

              "Revolving Lenders" means, as of any date of determination,
Lenders having a Revolving Loan Commitment.

              "Revolving Loan" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.

              "Revolving Loan Commitment" means (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances, incur
Letter of Credit Obligations or purchase Export-Related Loan Participations as
set forth on Annex J to the Agreement or in the most recent Assignment Agreement
executed by such Lender and (b) as to all Lenders, the aggregate commitment of
all Lenders to make Revolving Credit Advances, incur Letter of Credit
Obligations, or purchase Export-Related Loan Participations which aggregate
commitment shall be Fifty Million Dollars ($50,000,000) on the Closing Date, as
such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.

                                      A-24

<PAGE>

              "Revolving Loan Priority Collateral" means any Collateral
consisting of Accounts or Inventory or any Proceeds thereof.

              "Revolving Note" has the meaning ascribed to it in Section
1.1(a)(ii)(A).

              "Security Agreement" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.

              "Senior Note Documents" means the Senior Notes, the Senior Note
Indenture, any Guarantee (as defined in the Senior Note Indenture) and the
Registration Rights Agreement (as defined in the Senior Note Indenture).

              "Senior Note Indenture" means the Senior Note Indenture, dated,
June 19, 2001 made by the Borrower and AET Canada in favor of Wells Fargo Bank
Minnesota, National Association, as trustee.

              "Senior Notes" means those certain 10 3/4% Senior Notes due 2011
and 10 3/4% Series B Senior Notes due 2001 issued by Borrower pursuant to the
Senior Note Indenture.

              "Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.

              "Solvent" means, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.

              "Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).

              "Stockholder" means, with respect to any Person, each holder of
Stock of such Person.

                                      A-25

<PAGE>

              "Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.

              "Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.

              "Subsidiary Guaranty" means the Subsidiary Guaranty of even date
herewith executed by each Subsidiary of Borrower (other than AET Limited) in
favor of Agent, on behalf of itself and Lenders.

              "Supporting Obligations" means all "supporting obligations" as
such term is defined in the Code, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.

              "Swing Line Advance" has the meaning ascribed to it in Section
1.1(c)(i).

              "Swing Line Availability" has the meaning ascribed to it in
Section 1.1(c)(i).

              "Swing Line Commitment" means, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Advances as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.

              "Swing Line Lender" means GE Capital.

              "Swing Line Loan" means, as the context may require, at any time,
the aggregate amount of Swing Line Advances outstanding to Borrower.

              "Swing Line Note" has the meaning ascribed to it in Section
1.1(c)(ii).

              "Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding franchise or
other taxes imposed on or measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are organized or conduct
business or any political subdivision thereof.

                                      A-26

<PAGE>

               "Termination Date" means the date on which (a) the Loans have
been indefeasibly repaid in full, (b) all other Obligations under the Agreement
and the other Loan Documents have been completely discharged (other than
indemnification Obligations and so long as no suits, actions, proceedings or
claims are pending or threatened against any Indemnified Person asserting any
damages, losses or liabilities that are Indemnified Liabilities), (c) all Letter
of Credit Obligations have been cash collateralized, canceled or backed by
standby letters of credit in accordance with Annex B, and (d) none of Borrower
shall have any further right to borrow any monies under the Agreement.

               "Term Lenders" means those Lenders having Term Loan Commitments.

               "Term Loan" has the meaning assigned to it in Section 1.1(b)(i).

               "Term Loan Commitment" means (a) as to any Lender with a Term
Loan Commitment, the commitment of such Lender to make its Pro Rata Share of the
Term Loan as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan Commitment, the aggregate commitment of all Lenders to make the Term
Loan, which aggregate commitment shall be Fifty Million Dollars ($50,000,000) on
the Closing Date. After advancing the Term Loan, each reference to a Lender's
Term Loan Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan.

               "Term Loan Payment Account" means that certain account of Agent,
account number 50-270-797 in the name of Agent at Deutsche Bank Trust Company
Americas in New York, New York ABA No. 021 001 033, Reference: Applied Extrusion
Technologies, Attn: S. DeRaffele, or such other account as may be specified in
writing by Agent as the "Term Loan Payment Account."

               "Term Loan Priority Collateral" means all Collateral other than
Revolving Loan Priority Collateral.

               "Term Note" has the meaning assigned to it in Section 1.1(b)(i).

               "Terre Haute Sale/Leaseback" means collectively, (i) the sale of
the vacant parcel of land located described on Disclosure Schedule 6.8(f) owned
by Borrower located in Terre Haute, Indiana (the "Terre Haute Property"), for
nominal consideration, and (ii) on or prior to the date of such sale, the
execution and delivery of a lease and other documents reasonably satisfactory in
form and substance to the Agent providing for the (a) the construction of a
warehouse on the Terre Haute Property by the purchaser of such property, and (b)
the leaseback (the "Terre Haute Lease") by Borrower from the purchaser of such
warehouse and property on terms and conditions reasonably satisfactory to Agent
(including, that purchaser execute a landlord waiver and consent and that the
landlords' fee mortgagees execute non-disturbance agreements, in each case, in
form and substance satisfactory to Agent).

               "Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains,

                                      A-27

<PAGE>

contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.

               "Trademark License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.

               "Trademarks" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.

               "Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.

               "Welfare Plan" means a Plan described in Section 3(i) of ERISA.

               Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.

               Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective

                                      A-28

<PAGE>

successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that a member of management or officer or member of the
board of directors of such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or a member of management or officer or director
of such Credit Party, if it had exercised reasonable diligence, would have known
or been aware of such fact or circumstance.

               With respect to the amount of any obligation or liability
denominated in a currency other than Dollars, for purposes of making
calculations or determinations under the Loan Documents on any date, the amount
of such obligation or liability shall be measured in Dollars by converting such
amount in such other currency to Dollars at the conversion rate quoted on the
applicable Reuters Monitor Screen or other service selected by the Agent on such
date or, if such date is not a Business Day, on the Business Day immediately
preceding such date of determination, or at such other rate as may have been
agreed in writing between the Borrower and the Agent.

                                      A-29

<PAGE>

                              ANNEX B (Section 1.2)
                                       TO
                                CREDIT AGREEMENT

                                LETTERS OF CREDIT

               (a) Issuance. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued by GE Capital or a Subsidiary thereof or a bank or other legally
authorized Person selected by or acceptable to Agent in its sole discretion
(each, an "L/C Issuer") for Borrower's account and guaranteed by Agent;
provided, that if the L/C Issuer is a Revolving Lender, then such Letters of
Credit shall not be guaranteed by Agent but rather each Revolving Lender shall,
subject to the terms and conditions hereinafter set forth, purchase (or be
deemed to have purchased) risk participations in all such Letters of Credit
issued with the written consent of Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the least of (i) Ten Million Dollars ($10,000,000)
(the "L/C Sublimit") and (ii) the Maximum Amount less the aggregate outstanding
principal balance of the Revolving Credit Advances, the Export-Related Loan and
the Swing Line Loan, and (iii) the Borrowing Base less the aggregate outstanding
principal balance of the Revolving Credit Advances and the Swing Line Loan. No
such Letter of Credit shall have an expiry date that is more than one year
following the date of issuance thereof, unless otherwise determined by the
Agent, in its sole discretion, and neither Agent nor Revolving Lenders shall be
under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date that
is later than the Commitment Termination Date.

               (b) (i)  Advances Automatic; Participations. In the event that
Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance to Borrower under Section 1.1(a) of the
Agreement regardless of whether a Default or Event of Default has occurred and
is continuing and notwithstanding Borrower's failure to satisfy the conditions
precedent set forth in Section 2, and each Revolving Lender shall be obligated
to pay its Pro Rata Share thereof in accordance with the Agreement. The failure
of any Revolving Lender to make available to Agent for Agent's own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or
in respect of a Letter of Credit shall not relieve any other Revolving Lender of
its obligation hereunder to make available to Agent its Pro Rata Share thereof,
but no Revolving Lender shall be responsible for the failure of any other
Revolving Lender to make available such other Revolving Lender's Pro Rata Share
of any such payment.

                   (ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (A)

                                      B-1

<PAGE>

immediately and without further action whatsoever, each Revolving Lender shall
be deemed to have irrevocably and unconditionally purchased from Agent (or such
L/C Issuer, as the case may be) an undivided interest and participation equal to
such Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (B) thereafter, immediately upon issuance of any Letter of
Credit, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation in such Revolving Lender's Pro Rata Share
(based on the Revolving Loan Commitments) of the Letter of Credit Obligations
with respect to such Letter of Credit on the date of such issuance. Each
Revolving Lender shall fund its participation in all payments or disbursements
made under the Letters of Credit in the same manner as provided in the Agreement
with respect to Revolving Credit Advances.

          (c)  Cash Collateral.

               (i)   If Borrower is required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement prior to the Commitment
Termination Date, Borrower will pay to Agent for the ratable benefit of itself
and Revolving Lenders cash or cash equivalents acceptable to Agent ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable Letter of Credit outstanding for the benefit of
Borrower. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be
in the name of Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent.
Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.

               (ii)  If any Letter of Credit Obligations, whether or not then
due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower shall either (A) provide cash collateral therefor in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus 30 additional days) as, and in an amount equal to 105% of,
the aggregate maximum amount then available to be drawn under, the Letters of
Credit to which such outstanding Letter of Credit Obligations relate and shall
be issued by a Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent in its sole discretion.

               (iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable

                                      B-2

<PAGE>

by Borrower to Agent and Lenders with respect to such Letter of Credit
Obligations of Borrower and, upon the satisfaction in full of all Letter of
Credit Obligations of Borrower, to any other Obligations of Borrower then due
and payable.

               (iv)  Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent and Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations, any remaining amount
shall be paid to Borrower or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be for the account of Agent.

          (d)  Fees and Expenses. Borrower agrees to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (i) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (ii)
for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "Letter of Credit Fee") in an amount equal to two and
three quarters percent (2.75%) per annum multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of Credit.
Such fee shall be paid to Agent for the benefit of the Revolving Lenders in
arrears, on the first day of each month and on the Commitment Termination Date.
In addition, Borrower shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.

          (e)  Request for Incurrence of Letter of Credit Obligations. Borrower
shall give Agent at least 2 Business Days' prior written notice requesting the
incurrence of any Letter of Credit Obligation. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) and a completed Application for Standby Letter of Credit or Application
for Documentary Letter of Credit (as applicable) in the form customarily used by
the L/C Issuer. Notwithstanding anything contained herein to the contrary,
Letter of Credit applications by Borrower and approvals by Agent and the L/C
Issuer may be made and transmitted pursuant to electronic codes and security
measures mutually agreed upon and established by and among Borrower, Agent and
the L/C Issuer.

          (f)  Obligation Absolute. The obligation of Borrower to reimburse
Agent and Revolving Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following:

                                      B-3

<PAGE>

               (i)   any lack of validity or enforceability of any Letter of
          Credit or the Agreement or the other Loan Documents or any other
          agreement;

               (ii)  the existence of any claim, setoff, defense or other right
          that Borrower or any of its Affiliates or any Lender may at any time
          have against a beneficiary or any transferee of any Letter of Credit
          (or any Persons or entities for whom any such transferee may be
          acting), Agent, any Lender, or any other Person, whether in connection
          with the Agreement, the Letter of Credit, the transactions
          contemplated herein or therein or any unrelated transaction (including
          any underlying transaction between Borrower or any of its Affiliates
          and the beneficiary for which the Letter of Credit was procured);

               (iii) any draft, demand, certificate or any other document
          presented under any Letter of Credit proving to be forged, fraudulent,
          invalid or insufficient in any respect or any statement therein being
          untrue or inaccurate in any respect;

               (iv)  payment by Agent (except as otherwise expressly provided in
          paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
          Credit or guaranty thereof against presentation of a demand, draft or
          certificate or other document that does not comply with the terms of
          such Letter of Credit or such guaranty;

               (v)   any other circumstance or event whatsoever, that is similar
          to any of the foregoing; or

               (vi)  the fact that a Default or an Event of Default has occurred
          and is continuing.

          (g)  Indemnification; Nature of Lenders' Duties.

               (i)   In addition to amounts payable as elsewhere provided in the
Agreement, Borrower hereby agree to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) that Agent or any
Lender may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of
Agent or any Lender seeking indemnification or of any L/C Issuer to honor a
demand for payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, in each case other than
to the extent solely as a result of the gross negligence or willful misconduct
of Agent or such Lender (as finally determined by a court of competent
jurisdiction).

               (ii)  As between Agent and any Lender and Borrower, Borrower
assume all risks of the acts and omissions of, or misuse of any Letter of Credit
by beneficiaries, of any Letter of Credit. In furtherance and not in limitation
of the foregoing, to the fullest extent permitted by law, neither Agent nor any
Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in

                                      B-4

<PAGE>

connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to demand payment under such Letter of Credit;
provided, that in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was made
solely as a result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that the demand
for payment under such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under such Letter of
Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they may be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of any
document required in order to make a payment under any Letter of Credit or
guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and (H) any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder or under the Agreement.

               (iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between or among Borrower and such L/C
Issuer, including any Application For Standby Letter of Credit or Documentary
Letter of Credit, the Master Documentary Agreement and the Master Standby
Agreement entered into with Agent.

                                       B-5

<PAGE>

                              ANNEX C (Section 1.8)
                                       TO
                                CREDIT AGREEMENT

                             CASH MANAGEMENT SYSTEM

          Each Borrower shall, and shall cause its Subsidiaries to, establish
and maintain the Cash Management Systems described below:

          On or before the Closing Date and until the Termination Date, Borrower
and AET Canada shall (i) establish lock boxes ("Lock Boxes") or at Agent's
discretion, blocked accounts ("Blocked Accounts") at one or more of the banks
set forth in Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, (ii) deposit and cause its Subsidiaries to
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) ("Collections") into one or more Blocked Accounts in Borrower's name or any
such Subsidiary's name and at a bank identified in Disclosure Schedule (3.19)
(each, a "Relationship Bank"). At all times when any Export-Related Advance is
outstanding, Borrower shall (i) take all such reasonable steps to ensure that
all Account Debtors with respect to Export-Related Accounts forward payment
directly to a separate Lock Box established solely for receipt of Export-Related
Accounts, and (ii) deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all Collections with respect to Export-Related
Accounts (whether or not otherwise delivered to a Lock Box) into a separate
Blocked Account established solely for receipt of such Collections (the
"Export-Related Blocked Account", in Borrower's name and at a Relationship Bank
identified in Disclosure Schedule (3.19) as the "Export-Related Blocked
Account". In the event either Borrower or AET Canada establishes more than one
Blocked Account for its Collections, Borrower shall establish a concentration
account in its name, which account may be a Blocked Account referred to in
clause (a)(i) above (the "Concentration Account"), at the bank designated as the
Concentration Account bank for Borrower in Disclosure Schedule (3.19) (the
"Concentration Account Bank"), which bank shall be reasonably satisfactory to
Agent.

          (b) Each of Borrower and AET Canada may maintain, in its name,
accounts (each a "Disbursement Account" and collectively, the "Disbursement
Accounts") at banks reasonably acceptable to Agent which shall be used by such
Credit Parties for payments and disbursements. Borrower's Disbursement Account
(Account No. 8543522469 with PNC Bank, National Association) shall be used by
Agent, from time to time, to deposit proceeds of Revolving Credit Advances,
Export-Related Advances and Swing Line Advances made to Borrower pursuant to
Section 1.1 for use by Borrower solely in accordance with the provisions of
Section 1.4.

          (c) On or before the Closing Date (or such later date as Agent shall
consent to in writing), the Concentration Account Bank, each bank where a
Disbursement Account is

                                      C-1

<PAGE>

maintained and all other Relationship Banks, shall have entered into tri-party
blocked account agreements with Agent, for the benefit of itself and Lenders,
and Borrower and Subsidiaries thereof, as applicable, in form and substance
reasonably acceptable to Agent, which shall become operative on or prior to the
Closing Date. Each such blocked account agreement shall provide, among other
things, that (i) all Collections deposited in account and proceeds thereof
deposited in the applicable Blocked Account or Concentration Account are held by
such bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or
recoupment or any other claim against such account, as the case may be, other
than for payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment, and (iii) from and after the Closing Date (A) with respect to the banks
at which a Blocked Account of Borrower is maintained, such bank agrees to
forward immediately all amounts in each such Blocked Account (other than the
Export-Related Blocked Account) to Borrower's Concentration Account Bank and to
commence the process of daily sweeps from such Blocked Account (other than the
Export-Related Blocked Account) into the Concentration Account (or if no
Concentration Account has been established directly to the Collection Account),
(B) with respect to the Blocked Account established at Royal Bank of Canada
bearing Account Number 102-628-5 (the "AET Canada Account"), such bank agrees
that at any time following three business days after Agent delivers an
activation notice thereunder (which activation notice may be given by Agent at
any time at which a Default or Event of Default has occurred and is continuing),
to forward immediately all amounts in the AET Canada Account and, to the extent
requested by Agent, the Disbursement Accounts of AET Canada to a Blocked Account
of Borrower (or, if established, the Concentration Account) or to such other
account designated by Agent, and (C) with respect to each Concentration Account
Bank and the Export-Related Account Bank, such bank agrees to immediately
forward all amounts received in the Concentration Account or the Export-Related
Blocked Account, respectively, to the Collection Account through daily sweeps
from such Concentration Account or Export-Related Blocked Account, as
applicable, into the Collection Account. Borrower and AET Canada shall transfer
or cause to be transferred prior to the end of each business day from the AET
Canada Account and/or the Disbursement Accounts of AET Canada the aggregate
balance in (or held for the benefit of) AET Canada in the AET Canada Account and
such Disbursement Accounts in excess of CDN$3,000,000 to a Blocked Account of
Borrower (or, if established, the Concentration Account).

          (d) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account or any Disbursement Account; provided, that (i) Agent shall have
consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or
Lock Box, Borrower or its Subsidiaries, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance reasonably satisfactory to Agent. Borrower shall close any of
their accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days following notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes

                                      C-2

<PAGE>

of the bank holding such accounts or Agent's liability under any tri-party
blocked account agreement with such bank is no longer acceptable in Agent's
reasonable judgment.

          (e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.

          (f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and shall be applied (and
allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.

          (g) Borrower shall and shall cause its Subsidiaries, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
payable to or for the benefit of Borrower or any of its Subsidiaries, and (ii)
within 1 Business Day after receipt by Borrower, any Subsidiary or any such
Related Person of any checks, cash or other items of payment, deposit the same
into a Blocked Account of Borrower or Subsidiary, as applicable (and with
respect to any payments in respect of Export-Related Accounts, the
Export-Related Blocked Account). Borrower, each Subsidiary and each Related
Person thereof acknowledges and agrees that all cash, checks or other items of
payment constituting proceeds of Collateral are part of the Collateral. All
proceeds of the sale or other disposition of any Collateral, shall be deposited
directly into the applicable Blocked Accounts.

          (h) Borrower shall not and shall not permit or cause its Subsidiaries
to establish or permit to exist any bank accounts other than (i) the Blocked
Accounts, the Concentration Accounts, and the Disbursement Accounts, and (ii)
the other Accounts listed on Disclosure Schedule (3.19) provided that as the
close of business for any two consecutive Business Days amounts on deposit in
such Accounts shall not exceed the following: (A) all Accounts of AET Limited-
$150,000, (B) the Borrower's Account at First Virginia Bank-$300,000, (C) the
Borrower's Account at Old National Bank-$600,000, (D) all other Disbursement
Accounts of the Borrower-$300,000, (E) Borrower's government account with
Merrill Lynch-$75,000, (F) Borrower's account at JPMorgan Chase Bank holding
$150,000 as cash collateral for the outstanding letter of credit no. PG634548
issued by JPMorgan Chase Bank and (G) Borrower's inactive account with UBS
(#05520 21)-$0. Borrower shall not, and shall not cause or permit any Subsidiary
thereof to accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum balance
requirements.

                                       C-3

<PAGE>

                            ANNEX D (Section 2.1(a))
                                       to
                                CREDIT AGREEMENT

                                CLOSING CHECKLIST

In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):

          A. Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Agent.

          B. Revolving Notes, Export-Related Loan Note, Swing Line Notes and
Term Notes. Duly executed originals of the Revolving Notes, Export-Related Loan
Note, Swing Line Notes and Term Notes for each applicable Lender, dated the
Closing Date.

          C. Security Agreement. Duly executed originals of the Security
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.

          D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Agent, in favor of Agent, on behalf of Lenders.

          E. Security Interests and Code Filings.

             (a) Evidence satisfactory to Agent that Agent (for the benefit of
itself and Lenders) has a valid and perfected first priority security interest
in the Collateral, including (i) such documents duly executed by each Credit
Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Agent may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies
of such financing statements, none of which shall cover the Collateral, except
for those relating to the Prior Lender Obligations (all of which shall be
terminated on the Closing Date).

             (b) Evidence satisfactory to Agent, including copies, of all UCC-1
and other financing statements filed in favor of any Credit Party with respect
to each location, if any, at which Inventory may be consigned.

             (c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of Borrower, and (iii) all futures commission agents and

                                      D-1

<PAGE>

clearing houses with respect to all commodities contracts and commodities
accounts held by Borrower.

          F. Payoff Letter; Termination Statements. Copies of duly executed
payoff letters or other agreements, in form and substance reasonably
satisfactory to Agent, by and between the parties to the Prior Lenders' loan
documents evidencing repayment in full of all Prior Lender Obligations, together
with (a) UCC-3 or other appropriate termination statements, in form and
substance satisfactory to Agent, manually signed by the applicable Prior Lender
releasing all liens of such Prior Lender upon any of the personal property of
each Credit Party, and (b) termination of all blocked account agreements, bank
agency agreements or other similar agreements or arrangements or arrangements in
favor of each Prior Lender or relating to the Prior Lender Obligations.

          G. Intellectual Property Security Agreements. Duly executed originals
of Intellectual Property Security Agreement, dated the Closing Date and signed
by each Credit Party which owns Trademarks, Copyrights and/or Patents, as
applicable, all in form and substance reasonably satisfactory to Agent, together
with all instruments, documents and agreements executed pursuant thereto.

          H. [Intentionally Omitted]

          I. Subsidiary Guaranties. Guaranties executed by and each direct and
indirect Subsidiary of Borrower in favor of Agent, for the benefit of Lenders.

          J. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts, Eligible Inventory and
Eligible Export-Related Accounts of Borrower and, as applicable, AET Canada as
of a date acceptable to Agent.

          K. Initial Notice of Revolving Credit Advance. Duly executed originals
of a Notice of Revolving Credit Advance, dated the Closing Date, with respect to
the initial Revolving Credit Advance to be requested by Borrower on the Closing
Date.

          L. Letter of Direction. Duly executed originals of a letter of
direction from Borrower addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Closing Date of the proceeds of the Term
Loan and the initial Revolving Credit Advance.

          M. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.

          N. Charter and Good Standing. For each Credit Party, such Person's (a)
charter and all amendments thereto, (b) good standing certificates in its state
of incorporation and (c) good standing certificates and certificates of
qualification to conduct business in each

                                      D-2

<PAGE>

jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, each dated a recent date prior to the
Closing Date and certified by the applicable Secretary of State or other
authorized Governmental Authority.

          O. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors, approving and authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a party and the
transactions to be consummated in connection therewith, each certified as of the
Closing Date by such Person's corporate secretary or an assistant secretary as
being in full force and effect without any modification or amendment.

          P. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.

          Q. Opinions of Counsel. Duly executed originals of opinions of Ropes &
Gray LLP, Wilkinson, Goeller, Modesitt, Wilkinson & Drummy, LLP and Ogilvy
Renault, counsel for the Credit Parties, together with any other local counsel
opinions reasonably requested by Agent, each in form and substance reasonably
satisfactory to Agent and its counsel, dated the Closing Date.

          R. Pledge Agreements. Duly executed originals of each of the Pledge
Agreements accompanied by (as applicable) (a) share certificates representing
all of the outstanding Stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates executed in blank and (b) the original
Intercompany Notes and other instruments evidencing Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.

          S. Accountants' Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2.

          T. Solvency Certificate. The Credit Parties shall deliver to Agent for
the benefit of Lenders a solvency certificate from Borrower's Principal
Financial Officer, reasonably satisfactory in form and substance to Agent.

          U. Fee Letter. Duly executed originals of the GE Capital Fee Letter.

          V. Officer's Certificate. Agent shall have received duly executed
originals of a certificate of the President and Principal Financial Officer of
Borrower, dated the Closing Date, stating that, since September 30, 2002 (a) no
event or condition has occurred or is existing which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (b)
there has been no material adverse change in the industry in which any Credit
Party operates; (c) no Litigation has been commenced which, if successful, would
have a Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents; (d) there have been
no Restricted Payments made by any Credit

                                      D-3

<PAGE>

Party; and (e) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of the Credit Parties, taken as a
whole.

          W.  Waivers. Agent, on behalf of Lenders, shall have received landlord
waivers and consents, bailee letters and mortgagee agreements in form and
substance reasonably satisfactory to Agent, in each case as required pursuant to
Section 5.9.

          X.  Mortgages. Mortgages covering the properties located in Terre
Haute, Indiana and Varennes Canada (the "Mortgaged Properties") together with:
(a) title insurance policies, current as-built surveys, zoning letters and
certificates of occupancy, in each case reasonably satisfactory in form and
substance to Agent, in its sole discretion; (b) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on each Mortgaged Property in
favor of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law); and (c) an opinion of
counsel in each state in which any Mortgaged Property is located in form and
substance and from counsel reasonably satisfactory to Agent.

          Y.  Subordination and Intercreditor Agreements. Agent and Lenders
shall have received any and all subordination and/or intercreditor agreements,
all in form and substance reasonably satisfactory to Agent, in its sole
discretion, as Agent shall have deemed necessary or appropriate with respect to
any Indebtedness of any Credit Party.

          Z.  Environmental Reports. Agent shall have received Phase I
Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of the Mortgaged Properties, dated no more than 6 months
prior to the Closing Date, prepared by environmental engineers reasonably
satisfactory to Agent, all in form and substance reasonably satisfactory to
Agent, in its sole discretion; and Agent shall have further received such
environmental review and audit reports, including Phase II reports, with respect
to the Real Estate of any Credit Party as Agent shall have requested, and Agent
shall be satisfied, in its sole discretion, with the contents of all such
environmental reports. Agent shall have received letters executed by the
environmental firms preparing such environmental reports, in form and substance
reasonably satisfactory to Agent, authorizing Agent and Lenders to rely on such
reports.

          AA. Appraisals. Agent shall have received appraisals as to all
Equipment and as to each parcel of Real Estate owned by each Credit Party, each
of which shall be in form and substance reasonably satisfactory to Agent.

          BB. Audited Financials; Financial Condition. Agent shall have received
the Financial Statements, Projections and other materials set forth in Section
3.4, certified by Borrower's Principal Financial Officer, in each case in form
and substance reasonably satisfactory to Agent (including, without limitation,
that the EBITDA for the twelve month period ending August 31, 2003 is not less
than $35,000,000), and Agent shall be satisfied, in its sole discretion, with
all of the foregoing. Agent shall have further received a certificate of the
President and/or the Principal Financial Officer of Borrower, based on such Pro
Forma and

                                      D-4

<PAGE>

Projections, to the effect that (a) Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Pro Forma fairly
presents the financial condition of Borrower as of the date thereof after giving
effect to the transactions contemplated by the Loan Documents; and (c) the
Projections are based upon estimates and assumptions stated therein, all of
which Borrower believes to be reasonable and fair in light of current conditions
and current facts known to Borrower and, as of the Closing Date, reflect such
Borrower's good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period set
forth therein.

          CC. Master Standby Agreement. A Master Agreement for Standby Letters
of Credit among Borrower and GE Capital.

          DD. Master Documentary Agreement. A Master Agreement for Documentary
Letters of Credit among Borrower and GE Capital.

          EE. Other Documents. Such other certificates, documents and agreements
respecting any Credit Party as Agent may, in its sole discretion, request.

                                       D-5

<PAGE>

                            ANNEX E (Section 4.1(a))
                                       to
                                CREDIT AGREEMENT

                FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING

          Borrower shall deliver or cause to be delivered to Agent (with
sufficient copies for each Lender) and Agent shall forward to each Lender, as
indicated, the following:

          (a) Monthly Financials. To Agent, within 30 days after the end of each
Fiscal Month, financial information regarding Borrower and its Subsidiaries,
certified by the Principal Financial Officer of Borrower, consisting of
consolidated (i) unaudited balance sheets as of the close of such Fiscal Month
and the related statements of income and cash flows for that portion of the
Fiscal Year ending as of the close of such Fiscal Month; (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments); and (iii) a
summary of the outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month. Such financial information shall be accompanied by the
certification of the Principal Financial Officer of Borrower that (1) such
financial information presents fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments) the financial position and
results of operations of Borrower and its Subsidiaries, on a consolidated basis,
in each case as at the end of such Fiscal Month and for that portion of the
Fiscal Year then ended and (2) any other information presented is true, correct
and complete in all material respects and that to his knowledge there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default has occurred and is continuing, describing the nature thereof
and all efforts undertaken to cure such Default or Event of Default.

          (b) Quarterly Financials. To Agent, within 45 days after the end of
each Fiscal Quarter, consolidated financial information regarding Borrower and
its Subsidiaries, certified by the Principal Financial Officer of Borrower,
including (i) unaudited balance sheets as of the close of such Fiscal Quarter
(including a balance sheet for each Credit Party) and the related statements of
income and cash flow for that portion of the Fiscal Year ending as of the close
of such Fiscal Quarter and (ii) unaudited statements of income and cash flows
for such Fiscal Quarter, in each case setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate" showing the calculations used in determining compliance with each
of the Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Principal Financial Officer of Borrower that (i) such
financial information presents fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments) the financial position,
results of operations and statements of cash flows of Borrower and its
Subsidiaries, on a consolidated basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of

                                      E-1

<PAGE>

Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default. In addition,
Borrower shall deliver to Agent, within 45 days after the end of each Fiscal
Quarter, a management discussion and analysis that includes a comparison to
budget for that Fiscal Quarter and a comparison of performance for that Fiscal
Quarter to the corresponding period in the prior year.

          (c) Operating Plan. To Agent, as soon as available, but not later than
30 days prior to the beginning of each Fiscal Year, an annual operating plan for
Borrower for such Fiscal Year, on a consolidated and consolidating basis,
prepared in good faith and delivered to the Board of Directors of Borrower and
as soon as available but not later than December 31 of each Fiscal Year, an
annual operating plan for Borrower, on a consolidated and consolidating basis
approved by the Board of Directors of Borrower, for such Fiscal Year, which, in
each case, (i) includes a statement of all of the material assumptions on which
such plan is based, (ii) includes monthly balance sheets, income statements and
statements of cash flows for the following year and (iii) integrates sales,
gross profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability and Export-Related Borrowing Availability projections,
all prepared on the same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections, representing
management's good faith estimates of future financial performance based on
historical performance), and including plans for personnel, Capital Expenditures
and facilities.

          (d) Annual Audited Financials. To Agent, within 90 days after the end
of each Fiscal Year, audited Financial Statements for Borrower and its
Subsidiaries on a consolidated basis, consisting of balance sheets and
statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by Deloitte and Touche, LLP or another independent
certified public accounting firm of national standing or otherwise reasonably
acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared by the Principal Financial Officer in reasonable detail
showing the calculations used in determining compliance with each of the
Financial Covenants, (ii) a report from such accounting firm to the effect that,
in connection with their audit examination, nothing has come to their attention
to cause them to believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (iii) the annual letters to such accountants in
connection with their audit examination detailing contingent liabilities and
material litigation matters, and (iv) the certification of the President or
Principal Financial Officer of Borrower that all such Financial Statements
present fairly in all material respects in accordance with GAAP the financial
position, results of operations and statements of cash flows of Borrower and its
Subsidiaries on a consolidated basis, as at the end of such Fiscal Year and for
the period then ended, and that to his knowledge there was no Default or Event
of Default in existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default.

                                      E-2

<PAGE>

          (e) Management Letters. To Agent, within 5 Business Days after receipt
thereof by any Credit Party, copies of all management letters, exception reports
or similar letters or reports received by such Credit Party from its independent
certified public accountants.

          (f) Default Notices. To Agent, as soon as practicable, and in any
event within 5 Business Days after an executive officer of Borrower has actual
knowledge of the existence of any Default, Event of Default or other event that
has had a Material Adverse Effect, telephonic or telecopied notice specifying
the nature of such Default or Event of Default or other event, including the
anticipated effect thereof, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day.

          (g) SEC Filings and Press Releases. To Agent, promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices
and proxy statements made publicly available by any Credit Party to its security
holders; (ii) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by any Credit Party with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material changes or
developments in the business of any such Person.

          (h) Senior Note Documents and Equity Notices. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to the Senior Note Documents or Stock of such Person,
and, within 2 Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Senior Note Document,
notice of such event of default.

          (i) Supplemental Schedules. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), supplements to each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with respect to any matter hereafter
arising that, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or as an
exception to such representation or that is necessary to correct any information
in such Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Disclosure Schedule
or representation shall amend, supplement or otherwise modify the term
"Disclosure Schedule" as used herein or any representation with respect thereto,
or be or be deemed a waiver of any Default or Event of Default resulting from
the matters disclosed therein, except as consented to by Agent and Requisite
Lenders in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.

          (j) Litigation. To Agent in writing, promptly upon obtaining knowledge
thereof, notice of any Litigation commenced or threatened in writing against any
Credit Party that (i) seeks damages in excess of $100,000, (ii) seeks injunctive
relief, (iii) is asserted or

                                      E-3

<PAGE>

instituted against any Plan, its fiduciaries or its assets or against any Credit
Party or ERISA Affiliate in connection with any Plan, (iv) alleges criminal
misconduct by any Credit Party, (v) alleges the violation of any law regarding,
or seeks remedies in connection with, any Environmental Liabilities or (vi)
involves any product recall.

          (k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4.

          (l) Lease Default Notices. To Agent, within 2 Business Days after
receipt thereof, copies of (i) any and all default notices received under or
with respect to any leased location or public warehouse where Collateral is
located, and (ii) such other notices or documents as Agent may reasonably
request.

          (m) Lease Amendments. To Agent, within 2 Business Days after receipt
thereof, copies of all material amendments to any real estate leases.

          (n) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall from time to time reasonably request.

                                       E-4

<PAGE>

                            ANNEX F (Section 4.1(b))
                                       to
                                CREDIT AGREEMENT

                               COLLATERAL REPORTS

           Borrower shall deliver or cause to be delivered the following:

           (a) To Agent, upon its request, and in any event no less frequently
than 10 Business Days after the end of each Fiscal Month (together with a copy
of all or any part of the following reports requested by any Lender in writing
after the Closing Date), each of the following reports, each of which shall be
prepared by Borrower as of the last day of the immediately preceding Fiscal
Month or the date 2 days prior to the date of any such request:

               (i)   a Borrowing Base Certificate with respect to Borrower and
     AET Canada, in each case accompanied by such supporting detail and
     documentation as shall be requested by Agent in its reasonable discretion;

               (ii)  with respect to Borrower and AET Canada, a summary of
     Inventory by location and type with a supporting perpetual Inventory
     report, in each case accompanied by such supporting detail and
     documentation as shall be requested by Agent in its reasonable discretion;
     and

               (iii) with respect to Borrower and AET Canada, a monthly trial
     balance showing Accounts outstanding aged by due date as follows: 1 to 30
     days past due, 31 to 60 days past due, 61 to 90 days and 91 days or more
     past due, accompanied by such supporting detail and documentation as shall
     be requested by Agent in its reasonable discretion.

           (b) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:

               (i)   a reconciliation of the Accounts trial balance of Borrower
     to Borrower's most recent Borrowing Base Certificate, general ledger and
     monthly Financial Statements delivered pursuant to Annex E, in each case
     accompanied by such supporting detail and documentation as shall be
     requested by Agent in its reasonable discretion;

               (ii)  a reconciliation of the perpetual inventory by location of
     Borrower to Borrower's most recent Borrowing Base Certificate, general
     ledger and monthly Financial Statements delivered pursuant to Annex E, in
     each case accompanied by such supporting detail and documentation as shall
     be requested by Agent in its reasonable discretion; and

               (iii) a reconciliation of the outstanding Loans as set forth in
     the monthly Loan Account statement provided by Agent to Borrower's general
     ledger and monthly Financial Statements delivered pursuant to Annex E, in
     each case accompanied

                                      F-1

<PAGE>

     such supporting detail and documentation as shall be requested by Agent in
     its reasonable discretion;

           (d) To Agent, at the time of delivery of each of the quarterly
Financial Statements delivered pursuant to Annex E, an aging of accounts
payable, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;

           (e) To Agent, at the time of delivery of each of the annual Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
of Borrower subject to the Federal Assignment of Claims Act of 1940; and (ii) a
list of any applications for the registration of any Patent, Trademark or
Copyright filed by any Credit Party with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
the prior Fiscal Quarter;

           (f) Borrower, at its own expense, shall deliver to Agent the results
of each physical verification, if any, that Borrower or any of its Subsidiaries
may in their discretion have made, or caused any other Person to have made on
their behalf, of all or any portion of their Inventory (and, if a Default or an
Event of Default has occurred and is continuing, Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);

           (g) Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request such appraisals to be conducted by
an appraiser, and in form and substance reasonably satisfactory to Agent;
provided that Borrower shall not be liable for the cost of more than one
appraisal per year unless there exists a Default or an Event of Default; and

           (h) Such other reports, statements and reconciliations with respect
to the Borrowing Base, Collateral or Obligations of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion.

                                       F-2

<PAGE>

                             ANNEX G (Section 6.10)
                                       to
                                CREDIT AGREEMENT

                               FINANCIAL COVENANTS

           Borrower shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:

           (a) Maximum Capital Expenditures. Borrower and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during any Fiscal Year
that exceed in the aggregate the amounts set forth opposite each of such Fiscal
Year:

         Fiscal Year ending                    Maximum Capital Expenditures
         ------------------                    ----------------------------

         September 30, 2003                    $14,229,000
         September 30, 2004                      8,700,000
         September 30, 2005
         and each Fiscal Year thereafter        12,800,000

provided, however, that, if the Fixed Charge Coverage Ratio for the 12-month
period ending at the end of any Fiscal Year is greater than 1.20, the maximum
amount set forth above for the immediately succeeding Fiscal Year shall be
increased to $20,000,000; and provided, however, that, if the Fixed Charge
Coverage Ratio for the 12-month period ending at the end of any Fiscal Year (the
"Prior Fiscal Year") is greater than 1.00, the amount of permitted Capital
Expenditures referenced above will be increased in the immediately succeeding
Fiscal Year by the positive amount equal to the difference obtained by taking
the Capital Expenditures limit specified above for such Prior Fiscal Year minus
the actual amount of any Capital Expenditures expended during such Prior Fiscal
Year (the "Carry Over Amount"), and for purposes of measuring compliance
herewith, the Carry Over Amount shall be deemed to be the last amount spent on
Capital Expenditures in such immediately succeeding Fiscal Year.

                                      G-1

<PAGE>

           (b) Minimum Fixed Charge Coverage Ratio. Borrower and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Fixed Charge Coverage Ratio for the 12-month period
then ended of not less than the following:

<TABLE>
<CAPTION>
     Fiscal Quarter ending                           Minimum Fixed Charge Coverage Ratio
     ---------------------                           -----------------------------------
<S>                                                  <C>
     September 30, 2003                                    0.65
     December 31, 2003                                     0.55
     March 31, 2004                                        0.60
     June 30, 2004                                         0.70
     September 30, 2004                                    1.00
     December 31, 2004                                     1.05
     March 31, 2005                                        1.10
     June 30, 2005                                         1.15
     September 30, 2005
     and each Fiscal Quarter ending thereafter             1.20
</TABLE>

           (c) Minimum EBITDA. Borrower and its Subsidiaries on a consolidated
basis shall have, at the end of each Fiscal Quarter set forth below, EBITDA for
the 12-month period then ended of not less than the following:

     Fiscal Quarter ending                           Minimum EBITDA
     ---------------------                           --------------

     September 30, 2003                               $37,125,000
     December 31, 2003                                 35,628,000
     March 31, 2004                                    36,445,000
     June 30, 2004                                     38,879,000
     September 30, 2004                                49,122,000
     December 31, 2004                                 54,343,000
     March 31, 2005                                    57,495,000
     June 30, 2005                                     60,689,000
     September 30, 2005
     and each Fiscal Quarter ending thereafter         62,000,000

           (d) Minimum Borrowing Availability. Borrower shall at all times
through June 30, 2004 have Borrowing Availability of at least $5,000,000.

           Unless otherwise specifically provided herein, any accounting term
used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial

                                       G-2

<PAGE>

covenants, standards or terms used in the Agreement or any other Loan Document,
then Borrower, Agent and Lenders agree to enter into negotiations in order to
amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.

                                       G-3

<PAGE>

                            ANNEX H (Section 9.9(a))
                                       to
                                CREDIT AGREEMENT

                            WIRE TRANSFER INFORMATION

         Name:             General Electric Capital Corporation
         Bank:             Deutsche Bank Trust Company Americas
                           New York, New York
         ABA #:            021001033
         Account #:        50232854
         Account Name:     GECC/CAF Depository
         Reference:        Applied Extrusion Technologies

                                       H-1

<PAGE>

                             ANNEX I (Section 11.10)
                                       to
                                CREDIT AGREEMENT

                                NOTICE ADDRESSES

(A)  If to Agent or GE Capital, at
     General Electric Capital Corporation
     401 Merritt Seven, 2nd Floor
     Norwalk, Connecticut 06856
     Attention: Jim Kaufman, Applied Extrusion Technologies, Inc, Account
     Manager
     Telecopier No.: 203-229-1922
     Telephone No.: 203-229-1832

     and to:

     General Electric Capital Corporation
     335 Madison Avenue
     12th Floor
     New York, New York 10017
     Attention: Applied Extrusion Technologies, Inc, Account Manager
     Telecopier No.: 212-309-8798
     Telephone No.: 212-370-8035

     and, with respect to any Default or Event of Default, to:

     Paul, Hastings, Janofsky & Walker LLP
     1055 Washington Boulevard
     Stamford, Connecticut 06901
     Attention: Mario J. Ippolito
     Telecopier No.: 203-674-7620
     Telephone No.: 203-961-7420

     and

     General Electric Capital Corporation
     401 Merritt Seven, 2nd Floor
     Norwalk, Connecticut 06856
     Attention: Corporate Counsel - Capital Funding, Inc.
     Telecopier No.: 203-229-1991
     Telephone No.: 203-229-1447

     and

                                      I-1

<PAGE>

     General Electric Capital Corporation
     201 High Ridge Road
     Stamford, Connecticut 06927-5100
     Attention: Corporate Counsel - Commercial Finance
     Telecopier No.: 203-316-7889
     Telephone No.: 203-316-7336

(B)  If to Borrower, at
     Applied Extrusion Technologies, Inc.
     15 Read's Way
     New Castle, Delaware 19720
     Attention: Brian Crescenzo
     Telecopier No.: (302) 326-5561
     Telephone No.: (302) 326-5525

     and, with respect to any Default or Event of Default, to:

     Ropes & Gray LLP
     45 Rockefeller Plaza
     New York, New York 10111
     Attention: Jeffrey L. Dunetz
     Telecopier No.: 212-841-5725
     Telephone No.: 212-497-3606

                                       I-2

<PAGE>

                 ANNEX J (from Annex A - Commitments definition)
                                       to
                                CREDIT AGREEMENT

                                                          Lender(s)
                                                          ---------

Revolving Loan Commitment
(including a Swing Line Commitment
of $5,000,000 and a Export-Related
Loan Commitment of $5,000,000)
$50,000,000.00                              General Electric Capital Corporation
                                            ------------------------------------

Term Loan Commitment:
$50,000,000.00                              General Electric Capital Corporation
                                            ------------------------------------

                                      J-1<PAGE>

                                                             Execution Version

                                                                     EXHIBIT 4.1

================================================================================

                              IMCO RECYCLING INC.,

                    THE SUBSIDIARY GUARANTORS PARTIES HERETO,

                                       AND

                              JPMORGAN CHASE BANK,
                                   AS TRUSTEE

                      10 3/8% Senior Secured Notes due 2010

                                   ----------

                                    INDENTURE

                           Dated as of October 6, 2003

                                   ----------

================================================================================

<PAGE>

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           -----
<S>                                                                                         <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE........................................ 1

    SECTION 1.1.   Definitions.............................................................. 1
    SECTION 1.2.   Other Definitions........................................................31
    SECTION 1.3.   Incorporation by Reference of Trust Indenture Act........................33
    SECTION 1.4.   Rules of Construction....................................................33

ARTICLE II THE SECURITIES...................................................................34

    SECTION 2.1.   Form, Dating and Terms...................................................34
    SECTION 2.2.   Execution and Authentication.............................................43
    SECTION 2.3.   Registrar and Paying Agent...............................................44
    SECTION 2.4.   Paying Agent to Hold Money in Trust......................................45
    SECTION 2.5.   Securityholder Lists.....................................................45
    SECTION 2.6.   Transfer and Exchange....................................................46
    SECTION 2.7.   Form of Certificate to be Delivered in Connection with
                    Transfers to Institutional Accredited Investors.........................49
    SECTION 2.8.   Form of Certificate to be Delivered in Connection with
                    Transfers Pursuant to Regulation S......................................51
    SECTION 2.9.   Mutilated, Destroyed, Lost or Stolen Securities..........................52
    SECTION 2.10.  Outstanding Securities...................................................53
    SECTION 2.11.  Temporary Securities.....................................................53
    SECTION 2.12.  Cancellation.............................................................54
    SECTION 2.13.  Payment of Interest; Defaulted Interest..................................54
    SECTION 2.14.  Computation of Interest..................................................55
    SECTION 2.15.  CUSIP, Common Code and ISIN Numbers......................................55

ARTICLE III COVENANTS.......................................................................56

    SECTION 3.1.   Payment of Securities....................................................56
    SECTION 3.2.   Limitation on Indebtedness...............................................56
    SECTION 3.3.   Limitation on Restricted Payments........................................61
    SECTION 3.4.   Limitation on Restrictions on Distributions from Restricted
                    Subsidiaries....................2
    SECTION 3.5.   Limitation on Sales of Assets and Subsidiary Stock.......................65
    SECTION 3.6.   Limitation on Liens......................................................68
    SECTION 3.7.   Limitation on Sale/Leaseback Transactions................................75
    SECTION 3.8.   Limitation on Affiliate Transactions.....................................75
    SECTION 3.9.   Limitation on Sale of Capital Stock of Restricted Subsidiaries...........77
    SECTION 3.10.  Change of Control........................................................77
    SECTION 3.11.  SEC Reports..............................................................79
    SECTION 3.12.  Future Subsidiary Guarantors.............................................80
    SECTION 3.13.  Maintenance of Office or Agency..........................................80
    SECTION 3.14.  Corporate Existence......................................................80
</TABLE>

i

<PAGE>

<TABLE>
                                                                                           Page
                                                                                           -----
<S>                                                                                         <C>
    SECTION 3.15.  Payment of Taxes and Other Claims........................................81
    SECTION 3.16.  Payments for Consent.....................................................81
    SECTION 3.17.  Compliance Certificate...................................................81
    SECTION 3.18.  Further Instruments and Acts.............................................81
    SECTION 3.19.  Limitation on Lines of Business..........................................81
    SECTION 3.20.  Statement by Officers as to Default......................................81
    SECTION 3.21.  VAW-IMCO Redemption Payment..............................................82

ARTICLE IV SUCCESSOR COMPANY................................................................82

    SECTION 4.1.   Merger and Consolidation.................................................82

ARTICLE V REDEMPTION OF SECURITIES..........................................................83

    SECTION 5.1.   Redemption...............................................................83
    SECTION 5.2.   Applicability of Article.................................................83
    SECTION 5.3.   Election to Redeem; Notice to Trustee....................................83
    SECTION 5.4.   Selection by Trustee of Securities to Be Redeemed........................84
    SECTION 5.5.   Notice of Redemption.....................................................84
    SECTION 5.6.   Deposit of Redemption Price..............................................85
    SECTION 5.7.   Securities Payable on Redemption Date....................................85
    SECTION 5.8.   Securities Redeemed in Part..............................................86

ARTICLE VI DEFAULTS AND REMEDIES............................................................86

    SECTION 6.1.   Events of Default........................................................86
    SECTION 6.2.   Acceleration.............................................................89
    SECTION 6.3.   Other Remedies...........................................................90
    SECTION 6.4.   Waiver of Past Defaults..................................................90
    SECTION 6.5.   Control by Majority......................................................90
    SECTION 6.6.   Limitation on Suits......................................................91
    SECTION 6.7.   Rights of Holders to Receive Payment.....................................91
    SECTION 6.8.   Collection Suit by Trustee...............................................91
    SECTION 6.9.   Trustee May File Proofs of Claim.........................................91
    SECTION 6.10.  Priorities...............................................................92
    SECTION 6.11.  Undertaking for Costs....................................................92

ARTICLE VII TRUSTEE.........................................................................93

    SECTION 7.1.   Duties of Trustee........................................................93
    SECTION 7.2.   Rights of Trustee........................................................94
    SECTION 7.3.   Individual Rights of Trustee.............................................95
    SECTION 7.4.   Trustee's Disclaimer.....................................................95
    SECTION 7.5.   Notice of Defaults.......................................................95
    SECTION 7.6.   Reports by Trustee to Holders............................................96
    SECTION 7.7.   Compensation and Indemnity...............................................96
    SECTION 7.8.   Replacement of Trustee...................................................97
    SECTION 7.9.   Successor Trustee by Merger..............................................98
    SECTION 7.10.  Eligibility; Disqualification............................................98
</TABLE>

ii

<PAGE>

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           -----
<S>                                                                                        <C>
    SECTION 7.11.  Preferential Collection of Claims Against the Company....................98
    SECTION 7.12.  Trustee's Application for Instruction from the Company...................99

ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE.............................................99

    SECTION 8.1.   Discharge of Liability on Securities; Defeasance.........................99
    SECTION 8.2.   Conditions to Defeasance................................................101
    SECTION 8.3.   Application of Trust Money..............................................102
    SECTION 8.4.   Repayment to the Company................................................102
    SECTION 8.5.   Indemnity for U.S. Government Obligations...............................102
    SECTION 8.6.   Reinstatement...........................................................102

ARTICLE IX AMENDMENTS......................................................................103

    SECTION 9.1.   Without Consent of Holders..............................................103
    SECTION 9.2.   With Consent of Holders.................................................104
    SECTION 9.3.   Compliance with Trust Indenture Act.....................................105
    SECTION 9.4.   Revocation and Effect of Consents and Waivers...........................105
    SECTION 9.5.   Notation on or Exchange of Securities...................................106
    SECTION 9.6.   Trustee To Sign Amendments..............................................106

ARTICLE X SUBSIDIARY GUARANTEE.............................................................106

    SECTION 10.1.  Subsidiary Guarantee....................................................106
    SECTION 10.2.  Limitation on Liability; Termination, Release and Discharge.............108
    SECTION 10.3.  Right of Contribution...................................................109
    SECTION 10.4.  No Subrogation..........................................................110

ARTICLE XI COLLATERAL AND SECURITY.........................................................110

    SECTION 11.1.  The Collateral..........................................................110
    SECTION 11.2.  Further Assurances......................................................111
    SECTION 11.3.  Release of Liens on the Collateral......................................112
    SECTION 11.4.  Authorization of Actions to be Taken by the Trustee
                    Under the Collateral Documents.........................................113
    SECTION 11.5.  Collateral Account......................................................115

ARTICLE XII MISCELLANEOUS..................................................................116

    SECTION 12.1.  Trust Indenture Act Controls............................................116
    SECTION 12.2.  Notices.................................................................116
    SECTION 12.3.  Communication by Holders with other Holders.............................117
    SECTION 12.4.  Certificate and Opinion as to Conditions Precedent......................117
    SECTION 12.5.  Statements Required in Certificate or Opinion...........................117
    SECTION 12.6.  When Securities Disregarded.............................................118
    SECTION 12.7.  Rules by Trustee, Paying Agent and Registrar............................118
    SECTION 12.8.  Legal Holidays..........................................................118
    SECTION 12.9.  GOVERNING LAW...........................................................118
</TABLE>

iii

<PAGE>

<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           -----
<S>                                                                                        <C>
    SECTION 12.10. No Recourse Against Others..............................................118
    SECTION 12.11. Successors..............................................................119
    SECTION 12.12. Multiple Originals......................................................119
    SECTION 12.13. Qualification of Indenture..............................................119
    SECTION 12.14. Table of Contents; Headings.............................................119
</TABLE>

SCHEDULE 3.4
SCHEDULE 3.8

EXHIBIT A  Form of the Series A Note
EXHIBIT B  Form of the Series B Note
EXHIBIT C  Form of Indenture Supplement to Add Subsidiary Guarantors

iv

<PAGE>

                              CROSS-REFERENCE TABLE

TIA                                                             Indenture
Section                                                          Section

310(a)(1)              .....................................      7.10
   (a)(2)              .....................................      7.10
   (a)(3)              .....................................      N.A.
   (a)(4)              .....................................      N.A.
   (a)(5)              .....................................      7.10
   (b)                 .....................................      7.8; 7.10
   (c)                 .....................................      N.A.
311(a)                 .....................................      7.11
   (b)                 .....................................      7.11
   (c)                 .....................................      N.A.
312(a)                 .....................................      2.5
   (b)                 .....................................     12.3
   (c)                 .....................................     12.3
313(a)                 .....................................      7.6
   (b)(1)              .....................................      N.A.
   (b)(2)              .....................................      7.6; 11.2
   (c)                 .....................................      7.6; 11.2
   (d)                 .....................................      7.6
314(a)                 .....................................    3.11; 3.17; 12.5
   (b)                 .....................................     11.2
   (c)(1)              .....................................     12.4
   (c)(2)              .....................................     12.4
   (c)(3)              .....................................      N.A.
   (d)                 .....................................     11.2; 11.3
   (e)                 .....................................     12.5
315(a)                 .....................................      7.1
   (b)                 .....................................      7.5; 12.2
   (c)                 .....................................      7.1
   (d)                 .....................................      7.1
   (e)                 .....................................      6.11
316(a)(last sentence)  .....................................     12.6
   (a)(1)(A)           .....................................      6.5
   (a)(1)(B)           .....................................      6.4
   (a)(2)              .....................................      N.A.
   (b)                 .....................................      6.7
   (c)                 .....................................      6.5
317(a)(1)              .....................................      6.8
   (a)(2)              .....................................      6.9
   (b)                 .....................................      2.4
318(a)                 .....................................     12.1

        N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.

v

<PAGE>

                INDENTURE dated as of October 6, 2003, among IMCO RECYCLING
INC., a Delaware corporation (the "Company"), THE SUBSIDIARY GUARANTORS (as
defined herein) party hereto and JPMORGAN CHASE BANK (the "Trustee"), as
Trustee.

                Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of (i) the
Company's 10 3/8% Senior Secured Notes, Series A, due 2010, issued on the date
hereof and the guarantees thereof by certain of the Company's subsidiaries (the
"Initial Securities"), (ii) if and when issued, an unlimited principal amount of
additional 10 3/8% Senior Secured Notes, Series A, due 2010 in a non-registered
offering or 10 3/8% Senior Secured Notes, Series B, due 2010 in a registered
offering of the Company, and the guarantees thereof by certain of the Company's
subsidiaries that may be offered from time to time subsequent to the Issue Date,
in each case subject to Section 2.1 (the "Additional Securities") as provided in
Section 2.1(a) and (iii) if and when issued, the Company's 10 3/8% Senior
Secured Notes, Series B, due 2010 and the guarantees thereof by certain of the
Company's subsidiaries that may be issued from time to time in exchange for
Initial Securities or any Additional Securities in an offer registered under the
Securities Act as provided in the Registration Rights Agreement, as hereinafter
defined, (the "Exchange Securities," and together with the Initial Securities
and Additional Securities, the "Securities").

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                SECTION 1.1.  Definitions.

                "Acquired Indebtedness" means Indebtedness (i) of a Person or
any of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or (ii) assumed in connection with the acquisition of assets from
such Person, in each case whether or not Incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have
been Incurred, with respect to clause (i) of the preceding sentence, on the date
such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of
the preceding sentence, on the date of consummation of such acquisition of
assets.

                "Additional Assets" means:

                (1) any property or assets (other than Indebtedness and Capital
        Stock) to be used by the Company or a Restricted Subsidiary in a Related
        Business;

                (2) the Capital Stock of a Person that becomes a Restricted
        Subsidiary as a result of the acquisition of such Capital Stock by the
        Company or a Restricted Subsidiary; or

                (3) Capital Stock constituting a minority interest in any Person
        that at such time is a Restricted Subsidiary;

<PAGE>

                                                                               2

provided, however, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Related Business.

                "Additional Securities" has the meaning ascribed to it in the
second introductory paragraph of this Indenture.

                "Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that beneficial ownership of 15% or more of the Voting Stock of a
Person shall be deemed to be control.

                "Asset Disposition" means any direct or indirect sale, lease
(other than an operating lease or sublease entered into in the ordinary course
of business), transfer, issuance or other disposition, or a series of related
sales, leases, transfers, issuances or dispositions that are part of a common
plan, of shares of Capital Stock of a Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by the Company or any of its Restricted
Subsidiaries, including any disposition by means of a merger, consolidation or
similar transaction (provided that (i) the disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries, taken as a
whole, will be governed by Section 3.10 and Section 4.1 and (ii) the disposition
of all the Voting Stock of or all or substantially all of the assets of any
Subsidiary Guarantor will be governed by Section 3.9 and Section 10.2(b),
respectively).

                Notwithstanding the preceding, the following items shall not be
deemed to be Asset Dispositions:

                (1)     a disposition by a Restricted Subsidiary to the Company
        or by the Company or a Restricted Subsidiary to a Wholly-Owned
        Subsidiary (other than a Receivables Entity); provided that in the case
        of a sale by a Restricted Subsidiary to another Restricted Subsidiary,
        the Company directly or indirectly owns an equal or greater percentage
        of the Common Stock of the transferee than of the transferor;

                (2)     the sale of Cash Equivalents in the ordinary course of
        business;

                (3)     a disposition of inventory in the ordinary course of
        business;

                (4)     a disposition of obsolete, retired or worn out equipment
        or equipment that is no longer useful in the conduct of the business of
        the Company and its Restricted Subsidiaries and that is disposed of in
        each case in the ordinary course of business;

                (5)     transactions permitted under Section 4.1;

                (6)     an issuance of Capital Stock by a Restricted Subsidiary
        to the Company or to a Wholly-Owned Subsidiary (other than a Receivables
        Entity);

<PAGE>

                                                                               3

                (7)     for purposes of Section 3.5 only, the making of a
        Permitted Investment or a disposition subject to Section 3.3;

                (8)     an Asset Swap effected in compliance with Section 3.5;

                (9)     sales of accounts receivable and related assets or an
        interest therein of the type specified in the definition of "Qualified
        Receivables Transaction" to a Receivables Entity;

                (10)    dispositions of assets with an aggregate fair market
        value during any calendar year not exceeding $500,000;

                (11)    dispositions in connection with Permitted Liens;

                (12)    dispositions of receivables in connection with (i) a
        Qualified Receivables Transaction and (ii) the compromise, settlement or
        collection of receivables in the ordinary course of business or in
        bankruptcy or similar proceedings and exclusive of factoring or similar
        arrangements;

                (13)    the licensing or sublicensing of intellectual property
        or other general intangibles and licenses, leases or subleases of other
        property in the ordinary course of business which do not materially
        interfere with the business of the Company and its Restricted
        Subsidiaries; and

                (14)    foreclosure on assets.

                "Asset Swap" means concurrent purchase and sale or exchange of
Related Business Assets between the Company or any of its Restricted
Subsidiaries and another Person; provided that any cash received must be applied
in accordance with Section 3.5.

                "Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded
semi-annually) of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been extended).

                "Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (1) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (2) the sum of all
such payments.

                "Bankruptcy Law" means Title 11 of the United States Code or
similar federal or state law for the relief of debtors.

                "Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.

<PAGE>

                                                                               4

                "Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of a Person to have been duly adopted by the
Board of Directors of such Person and to be in full force and effect on the date
of such certification, and delivered to the Trustee.

                "Borrowing Base" means, as of the date of determination, an
amount equal to the sum, without duplication of (1) 85% of the net book value of
the Company's and its Subsidiary Guarantors' accounts receivable at such date
(other than any accounts receivable pledged or otherwise transferred or
encumbered in connection with a Qualified Receivables Transaction) and (2) 65%
of the net book value of the Company's and its Subsidiary Guarantors'
inventories at such date. Net book value shall be determined in accordance with
GAAP and shall be that reflected on the most recent available balance sheet (it
being understood that the accounts receivable and inventories of an acquired
business may be included if such acquisition has been completed on or prior to
the date of determination).

                "Business Day" means each day that is not a Saturday, Sunday or
other day on which banking institutions in New York, New York are authorized or
required by law to close.

                "Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.

                "Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation will be the capitalized amount of such obligation
at the time any determination thereof is to be made as determined in accordance
with GAAP, and the Stated Maturity thereof will be the date of the last payment
of rent or any other amount due under such lease prior to the first date such
lease may be terminated without penalty.

                "Cash Equivalents" means:

                (1)     securities issued or directly and fully guaranteed or
        insured by the United States Government or any agency or instrumentality
        of the United States (provided that the full faith and credit of the
        United States is pledged in support thereof), having maturities of not
        more than one year from the date of acquisition;

                (2)     marketable general obligations issued by any state of
        the United States of America or any political subdivision of any such
        state or any public instrumentality thereof maturing within one year
        from the date of acquisition and, at the time of acquisition, having a
        credit rating of "A" or better from either Standard & Poor's Ratings
        Services or Moody's Investors Service, Inc.;

                (3)     demand deposits, trust accounts, certificates of
        deposit, time deposits, eurodollar time deposits, overnight bank
        deposits or bankers' acceptances having maturities of not more than one
        year from the date of acquisition thereof issued by any commercial bank
        the long-term debt of which is rated at the time of acquisition thereof
        at

<PAGE>

                                                                               5

        least "A" or the equivalent thereof by Standard & Poor's Ratings
        Services, or "A" or the equivalent thereof by Moody's Investors Service,
        Inc., and having combined capital and surplus in excess of $500 million;

                (4)     repurchase obligations with a term of not more than 30
        days for underlying securities of the types described in clauses (1),
        (2) and (3) entered into with any bank meeting the qualifications
        specified in clause (3) above;

                (5)     commercial paper rated at the time of acquisition
        thereof at least "A-2" or the equivalent thereof by Standard & Poor's
        Ratings Services or "P-2" or the equivalent thereof by Moody's Investors
        Service, Inc., or carrying an equivalent rating by a nationally
        recognized rating agency, if both of the two named rating agencies cease
        publishing ratings of investments, and in any case maturing within one
        year after the date of acquisition thereof;

                (6)     interests in any investment company or money market fund
        which invests 95% or more of its assets in instruments of the type
        specified in clauses (1) through (5) above; and

                (7)     securities, bank accounts, investments, interests and
        other assets that are purchased by a Foreign Subsidiary and that are (i)
        comparable in nature, but not in risk or identity of issuer, to the
        foregoing but reflecting local business, governmental and capital
        markets conditions in the country in which the applicable Foreign
        Subsidiary is doing business or maintaining cash, (ii) reasonably
        necessary for the short term management of the cash of Foreign
        Subsidiaries, and (iii) prudent investments for a Foreign Subsidiary
        under the applicable circumstances in the country in which such Foreign
        Subsidiary is doing business.

                "Change of Control" means:

                (1)     any "person" or "group" of related persons (as such
        terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or
        becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
        the Exchange Act, except that such person or group shall be deemed to
        have "beneficial ownership" of all shares that any such person or group
        has the right to acquire, whether such right is exercisable immediately
        or only after the passage of time), directly or indirectly, of more than
        35% of the total voting power of the Voting Stock of the Company (or its
        successor by merger, consolidation or purchase of all or substantially
        all of its assets) (for the purposes of this clause, such person or
        group shall be deemed to beneficially own any Voting Stock of the
        Company held by a parent entity, if such person or group "beneficially
        owns" (as defined above), directly or indirectly, more than 35% of the
        voting power of the Voting Stock of such parent entity); or

                (2)     the first day on which a majority of the members of the
        Board of Directors of the Company are not Continuing Directors; or

                (3)     the sale, lease, transfer, conveyance or other
        disposition (other than by way of merger or consolidation), in one or a
        series of related transactions, of all or substantially

<PAGE>

                                                                               6

        all of the assets of the Company and its Restricted Subsidiaries taken
        as a whole to any "person" (as such term is used in Sections 13(d) and
        14(d) of the Exchange Act); or

                (4)     the adoption by the stockholders of the Company of a
        plan or proposal for the liquidation or dissolution of the Company.

                "Code" means the Internal Revenue Code of 1986, as amended.

                "Collateral" means the property and assets pledged on a first
priority basis as security for the Securities, consisting of the real property,
fixtures, equipment and the Intercompany Note that are pledged as collateral
pursuant to the Collateral Documents and any additional property or assets that
are pledged as collateral pursuant to the terms hereof.

                "Collateral Account" means a segregated account under the sole
control of the Trustee that includes all cash and Cash Equivalents received by
the Trustee from Asset Dispositions of Collateral, Recovery Events, Asset Swaps
involving the transfer of Collateral, Intercompany Note Payments, foreclosures
on or sales of the Collateral, the VAW-IMCO Redemption Payment, any issuance of
Additional Securities or any other awards or proceeds pursuant to the Collateral
Documents, including earnings, revenues, rents, issues, profits and income from
the Collateral received pursuant to the Collateral Documents, and interest
earned thereon, and is free from all other Liens.

                "Collateral Documents" means the mortgages, deeds of trust,
deeds to secure debt, security agreements, pledge agreements, agency agreements
and other instruments and documents executed and delivered pursuant to this
Indenture or any of the foregoing, as the same may be amended, supplemented or
otherwise modified from time to time and pursuant to which Collateral is
pledged, assigned or granted to or on behalf of the Trustee for the ratable
benefit of the Holders and the Trustee or notice of such pledge, assignment or
grant is given.

                "Common Stock" means with respect to any Person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of such Person's common stock
whether or not outstanding on the Issue Date, and includes, without limitation,
all series and classes of such common stock.

                "Company" means the Person named as the "Company" in the first
introductory paragraph of this instrument until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor Person.

                "Consolidated Coverage Ratio" means as of any date of
determination, with respect to any Person, the ratio of (x) the aggregate amount
of Consolidated EBITDA of such Person for the period of the most recent four
consecutive fiscal quarters ending prior to the date of such determination for
which financial statements are in existence to (y) Consolidated Interest Expense
for such four fiscal quarters, provided, however, that:

                (1)     if the Company or any Restricted Subsidiary:

<PAGE>

                                                                               7

                (a)     has Incurred any Indebtedness since the beginning of
                        such period that remains outstanding on such date of
                        determination or if the transaction giving rise to the
                        need to calculate the Consolidated Coverage Ratio is an
                        Incurrence of Indebtedness, Consolidated EBITDA and
                        Consolidated Interest Expense for such period will be
                        calculated after giving effect on a pro forma basis to
                        such Indebtedness as if such Indebtedness had been
                        Incurred on the first day of such period (except that in
                        making such computation, the amount of Indebtedness
                        under any revolving credit facility outstanding on the
                        date of such calculation will be deemed to be (i) the
                        average daily balance of such Indebtedness during such
                        four fiscal quarters or such shorter period for which
                        such facility was outstanding or (ii) if such facility
                        was created after the end of such four fiscal quarters,
                        the average daily balance of such Indebtedness during
                        the period from the date of creation of such facility to
                        the date of such calculation) and the discharge of any
                        other Indebtedness repaid, repurchased, defeased or
                        otherwise discharged with the proceeds of such new
                        Indebtedness as if such discharge had occurred on the
                        first day of such period; or

                (b)     has repaid, repurchased, defeased or otherwise
                        discharged any Indebtedness since the beginning of the
                        period that is no longer outstanding on such date of
                        determination or if the transaction giving rise to the
                        need to calculate the Consolidated Coverage Ratio
                        involves a discharge of Indebtedness (in each case other
                        than Indebtedness Incurred under any revolving credit
                        facility unless such Indebtedness has been permanently
                        repaid and the related commitment terminated),
                        Consolidated EBITDA and Consolidated Interest Expense
                        for such period will be calculated after giving effect
                        on a pro forma basis to such discharge of such
                        Indebtedness, including with the proceeds of such new
                        Indebtedness, as if such discharge had occurred on the
                        first day of such period;

                (2)     if since the beginning of such period the Company or any
        Restricted Subsidiary will have made any Asset Disposition or disposed
        of any company, division, operating unit, segment, business, group of
        related assets or line of business or if the transaction giving rise to
        the need to calculate the Consolidated Coverage Ratio is such an Asset
        Disposition:

                (a)     the Consolidated EBITDA for such period will be reduced
                        by an amount equal to the Consolidated EBITDA (if
                        positive) directly attributable to the assets which are
                        the subject of such Asset Disposition for such period or
                        increased by an amount equal to the Consolidated EBITDA
                        (if negative) directly attributable thereto for such
                        period; and

                (b)     Consolidated Interest Expense for such period will be
                        reduced by an amount equal to the Consolidated Interest
                        Expense directly attributable to any Indebtedness of the
                        Company or any Restricted Subsidiary repaid,
                        repurchased, defeased or otherwise discharged with
                        respect to the Company and its continuing Restricted
                        Subsidiaries in connection with

<PAGE>

                                                                               8

                        such Asset Disposition for such period (or, if the
                        Capital Stock of any Restricted Subsidiary is sold, the
                        Consolidated Interest Expense for such period directly
                        attributable to the Indebtedness of such Restricted
                        Subsidiary to the extent the Company and its continuing
                        Restricted Subsidiaries are no longer liable for such
                        Indebtedness after such sale);

                (3)     if since the beginning of such period the Company or any
        Restricted Subsidiary (by merger or otherwise) will have made an
        Investment in any Restricted Subsidiary (or any Person which becomes a
        Restricted Subsidiary or is merged with or into the Company) or an
        acquisition of assets, including any acquisition of assets occurring in
        connection with a transaction causing a calculation to be made
        hereunder, which constitutes all or substantially all of a company,
        division, operating unit, segment, business, group of related assets or
        line of business, Consolidated EBITDA and Consolidated Interest Expense
        for such period will be calculated after giving pro forma effect thereto
        (including the Incurrence of any Indebtedness) as if such Investment or
        acquisition occurred on the first day of such period; and

                (4)     if since the beginning of such period any Person (that
        subsequently became a Restricted Subsidiary or was merged with or into
        the Company or any Restricted Subsidiary since the beginning of such
        period) will have Incurred any Indebtedness or discharged any
        Indebtedness, made any Asset Disposition or any Investment or
        acquisition of assets that would have required an adjustment pursuant to
        clause (2) or (3) above if made by the Company or a Restricted
        Subsidiary during such period, Consolidated EBITDA and Consolidated
        Interest Expense for such period will be calculated after giving pro
        forma effect thereto as if such Asset Disposition or Investment or
        acquisition of assets occurred on the first day of such period.

                For purposes of this definition, whenever pro forma effect is to
be given to any calculation under this definition, the pro forma calculations
will be determined in good faith by a responsible financial or accounting
officer of the Company (including pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities Act).
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness will be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months). If any Indebtedness that is being given pro forma effect bears an
interest rate at the option of the Company, the interest rate shall be
calculated by applying such optional rate chosen by the Company.

                "Consolidated EBITDA" for any period means, without duplication,
the Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:

                (1)     Consolidated Interest Expense;

                (2)     Consolidated Income Taxes;

<PAGE>

                                                                               9

                (3)     consolidated depreciation expense;

                (4)     consolidated amortization expense or impairment charges
        recorded in connection with the application of Financial Accounting
        Standard No. 142 "Goodwill and Other Intangibles"; and

                (5)     other non-cash charges reducing Consolidated Net Income,
        including an amount not to exceed $1.0 million with respect to the
        write-off of financing costs in connection with the refinancing of
        Indebtedness with the proceeds from the sale of the Initial Securities,
        (but, in any event, excluding any such non-cash charge to the extent it
        represents an accrual of or reserve for cash charges in any future
        period or amortization of a prepaid cash expense that was paid in a
        prior period not included in the calculation).

                Notwithstanding the preceding sentence, clauses (2) through (5)
relating to amounts of a Restricted Subsidiary of a Person will be added to
Consolidated Net Income to compute Consolidated EBITDA of such Person only to
the extent (and in the same proportion) that the net income (loss) of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person and, to the extent the amounts set forth in clauses (2) through (5)
are in excess of those necessary to offset a net loss of such Restricted
Subsidiary or if such Restricted Subsidiary has net income for such period
included in Consolidated Net Income, only if a corresponding amount would be
permitted at the date of determination to be dividended to the Company by such
Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.

                "Consolidated Income Taxes" means, with respect to any Person
for any period, taxes imposed upon such Person or other payments required to be
made by such Person by any governmental authority which taxes or other payments
are calculated by reference to the income or profits of such Person or such
Person and its Restricted Subsidiaries (to the extent such income or profits
were included in computing Consolidated Net Income for such period), regardless
of whether such taxes or payments are required to be remitted to any
governmental authority.

                "Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its consolidated Restricted Subsidiaries,
whether paid or accrued, plus, to the extent not included in such interest
expense:

                (1)     interest expense attributable to Capitalized Lease
        Obligations and the interest portion of rent expense associated with
        Attributable Indebtedness in respect of the relevant lease giving rise
        thereto, determined as if such lease were a capitalized lease in
        accordance with GAAP and the interest component of any deferred payment
        obligations;

                (2)     amortization of debt discount and debt issuance cost
        (provided that any amortization of bond premium will be credited to
        reduce Consolidated Interest Expense

<PAGE>

                                                                              10

        unless, pursuant to GAAP, such amortization of bond premium has
        otherwise reduced Consolidated Interest Expense);

                (3)     non-cash interest expense;

                (4)     commissions, discounts and other fees and charges owed
        with respect to letters of credit and bankers' acceptance financing;

                (5)     the interest expense on Indebtedness of another Person
        that is Guaranteed by such Person or one of its Restricted Subsidiaries
        or secured by a Lien on assets of such Person or one of its Restricted
        Subsidiaries;

                (6)     net costs, after giving effect to the effects of the
        underlying hedged transaction, associated with Hedging Obligations
        (including amortization of fees) provided, however, that if Hedging
        Obligations result in net benefits rather than net costs, such benefits
        shall be credited to reduce Consolidated Interest Expense unless,
        pursuant to GAAP, such net benefits are otherwise reflected in
        Consolidated Net Income;

                (7)     the consolidated interest expense of such Person and its
        Restricted Subsidiaries that was capitalized during such period;

                (8)     the product of (a) all dividends paid or payable, in
        cash, Cash Equivalents or Indebtedness or accrued during such period on
        any series of Disqualified Stock of such Person or on Preferred Stock of
        its Restricted Subsidiaries payable to a party other than the Company or
        a Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which
        is one and the denominator of which is one minus the then current
        combined federal, state, provincial and local statutory tax rate of such
        Person, expressed as a decimal, in each case, on a consolidated basis
        and in accordance with GAAP;

                (9)     Receivables Fees; and

                (10)    the cash contributions to any employee stock ownership
        plan or similar trust to the extent such contributions are used by such
        plan or trust to pay interest or fees to any Person (other than the
        Company) in connection with Indebtedness Incurred by such plan or trust.

                For the purpose of calculating the Consolidated Coverage Ratio
in connection with the Incurrence of any Indebtedness described in the final
paragraph of the definition of "Indebtedness", the calculation of Consolidated
Interest Expense shall include all interest expense (including any amounts
described in clauses (1) through (10) above) relating to any Indebtedness of the
Company or any Restricted Subsidiary described in the final paragraph of the
definition of "Indebtedness".

                For purposes of the foregoing, total interest expense will be
determined (i) after giving effect to any net payments made or received by the
Company and its Subsidiaries with respect to Interest Rate Agreements and (ii)
exclusive of amounts classified as other comprehensive income in the balance
sheet of the Company. Notwithstanding anything to the contrary contained herein,
commissions, discounts, yield and other fees and charges Incurred in

<PAGE>

                                                                              11

connection with any transaction pursuant to which the Company or its Restricted
Subsidiaries may sell, convey or otherwise transfer or grant a security interest
in any accounts receivable or related assets shall be included in Consolidated
Interest Expense.

                "Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Restricted Subsidiaries determined in
accordance with GAAP; provided, however, that there will not be included in such
Consolidated Net Income:

                (1)     any net income (loss) of any Person if such Person is
        not a Restricted Subsidiary, except that:

                (a)     subject to the limitations contained in clauses (3), (4)
                        and (5) below, the Company's equity in the net income of
                        any such Person for such period will be included in such
                        Consolidated Net Income up to the aggregate amount of
                        cash actually distributed by such Person during such
                        period to the Company or a Restricted Subsidiary as a
                        dividend or other distribution (subject, in the case of
                        a dividend or other distribution to a Restricted
                        Subsidiary, to the limitations contained in clause (2)
                        below); and

                (b)     the Company's equity in a net loss of any such Person
                        (other than an Unrestricted Subsidiary) for such period
                        will be included in determining such Consolidated Net
                        Income to the extent such loss has been funded with cash
                        from the Company or a Restricted Subsidiary;

                (2)     any net income (but not loss) of any Restricted
        Subsidiary if such Restricted Subsidiary is then restricted, directly or
        indirectly, in the payment of dividends or the making of distributions
        by such Restricted Subsidiary, to the Company, except that:

                (a)     subject to the limitations contained in clauses (3), (4)
                        and (5) below, the Company's equity in the net income of
                        any such Restricted Subsidiary for such period will be
                        included in such Consolidated Net Income up to the
                        aggregate amount of cash that could have been
                        distributed by such Restricted Subsidiary during such
                        period to the Company or another Restricted Subsidiary
                        as a dividend (subject, in the case of a dividend to
                        another Restricted Subsidiary, to the limitation
                        contained in this clause); and

                (b)     the Company's equity in a net loss of any such
                        Restricted Subsidiary for such period will be included
                        in determining such Consolidated Net Income;

                (3)     any gain (loss) realized upon the sale or other
        disposition of any property, plant or equipment of the Company or its
        consolidated Restricted Subsidiaries (including pursuant to any
        Sale/Leaseback Transaction) which is not sold or otherwise disposed of
        in the ordinary course of business and any gain (loss) realized upon the
        sale or other disposition of any Capital Stock of any Person;

<PAGE>

                                                                              12

                (4)     any extraordinary gain or loss;

                (5)     the cumulative effect of a change in accounting
        principles; and

                (6)     gains or losses arising from the repurchase, repayment
        or redemption of Indebtedness with the proceeds from the sale of the
        Initial Securities (including for these purposes, gain or losses arising
        from the making of the VAW-IMCO Redemption Payment).

                "Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who: (1) was a member of
such Board of Directors on the date of the Indenture; or (2) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.

                "Credit Facility" means, with respect to the Company or any
Subsidiary Guarantor, one or more debt facilities (including, without
limitation, the Senior Secured Credit Agreement) or commercial paper facilities
with banks or other institutional lenders providing for revolving credit loans,
term loans, Qualified Receivables Transactions, receivables financing (including
through the sale of receivables to such lenders or to special purpose entities
formed to borrow from such lenders against such receivables) or letters of
credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time (and whether or not
with the original administrative agent and lenders or another administrative
agent or agents or other lenders and whether provided under the original Senior
Secured Credit Agreement or any other credit or other agreement or indenture).

                "Credit Facility Collateral Documents" means agreements,
pledges, agency agreements and other instruments and documents creating or
perfecting Liens and executed and delivered pursuant to any Credit Facility.

                "Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement, futures contract, option contract or
other similar agreement as to which such Person is a party or a beneficiary.

                "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.

                "Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.

                "Definitive Securities" means certificated Securities.

                "Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or upon the
happening of any event:

                (1)     matures or is mandatorily redeemable pursuant to a
        sinking fund obligation or otherwise;

<PAGE>

                                                                              13

                (2)     is convertible or exchangeable for Indebtedness or
        Disqualified Stock (excluding Capital Stock which is convertible or
        exchangeable solely at the option of the Company or a Restricted
        Subsidiary); or

                (3)     is redeemable at the option of the holder of the Capital
        Stock in whole or in part,

in each case on or prior to the date that is 91 days after the earlier of the
date (a) of the Stated Maturity of the Securities or (b) on which there are no
Securities outstanding, provided that only the portion of Capital Stock which so
matures or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such date will be deemed
to be Disqualified Stock; provided, further that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or asset sale (each defined in a substantially identical
manner to the corresponding definitions in this Indenture) shall not constitute
Disqualified Stock if the terms of such Capital Stock (and all such securities
into which it is convertible or for which it is ratable or exchangeable) provide
that the Company may not repurchase or redeem any such Capital Stock (and all
such securities into which it is convertible or for which it is ratable or
exchangeable) pursuant to such provision prior to compliance by the Company with
the provisions of this Indenture described under Sections 3.10 and 3.5 and such
repurchase or redemption complies with Section 3.3.

                "Domestic Subsidiary" means any Restricted Subsidiary that is
organized under the laws of the United States of America or any state thereof or
the District of Columbia.

                "DTC" means The Depository Trust Company, its nominees and their
respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.

                "Equity Offering" means a public or private sale for cash by the
Company of its Common Stock, or options, warrants or rights with respect to its
Common Stock, other than public offerings with respect to the Company's Common
Stock, or options, warrants or rights, registered on Form S-4 or S-8.

                "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

                "Exchange Securities" has the meaning ascribed to it in the
second introductory paragraph of this Indenture.

                "Fiscal Year" means the fiscal year of the Company ending on
December 31 of each year.

                "Foreign Subsidiary" means any Restricted Subsidiary that is not
organized under the laws of the United States of America or any state thereof or
the District of Columbia.

                "GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including those set forth in the opinions and

<PAGE>

                                                                              14

pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession. All ratios and
computations based on GAAP contained in this Indenture will be computed in
conformity with GAAP.

                "Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
Person:

                (1)     to purchase or pay (or advance or supply funds for the
        purchase or payment of) such Indebtedness of such other Person (whether
        arising by virtue of partnership arrangements, or by agreement to
        keep-well, to purchase assets, goods, securities or services, to
        take-or-pay, or to maintain financial statement conditions or
        otherwise); or

                (2)     entered into for purposes of assuring in any other
        manner the obligee of such Indebtedness of the payment thereof or to
        protect such obligee against loss in respect thereof (in whole or in
        part); provided, however, that the term "Guarantee" will not include
        endorsements for collection or deposit in the ordinary course of
        business. The term "Guarantee" used as a verb has a corresponding
        meaning.

                "Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is expressly
subordinate in right of payment to the obligations of such Subsidiary Guarantor
under its Subsidiary Guarantee pursuant to a written agreement.

                "Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.

                "Holder" or "Securityholder" means a Person in whose name a
Security is registered in the Securities Register.

                "IAI" means an institutional "accredited investor" as described
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

                "Incur" means issue, create, assume, Guarantee, incur or
otherwise become liable for; provided, however, that any Indebtedness or Capital
Stock of a Person existing at the time such Person becomes a Restricted
Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be
deemed to be Incurred by such Restricted Subsidiary at the time it becomes a
Restricted Subsidiary; and the terms "Incurred" and "Incurrence" have meanings
correlative to the foregoing.

                "Indebtedness" means, with respect to any Person on any date of
determination (without duplication):

                (1)     the principal of and premium (if any) in respect of
        indebtedness of such Person for borrowed money;

<PAGE>

                                                                              15

                (2)     the principal of and premium (if any) in respect of
        obligations of such Person evidenced by bonds, debentures, notes or
        other similar instruments;

                (3)     the principal component of all obligations of such
        Person in respect of letters of credit, bankers' acceptances or other
        similar instruments (including reimbursement obligations with respect
        thereto except to the extent such reimbursement obligation relates to a
        trade payable and such obligation is satisfied within 30 days of
        Incurrence);

                (4)     the principal component of all obligations of such
        Person to pay the deferred and unpaid purchase price of property (except
        trade payables), which purchase price is due more than six months after
        the date of placing such property in service or taking delivery and
        title thereto;

                (5)     Capitalized Lease Obligations and all Attributable
        Indebtedness of such Person;

                (6)     the principal component or liquidation preference of all
        obligations of such Person with respect to the redemption, repayment or
        other repurchase of any Disqualified Stock or, with respect to any
        Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock;

                (7)     the principal component of all Indebtedness of other
        Persons secured by a Lien on any asset of such Person, whether or not
        such Indebtedness is assumed by such Person; provided, however, that the
        amount of such Indebtedness will be the lesser of (a) the fair market
        value of such asset at such date of determination and (b) the amount of
        such Indebtedness of such other Persons;

                (8)     the principal component of Indebtedness of other Persons
        to the extent Guaranteed by such Person; and

                (9)     to the extent not otherwise included in this definition,
        net obligations of such Person under Currency Agreements and Interest
        Rate Agreements (the amount of any such obligations to be equal at any
        time to the termination value of such agreement or arrangement giving
        rise to such obligation that would be payable by such Person at such
        time).

                The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.

                In addition, "Indebtedness" of any Person shall include
Indebtedness described in the preceding paragraph that would not appear as a
liability on the balance sheet of such Person if:

                (1)     such Indebtedness is the obligation of a partnership or
        joint venture that is not a Restricted Subsidiary (a "Joint Venture");

<PAGE>

                                                                              16

                (2)     such Person or a Restricted Subsidiary of such Person is
        a general partner of the Joint Venture (a "General Partner"); and

                (3)     there is recourse, by contract or operation of law, with
        respect to the payment of such Indebtedness to property or assets of
        such Person or a Restricted Subsidiary of such Person; and then such
        Indebtedness shall be included in an amount not to exceed:

                (a)     the lesser of (i) the net assets of the General Partner
                        and (ii) the amount of such obligations to the extent
                        that there is recourse, by contract or operation of law,
                        to the property or assets of such Person or a Restricted
                        Subsidiary of such Person; or

                (b)     if less than the amount determined pursuant to clause
                        (a) immediately above, the actual amount of such
                        Indebtedness that is recourse to such Person or a
                        Restricted Subsidiary of such Person, if the
                        Indebtedness is evidenced by a writing and is for a
                        determinable amount..

                "Indenture" means this Indenture as amended or supplemented from
time to time.

                "Initial Purchasers" means, collectively, J.P. Morgan Securities
Inc., PNC Capital Markets, Inc. and Citigroup Global Markets, Inc. with respect
to the Initial Securities.

                "Initial Securities" has the meaning ascribed to it in the
second introductory paragraph of this Indenture.

                "Intercompany Note" means the intercompany note pledged as
Collateral pursuant to the Collateral Documents.

                "Intercompany Note Payments" means prepayments or payments of
interest or principal of the Indebtedness evidenced by the Intercompany Note.

                "Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.

                "Investment" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the form of any direct
or indirect advance, loan (other than advances or extensions of credit to
customers in the ordinary course of business) or other extensions of credit
(including by way of Guarantee or similar arrangement, but excluding any debt or
extension of credit represented by a bank deposit other than a time deposit) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by, such Person and all other items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP; provided that none of the following will be deemed to be an Investment:

<PAGE>

                                                                              17

                (1)     Hedging Obligations entered into in the ordinary course
        of business and in compliance with this Indenture;

                (2)     endorsements of negotiable instruments and documents in
        the ordinary course of business; and

                (3)     an acquisition of assets, Capital Stock or other
        securities by the Company or a Subsidiary for consideration to the
        extent such consideration consists of Common Stock of the Company.

                For purposes of Section 3.3,

                (1)     "Investment" will include the portion (proportionate to
        the Company's equity interest in a Restricted Subsidiary to be
        designated as an Unrestricted Subsidiary) of the fair market value of
        the net assets of such Restricted Subsidiary at the time that such
        Restricted Subsidiary is designated an Unrestricted Subsidiary;
        provided, however, that upon a redesignation of such Subsidiary as a
        Restricted Subsidiary, the Company will be deemed to continue to have a
        permanent "Investment" in an Unrestricted Subsidiary in an amount (if
        positive) equal to (a) the Company's "Investment" in such Subsidiary at
        the time of such redesignation less (b) the portion (proportionate to
        the Company's equity interest in such Subsidiary) of the fair market
        value of the net assets (as conclusively determined by the Board of
        Directors of the Company in good faith) of such Subsidiary at the time
        that such Subsidiary is so re-designated a Restricted Subsidiary; and

                (2)     any property transferred to or from an Unrestricted
        Subsidiary will be valued at its fair market value at the time of such
        transfer, in each case as determined in good faith by the Board of
        Directors of the Company.

                "Issue Date" means October 6, 2003.

                "Legal Holiday" has the meaning ascribed to it in Section 12.8.

                "Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).

                "Net Available Cash" from an Asset Disposition, Recovery Event,
Asset Swap or prepayments of the Intercompany Note means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and net proceeds from
the sale or other disposition of any securities received as consideration, but
only as and when received, but excluding any other consideration received in the
form of assumption by the acquiring person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset
Disposition or received in any other non-cash form) therefrom, in each case net
of:

                (1)     all legal, accounting, investment banking, title and
        recording tax expenses, commissions and other fees and expenses
        Incurred, and all Federal, state, provincial,

<PAGE>

                                                                              18

        foreign and local taxes required to be paid or accrued as a liability
        under GAAP (after taking into account any available tax credits or
        deductions and any tax sharing agreements), as a consequence of such
        Asset Disposition;

                (2)     all payments made on any Indebtedness which is secured
        by any assets subject to such Asset Disposition, in accordance with the
        terms of any Lien upon such assets, or which must by its terms, or in
        order to obtain a necessary consent to such Asset Disposition, or by
        applicable law be repaid out of the proceeds from such Asset
        Disposition;

                (3)     all distributions and other payments required to be made
        to minority interest holders in Subsidiaries or joint ventures as a
        result of such Asset Disposition; and

                (4)     the deduction of appropriate amounts to be provided by
        the seller as a reserve, in accordance with GAAP, against any
        liabilities associated with the assets disposed of in such Asset
        Disposition and retained by the Company or any Restricted Subsidiary
        after such Asset Disposition.

                "Net Award" means any awards or proceeds in respect of any
condemnation or other eminent domain proceeding relating to any Collateral
deposited in the Collateral Account pursuant to the Collateral Documents.

                "Net Cash Proceeds" means, with respect to any issuance or sale
of Capital Stock, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually Incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).

                "Net Insurance Proceeds" means any awards or proceeds in respect
of any casualty insurance or title insurance claim relating to any Collateral
deposited in the Collateral Account pursuant to the Collateral Documents.

                "Non-Recourse Debt" means Indebtedness of a Person:

                (1)     as to which neither the Company nor any Restricted
        Subsidiary (a) provides any Guarantee or credit support of any kind
        (including any undertaking, guarantee, indemnity, agreement or
        instrument that would constitute Indebtedness) or (b) is directly or
        indirectly liable (as a guarantor or otherwise);

                (2)     no default with respect to which (including any rights
        that the holders thereof may have to take enforcement action against an
        Unrestricted Subsidiary) would permit (upon notice, lapse of time or
        both) any holder of any other Indebtedness of the Company or any
        Restricted Subsidiary to declare a default under such other Indebtedness
        or cause the payment thereof to be accelerated or payable prior to its
        stated maturity; and

<PAGE>

                                                                              19

                (3)     the explicit terms of which provide there is no recourse
        against any of the assets of the Company or its Restricted Subsidiaries
        except that Standard Securitization Undertakings shall not be considered
        recourse.

                "Non-U.S. Person" means a Person who is not a U.S. Person (as
defined in Regulation S).

                "Offering Memorandum" means the offering memorandum, dated
October 2, 2003, relating to the offering by the Company of $210.0 million of
the 10 3/8% Senior Secured Notes, Series A, due 2010 and any future offering
memoranda relating to Additional Securities.

                "Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President, the
Treasurer or the Secretary of a Person or similarly titled position of such
Person.

                "Officers' Certificate" means a certificate signed by two
Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company.

                "Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company or the Trustee.

                "Pari Passu Indebtedness" means Indebtedness that ranks equally
in right of payment with the Securities.

                "Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:

                (1)     a Restricted Subsidiary (other than a Receivables
        Entity) or a Person which will, upon the making of such Investment,
        become a Restricted Subsidiary; provided, however, that the primary
        business of such Restricted Subsidiary is a Related Business;

                (2)     another Person if as a result of such Investment such
        other Person is merged or consolidated with or into, or transfers or
        conveys all or substantially all its assets to the Company or a
        Restricted Subsidiary (other than a Receivables Entity); provided,
        however, that such Person's primary business is a Related Business;

                (3)     cash and Cash Equivalents;

                (4)     receivables owing to the Company or any Restricted
        Subsidiary created or acquired in the ordinary course of business and
        payable or dischargeable in accordance with customary trade terms;
        provided, however, that such trade terms may include such concessionary
        trade terms as the Company or any such Restricted Subsidiary deems
        reasonable under the circumstances;

<PAGE>

                                                                              20

                (5)     payroll, travel and similar advances to cover matters
        that are expected at the time of such advances ultimately to be treated
        as expenses in accordance with GAAP and that are made in the ordinary
        course of business;

                (6)     loans or advances to employees (other than loans to
        executive officers not permitted by applicable law) made in the ordinary
        course of business consistent with past practices of the Company or such
        Restricted Subsidiary;

                (7)     Capital Stock, obligations or securities received in
        settlement of debts created in the ordinary course of business and owing
        to the Company or any Restricted Subsidiary or in satisfaction of
        judgments or pursuant to any plan of reorganization or similar
        arrangement upon the bankruptcy or insolvency of a debtor;

                (8)     Investments made as a result of the receipt of non-cash
        consideration from an Asset Disposition that was made pursuant to and in
        compliance with Section 3.5;

                (9)     Investments in existence on the Issue Date;

                (10)    Currency Agreements, Interest Rate Agreements and
        related Hedging Obligations, which transactions or obligations are
        Incurred in compliance with Section 3.2;

                (11)    Investments by the Company or any of its Restricted
        Subsidiaries, together with all other Investments pursuant to this
        clause (11), in an aggregate amount at the time of such Investment not
        to exceed $15.0 million outstanding at any one time (with the fair
        market value of such Investment being measured at the time made and
        without giving effect to subsequent changes in value);

                (12)    Guarantees issued in accordance with Section 3.2;

                (13)    Investments by the Company or a Restricted Subsidiary in
        a Receivables Entity or any Investment by a Receivables Entity in any
        other Person, in each case, in connection with a Qualified Receivables
        Transaction, provided, however, that any Investment in any such Person
        is in the form of a Purchase Money Note, or any equity interest or
        interests in Receivables and related assets generated by the Company or
        a Restricted Subsidiary and transferred to any Person in connection with
        a Qualified Receivables Transaction or any such Person owning such
        Receivables; and

                (14)    any Asset Swap made in accordance with Section 3.5.

                "Permitted Liens" means, with respect to any Person:

                (1)     Liens on any assets, real or personal, tangible or
        intangible (other than the Collateral), securing Indebtedness and other
        obligations under the Senior Secured Credit Agreement, and related
        Hedging Obligations and Liens on assets, real or personal, tangible or
        intangible (other than the Collateral), of Restricted Subsidiaries
        securing Guarantees of Indebtedness and other obligations of the Company
        under the Senior

<PAGE>

                                                                              21

        Secured Credit Agreement permitted to be Incurred under this Indenture
        under the provisions described in clause (b)(1) of Section 3.2;

                (2)     pledges or deposits by such Person, under workmen's
        compensation laws, unemployment insurance laws, or similar legislation,
        or good faith deposits in connection with bids, tenders, contracts
        (other than for the payment of Indebtedness) or leases to which such
        Person is a party, or deposits to secure public or statutory obligations
        of such Person or deposits of cash or United States government bonds to
        secure surety or appeal bonds to which such Person is a party, or
        deposits as security for contested taxes or import or customs duties or
        for the payment of rent, in each case Incurred in the ordinary course of
        business;

                (3)     Liens imposed by law, including carriers',
        warehousemen's, supplier's, materialmen's, repairmen's and mechanics'
        Liens, in each case for sums not yet due or being contested in good
        faith by appropriate proceedings if a reserve or other appropriate
        provisions, if any, as shall be required by GAAP shall have been made in
        respect thereof;

                (4)     Liens for taxes, assessments or other governmental
        charges not yet subject to penalties for non-payment or which are being
        contested in good faith by appropriate proceedings provided appropriate
        reserves required pursuant to GAAP have been made in respect thereof;

                (5)     Liens in favor of issuers of surety, bid, appeal or
        performance bonds or letters of credit or bankers' acceptances issued
        pursuant to the request of and for the account of such Person in the
        ordinary course of its business; provided, however, that such letters of
        credit do not constitute Indebtedness;

                (6)     encumbrances, ground leases, easements or reservations
        of, or rights of others for, licenses, rights of way, sewers, electric
        lines, telegraph and telephone lines and other similar purposes, or
        zoning, building codes or other restrictions (including, without
        limitation, minor defects or irregularities in title and similar
        encumbrances) as to the use of real properties or Liens incidental to
        the conduct of the business of such Person or to the ownership of its
        properties which do not in the aggregate materially adversely affect the
        value of said properties or materially impair their use in the operation
        of the business of such Person;

                (7)     Liens securing Hedging Obligations so long as the
        related Indebtedness is, and is permitted to be under this Indenture,
        secured by a Lien on the same property securing such Hedging Obligation;

                (8)     leases, licenses, subleases and sublicenses of assets
        (including, without limitation, real property and intellectual property
        rights) which do not materially interfere with the ordinary conduct of
        the business of the Company or any of its Restricted Subsidiaries;

                (9)     judgment Liens not giving rise to an Event of Default so
        long as such Lien is adequately bonded and any appropriate legal
        proceedings which may have been duly

<PAGE>

                                                                              22

        initiated for the review of such judgment have not been finally
        terminated or the period within which such proceedings may be initiated
        has not expired;

                (10)    Liens for the purpose of securing the payment of all or
        a part of the purchase price of, or Capitalized Lease Obligations,
        purchase money obligations or other payments Incurred to finance the
        acquisition, improvement or construction of, assets or property acquired
        or constructed in the ordinary course of business; provided that:

                (a)     the aggregate principal amount of Indebtedness secured
                        by such Liens is otherwise permitted to be Incurred
                        under this Indenture and does not exceed the cost of the
                        assets or property so acquired or constructed; and

                (b)     such Liens are created within 180 days of construction
                        or acquisition of such assets or property and do not
                        encumber any other assets or property of the Company or
                        any Restricted Subsidiary other than such assets or
                        property and assets affixed or appurtenant thereto and
                        the proceeds of any such assets;

                (11)    Liens arising solely by virtue of any statutory or
        common law provisions relating to banker's Liens, rights of set-off or
        similar rights and remedies as to deposit accounts or other funds
        maintained with a depositary institution; provided that:

                (a)     such deposit account is not a dedicated cash collateral
                        account and is not subject to restrictions against
                        access by the Company in excess of those set forth by
                        regulations promulgated by the Federal Reserve Board;
                        and

                (b)     such deposit account is not intended by the Company or
                        any Restricted Subsidiary to provide collateral to the
                        depository institution;

                (12)    Liens arising from Uniform Commercial Code financing
        statement filings regarding (i) operating leases entered into by the
        Company and its Restricted Subsidiaries in the ordinary course of
        business and (ii) goods consigned or entrusted to or bailed with a
        Person in connection with the processing, reprocessing, recycling or
        tolling of such goods;

                (13)    Liens existing on the Issue Date;

                (14)    Liens on property or shares of stock of a Person at the
        time such Person becomes a Restricted Subsidiary; provided, however,
        that such Liens are not created, Incurred or assumed in connection with,
        or in contemplation of, such other Person becoming a Restricted
        Subsidiary; provided further, however, that any such Lien may not extend
        to any other property owned by the Company or any Restricted Subsidiary;

                (15)    Liens on property at the time the Company or a
        Restricted Subsidiary acquired the property, including any acquisition
        by means of a merger or consolidation with or into the Company or any
        Restricted Subsidiary; provided, however, that such Liens are not
        created, Incurred or assumed in connection with, or in contemplation of,

<PAGE>

                                                                              23

        such acquisition; provided further, however, that such Liens may not
        extend to any other property owned by the Company or any Restricted
        Subsidiary;

                (16)    Liens securing Indebtedness or other obligations of a
        Restricted Subsidiary owing to the Company or a Wholly-Owned Subsidiary
        (other than a Receivables Entity);

                (17)    Liens securing the Securities and Subsidiary Guarantees
        or any obligations owing to the Trustee under the Indenture or the
        Collateral Documents;

                (18)    Liens securing Refinancing Indebtedness Incurred to
        refinance Indebtedness that was previously so secured, provided that any
        such Lien is limited to all or part of the same property or assets (plus
        improvements, accessions, proceeds or dividends or distributions in
        respect thereof) that secured (or, under the written arrangements under
        which the original Lien arose, could secure) the Indebtedness being
        refinanced or is in respect of property that is the security for a
        Permitted Lien hereunder;

                (19)    any interest or title of a lessor under any Capitalized
        Lease Obligation or operating lease;

                (20)    Liens in favor of customs and revenue authorities to
        secure the payment of customs duties in connection with the exporting or
        importing of goods;

                (21)    Liens on assets transferred to a Receivables Entity or
        on assets of a Receivables Entity, in either case Incurred in connection
        with a Qualified Receivables Transaction;

                (22)    Liens on the Capital Stock or assets, real or personal,
        tangible or intangible, of a Foreign Subsidiary, and securing
        Indebtedness and other obligations and Guarantees permitted to be
        Incurred under this Indenture under the provisions described in clause
        (b)(11) of Section 3.2;

                (23)    Liens securing Indebtedness (other than Subordinated
        Obligations, Guarantor Subordinated Obligations and the Collateral) in
        an aggregate principal amount not to exceed $10 million at any one time
        outstanding; and

                (24)    Liens existing on the Collateral at the (x)
        Uhrichsville, Ohio facility pursuant to Exhibit G to the Supply
        Agreement by and among Commonwealth Aluminum Corporation, IMCO Recycling
        of Ohio Inc. and IMCO Recycling Inc., dated as of April 1, 1999, as in
        effect on the date hereof or on terms materially consistent therewith,
        and (y) Saginaw, Michigan facility pursuant to Exhibit 5 to the Long
        Term Agreement between General Motors Corporation and Alchem Aluminum
        Inc., dated as of February 26, 1999, as in effect on of the date hereof
        or on terms materially consistent therewith.

                "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
hereof or any other entity.

<PAGE>

                                                                              24

                "Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.9 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.

                "Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.

                "Public Market" exists at any time with respect to the Common
Stock of the Company if the Common Stock of the Company is then registered with
SEC pursuant to Section 12(b) or 12(g) of Exchange Act and traded either on a
national securities exchange or in the National Association of Securities
Dealers Automated Quotation System.

                "Purchase Money Note" means a promissory note of a Receivables
Entity evidencing the deferred purchase price of Receivables (and related
assets) and/or a line of credit, which may be irrevocable, from the Company or
any Restricted Subsidiary in connection with a Qualified Receivables Transaction
with a Receivables Entity, which deferred purchase price or line is repayable
from cash available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts owing to such investors and amounts paid in connection with the purchase
of newly generated Receivables.

                "QIB" means any "qualified institutional buyer" as such term is
defined in Rule 144A.

                "Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Restricted Subsidiaries pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Entity
(in the case of a transfer by the Company or any of its Restricted Subsidiaries)
and (2) any other Person (in the case of a transfer by a Receivables Entity), or
may grant a security interest in, any Receivables (whether now existing or
arising in the future) of the Company or any of its Restricted Subsidiaries, and
any assets related thereto including, without limitation, all collateral
securing such Receivables, all contracts and all guarantees or other obligations
in respect of such accounts receivable, the proceeds of such Receivables and
other assets which are customarily transferred, or in respect of which security
interests are customarily granted, in connection with asset securitizations
involving Receivables.

                "Receivable" means a right to receive payment arising from a
sale or lease of goods or the performance of services by a Person pursuant to an
arrangement with another Person pursuant to which such other Person is obligated
to pay for goods or services under terms that permit the purchase of such goods
and services on credit and shall include, in any event, any items of property
that would be classified as an "account," "chattel paper," "payment intangible"

<PAGE>

                                                                              25

or "instrument" under the Uniform Commercial Code as in effect in the State of
New York and any "supporting obligations" as so defined.

                "Receivables Entity" means a Wholly-Owned Subsidiary (or another
Person in which the Company or any Restricted Subsidiary makes an Investment and
to which the Company or any Restricted Subsidiary transfers Receivables and
related assets) which engages in no activities other than in connection with the
financing of Receivables and which is designated by the Board of Directors of
the Company (as provided below) as a Receivables Entity:

                (1)     no portion of the Indebtedness or any other obligations
        (contingent or otherwise) of which:

                (a)     is guaranteed by the Company or any Restricted
                        Subsidiary (excluding guarantees of Obligations (other
                        than the principal of, and interest on, Indebtedness)
                        pursuant to Standard Securitization Undertakings);

                (b)     is recourse to or obligates the Company or any
                        Restricted Subsidiary in any way other than pursuant to
                        Standard Securitization Undertakings; or

                (c)     subjects any property or asset of the Company or any
                        Restricted Subsidiary, directly or indirectly,
                        contingently or otherwise, to the satisfaction thereof,
                        other than pursuant to Standard Securitization
                        Undertakings;

                (2)     with which neither the Company nor any Restricted
        Subsidiary has any material contract, agreement, arrangement or
        understanding (except in connection with a Purchase Money Note or
        Qualified Receivables Transaction) other than on terms no less favorable
        to the Company or such Restricted Subsidiary than those that might be
        obtained at the time from Persons that are not Affiliates of the
        Company, other than fees payable in the ordinary course of business in
        connection with servicing Receivables; and

                (3)     to which neither the Company nor any Restricted
        Subsidiary has any obligation to maintain or preserve such entity's
        financial condition or cause such entity to achieve certain levels of
        operating results.

        Any such designation by the Board of Directors of the Company shall be
        evidenced to the Trustee by filing with the Trustee a Board Resolution
        of the Company giving effect to such designation and an Officers'
        Certificate certifying that such designation complied with the foregoing
        conditions.

                "Receivables Fees" means any fees or interest paid to purchasers
or lenders providing the financing in connection with a Qualified Receivables
Transaction, a factoring agreement or other similar agreement, including any
such amounts paid by discounting the face amount of Receivables or
participations therein transferred in connection with a Qualified Receivables
Transaction, a factoring agreement or other similar arrangement, regardless of
whether any such transaction is structured as on-balance sheet or off--balance
sheet or through a Restricted Subsidiary or an Unrestricted Subsidiary.

<PAGE>

                                                                              26

                "Recovery Event" means any event, occurrence, claim or
proceeding that results in any Net Award or Net Insurance Proceeds being
deposited into the Collateral Account pursuant to the Collateral Documents.

                "Redemption Agreement" means the Agreement, dated March 2003,
among Imco Recycling Holding B.V., VAW-IMCO Guss und Recycling GmbH and Hydro
Aluminium Deutschland GmbH, as amended, supplemented or modified from time to
time.

                "Redemption Date" means, with respect to any redemption of
Securities, the date of redemption with respect thereto.

                "Refinancing Indebtedness" means Indebtedness that is Incurred
to refund, refinance, replace, exchange, renew, repay or extend (including
pursuant to any defeasance or discharge mechanism) (collectively, "refinance,"
"refinances," and "refinanced" shall have a correlative meaning) any
Indebtedness existing on the date of this Indenture or Incurred in compliance
with this Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted Subsidiary)
including Indebtedness that refinances Refinancing Indebtedness, provided,
however, that:

                (1)     (a) if the Stated Maturity of the Indebtedness being
        refinanced is earlier than the Stated Maturity of the Securities, the
        Refinancing Indebtedness has a Stated Maturity no earlier than the
        Stated Maturity of the Indebtedness being refinanced or (b) if the
        Stated Maturity of the Indebtedness being refinanced is later than the
        Stated Maturity of the Securities, the Refinancing Indebtedness has a
        Stated Maturity at least 91 days later than the Stated Maturity of the
        Securities;

                (2)     the Refinancing Indebtedness has an Average Life at the
        time such Refinancing Indebtedness is Incurred that is equal to or
        greater than the Average Life of the Indebtedness being refinanced;

                (3)     such Refinancing Indebtedness is Incurred in an
        aggregate principal amount (or if issued with original issue discount,
        an aggregate issue price) that is equal to or less than the sum of the
        aggregate principal amount (or if issued with original issue discount,
        the aggregate accreted value) then outstanding or of the Indebtedness
        being refinanced (plus, without duplication, any additional Indebtedness
        Incurred to pay interest or premiums required by the instruments
        governing such existing Indebtedness and fees Incurred in connection
        therewith); and

                (4)     if the Indebtedness being refinanced is subordinated in
        right of payment to the Securities or the Subsidiary Guarantee, such
        Refinancing Indebtedness is subordinated in right of payment to the
        Securities or the Subsidiary Guarantee on terms at least as favorable to
        the Holders as those contained in the documentation governing the
        Indebtedness being extended, refinanced, renewed, replaced, defeased or
        refunded.

                "Registered Exchange Offer" shall have the meaning set forth in
the Registration Rights Agreement.

<PAGE>

                                                                              27

                "Registration Rights Agreement" means that certain registration
rights agreement dated as of the date of this Indenture by and among the
Company, the Subsidiary Guarantors and the Initial Purchasers and future
registration rights agreements with respect to Additional Securities.

                "Regulation S" means Regulation S under the Securities Act.

                "Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the date of this Indenture, including, without
limiting the generality of the foregoing, the manufacture, sales, distribution,
or modification of metals, metal products or goods using metals, and any
services related to any of the foregoing.

                "Related Business Assets" means assets used or useful in a
Related Business.

                "Restoration" has the meaning ascribed to it in the applicable
Collateral Document.

                "Restricted Investment" means any Investment other than a
Permitted Investment.

                "Restricted Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (A) the
day on which the Securities are first offered to Persons other than distributors
(as defined in Regulation S), notice of which day shall be promptly given by the
Company to the Trustee, and (B) the issue date with respect to such Securities.

                "Restricted Securities" means Initial Securities and Additional
Securities bearing one of the restrictive legends described in Section 2.1(d).

                "Restricted Securities Legend" means the Private Placement
Legend set forth in Section 2.1(d)(A) or the Regulation S Legend set forth in
Section 2.1(d)(B), as applicable.

                "Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.

                "Rule 144A" means Rule 144A under the Securities Act.

                "Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.

                "SEC" means the United States Securities and Exchange
Commission.

                "Securities" has the meaning ascribed to it in the second
introductory paragraph of this Indenture.

                "Securities Act" means the Securities Act of 1933 (15 U.S.C.
Sections 77a-77aa), as amended, and the rules and regulations of the SEC
promulgated thereunder.

<PAGE>

                                                                              28

                "Securities Custodian" means the custodian with respect to the
Global Security (as appointed by DTC), or any successor Person thereto and shall
initially be the Trustee.

                "Securities Register" means the register of Securities,
maintained by the Registrar, pursuant to Section 2.3.

                "Senior Secured Credit Agreement" means the Credit Facility to
be entered into among the Company, certain of its Subsidiaries, PNC Bank,
National Association (or any Affiliate thereof), as lender and as Administrative
Agent, JPMorgan Chase Bank (or any Affiliate thereof) as lender and
Documentation Agent, and the other lenders and agents parties thereto from time
to time, as the same may be amended, supplemented, or otherwise modified from
time to time.

                "Shelf Registration Statement" shall have the meaning set forth
in the Registration Rights Agreement.

                "Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.

                "Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Restricted Subsidiary which are reasonably customary in securitization of
Receivables transactions.

                "Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any date on which the payment of
principal of such security is due and payable as a result of any contingent
obligations to repay, redeem or repurchase any such principal prior to the date
originally scheduled for the payment thereof.

                "Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.

                "Subsidiary" of any Person means (a) any corporation,
association or other business entity (other than a partnership, joint venture,
limited liability company or similar entity) of which more than 50% of the total
ordinary voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof (or persons performing similar functions) or (b) any
partnership, joint venture limited liability company or similar entity of which
more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general or limited partnership interests, as applicable, is,
in the case of clauses (a) and (b), at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of
such Person or (3) one or more Subsidiaries of such Person. Unless otherwise
specified herein, each reference to a Subsidiary will refer to a Subsidiary of
the Company.

<PAGE>

                                                                              29

                "Subsidiary Guarantee" means, individually, any Guarantee of
payment of the Securities by a Subsidiary Guarantor pursuant to the terms of
this Indenture and any supplemental indenture hereto, and, collectively, all
such Guarantees. Each such Subsidiary Guarantee will be in the form prescribed
by this Indenture.

                "Subsidiary Guarantor" means each wholly-owned Domestic
Subsidiary of the Company in existence on the Issue Date and any Restricted
Subsidiary created or acquired by the Company after the Issue Date (other than a
Foreign Subsidiary or a Receivables Entity).

                "TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this
Indenture.

                "Trustee" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor.

                "Trust Officer" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

                "Unrestricted Subsidiary" means:

                (1)     any Subsidiary of the Company that at the time of
        determination shall be designated an Unrestricted Subsidiary by the
        Board of Directors of the Company in the manner provided below; and

                (2)     any Subsidiary of an Unrestricted Subsidiary.

                The Board of Directors of the Company may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary or a Person becoming a Subsidiary through merger or consolidation or
Investment therein) to be an Unrestricted Subsidiary only if:

                (1)     such Subsidiary or any of its Subsidiaries does not own
        any Capital Stock or Indebtedness of or have any Investment in, or own
        or hold any Lien on any property of, any other Subsidiary of the Company
        which is not a Subsidiary of the Subsidiary to be so designated or
        otherwise an Unrestricted Subsidiary;

                (2)     all the Indebtedness of such Subsidiary and its
        Subsidiaries shall, at the date of designation, and will at all times
        thereafter, consist of Non-Recourse Debt;

                (3)     such designation and the Investment of the Company in
        such Subsidiary complies with Section 3.3;

<PAGE>

                                                                              30

                (4)     such Subsidiary, either alone or in the aggregate with
        all other Unrestricted Subsidiaries, does not operate, directly or
        indirectly, all or substantially all of the business of the Company and
        its Subsidiaries;

                (5)     such Subsidiary is a Person with respect to which
        neither the Company nor any of its Restricted Subsidiaries has any
        direct or indirect obligation:

                (a)     to subscribe for additional Capital Stock of such
                        Person; or

                (b)     to maintain or preserve such Person's financial
                        condition or to cause such Person to achieve any
                        specified levels of operating results; and

                (6)     on the date such Subsidiary is designated an
        Unrestricted Subsidiary, such Subsidiary is not a party to any
        agreement, contract, arrangement or understanding with the Company or
        any Restricted Subsidiary with terms substantially less favorable to the
        Company than those that might have been obtained from Persons who are
        not Affiliates of the Company.

                Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a Board Resolution
of the Company giving effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be Incurred as of such date.

                The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation, no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof and the
Company could Incur at least $1.00 of additional Indebtedness under Section
3.2(a) on a pro forma basis taking into account such designation.

                "U.S. Government Obligations" means securities that are (a)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (b) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation of the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depositary receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligations or a specific payment of principal of or
interest on any such U.S. Government Obligations held by such custodian for the
account of the holder of such depositary receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount received
by the custodian in respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government Obligations evidenced
by such depositary receipt.

<PAGE>

                                                                              31

                "VAW-IMCO Redemption Payment" means the amount deposited into
the Collateral Account pursuant to Section 3.21 on or prior to the Issue Date to
repay substantially all amounts owing to Hydro Aluminium Deutschland GmbH
pursuant to the Redemption Agreement.

                "Voting Stock" of a corporation means all classes of Capital
Stock or other interests of such corporation then outstanding and normally
entitled to vote in the election of directors.

                "Wholly-Owned Subsidiary" means a Restricted Subsidiary, all of
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly-Owned Subsidiary.

                SECTION 1.2.  Other Definitions.

                                                                   Defined in
Term                                                                Section
----                                                                -------

"Additional Restricted Securities" ...........................       2.1(b)

"Affiliate Transaction".......................................       3.8

"Agent Member"................................................       2.1(e)

"Asset Disposition Offer Amount"..............................       3.5(c)

"Asset Disposition Offer Period"..............................       3.5(c)

"Asset Disposition Offer".....................................       3.5(b)

"Asset Disposition Purchase Date".............................       3.5(c)

"Authenticating Agent"........................................       2.2

"Change of Control Offer".....................................       3.10

"Change of Control Payment"...................................       3.10

"Change of Control Payment Date"..............................       3.10

"Collateral Disposition Offer" ...............................       3.5(a)

"Company Order"...............................................       2.2

"covenant defeasance option"..................................       8.1(b)

<PAGE>

                                                                              32

                                                                   Defined in
Term                                                                Section
----                                                                -------

"cross acceleration provision"................................       6.1(6)(b)

"Defaulted Interest"..........................................       2.13

"Event of Default"............................................       6.1

"Excess Collateral Proceeds"..................................       3.5(a)

"Excess Proceeds".............................................       3.5(b)

"Exchange Global Note"........................................       2.1(b)

"General Partner".............................................       1.1

"Global Securities"...........................................       2.1(b)

"Institutional Accredited Investor Global Note"...............       2.1(b)

"Institutional Accredited Investor Note"......................       2.1(b)

"Joint Venture"...............................................       1.1

"judgment default provision"..................................       6.1(9)

"legal defeasance option".....................................       8.1(b)

"Obligations".................................................      10.1

"Pari Passu Notes"............................................       3.5(b)

"Paying Agent"................................................       2.3

"Payment Default" ............................................       6.1(6)(a)

"Private Placement Legend"....................................       2.1(d)

"protected purchaser".........................................       2.9

"Registrar"...................................................       2.3

"Regulation S Global Note"....................................       2.1(b)

"Regulation S Legend".........................................       2.1(d)

"Regulation S Notes"..........................................       2.1(b)

<PAGE>

                                                                              33

                                                                   Defined in
Term                                                                Section
----                                                                -------

"Resale Restriction Termination Date".........................       2.6(a)

"Restricted Payment"..........................................       3.3

"Rule 144A Global Note".......................................       2.1(b)

"Rule 144A Note"..............................................       2.1(b)

"Securities Register" ........................................       2.3

"Special Interest Payment Date"...............................       2.13(a)

"Special Record Date".........................................       2.13(a)

"Successor Company"...........................................       4.1(1)

                SECTION 1.3.  Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:

                "Commission" means the SEC.

                "indenture securities" means the Securities.

                "indenture security holder" means a Securityholder.

                "indenture to be qualified" means this Indenture.

                "indenture trustee" or "institutional trustee" means the
Trustee.

                "obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.

                All other TIA terms used in this Indenture that are defined by
the TIA, defined in the TIA by reference to another statute or defined by SEC
rule have the meanings assigned to them by such definitions.

                SECTION 1.4.  Rules of Construction. Unless the context
otherwise requires:

                (1)     a term has the meaning assigned to it;

                (2)     an accounting term not otherwise defined has the meaning
        assigned to it in accordance with GAAP;

                (3)     "or" is not exclusive;

<PAGE>

                                                                              34

                (4)     "including" means including without limitation;

                (5)     words in the singular include the plural and words in
        the plural include the singular;

                (6)     the principal amount of any noninterest bearing or other
        discount security at any date shall be the principal amount thereof that
        would be shown on a balance sheet of the issuer dated such date prepared
        in accordance with GAAP;

                (7)     the principal amount of any Preferred Stock shall be (i)
        the maximum liquidation value of such Preferred Stock or (ii) the
        maximum mandatory redemption or mandatory repurchase price with respect
        to such Preferred Stock, whichever is greater;

                (8)     all amounts expressed in this Indenture or in any of the
        Securities in terms of money refer to the lawful currency of the United
        States of America; and

                (9)     the words "herein," "hereof" and "hereunder" and other
        words of similar import refer to this Indenture as a whole and not to
        any particular Article, Section or other subdivision.

                                   ARTICLE II

                                 THE SECURITIES

                SECTION 2.1.  Form, Dating and Terms.

                (a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The Initial
Securities issued on the date hereof will be in an aggregate principal amount of
$210,000,000. In addition, the Company may issue, from time to time in
accordance with the provisions of this Indenture, Additional Securities (as
provided herein) and Exchange Securities. Furthermore, Securities may be
authenticated and delivered upon registration of transfer, exchange or in lieu
of, other Securities pursuant to Section 2.2, 2.6, 2.9, 2.11, 5.8 or 9.5, in
connection with a Collateral Disposition Offer or Asset Disposition Offer
pursuant to Section 3.5 or in connection with a Change of Control Offer pursuant
to Section 3.10.

                Notwithstanding anything to the contrary contained herein, the
Company may not issue any Additional Securities, unless:

                (1)     Immediately after giving effect to such issuance, no
        Default or Event of Default shall have occurred and be continuing;

                (2)     Immediately after giving effect to such issuance, the
        Company would be able to Incur at least an additional $1.00 of
        Indebtedness pursuant to Section 3.2(a); and

<PAGE>

                                                                              35

                (3)     At least 80% of the net cash proceeds from any such
        issuance shall be deposited into the Collateral Account and invested by
        the Company in Additional Assets, which Additional Assets are thereupon
        with their acquisition added to the Collateral securing the Securities
        in accordance with Section 11.4(c); provided, however, to the extent
        that the Credit Facility Collateral Documents restrict the Company's
        ability to pledge such Additional Assets as Collateral, the Company
        shall either pledge other property or assets as Collateral having a fair
        market value, as determined in good faith by the Board of Directors, at
        least equal to the fair market value of such Additional Assets or
        deposit an amount of cash or Cash Equivalents into the Collateral
        Account having a value at least equal to the fair market value of such
        Additional Assets (which Cash or Cash Equivalents may be withdrawn by
        the Company from the Collateral Account to be invested in Additional
        Assets which are pledged as Collateral in accordance with this
        Indenture); provided, further, that prior to such investment, pledge or
        deposit (and any related withdrawal from the Collateral Account) the
        Company shall have delivered to the Trustee an Officers' Certificate
        stating, as applicable, that (i) funds to be withdrawn from the
        Collateral Account are to be invested in Additional Assets in compliance
        with this clause (3), (ii) in accordance with this clause (3), other
        property or assets may be pledged as Collateral having the fair market
        value required by said clause or (iii) in accordance with this clause
        (3), cash or Cash Equivalents are to be deposited into the Collateral
        Account having the fair market value required by said clause and that,
        in the case of clause (i), (ii) or (iii), all conditions precedent
        provided for in this Indenture to such investment, pledge, deposit or
        withdrawal have been complied with.

                The Initial Securities shall be known and designated as "10 3/8%
Senior Secured Notes, Series A, due 2010" of the Company. Additional Securities
issued as Restricted Securities shall be known and designated as "10 3/8% Senior
Secured Notes, Series A, due 2010" of the Company. Additional Securities issued
other than as Restricted Securities shall be known and designated as "10 3/8%
Senior Secured Notes, Series B, due 2010" of the Company, and Exchange
Securities shall be known and designated as "10 3/8% Senior Secured Notes,
Series B, due 2010" of the Company.

                With respect to any Additional Securities, the Company shall set
forth in (a) a Board Resolution and (b) (i) an Officers' Certificate or (ii) one
or more indentures supplemental hereto, the following information:

                (1)     the aggregate principal amount of such Additional
        Securities to be authenticated and delivered pursuant to this Indenture;

                (2)     the issue price and the issue date of such Additional
        Securities, including the date from which interest shall accrue; and

                (3)     whether such Additional Securities shall be Restricted
        Securities issued in the form of Exhibit A hereto and/or shall be issued
        in the form of Exhibit B hereto.

                In authenticating and delivering Additional Securities, the
Trustee shall be entitled to receive and shall be fully protected in relying
upon, in addition to the Opinion of

<PAGE>

                                                                              36

Counsel and Officers' Certificate required by Section 12.4, an Opinion of
Counsel as to the due authorization, execution, delivery, validity and
enforceability of such Additional Securities.

                The Initial Securities, the Additional Securities and the
Exchange Securities shall be considered collectively as a single class for all
purposes of this Indenture. Holders of the Initial Securities, the Additional
Securities and the Exchange Securities will vote and consent together on all
matters to which such Holders are entitled to vote or consent as one class, and
none of the Holders of the Initial Securities, the Additional Securities or the
Exchange Securities shall have the right to vote or consent as a separate class
on any matter to which such Holders are entitled to vote or consent.

                If any of the terms of any Additional Securities are established
by action taken pursuant to Board Resolutions of the Company, a copy of an
appropriate record of such action shall be certified by the Secretary or any
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or the indenture supplemental hereto
setting forth the terms of the Additional Securities.

                (b) The Initial Securities are being offered and sold by the
Company pursuant to a Purchase Agreement, dated October 2, 2003, among the
Company, the Subsidiary Guarantors, J.P. Morgan Securities Inc. and the other
initial purchasers named therein. The Initial Securities and any Additional
Securities (if issued as Restricted Securities) (the "Additional Restricted
Securities") will be resold initially only to (A) QIBs in reliance on Rule 144A
and (B) Non-U.S. Persons in reliance on Regulation S. Such Initial Securities
and Additional Restricted Securities may thereafter be transferred to, among
others, QIBs, purchasers in reliance on Regulation S and IAIs in accordance with
Rule 501 of the Securities Act, in each case, in accordance with the procedure
described herein. Additional Securities offered after the date hereof may be
offered and sold by the Company from time to time pursuant to one or more
purchase agreements in accordance with applicable law.

                Initial Securities and Additional Restricted Securities offered
and sold to QIBs in the United States of America in reliance on Rule 144A (the
"Rule 144A Notes") shall be issued in the form of a permanent global Security
substantially in the form of Exhibit A, which is hereby incorporated by
reference and made a part of this Indenture, including appropriate legends as
set forth in Section 2.1(d) (the "Rule 144A Global Note"), deposited with the
Trustee, as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Rule 144A Global Note may be
represented by more than one certificate, if so required by DTC's rules
regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Rule 144A Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

                Initial Securities and any Additional Restricted Securities
offered and sold outside the United States of America (the "Regulation S Notes")
in reliance on Regulation S shall initially be issued in the form of a permanent
global Security substantially in the form of Exhibit A including appropriate
legends as set forth in Section 2.1(d) (the "Regulation S Global Note"). The
Regulation S Note will be deposited upon issuance with, or on behalf of, the
Trustee, as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as

<PAGE>

                                                                              37

hereinafter provided. During the Restricted Period, interests in the Regulation
S Global Note may only be transferred to non-U.S. persons pursuant to Regulation
S.

                The Regulation S Global Note may be represented by more than one
certificate, if so required by DTC's rules regarding the maximum principal
amount to be represented by a single certificate. The aggregate principal amount
of the Regulation S Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

                Initial Securities and Additional Restricted Securities resold
to IAIs (the "Institutional Accredited Investor Notes") in the United States of
America shall be issued in the form of a permanent global Security substantially
in the form of Exhibit A including appropriate legends as set forth in Section
2.1(d) (the "Institutional Accredited Investor Global Note") deposited with the
Trustee, as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Institutional Accredited Investor
Global Note may be represented by more than one certificate, if so required by
DTC's rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Institutional Accredited
Investor Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

                Exchange Securities exchanged for interests in the Rule 144A
Notes, the Regulation S Notes and the Institutional Accredited Investor Notes
will be issued in the form of a permanent global Security, substantially in the
form of Exhibit B, which is hereby incorporated by reference and made a part of
this Indenture, deposited with the Trustee as hereinafter provided, including
the appropriate legend set forth in Section 2.1(d) (the "Exchange Global Note").
The Exchange Global Note will be deposited upon issuance with, or on behalf of,
the Trustee as custodian for DTC, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The Exchange Global Note may be
represented by more than one certificate, if so required by DTC's rules
regarding the maximum principal amount to be represented by a single
certificate.

                The Rule 144A Global Note, the Regulation S Global Note, the
Institutional Accredited Investor Global Note and the Exchange Global Note are
sometimes collectively herein referred to as the "Global Securities."

                The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York, or at such other office or agency of
the Company as may be maintained for such purpose pursuant to Section 2.3;
provided, however, that, at the option of the Company, each installment of
interest may be paid by (i) check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Securities Register or (ii) wire
transfer to an account located in the United States maintained by the payee,
subject to the last sentence of this paragraph. Payments in respect of
Securities represented by a Global Security (including principal, premium, if
any, and interest) will be made by wire transfer of immediately available funds
to the accounts specified by DTC. Payments in respect of Securities represented
by Definitive Securities (including principal, premium, if any, and interest)
held by a Holder of at least $1,000,000

<PAGE>

                                                                              38

aggregate principal amount of Securities represented by Definitive Securities
will be made by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 15 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).

                The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage, in addition to those set forth on
Exhibit A and Exhibit B and in Section 2.1(d). The Company shall approve any
notation, endorsement or legend on the Securities. Each Security shall be dated
the date of its authentication. The terms of the Securities set forth in Exhibit
A and Exhibit B are part of the terms of this Indenture and, to the extent
applicable, the Company, the Subsidiary Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to be bound by such
terms.

                (c) Denominations. The Securities shall be issuable only in
fully registered form, without coupons, and only in denominations of $1,000 and
any integral multiple thereof.

                (d) Restrictive Legends. Unless and until (i) an Initial
Security or an Additional Security issued as a Restricted Security is sold under
an effective registration statement or (ii) an Initial Security or an Additional
Security issued as a Restricted Security is exchanged for an Exchange Security
in connection with an effective registration statement, in each case pursuant to
the Registration Rights Agreement or a similar agreement, (A) the Rule 144A
Global Note and the Institutional Accredited Investor Global Note shall bear the
following legend (the "Private Placement Legend") on the face thereof:

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
        AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
        OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
        PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
        PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
        REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
        TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
        HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT
        FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE
        TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
        TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
        ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
        AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
        PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO
        A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
        SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
        RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
        REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
        RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
        FOR THE ACCOUNT OF A

<PAGE>

                                                                              39

        QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
        IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES
        THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
        UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
        WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
        SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING
        THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
        INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
        AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
        WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
        IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
        EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
        SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
        PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
        OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY
        TO IT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
        THE RESALE RESTRICTION TERMINATION DATE.

        BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
        HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS
        USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE
        ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE
        U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
        ("ERISA"), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER
        ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL
        REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY
        FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE
        SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF
        AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN
        ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE
        AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED
        TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A
        SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

                (B) the Regulation S Global Note shall bear the following legend
(the "Regulation S Legend") on the face thereof:

        THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
        AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
        OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
        PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
        PLEDGED, ENCUMBERED OR OTHERWISE

<PAGE>

                                                                              40

        DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
        TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE
        HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN
        BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
        SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
        THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS 40 DAYS
        AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
        WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
        SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY,
        (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
        EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
        ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
        TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
        AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
        OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
        WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
        144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
        STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
        TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
        501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
        INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
        ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR,
        IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF
        $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
        SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
        ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
        REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
        COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
        CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
        COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO IT.
        THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
        RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE
        HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT
        PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS
        SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S
        UNDER THE SECURITIES ACT.

        BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
        HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS
        USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE
        ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE
        U.S. EMPLOYEE RETIREMENT

<PAGE>

                                                                              41

        INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OF PLANS, INDIVIDUAL
        RETIREMENT ACCOUNTS OR OTHER ARRANGEMENTS THAT ARE SUBJECT TO SECTION
        4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
        OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR
        REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE
        ("SIMILAR LAWS"), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED
        TO INCLUDE "PLAN ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR
        (II) THE PURCHASE AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A
        NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION
        4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR
        LAWS.

                (C) Each Global Security, whether or not an Initial Security,
shall bear the following legend on the face thereof:

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
        THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
        NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
        EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
        NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
        AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
        OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
        OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
        BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
        CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
        WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR
        THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
        GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
        THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE
        HEREOF.

                (e) Book-Entry Provisions. (i) This Section 2.1(e) shall apply
only to Global Securities deposited with the Trustee, as custodian for DTC.

                        (ii)    Each Global Security initially shall (x) be
                                registered in the name of DTC or the nominee of
                                DTC, (y) be delivered to the Trustee as
                                custodian for DTC and (z) bear legends as set
                                forth in Section 2.1(d).

                        (iii)   Members of, or participants in, DTC ("Agent
                                Members") shall have no rights under this
                                Indenture with respect to any Global Security
                                held on their behalf by DTC or by the Trustee as
                                the

<PAGE>

                                                                              42

                                custodian of DTC or under such Global Security,
                                and DTC may be treated by the Company, the
                                Trustee and any agent of the Company or the
                                Trustee as the absolute owner of such Global
                                Security for all purposes whatsoever.
                                Notwithstanding the foregoing, nothing herein
                                shall prevent the Company, the Trustee or any
                                agent of the Company or the Trustee from giving
                                effect to any written certification, proxy or
                                other authorization furnished by DTC or impair,
                                as between DTC and its Agent Members, the
                                operation of customary practices of DTC
                                governing the exercise of the rights of a Holder
                                of a beneficial interest in any Global Security.

                        (iv)    In connection with any transfer of a portion of
                                the beneficial interest in a Global Security
                                pursuant to subsection (f) of this Section 2.1
                                to beneficial owners who are required to hold
                                Definitive Securities, the Securities Custodian
                                shall reflect on its books and records the date
                                and a decrease in the principal amount of such
                                Global Security in an amount equal to the
                                principal amount of the beneficial interest in
                                the Global Security to be transferred, and the
                                Company shall execute, and the Trustee shall
                                authenticate and make available for delivery,
                                one or more Definitive Securities of like tenor
                                and amount.

                        (v)     In connection with the transfer of an entire
                                Global Security to beneficial owners pursuant to
                                subsection (f) of this Section 2.1, such Global
                                Security shall be deemed to be surrendered to
                                the Trustee for cancellation, and the Company
                                shall execute, and the Trustee shall
                                authenticate and make available for delivery, to
                                each beneficial owner identified by DTC in
                                exchange for its beneficial interest in such
                                Global Security, an equal aggregate principal
                                amount of Definitive Securities of authorized
                                denominations.

                        (vi)    The registered Holder of a Global Security may
                                grant proxies and otherwise authorize any
                                person, including Agent Members and persons that
                                may hold interests through Agent Members, to
                                take any action which a Holder is entitled to
                                take under this Indenture or the Securities.

                        (vii)   Any Holder of a Global Security shall, by
                                acceptance of such Global Security, agree that
                                transfers of beneficial interests in such Global
                                Security may be effected only through a
                                book-entry system maintained by (a) the Holder
                                of such Global Security (or its agent) or (b)
                                any Holder of a beneficial interest in such
                                Global Security, and that ownership of a
                                beneficial interest in such Global Security
                                shall be required to be reflected in a book
                                entry.

<PAGE>

                                                                              43

                (f) Definitive Securities. (i) Except as provided below, owners
of beneficial interests in Global Securities will not be entitled to receive
Definitive Securities. If required to do so pursuant to any applicable law or
regulation, beneficial owners may obtain Definitive Securities in exchange for
their beneficial interests in a Global Security upon written request in
accordance with DTC's and the Registrar's procedures. In addition, Definitive
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Security if (A) DTC notifies the Company that
it is unwilling or unable to continue as depositary for such Global Security or
DTC ceases to be a clearing agency registered under the Exchange Act, at a time
when DTC is required to be so registered in order to act as depositary, and in
each case a successor depositary is not appointed by the Company within 90 days
of such notice or, (B) the Company in its sole discretion executes and delivers
to the Trustee and Registrar an Officers' Certificate stating that such Global
Security shall be so exchangeable or (C) an Event of Default has occurred and is
continuing and the Registrar has received a request from DTC. In the event of
the occurrence of any of the events specified in clause (A), (B) or (C) of the
preceding sentence, the Company shall promptly make available to the Trustee a
reasonable supply of Definitive Securities.

                (g) Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to Section 2.1(e)(iv) or (v) shall,
except as otherwise provided by Section 2.6(c), bear the applicable legend
regarding transfer restrictions applicable to the Definitive Security set forth
in Section 2.1(d).

                (h) In connection with the exchange of a portion of a Definitive
Security for a beneficial interest in a Global Security, the Trustee shall
cancel such Definitive Security, and the Company shall execute, and the Trustee
shall authenticate and make available for delivery, to the transferring Holder a
new Definitive Security representing the principal amount not so transferred.

                SECTION 2.2.  Execution and Authentication. One Officer shall
sign the Securities for the Company by manual or facsimile signature. If the
Officer whose signature is on a Security no longer holds that office at the time
the Trustee authenticates the Security, the Security shall be valid
nevertheless.

                A Security shall not be valid until an authorized officer of the
Trustee manually authenticates the Security. The signature of the Trustee on a
Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture. A Security shall be dated
the date of its authentication.

                At any time and from time to time after the execution and
delivery of this Indenture, the Trustee shall authenticate and make available
for delivery: (1) Initial Securities for original issue on the Issue Date in an
aggregate principal amount of $210,000,000, (2) subject to the terms of this
Indenture, Additional Securities for original issue in an unlimited principal
amount and (3) Exchange Securities for issue only in a Registered Exchange Offer
pursuant to the Registration Rights Agreement or upon resale under an effective
Shelf Registration Statement, and only in exchange for Initial Securities or
Additional Securities of an equal principal amount, in each case upon a written
order of the Company signed by one Officer of the Company (the "Company Order").
Such Company Order shall specify whether the Securities

<PAGE>

                                                                              44

will be in the form of Definitive Securities or Global Securities, the amount of
the Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Initial
Securities, Additional Securities or Exchange Securities.

                The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Any such
instrument shall be evidenced by an instrument signed by a Trust Officer, a copy
of which shall be furnished to the Company. Unless limited by the terms of such
appointment, any such Authenticating Agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by the Authenticating Agent. An Authenticating
Agent has the same rights as any Registrar, Paying Agent or agent for service of
notices and demands.

                In case the Company or any Subsidiary Guarantor, pursuant to
Article IV or Section 10.2, as applicable, shall be consolidated or merged with
or into any other Person or shall convey, transfer, lease or otherwise dispose
of its properties and assets substantially as an entirety to any Person, and the
successor Person resulting from such consolidation, or surviving such merger, or
into which the Company or any Subsidiary Guarantor shall have been merged, or
the Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article IV, or Section 10.2, as applicable, any of
the Securities authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Securities executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Order of the successor Person, shall authenticate and make
available for delivery Securities as specified in such order for the purpose of
such exchange. If Securities shall at any time be authenticated and delivered in
any new name of a successor Person pursuant to this Section 2.2 in exchange or
substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time outstanding for
Securities authenticated and delivered in such new name.

                SECTION 2.3.  Registrar and Paying Agent. The Company shall
maintain in New York, New York an office or agency where Securities may be
presented for registration of transfer or for exchange (the "Registrar") and an
office or agency where Securities may be presented for payment (the "Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange (the "Securities Register"). The Company may have one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent and the term "Registrar" includes
any co-registrar.

                The Company shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any of

<PAGE>

                                                                              45

its wholly owned Subsidiaries organized in the United States may act as Paying
Agent, Registrar or transfer agent.

                The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities. The Company may remove any Registrar or Paying
Agent upon written notice to such Registrar or Paying Agent and to the Trustee;
provided, however, that no such removal shall become effective until (i)
acceptance of any appointment by a successor as evidenced by an appropriate
agreement entered into by the Company and such successor Registrar or Paying
Agent, as the case may be, and delivered to the Trustee or (ii) notification to
the Trustee that the Trustee shall serve as Registrar or Paying Agent until the
appointment of a successor in accordance with clause (i) above. The Registrar or
Paying Agent may resign at any time upon written notice to the Company and the
Trustee.

                SECTION 2.4.  Paying Agent to Hold Money in Trust. By no later
than 10:00 a.m. (New York City time) on the date on which any principal of,
premium, if any, or interest on any Security is due and payable, the Company
shall deposit with the Paying Agent a sum sufficient in immediately available
funds to pay such principal, premium or interest when due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that such
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by such Paying Agent for the payment of principal of,
premium, if any, or interest on the Securities (whether such assets have been
distributed to it by the Company or other obligors on the Securities), shall
notify the Trustee in writing of any default by the Company or any Subsidiary
Guarantor in making any such payment and shall during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith deliver to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Securities together with a full accounting
thereof. If the Company or a Subsidiary of the Company acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent (other than the
Trustee) to pay all money held by it to the Trustee and to account for any funds
or assets disbursed by such Paying Agent. Upon complying with this Section, the
Paying Agent (if other than the Company or a Subsidiary of the Company) shall
have no further liability for the money delivered to the Trustee. Upon any
bankruptcy, reorganization or similar proceeding with respect to the Company,
the Trustee shall serve as Paying Agent for the Securities.

                SECTION 2.5.  Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, or to the extent
otherwise required under the TIA, the Company, on its own behalf and on behalf
of each of the Subsidiary Guarantors, shall furnish or cause the Registrar to
furnish to the Trustee, in writing at least five Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders and the Company shall
otherwise comply with TIA Section 312(a).

<PAGE>

                                                                              46

                SECTION 2.6.  Transfer and Exchange.

                (a) The following provisions shall apply with respect to any
proposed registration of transfer of a Rule 144A Note or an Institutional
Accredited Investor Note prior to the date which is two years after the later of
the date of its original issue and the last date on which the Company or any
Affiliate of the Company was the owner of such Securities (or any predecessor
thereto) (the "Resale Restriction Termination Date"):

                        (i)     a registration of transfer of a Rule 144A Note
                                or an Institutional Accredited Investor Note or
                                a beneficial interest therein to a QIB shall be
                                made upon the representation of the transferee
                                in the form as set forth on the reverse of the
                                Security that it is purchasing for its own
                                account or an account with respect to which it
                                exercises sole investment discretion and that it
                                and any such account is a "qualified
                                institutional buyer" within the meaning of Rule
                                144A, and is aware that the sale to it is being
                                made in reliance on Rule 144A and acknowledges
                                that it has received such information regarding
                                the Company as the undersigned has requested
                                pursuant to Rule 144A or has determined not to
                                request such information and that it is aware
                                that the transferor is relying upon its
                                foregoing representations in order to claim the
                                exemption from registration provided by Rule
                                144A;

                        (ii)    a registration of transfer of a Rule 144A Note
                                or an Institutional Accredited Investor Note or
                                a beneficial interest therein to an IAI shall be
                                made upon receipt by the Trustee or its agent of
                                a certificate substantially in the form set
                                forth in Section 2.7 from the proposed
                                transferee and, if requested by the Company, the
                                delivery of an opinion of counsel, certification
                                and/or other information satisfactory to it; and

                        (iii)   a registration of transfer of a Rule 144A Note
                                or a beneficial interest therein to a Non-U.S.
                                Person shall be made upon receipt by the Trustee
                                or its agent of a certificate substantially in
                                the form set forth in Section 2.8 from the
                                proposed transferee and, if requested by the
                                Company, the delivery of an opinion of counsel,
                                certification and/or other information
                                satisfactory to it.

                (b) Prior to the expiration of the Restricted Period, a
registration of transfer of a Regulation S Note or a beneficial interest therein
shall only be made to a Non-U.S. Person and shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set forth in
Section 2.8 hereof from the proposed transferee and, if requested by the
Company, receipt by the Trustee or its agent of an opinion of counsel,
certification and/or other information satisfactory to the Company.

<PAGE>

                                                                              47

                After the expiration of the Restricted Period, interests in the
Regulation S Note may be transferred in accordance with applicable law without
requiring the certification set forth in Section 2.8 or any additional
certification.

                (c) Restricted Securities Legend. Upon the transfer, exchange or
replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing a
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear a Restricted Securities Legend unless (i) Initial Securities are being
exchanged for Exchange Securities in a Registered Exchange Offer in which case
the Exchange Securities shall not bear a Restricted Securities Legend, (ii) an
Initial Security is being transferred pursuant to the Shelf Registration
Statement or other effective registration statement or (iii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory to the Company
and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act. Any Additional Securities sold in a registered
offering shall not be required to bear the Restricted Securities Legend.

                (d) The Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 2.1 or this
Section 2.6. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable prior written notice to the Registrar.

                (e) Obligations with Respect to Transfers and Exchanges of
Securities.

                        (i)     To permit registrations of transfers and
                                exchanges, the Company shall, subject to the
                                other terms and conditions of this Article II,
                                execute and the Trustee shall authenticate
                                Definitive Securities and Global Securities at
                                the Registrar's request.

                        (ii)    No service charge shall be made to a Holder for
                                any registration of transfer or exchange, but
                                the Company may require the Holder to pay a sum
                                sufficient to cover any transfer tax,
                                assessments, or similar governmental charge
                                payable in connection therewith (other than any
                                such transfer taxes, assessments or similar
                                governmental charges payable upon exchange or
                                transfer pursuant to Sections 2.2, 2.6, 2.9,
                                2.11, 3.5, 3.10, 5.8 or 9.5).

                        (iii)   The Company (and the Registrar) shall not be
                                required to register the transfer of or exchange
                                of any Security (A) for a period beginning (1)
                                15 days before the mailing of a notice of an
                                offer to repurchase or redeem Securities and
                                ending at the close of business on the day of
                                such mailing or (2) 15 days before an interest
                                payment date and ending on such interest payment
                                date or (B) called for redemption, except the
                                unredeemed portion of any Security being
                                redeemed in part.

<PAGE>

                                                                              48

                        (iv)    Prior to the due presentation for registration
                                of transfer of any Security, the Company, the
                                Trustee, the Paying Agent or the Registrar may
                                deem and treat the person in whose name a
                                Security is registered as the owner of such
                                Security for the purpose of receiving payment of
                                principal of, premium, if any, and (subject to
                                paragraph 2 of the forms of Securities attached
                                hereto as Exhibits A and B) interest on such
                                Security and for all other purposes whatsoever,
                                including without limitation the transfer or
                                exchange of such Security, whether or not such
                                Security is overdue, and none of the Company,
                                the Trustee, the Paying Agent or the Registrar
                                shall be affected by notice to the contrary.

                        (v)     Any Definitive Security delivered in exchange
                                for an interest in a Global Security pursuant to
                                Section 2.1(e) shall, except as otherwise
                                provided by Section 2.6(c), bear the applicable
                                legend regarding transfer restrictions
                                applicable to the Definitive Security set forth
                                in Section 2.1(d).

                        (vi)    All Securities issued upon any transfer or
                                exchange pursuant to the terms of this Indenture
                                shall evidence the same debt and shall be
                                entitled to the same benefits under this
                                Indenture as the Securities surrendered upon
                                such transfer or exchange.

                (f) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, DTC or other Person with respect to the accuracy
of the records of DTC or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person (other
than DTC) of any notice (including any notice of redemption or purchase) or the
payment of any amount or delivery of any Securities (or other security or
property) under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made to Holders
in respect of the Securities shall be given or made only to or upon the order of
the registered Holders (which shall be DTC or its nominee in the case of a
Global Security). The rights of beneficial owners in any Global Security shall
be exercised only through DTC subject to the applicable rules and procedures of
DTC. The Trustee may rely and shall be fully protected in relying upon
information furnished by DTC with respect to its members, participants and any
beneficial owners.

                (ii)    The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among DTC
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

<PAGE>

                                                                              49

                SECTION 2.7.  Form of Certificate to be Delivered in Connection
with Transfers to Institutional Accredited Investors.

                                            [Date]

IMCO Recycling Inc.
c/o JPMorgan Chase Bank
600 Travis, Suite 1100
Houston, Texas 77002
Attention:  Institutional Trust Services

Ladies and Gentlemen:

                This certificate is delivered to request a transfer of
$[_________] principal amount of the 10 3/8% Senior Secured Notes due 2010 (the
"Securities") of IMCO Recycling Inc. (the "Company").

                  Upon transfer, the Securities would be registered in the name
of the new beneficial owner as follows:

                Name: ___________________________________

                Address: ________________________________

                Taxpayer ID Number: _____________________

                The undersigned represents and warrants to you that:

                1.      We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended (the "Securities Act")) purchasing for our own account or for the
account of such an institutional "accredited investor" at least $250,000
principal amount of the Securities, and we are acquiring the Securities not with
a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risk of our investment in the Securities and we invest in or purchase securities
similar to the Securities in the normal course of our business. We and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.

                2.      We understand that the Securities have not been
registered under the Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing Securities to offer,
sell or otherwise transfer such Securities prior to the date that is two years
after the later of the date of original issue and the last date on which the
Company or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a "qualified institutional buyer" under Rule 144A of the Securities
Act (a

<PAGE>

                                                                              50

"QIB") that is purchasing for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor," in each case in a
minimum principal amount of Securities of $250,000 for investment purposes and
not with a view to or for offer or sale in connection with any distribution in
violation of the Securities Act or (f) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and in compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Securities
is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and that it is acquiring such Securities
for investment purposes and not for distribution in violation of the Securities
Act. Each purchaser acknowledges that the Company and the Trustee reserve the
right prior to any offer, sale or other transfer prior to the Resale Termination
Date of the Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.

                                        TRANSFEREE:
                                                   ----------------------

                                        BY:
                                           ------------------------------

<PAGE>

                                                                              51

                SECTION 2.8.  Form of Certificate to be Delivered in Connection
with Transfers Pursuant to Regulation S.

                                          [Date]

IMCO Recycling Inc.
c/o JPMorgan Chase Bank
600 Travis, Suite 1100
Houston, Texas 77002
Attention:  Institutional Trust Services

                Re:     IMCO Recycling Inc.
                        10 3/8% Senior Secured Notes due 2010 (the "Securities")

Ladies and Gentlemen:

                In connection with our proposed sale of $[________] aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:

                (a)     the offer of the Securities was not made to a person in
        the United States;

                (b)     at the time the buy order was originated, the transferee
        was outside the United States or we and any person acting on our behalf
        reasonably believed that the transferee was outside the United States;

                (c)     no directed selling efforts have been made in the United
        States in contravention of the requirements of Rule 903(a)(2) or Rule
        904(a)(2) of Regulation S, as applicable; and

                (d)     the transaction is not part of a plan or scheme to evade
        the registration requirements of the Securities Act.

                In addition, if the sale is made during a restricted period and
the provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may
be.

                You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.

<PAGE>

                                                                              52

                Very truly yours,

                [Name of Transferor]

                By:
                   ----------------------------

                -------------------------------
                      Authorized Signature

                SECTION 2.9.  Mutilated, Destroyed, Lost or Stolen Securities.
If a mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code are
met, such that the Securityholder (a) satisfies the Company or the Trustee that
such Security has been lost, destroyed or wrongfully taken within a reasonable
time after such Securityholder has notice of such loss, destruction or wrongful
taking and the Registrar has not registered a transfer prior to receiving such
notification, (b) makes such request to the Company or Trustee prior to the
Security being acquired by a protected purchaser as defined in Section 8-303 of
the Uniform Commercial Code (a "protected purchaser") and (c) satisfies any
other reasonable requirements of the Trustee; provided, however, if after the
delivery of such replacement Security, a protected purchaser of the Security for
which such replacement Security was issued presents for payment or registration
such replaced Security, the Trustee or the Company shall be entitled to recover
such replacement Security from the Person to whom it was issued and delivered or
any Person taking therefrom, except a protected purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Company or the Trustee in
connection therewith. If required by the Trustee or the Company, such Holder
shall furnish an indemnity bond sufficient in the judgment of the Company and
the Trustee to protect the Company, the Trustee, the Paying Agent and the
Registrar from any loss which any of them may suffer if a Security is replaced,
and, in the absence of notice to the Company, any Subsidiary Guarantor or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon receipt of a Company Order the Trustee shall
authenticate and make available for delivery, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount, bearing a number not
contemporaneously outstanding.

                In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.

                Upon the issuance of any new Security under this Section, the
Company may require that such Holder pay a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of counsel and of the Trustee) in
connection therewith.

<PAGE>

                                                                              53

                Subject to the proviso in the initial paragraph of this Section
2.9 every new Security issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, any Subsidiary Guarantor (if applicable)
and any other obligor upon the Securities, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

                The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

                SECTION 2.10. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding in
the event the Company or an Affiliate of the Company holds the Security,
provided, however, that (i) for purposes of determining which are outstanding
for consent or voting purposes hereunder, the provisions of Section 12.6 shall
apply and (ii) in determining whether the Trustee shall be protected in making a
determination whether the Holders of the requisite principal amount of
outstanding Securities are present at a meeting of Holders of Securities for
quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, or relying upon any such quorum, consent or vote, only Securities
which a Trust Officer of the Trustee actually knows to be held by the Company or
an Affiliate of the Company shall not be considered outstanding.

                If a Security is replaced pursuant to Section 2.9 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee and the Company receive proof satisfactory to them that the
replaced Security is held by a protected purchaser. A mutilated Security ceases
to be outstanding upon surrender of such Security and replacement pursuant to
Section 2.9.

                If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a Redemption Date or maturity date money sufficient to
pay all principal, premium, if any, and accrued interest payable on that date
with respect to the Securities (or portions thereof) to be redeemed or maturing,
as the case may be, and the Paying Agent is not prohibited from paying such
money to the Securityholders on that date pursuant to the terms of this
Indenture, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.

                SECTION 2.11. Temporary Securities. In the event that Definitive
Securities are to be issued under the terms of this Indenture, until such
Definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form, and shall carry all rights, of Definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Securities. After the preparation of
Definitive Securities, the temporary

<PAGE>

                                                                              54

Securities shall be exchangeable for Definitive Securities upon surrender of the
temporary Securities at any office or agency maintained by the Company for that
purpose and such exchange shall be without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Securities, the Company shall
execute, and the Trustee shall authenticate and make available for delivery in
exchange therefor, one or more Definitive Securities representing an equal
principal amount of Securities. Until so exchanged, the Holder of temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as a Holder of Definitive Securities.

                SECTION 2.12. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and dispose of such Securities in accordance with its internal
policies and customary procedures including delivery of a certificate describing
such Securities disposed (subject to the record retention requirements of the
Exchange Act) or deliver canceled Securities to the Company pursuant to written
direction by one Officer of the Company. If the Company or any Subsidiary
Guarantor acquires any of the Securities, such acquisition shall not operate as
a redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.12. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation for
any reason other than in connection with a transfer or exchange.

                At such time as all beneficial interests in a Global Security
have either been exchanged for Definitive Securities, transferred, redeemed,
repurchased or canceled, such Global Security shall be returned by DTC to the
Trustee for cancellation or retained and canceled by the Trustee. At any time
prior to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, transferred in exchange for an interest in
another Global Security, redeemed, repurchased or canceled, the principal amount
of Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.

                SECTION 2.13. Payment of Interest; Defaulted Interest. Interest
on any Security which is payable, and is punctually paid or duly provided for,
on any interest payment date shall be paid to the Person in whose name such
Security (or one or more Predecessor Securities) is registered at the close of
business on the regular record date for such payment at the office or agency of
the Company maintained for such purpose pursuant to Section 2.3.

                Any interest on any Security which is payable, but is not paid
when the same becomes due and payable and such nonpayment continues for a period
of 30 days shall forthwith cease to be payable to the Holder on the regular
record date, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest")
shall be paid by the Company, at its election in each case, as provided in
clause (a) or (b) below:

<PAGE>

                                                                              55

                (a) The Company may elect to make payment of any Defaulted
        Interest to the Persons in whose names the Securities (or their
        respective predecessor Securities) are registered at the close of
        business on a Special Record Date (as defined below) for the payment of
        such Defaulted Interest, which shall be fixed in the following manner.
        The Company shall notify the Trustee in writing of the amount of
        Defaulted Interest proposed to be paid on each Security and the date
        (not less than 30 days after such notice) of the proposed payment (the
        "Special Interest Payment Date"), and at the same time the Company shall
        deposit with the Trustee an amount of money equal to the aggregate
        amount proposed to be paid in respect of such Defaulted Interest or
        shall make arrangements satisfactory to the Trustee for such deposit
        prior to the date of the proposed payment, such money when deposited to
        be held in trust for the benefit of the Persons entitled to such
        Defaulted Interest as in this clause provided. Thereupon the Trustee
        shall fix a record date (the "Special Record Date") for the payment of
        such Defaulted Interest, which date shall be not more than 15 days and
        not less than 10 days prior to the Special Interest Payment Date and not
        less than 10 days after the receipt by the Trustee of the notice of the
        proposed payment. The Trustee shall promptly notify the Company of such
        Special Record Date, and in the name and at the expense of the Company,
        shall cause notice of the proposed payment of such Defaulted Interest
        and the Special Record Date and Special Interest Payment Date therefor
        to be given in the manner provided for in Section 12.2, not less than 10
        days prior to such Special Record Date. Notice of the proposed payment
        of such Defaulted Interest and the Special Record Date and Special
        Interest Payment Date therefor having been so given, such Defaulted
        Interest shall be paid on the Special Interest Payment Date to the
        Persons in whose names the Securities (or their respective predecessor
        Securities) are registered at the close of business on such Special
        Record Date and shall no longer be payable pursuant to the following
        clause (b).

                (b) The Company may make payment of any Defaulted Interest in
        any other lawful manner not inconsistent with the requirements of any
        securities exchange on which the Securities may be listed, and upon such
        notice as may be required by such exchange, if, after notice given by
        the Company to the Trustee of the proposed payment pursuant to this
        clause, such manner of payment shall be deemed practicable by the
        Trustee.

                Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of, transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

                SECTION 2.14. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months.

                SECTION 2.15. CUSIP, Common Code and ISIN Numbers. The Company
in issuing the Securities may use "CUSIP", "Common Code" and "ISIN" numbers and,
if so, the Trustee shall use "CUSIP", "Common Code" and "ISIN" numbers in
notices of redemption or purchase as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption or purchase and that reliance may be placed only
on

<PAGE>

                                                                              56

the other identification numbers printed on the Securities, and any such
redemption or purchase shall not be affected by any defect in or omission of
such CUSIP, Common Code and ISIN numbers. The Company shall promptly notify the
Trustee in writing of any change in the CUSIP, Common Code and ISIN numbers.

                                   ARTICLE III

                                    COVENANTS

                SECTION 3.1. Payment of Securities. The Company shall promptly
pay the principal of, premium, if any, and interest on the Securities on the
dates and in the manner provided in the Securities and in this Indenture.
Principal, premium, if any, and interest shall be considered paid on the date
due if on such date the Trustee or the Paying Agent holds in accordance with
this Indenture money sufficient to pay all principal, premium, if any, and
interest then due and the Trustee or the Paying Agent, as the case may be, is
not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture. The Company's obligation to pay the
principal of or interest on the Securities shall be reduced to the extent that
the Trustee has received for deposit to the Collateral Account payments under
the Intercompany Note (other than prepayments) and the Trustee is not prohibited
from paying such money to the Securityholders on the date such payments are due
and payable pursuant to this Indenture.

                The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

                Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.

                SECTION 3.2. Limitation on Indebtedness.

                (a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness (including Acquired
Indebtedness); provided, however, that the Company or any of the Subsidiary
Guarantors may Incur Indebtedness if on the date thereof:

                (1)     the Consolidated Coverage Ratio for the Company and its
        Restricted Subsidiaries is at least 2.00 to 1.00; and

                (2)     no Default or Event of Default will have occurred or be
        continuing or would occur as a consequence of Incurring the Indebtedness
        or transactions relating to such Incurrence.

                (b) Clause (a) of this Section 3.2 will not prohibit the
Incurrence of the following Indebtedness:

<PAGE>

                                                                              57

                (1)     Indebtedness of the Company and the Subsidiary
        Guarantors Incurred pursuant to the Credit Facility and the principal
        component of amounts outstanding under Qualified Receivables
        Transactions in an aggregate amount up to the greater of (a) the
        Borrowing Base and (b) $120.0 million less (in the case of this clause
        (b)) all mandatory prepayments of principal thereof permanently reducing
        the commitments thereunder;

                (2)     Guarantees by the Subsidiary Guarantors and Foreign
        Subsidiaries of Indebtedness Incurred in accordance with the provisions
        of this Indenture; provided that in the event such Indebtedness that is
        being Guaranteed is a Subordinated Obligation or a Guarantor
        Subordinated Obligation, then the related Guarantee shall be
        subordinated in right of payment to the Subsidiary Guarantee;

                (3)     Indebtedness of the Company owing to and held by any
        Restricted Subsidiary (other than a Receivables Entity) or Indebtedness
        of a Restricted Subsidiary owing to and held by the Company or any other
        Restricted Subsidiary (other than a Receivables Entity); provided,
        however,

                (a)     if the Company is the obligor on such Indebtedness, such
                        Indebtedness is expressly subordinated to the prior
                        payment in full in cash of all obligations with respect
                        to the Securities; or

                (b)     if a Subsidiary Guarantor is the obligor on such
                        Indebtedness and the Company or a Subsidiary Guarantor
                        is not the obligee, such Indebtedness is subordinated in
                        right of payment to the Subsidiary Guarantees of such
                        Subsidiary Guarantor; and

                        (i)     any subsequent issuance or transfer of Capital
                                Stock or any other event which results in any
                                such Indebtedness being beneficially held by a
                                Person other than the Company or a Restricted
                                Subsidiary (other than a Receivables Entity); or

                        (ii)    any sale or other transfer of any such
                                Indebtedness to a Person other than the Company
                                or a Restricted Subsidiary (other than a
                                Receivables Entity)

                        shall be deemed, in each case, to constitute an
                        Incurrence of such Indebtedness by the Company or such
                        Subsidiary, as the case may be.

                (4)     Indebtedness represented by (a) the Securities and the
        Subsidiary Guarantees issued on the Issue Date and the Exchange
        Securities and exchange guarantees evidencing the same Indebtedness as
        the Securities and the Subsidiary Guarantees issued in a Registered
        Exchange Offer pursuant to the Registration Rights Agreement, (b) any
        Indebtedness (other than the Indebtedness described in clauses (1), (2),
        (3), (6), (8), (9), (10), (11) and (12) of this Section 3.2(b))
        outstanding on the Issue Date and (c) any Refinancing Indebtedness
        Incurred in respect of any Indebtedness described in this clause (4) or
        clause (5) of Section 3.2(b) or Incurred pursuant to Section 3.2(a);

<PAGE>

                                                                              58

                (5)     Indebtedness of a Person Incurred and outstanding on the
        date on which such Person was acquired by the Company or a Restricted
        Subsidiary and became a Restricted Subsidiary or part of a Restricted
        Subsidiary or the Company or merged, consolidated, amalgamated or
        liquidated with or into a Restricted Subsidiary or the Company (other
        than Indebtedness Incurred (a) to provide all or any portion of the
        funds utilized to consummate the transaction or series of related
        transactions pursuant to which such Person became a Restricted
        Subsidiary or was otherwise acquired by the Company or a Restricted
        Subsidiary or merged, consolidated, amalgamated or liquidated with or
        into a Restricted Subsidiary or (b) otherwise in connection with, or in
        contemplation of, such acquisition); provided, however, that at the time
        such Restricted Subsidiary is acquired by the Company, the Company would
        have been able to Incur $1.00 of additional Indebtedness pursuant to
        Section 3.2(a) after giving effect to the Incurrence of such
        Indebtedness pursuant to this clause (5) of Section 3.2(b);

                (6)     Indebtedness under Currency Agreements and Interest Rate
        Agreements; provided, that in the case of Currency Agreements, such
        Currency Agreements are related to business transactions of the Company
        or its Restricted Subsidiaries entered into in the ordinary course of
        business or in the case of Currency Agreements and Interest Rate
        Agreements, such Currency Agreements and Interest Rate Agreements are
        entered into for bona fide hedging purposes of the Company or its
        Restricted Subsidiaries (as determined in good faith by the Board of
        Directors or senior management of the Company) and substantially
        correspond (in case of Interest Rate Agreements) in terms of notional
        amount, duration, currencies and interest rates, as applicable, to
        Indebtedness of the Company or its Restricted Subsidiaries Incurred
        without violation of the Indenture;

                (7)     the Incurrence by the Company or any of its Restricted
        Subsidiaries of Indebtedness represented by Capitalized Lease
        Obligations, real property financings, conditional sale obligations,
        obligations under title retention agreements or purchase money
        obligations with respect to assets other than Capital Stock or other
        Investments, in each case Incurred for the purpose of financing all or
        any part of the purchase price, leasing, or cost of acquisition,
        construction, development or improvement of property or assets used in
        the business of the Company or such Restricted Subsidiary, in an
        aggregate principal amount not to exceed $20.0 million at any time
        outstanding;

                (8)     Indebtedness Incurred in respect of workers'
        compensation claims, self-insurance obligations, performance, surety,
        appeal and similar bonds and completion guarantees provided by the
        Company or a Restricted Subsidiary in the ordinary course of business;

                (9)     Indebtedness arising from agreements of the Company or a
        Restricted Subsidiary providing for indemnification, adjustment of
        purchase price or similar obligations, in each case, Incurred or assumed
        in connection with the disposition of any business, assets or Capital
        Stock of a Restricted Subsidiary, provided that the maximum aggregate
        liability in respect of all such Indebtedness shall at no time exceed
        the gross proceeds actually received by the Company and its Restricted
        Subsidiaries in connection with such disposition;

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                                                                              59

                (10)    Indebtedness arising from the honoring by a bank or
        other financial institution of a check, draft or similar instrument
        (except in the case of daylight overdrafts) drawn against insufficient
        funds in the ordinary course of business, provided, however, that such
        Indebtedness is extinguished within five Business Days of Incurrence;

                (11)    Indebtedness of Foreign Subsidiaries Incurred for
        working capital financing in an aggregate outstanding principal amount
        which, when taken together with the principal amount of all other
        Indebtedness Incurred pursuant to this clause (11) of Section 3.2(b) and
        then outstanding, will not exceed $40.0 million at any one time
        outstanding; and

                (12)    in addition to the items referred to in clauses (1)
        through (11) above of this Section 3.2(b), Indebtedness of the Company
        and the Subsidiary Guarantors in an aggregate outstanding principal
        amount which, when taken together with the principal amount of all other
        Indebtedness Incurred pursuant to this clause (12) of Section 3.2(b) and
        then outstanding, will not exceed $15.0 million at any time outstanding.

                The Company will not Incur any Indebtedness under this Section
3.2(b) if the proceeds thereof are used, directly or indirectly, to refinance
any Subordinated Obligations of the Company unless such Indebtedness will be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations. No Subsidiary Guarantor will Incur any indebtedness if the proceeds
thereof are used, directly or indirectly, to refinance any Guarantor
Subordinated Obligations of such Subsidiary Guarantor unless such Indebtedness
will be subordinated to the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee to at least the same extent as such Guarantor Subordinated
Obligations. No Restricted Subsidiary other than a Subsidiary Guarantor may
Incur any Indebtedness if the proceeds are used to refinance Indebtedness of the
Company.

                All intercompany debt shall be unsecured and subordinate in
right of payment to the Securities (other than the Intercompany Note).

                (c) For purposes of determining compliance with, and the
outstanding principal amount of any particular Indebtedness Incurred pursuant to
and in compliance with, this Section 3.2:

                (1)     in the event that Indebtedness meets the criteria of
        more than one of the types of Indebtedness described in clauses (a) and
        (b) of this Section 3.2, the Company, in its sole discretion, will
        classify such item of Indebtedness on the date of Incurrence and only be
        required to include the amount and type of such Indebtedness in one of
        such clauses;

                (2)     all Indebtedness outstanding on the date of this
        Indenture under the Senior Secured Credit Agreement shall be deemed
        initially Incurred on the Issue Date under Section 3.2(b)(1) and not
        Section 3.2(a) or Section 3.2(b)(4);

                (3)     Guarantees of, or obligations in respect of letters of
        credit relating to, Indebtedness which is otherwise included in the
        determination of a particular amount of Indebtedness shall not be
        included;

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                                                                              60

                (4)     if obligations in respect of letters of credit are
        Incurred pursuant to a Credit Facility and are being treated as Incurred
        pursuant to Section 3.2(b)(1) and the letters of credit relate to other
        Indebtedness, then such other Indebtedness shall not be included;

                (5)     the principal amount of any Disqualified Stock of the
        Company or a Restricted Subsidiary, or Preferred Stock of a Restricted
        Subsidiary that is not a Subsidiary Guarantor, will be equal to the
        greater of the maximum mandatory redemption or repurchase price (not
        including, in either case, any redemption or repurchase premium) or the
        liquidation preference thereof;

                (6)     Indebtedness permitted by this Section 3.2 need not be
        permitted solely by reference to one provision permitting such
        Indebtedness but may be permitted in part by one such provision and in
        part by one or more other provisions of this Section 3.2 permitting such
        Indebtedness; and

                (7)     the amount of Indebtedness issued at a price that is
        less than the principal amount thereof will be equal to the amount of
        the liability in respect thereof determined in accordance with GAAP.

                Accrual of interest, accrual of dividends, the accretion of
accreted value, the payment of interest in the form of additional Indebtedness
and the payment of dividends in the form of additional shares of Preferred Stock
or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for
purposes of this Section 3.2. The amount of any Indebtedness outstanding as of
any date shall be (i) the accreted value thereof in the case of any Indebtedness
issued with original issue discount and (ii) the principal amount or liquidation
preference thereof, together with any interest thereon that is more than 30 days
past due, in the case of any other Indebtedness.

                In addition, the Company will not permit any of its Unrestricted
Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified
Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such
Indebtedness is not permitted to be Incurred as of such date under this Section
3.2, the Company shall be in Default under this Section 3.2).

                For purposes of determining compliance with any U.S.
dollar-denominated restriction on the Incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was Incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
provided that if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
U.S. dollar-dominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. Notwithstanding any
other provision of this

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                                                                              61

Section 3.2, the maximum amount of Indebtedness that the Company may Incur
pursuant to this Section 3.2 shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rate of currencies. The principal amount
of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
Refinancing Indebtedness is denominated that is in effect on the date of such
refinancing.

                SECTION 3.3.  Limitation on Restricted Payments. The Company
will not, and will not permit any of its Restricted Subsidiaries, directly or
indirectly, to:

                (1)     declare or pay any dividend or make any distribution on
        or in respect of its Capital Stock (including any payment in connection
        with any merger or consolidation involving the Company or any of its
        Restricted Subsidiaries) except:

                (a)     dividends or distributions payable in Capital Stock of
                        the Company (other than Disqualified Stock) or in
                        options, warrants or other rights to purchase such
                        Capital Stock of the Company; and

                (b)     dividends or distributions payable to the Company or a
                        Restricted Subsidiary (and if such Restricted Subsidiary
                        is not a Wholly-Owned Subsidiary, to its other holders
                        of common Capital Stock on a pro rata basis);

                (2)     purchase, redeem, retire or otherwise acquire for value
        any Capital Stock of the Company or any direct or indirect parent of the
        Company held by Persons other than the Company or a Restricted
        Subsidiary (other than in exchange for Capital Stock of the Company
        (other than Disqualified Stock));

                (3)     purchase, repurchase, redeem, defease or otherwise
        acquire or retire for value, prior to scheduled maturity, scheduled
        repayment or scheduled sinking fund payment, any Subordinated
        Obligations or Guarantor Subordinated Obligations (other than the
        purchase, repurchase, redemption, defeasance or other acquisition or
        retirement of Subordinated Obligations or Guarantor Subordinated
        Obligations purchased in anticipation of satisfying a sinking fund
        obligation, principal installment or final maturity, in each case due
        within one year of the date of purchase, repurchase, redemption,
        defeasance or other acquisition or retirement); or

                (4)     make any Restricted Investment in any Person;

(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Restricted Investment referred to in clauses
(1) through (4) shall be referred to herein as a "Restricted Payment"), if at
the time the Company or such Restricted Subsidiary makes such Restricted
Payment:

                (a)     a Default shall have occurred and be continuing (or
                        would result therefrom); or

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                                                                              62

                (b)     the Company is not able to Incur an additional $1.00 of
                        Indebtedness pursuant to Section 3.2(a) after giving
                        effect, on a pro forma basis, to such Restricted
                        Payment; or

                (c)     the aggregate amount of such Restricted Payment and all
                        other Restricted Payments declared or made subsequent to
                        the Issue Date would exceed the sum of:

                        (i)     50% of Consolidated Net Income for the period
                        (treated as one accounting period) from the beginning of
                        the first fiscal quarter commencing after the Issue Date
                        occurs to the end of the most recent fiscal quarter
                        ending prior to the date of such Restricted Payment for
                        which financial statements are in existence (or, in case
                        such Consolidated Net Income is a deficit, minus 100% of
                        such deficit);

                        (ii)    100% of the aggregate Net Cash Proceeds received
                        by the Company from the issue or sale of its Capital
                        Stock (other than Disqualified Stock) or other capital
                        contributions subsequent to the Issue Date (other than
                        Net Cash Proceeds received from an issuance or sale of
                        such Capital Stock to a Subsidiary of the Company or an
                        employee stock ownership plan, option plan or similar
                        trust to the extent such sale to an employee stock
                        ownership plan or similar trust is financed by loans
                        from or Guaranteed by the Company or any Restricted
                        Subsidiary unless such loans have been repaid with cash
                        on or prior to the date of determination);

                        (iii)   the amount by which Indebtedness of the Company
                        or its Restricted Subsidiaries is reduced on the
                        Company's balance sheet upon the conversion or exchange
                        (other than by a Subsidiary of the Company) subsequent
                        to the Issue Date of any Indebtedness of the Company or
                        its Restricted Subsidiaries convertible or exchangeable
                        for Capital Stock (other than Disqualified Stock) of the
                        Company (less the amount of any cash, or the fair market
                        value of any other property, distributed by the Company
                        upon such conversion or exchange); and

                        (iv)    the amount equal to the net reduction in
                        Restricted Investments made by the Company or any of its
                        Restricted Subsidiaries in any Person resulting from:

                        (A)     repurchases or redemptions of such Restricted
                                Investments by such Person, proceeds realized
                                upon the sale of such Restricted Investment to
                                an unaffiliated purchaser, repayments of loans
                                or advances or other transfers of assets
                                (including by way of dividend or distribution)
                                by such Person to the Company or any Restricted
                                Subsidiary; or

                        (B)     the redesignation of Unrestricted Subsidiaries
                                as Restricted Subsidiaries (valued in each case
                                as provided in the definition of

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                                                                              63

                                "Investment") not to exceed, in the case of any
                                Unrestricted Subsidiary, the amount of
                                Investments previously made by the Company or
                                any Restricted Subsidiary in such Unrestricted
                                Subsidiary,

                        which amount in each case under this clause (iv) was
                        included in the calculation of the amount of Restricted
                        Payments; provided, however, that no amount will be
                        included under this clause (iv) to the extent it is
                        already included in Consolidated Net Income.

        The provisions of the preceding paragraph will not prohibit:

                (1)     any purchase, repurchase, redemption, defeasance or
        other acquisition, cancellation or retirement of Capital Stock,
        Disqualified Stock or Subordinated Obligations of the Company or
        Guarantor Subordinated Obligation of any Subsidiary Guarantor made by
        exchange for, or out of the proceeds of the substantially concurrent
        sale of, Capital Stock of the Company (other than Disqualified Stock and
        other than Capital Stock issued or sold to a Subsidiary or an employee
        stock ownership plan or similar trust to the extent such sale to an
        employee stock ownership plan or similar trust is financed by loans from
        or Guaranteed by the Company or any Restricted Subsidiary unless such
        loans have been repaid with cash on or prior to the date of
        determination); provided, however, that (a) such purchase, repurchase,
        redemption, defeasance, acquisition, cancellation or retirement will be
        excluded in subsequent calculations of the amount of Restricted Payments
        and (b) the Net Cash Proceeds from such sale of Capital Stock will be
        excluded from clause (c)(ii) of the preceding paragraph;

                (2)     any purchase, repurchase, redemption, defeasance or
        other acquisition or retirement of Subordinated Obligations of the
        Company or Guarantor Subordinated Obligations of any Subsidiary
        Guarantor made by exchange for, or out of the proceeds of the
        substantially concurrent sale of, Subordinated Obligations of the
        Company or any purchase, repurchase, redemption, defeasance or other
        acquisition or retirement of Guarantor Subordinated Obligations made by
        exchange for or out of the proceeds of the substantially concurrent sale
        of Guarantor Subordinated Obligations that, in each case, is permitted
        to be Incurred pursuant to Section 3.2 and that in each case constitutes
        Refinancing Indebtedness; provided, however, that such purchase,
        repurchase, redemption, defeasance, acquisition or retirement will be
        excluded in subsequent calculations of the amount of Restricted
        Payments;

                (3)     any purchase, repurchase, redemption, defeasance or
        other acquisition or retirement of Disqualified Stock of the Company or
        a Restricted Subsidiary made by exchange for or out of the proceeds of
        the substantially concurrent sale of Disqualified Stock of the Company
        or such Restricted Subsidiary, as the case may be, that, in each case,
        is permitted to be Incurred pursuant to Section 3.2 and that in each
        case constitutes Refinancing Indebtedness; provided, however, that such
        purchase, repurchase, redemption, defeasance, acquisition or retirement
        will be excluded in subsequent calculations of the amount of Restricted
        Payments;

<PAGE>

                                                                              64

                (4)     so long as no Default or Event of Default has occurred
        and is continuing, any purchase or redemption of Subordinated
        Obligations or Guarantor Subordinated Obligations of a Subsidiary
        Guarantor from Net Available Cash to the extent permitted under Section
        3.5 below; provided, however, that such purchase or redemption will be
        excluded in subsequent calculations of the amount of Restricted
        Payments;

                (5)     dividends paid within 60 days after the date of
        declaration if at such date of declaration such dividend would have
        complied with this provision; provided, however, that such dividends
        will be included in subsequent calculations of the amount of Restricted
        Payments;

                (6)     so long as no Default or Event of Default has occurred
        and is continuing,

                (a)     the purchase, redemption or other acquisition,
                        cancellation or retirement for value of Capital Stock,
                        or options, warrants, equity appreciation rights or
                        other rights to purchase or acquire Capital Stock of the
                        Company or any Restricted Subsidiary or any parent of
                        the Company held by any existing or former directors,
                        employees or management of the Company or any Subsidiary
                        of the Company or their assigns, estates or heirs, in
                        each case in connection with the repurchase provisions
                        under employee stock option or stock purchase agreements
                        or other agreements to compensate management employees
                        or directors; provided that such redemptions or
                        repurchases pursuant to this clause will not exceed $1.0
                        million in the aggregate during any calendar year and
                        $3.0 million in the aggregate for all such redemptions
                        and repurchases; provided, however, that such repurchase
                        or redemption will be included in subsequent
                        calculations of the amount of Restricted Payments; and

                (b)     loans or advances to employees or directors of the
                        Company or any Subsidiary of the Company, in each case
                        as permitted by applicable law, the proceeds of which
                        are used to purchase Capital Stock of the Company, in an
                        aggregate amount not in excess of $3.0 million at any
                        one time outstanding; provided, however, that such loans
                        or advances will be included in subsequent calculations
                        of the amount of Restricted Payments;

                (7)     so long as no Default or Event of Default has occurred
        and is continuing, the declaration and payment of dividends to holders
        of any class or series of Disqualified Stock of the Company, issued in
        accordance with the terms of this Indenture to the extent such dividends
        are included in the definition of "Consolidated Interest Expense";
        provided, however, that such dividends will be excluded in subsequent
        calculations of the amount of Restricted Payments;

                (8)     repurchases of Capital Stock deemed to occur upon the
        exercise of stock options, warrants or other convertible securities if
        such Capital Stock represents a portion of the exercise price thereof;
        provided, however, that such repurchases will be excluded in subsequent
        calculations of the amount of Restricted Payments;

<PAGE>

                                                                              65

                (9)     the purchase, repurchase, redemption, defeasance, or
        other acquisition or retirement for value of any Subordinated Obligation
        (i) at a purchase price not greater than 101% of the principal amount of
        such Subordinated Obligation in the event of a Change of Control in
        accordance with provisions similar to Section 3.10 or (ii) at a purchase
        price not greater than 100% of the principal amount thereof in
        accordance with provisions similar to Section 3.5; provided that, prior
        to or simultaneously with such purchase, repurchase, redemption,
        defeasance or other acquisition or retirement, the Company has made the
        Change of Control Offer or Asset Disposition Offer, as applicable, as
        provided in such Section 3.5 or 3.10 with respect to the Securities and
        has completed the repurchase or redemption of all Securities validly
        tendered for payment in connection with such Change of Control Offer or
        Asset Disposition Offer; and

                (10)    Restricted Payments in an amount not to exceed $10.0
        million; provided, however, that such Restricted Payments will be
        included in subsequent calculations of the amount of Restricted
        Payments.

                The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be paid, transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any cash Restricted Payment shall be its face amount
and any non-cash Restricted Payment shall be determined conclusively by the
Board of Directors of the Company acting in good faith whose resolution with
respect thereto shall be delivered to the Trustee, such determination to be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value is
estimated in good faith by the Board of Directors of the Company to exceed $10.0
million. Not later than the date of making any Restricted Payment pursuant to
the first paragraph of this Section 3.3, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this Section 3.3 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.

                For the avoidance of doubt, neither the VAW-IMCO Redemption
Payment nor the application of such deposit to repay amounts pursuant to the
Redemption Agreement shall constitute a Restricted Payment pursuant to this
Section 3.3.

                SECTION 3.4.  Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to:

                (1)     pay dividends or make any other distributions on its
        Capital Stock or pay any Indebtedness or other obligations owed to the
        Company or any Restricted Subsidiary (it being understood that the
        priority of any Preferred Stock in receiving dividends or liquidating
        distributions prior to dividends or liquidating distributions being paid
        on Common Stock shall not be deemed a restriction on the ability to make
        distributions on Capital Stock);

<PAGE>

                                                                              66

                (2)     make any loans or advances to the Company or any
        Restricted Subsidiary (it being understood that the subordination of
        loans or advances made to the Company or any Restricted Subsidiary to
        other Indebtedness Incurred by the Company or any Restricted Subsidiary
        shall not be deemed a restriction on the ability to make loans or
        advances); or

                (3)     transfer any of its property or assets to the Company or
        any Restricted Subsidiary.

                The preceding provisions will not prohibit:

                        (i)     any encumbrance or restriction pursuant to an
                        agreement in effect at or entered into on the date of
                        this Indenture and identified in Schedule 3.4 to this
                        Indenture, including, without limitation, this
                        Indenture, any Qualified Receivables Transaction and the
                        Senior Secured Credit Agreement in effect on such date;

                        (ii)    any encumbrance or restriction with respect to a
                        Restricted Subsidiary pursuant to an agreement relating
                        to any Capital Stock or Indebtedness Incurred by a
                        Restricted Subsidiary on or before the date on which
                        such Restricted Subsidiary was acquired by the Company
                        (other than Capital Stock or Indebtedness Incurred as
                        consideration in, or to provide all or any portion of
                        the funds utilized to consummate, the transaction or
                        series of related transactions pursuant to which such
                        Restricted Subsidiary became a Restricted Subsidiary or
                        was acquired by the Company or a Restricted Subsidiary
                        or in contemplation of the transaction) and outstanding
                        on such date; provided, that any such encumbrance or
                        restriction shall not extend to any assets or property
                        of the Company or any other Restricted Subsidiary other
                        than the assets and property so acquired;

                        (iii)   any encumbrance or restriction with respect to a
                        Restricted Subsidiary pursuant to an agreement effecting
                        a refunding, replacement or refinancing of Indebtedness
                        Incurred pursuant to an agreement referred to in clause
                        (i) or (ii) of this paragraph or this clause (iii) or
                        contained in any amendment to an agreement referred to
                        in clause (i) or (ii) of this paragraph or this clause
                        (iii); provided, however, that the encumbrances and
                        restrictions with respect to such Restricted Subsidiary
                        contained in any such agreement are no less favorable in
                        any material respect to the Holders of the Securities
                        than the encumbrances and restrictions contained in such
                        agreements referred to in clauses (i) or (ii) of this
                        paragraph on the Issue Date or the date such Restricted
                        Subsidiary became a Restricted Subsidiary, whichever is
                        applicable;

                        (iv)    in the case of Section 3.4(3), any encumbrance
                        or restriction:

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                                                                              67

                        (a)     that restricts in a customary manner the
                                subletting, assignment or transfer of any
                                property or asset that is subject to a lease,
                                license or similar contract, or the assignment
                                or transfer of any such lease, license or other
                                contract;

                        (b)     contained in mortgages, deeds of trust, pledges
                                or other security agreements permitted under
                                this Indenture securing Indebtedness of the
                                Company or a Restricted Subsidiary to the extent
                                such encumbrances or restrictions restrict the
                                transfer of the property subject to such
                                mortgages, deeds of trust, pledges or other
                                security agreements; or

                        (c)     pursuant to customary provisions restricting
                                dispositions of real property interests set
                                forth in any reciprocal easement agreements of
                                the Company or any Restricted Subsidiary;

                (v)     (a) purchase money obligations for property acquired in
                the ordinary course of business and (b) Capitalized Lease
                Obligations permitted under this Indenture, in each case, that
                impose encumbrances or restrictions of the nature described in
                Section 3.4(3) on the property so acquired;

                (vi)    any Purchase Money Note or other Indebtedness or
                contractual requirements Incurred with respect to a Qualified
                Receivables Transaction relating exclusively to a Receivables
                Entity that, in the good faith determination of the Board of
                Directors, are necessary to effect such Qualified Receivables
                Transaction;

                (vii)   any restriction with respect to a Restricted Subsidiary
                (or any of its property or assets) imposed pursuant to an
                agreement entered into for the direct or indirect sale or
                disposition of all or substantially all the Capital Stock or
                assets of such Restricted Subsidiary (or the property or assets
                that are subject to such restriction) pending the closing of
                such sale or disposition;

                (viii)  any customary provisions in joint venture agreements
                relating to joint ventures that are not Restricted Subsidiaries
                and other similar agreements entered into in the ordinary course
                of business;

                (ix)    net worth provisions in leases and other agreements
                entered into by the Company or any Restricted Subsidiary in the
                ordinary course of business; and

                (x)     encumbrances or restrictions arising or existing by
                reason of applicable law or any applicable rule, regulation or
                order.

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                                                                              68

                SECTION 3.5.  Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition of Collateral unless:

                (1)     the Company or such Restricted Subsidiary, as the case
        may be, receives consideration at least equal to the fair market value
        (such fair market value to be determined on the date of contractually
        agreeing to such Asset Disposition), as determined in good faith by the
        Board of Directors (including as to the value of all non-cash
        consideration), of the Collateral subject to such Asset Disposition
        (notwithstanding the foregoing, the consideration received by the
        Company or any of its Restricted Subsidiaries from the sale of the
        Uhrichsville, Ohio facility on terms materially consistent with the
        terms, as in effect as of the Issue Date, set forth in Exhibit G to the
        Supply Agreement by and among Commonwealth Aluminum Corporation, IMCO
        Recycling of Ohio Inc. and IMCO Recycling Inc., dated as of April 1,
        1999, or the sale of the Saginaw, Michigan facility on terms materially
        consistent with the terms, as in effect as of the Issue Date, set forth
        in Exhibit 5 to the Long Term Agreement between General Motors
        Corporation and Alchem Aluminum Inc., dated as of February 26, 1999,
        shall, in each case, be deemed to be fair market value for purposes of
        this paragraph);

                (2)     at least 75% of the consideration from such Asset
        Disposition received by the Company or such Restricted Subsidiary, as
        the case may be, is in the form of cash or Cash Equivalents and 100% of
        the Net Available Cash therefrom is deposited directly by the Company
        into the Collateral Account; and

                (3)     the remaining consideration from such Asset Disposition
        that is not in the form of cash or Cash Equivalents is thereupon with
        its acquisition pledged as Collateral to secure the Securities;
        provided, however, to the extent that the Credit Facility Collateral
        Documents restrict the Company's ability to pledge such other
        consideration as Collateral, the Company shall either pledge other
        property or assets as Collateral having a fair market value, as
        determined in good faith by the Board of Directors, at least equal to
        the fair market value of such other consideration or deposit an amount
        of cash or Cash Equivalents into the Collateral Account having a value
        at least equal to the fair market value of such other consideration
        (which Cash or Cash Equivalents may be withdrawn by the Company from the
        Collateral Account to be invested in Additional Assets in the manner set
        forth under this subsection (a)); provided, further, that prior to such
        pledge, deposit or withdrawal, the Company shall have delivered to the
        Trustee an Officers' Certificate stating, as applicable, that (i) in
        accordance with this clause (3), other property or assets may be pledged
        as Collateral having the fair market value required by said clause, (ii)
        in accordance with this clause (3), cash or Cash Equivalents are to be
        deposited into the Collateral Account having the fair market value
        required by said clause or (iii) funds to be withdrawn from the
        Collateral Account are to be invested in Additional Assets in compliance
        with this clause (3) and that, in the case of clause (i), (ii) or (iii),
        all conditions precedent provided for in this Indenture to such pledge,
        deposit or withdrawal have been complied with.

                Any Net Available Cash deposited into the Collateral Account
from any Asset Dispositions of Collateral, Recovery Events (as described in the
next paragraph), Asset Swaps

<PAGE>

                                                                              69

involving the transfer of Collateral (as described in Section 3.5(d) below) or
prepayments of the Intercompany Note may be withdrawn by the Company to be
invested by the Company in Additional Assets within 360 days from the later of
the date of (x) such Asset Disposition, Recovery Event, Asset Swap or
prepayments and (y) the receipt of such Net Available Cash, which Additional
Assets are thereupon with their acquisition added to the Collateral securing the
Notes; provided, however, to the extent that the Credit Facility Collateral
Documents restrict the Company's ability to pledge such Additional Assets as
Collateral, the Company shall either pledge other property or assets as
Collateral having a fair market value, as determined in good faith by the Board
of Directors, at least equal to the fair market value of such Additional Assets
or deposit an amount of cash or Cash Equivalents into the Collateral Account
having a value at least equal to the fair market value of such Additional
Assets; provided, further, that prior to such investment (and the related
withdrawal from the Collateral Account), pledge or deposit, the Company shall
have delivered to the Trustee an Officers' Certificate stating, as applicable,
that (i) funds to be withdrawn from the Collateral Account are to be invested in
Additional Assets in compliance with this paragraph, (ii) in accordance with
this paragraph, other property or assets may be pledged as Collateral having the
fair market value required by said paragraph or (iii) in accordance with this
paragraph, cash or Cash Equivalents are to be deposited into the Collateral
Account having the fair market value required by said paragraph and that, in the
case of clause (i), (ii) or (iii), all conditions precedent provided for in this
Indenture to such investment, pledge or deposit have been complied with.

                All of the Net Available Cash received by the Company or such
Restricted Subsidiary, as the case may be, from any Recovery Event shall be
deposited directly into the Collateral Account and may be withdrawn by the
Company or such Restricted Subsidiary to be invested in Additional Assets (which
may include performance of a Restoration of the affected Collateral) in
accordance with the preceding paragraph within 360 days from the receipt of such
Net Available Cash.

                Any Net Available Cash from Asset Dispositions of Collateral,
Asset Swaps involving the transfer of Collateral, Recovery Events or prepayments
of the Intercompany Note that are not applied or invested as provided in this
subsection (a) or in accordance with the Collateral Documents will be deemed to
constitute "Excess Collateral Proceeds." On the 361st day after an Asset
Disposition, Asset Swap, Recovery Event or prepayment of the Intercompany Note
pursuant to this subsection (a), if the aggregate amount of Excess Collateral
Proceeds exceeds $5.0 million, the Company will be required to make an offer
("Collateral Disposition Offer") to all holders of Securities to purchase the
maximum principal amount of Securities to which the Collateral Disposition Offer
applies that may be purchased out of the Excess Collateral Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount of the
Securities plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in this Indenture in integral multiples
of $1,000. To the extent that the aggregate amount of Securities so validly
tendered and not properly withdrawn pursuant to a Collateral Disposition Offer
is less than the Excess Collateral Proceeds, the Company may use any remaining
Excess Collateral Proceeds for general corporate purposes, free and clear of any
Liens created by the Collateral Documents, subject to other covenants contained
in this Indenture. If the aggregate principal amount of Securities surrendered
by Holders thereof exceeds the amount of Excess Collateral Proceeds, the Trustee
shall select the Securities to be purchased on a pro rata basis on the basis of
the aggregate principal amount of tendered

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                                                                              70

Securities. Upon completion of such Collateral Disposition Offer, the amount of
Excess Collateral Proceeds shall be reset at zero.

                (b) The Company will not, and will not permit any of its
Restricted Subsidiaries to, make any Asset Disposition (other than an Asset
Disposition of Collateral) unless:

                (1)     the Company or such Restricted Subsidiary, as the case
        may be, receives consideration at least equal to the fair market value
        (such fair market value to be determined on the date of contractually
        agreeing to such Asset Disposition), as determined in good faith by the
        Board of Directors (including as to the value of all non-cash
        consideration), of the shares and assets subject to such Asset
        Disposition;

                (2)     at least 75% of the consideration from such Asset
        Disposition received by the Company or such Restricted Subsidiary, as
        the case may be, is in the form of cash or Cash Equivalents; and

                (3)     an amount equal to 100% of the Net Available Cash from
        such Asset Disposition is applied by the Company or such Restricted
        Subsidiary, as the case may be:

                (a)     first, to the extent the Company or any Restricted
                        Subsidiary, as the case may be, elects (or is required
                        by the terms of any Indebtedness), to prepay, repay,
                        purchase, repurchase, redeem, retire, defease or
                        otherwise acquire Indebtedness of the Company (other
                        than any Disqualified Stock or Subordinated Obligations)
                        or Indebtedness of a Wholly-Owned Subsidiary (other than
                        any Disqualified Stock or Guarantor Subordinated
                        Obligations) (in each case other than Indebtedness owed
                        to the Company or an Affiliate of the Company) within
                        360 days from the later of the date of such Asset
                        Disposition or the receipt of such Net Available Cash;
                        provided, however, that, in connection with any
                        prepayment, repayment, purchase, redemption, retirement,
                        defeasance or other acquisition or purchase of
                        Indebtedness pursuant to this clause (a), the Company or
                        such Restricted Subsidiary will retire such Indebtedness
                        and will cause the related commitment (if any) to be
                        permanently reduced in an amount equal to the principal
                        amount so prepaid, repaid, purchased, repurchased,
                        redeemed, retired, defeased or otherwise acquired; and

                (b)     second, to the extent of the balance of such Net
                        Available Cash after application in accordance with
                        clause (a), to the extent the Company or such Restricted
                        Subsidiary elects, to invest in Additional Assets within
                        360 days from the later of the date of such Asset
                        Disposition or the receipt of such Net Available Cash;

        provided that pending the final application of any such Net Available
        Cash in accordance with clause (a) or clause (b) above, the Company and
        its Restricted Subsidiaries may temporarily reduce Indebtedness or
        otherwise invest such Net Available Cash in any manner not prohibited by
        this Indenture.

<PAGE>

                                                                              71

                Any Net Available Cash from Asset Dispositions (other than Asset
Dispositions of Collateral) that are not applied or invested as provided in this
subsection (b) will be deemed to constitute "Excess Proceeds." On the 361st day
after such an Asset Disposition, if the aggregate amount of Excess Proceeds
exceeds $5.0 million, the Company will be required to make an offer ("Asset
Disposition Offer") to all Holders of Securities and to the extent required by
the terms of other Pari Passu Indebtedness, to all holders of other Pari Passu
Indebtedness outstanding with similar provisions requiring the Company to make
an offer to purchase such Pari Passu Indebtedness with the proceeds from any
such Asset Disposition ("Pari Passu Notes"), to purchase the maximum principal
amount of Securities and any such Pari Passu Notes to which the Asset
Disposition Offer applies that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount of the
Securities and Pari Passu Notes plus accrued and unpaid interest to the date of
purchase, in accordance with the procedures set forth in this Indenture or the
agreements governing the Pari Passu Notes, as applicable, in each case in
integral multiples of $1,000. To the extent that the aggregate amount of
Securities and Pari Passu Notes, if applicable, so validly tendered and not
properly withdrawn pursuant to an Asset Disposition Offer is less than the
Excess Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes, subject to other covenants contained in this Indenture. If
the aggregate principal amount of Securities surrendered by Holders thereof and
other Pari Passu Notes surrendered by holders or lenders, collectively, exceeds
the amount of Excess Proceeds, the Excess Proceeds shall be allocated by the
Company among the Securities and the Pari Passu Securities on a pro rata basis
on the basis of the aggregate principal amount of Securities and Pari Passu
Notes that have been tendered and the particular Securities to be purchased
shall be selected by the Trustee on a pro rata basis (with such adjustments as
may be deemed appropriate by the Trustee so that only Securities in
denominations of $1,000 or integral multiples thereof shall be purchased). Upon
completion of such Asset Disposition Offer, the amount of Excess Proceeds shall
be reset at zero.

                (c) The Collateral Disposition Offer or Asset Disposition Offer
will remain open for a period of 20 Business Days following its commencement,
except to the extent that a longer period is required by applicable law (the
"Asset Disposition Offer Period"). No later than five Business Days after the
termination of the Asset Disposition Offer Period (the "Asset Disposition
Purchase Date"), the Company will purchase the principal amount of Securities
and Pari Passu Notes required to be purchased pursuant to this Section 3.5 (the
"Asset Disposition Offer Amount") or, if less than the Asset Disposition Offer
Amount has been so validly tendered, all Securities and Pari Passu Notes, if
applicable, validly tendered in response to the Asset Disposition Offer.

        Upon the commencement of a Collateral Disposition Offer or Asset
Disposition Offer, as applicable, the Company will send, by first class mail, a
notice to the Trustee and each of the Holders of the Securities. The notice will
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Collateral Disposition Offer or Asset
Disposition Offer, as applicable. The notice, which will govern the terms of the
Collateral Disposition Offer or Asset Disposition Offer, as applicable, will
state:

                (1)     that the Collateral Disposition Offer or Asset
        Disposition Offer is being made pursuant to this Section 3.5 and the
        length of time the Collateral Disposition Offer or Asset Disposition
        Offer will remain open;

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                                                                              72

                (2)     the Asset Disposition Offer Amount, the purchase price
        and the Asset Disposition Purchase Date;

                (3)     that any Security not tendered or accepted for payment
        will continue to accrue interest;

                (4)     that, unless the Company defaults in making such
        payment, any Security accepted for payment pursuant to the Collateral
        Disposition Offer or Asset Disposition Offer will cease to accrue
        interest after the Asset Disposition Purchase Date;

                (5)     that Holders electing to have a Security purchased
        pursuant to a Collateral Disposition Offer or Asset Disposition Offer,
        as applicable, may elect to have Securities purchased in integral
        multiples of $1,000 only;

                (6)     that Holders electing to have a Security purchased
        pursuant to any Collateral Disposition Offer or Asset Disposition Offer,
        as applicable, will be required to surrender the Security, with the form
        entitled "Option of Holder to Elect Purchase" attached to the Security
        completed, or transfer its interest in such Security by book-entry
        transfer, to the Company or a Paying Agent at the address specified in
        the notice at least three Business Days before the Asset Disposition
        Purchase Date;

                (7)     that Holders will be entitled to withdraw their election
        if the Company or the Paying Agent, as the case may be, receives, not
        later than the expiration of the Asset Disposition Offer Period, a
        telegram, telex, facsimile transmission or letter setting forth the name
        of the Holder, the principal amount of the Security the Holder delivered
        for purchase and a statement that such Holder is withdrawing his
        election to have such Security purchased;

                (8)     that, if the aggregate principal amount of Securities
        and, if applicable, other Pari Passu Notes surrendered by the Holders
        thereof exceeds the Asset Disposition Offer Amount, the Company will
        select the Securities and, if applicable, other Pari Passu Notes to be
        purchased on a pro rata basis based on the principal amount of
        Securities and such other Pari Passu Notes surrendered (with such
        adjustments as may be deemed appropriate so that only Securities in
        denominations of $1,000, or integral multiples thereof, will be
        purchased); and

                (9)     that Holders whose Securities were purchased only in
        part will be issued new Securities equal in principal amount to the
        unpurchased portion of the Securities surrendered (or transferred by
        book-entry transfer).

                If the Asset Disposition Purchase Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest will be paid on such Asset Disposition Purchase Date
to the Person in whose name a Security is registered at the close of business on
such record date, and no additional interest will be payable to Holders who
tender Securities pursuant to the Asset Disposition Offer.

                On or before the Asset Disposition Purchase Date, the Company
will, to the extent lawful, accept for payment, on a pro rata basis to the
extent necessary, the Asset

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                                                                              73

Disposition Offer Amount of Securities and Pari Passu Notes, if applicable, or
portions of Securities and Pari Passu Notes, if applicable, so validly tendered
and not properly withdrawn pursuant to the Asset Disposition Offer, or if less
than the Asset Disposition Offer Amount has been validly tendered and not
properly withdrawn, all Securities and Pari Passu Notes, if applicable, so
validly tendered and not properly withdrawn, in each case in integral multiples
of $1,000. The Company will deliver to the Trustee an Officers' Certificate
stating that such Securities or portions thereof were accepted for payment by
the Company in accordance with the terms of this Section 3.5 and, in addition,
the Company will deliver all certificates and notes required, if any, by the
agreements governing the Pari Passu Notes, if applicable. The Paying Agent or
the Company, as the case may be, will promptly (but in any case not later than
five Business Days after termination of the Asset Disposition Offer Period) mail
or deliver to each tendering Holder of Securities or holder or lender of Pari
Passu Notes, if applicable, as the case may be, an amount equal to the purchase
price of the Securities or Pari Passu Notes, if applicable, so validly tendered
and not properly withdrawn by such holder or lender, if applicable, as the case
may be, and accepted by the Company for purchase, and the Company will promptly
issue a new Security, and the Trustee, upon delivery of an Officers' Certificate
from the Company, will authenticate and mail or deliver such new Security to
such Holder, in a principal amount equal to any unpurchased portion of the
Security surrendered; provided that each such new Security will be in a
principal amount of $1,000 or an integral multiple of $1,000. In addition, the
Company will take any and all other actions required by the agreements governing
the Pari Passu Notes, if applicable. Any Security not so accepted will be
promptly mailed or delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Asset Disposition Offer or the
Collateral Disposition Offer, as applicable, on the Asset Disposition Purchase
Date.

                For the purposes of this Section 3.5, the following will be
deemed to be cash:

                (1)     the assumption by the transferee of Indebtedness (other
        than Subordinated Obligations or Disqualified Stock) of the Company or
        Indebtedness of a Wholly-Owned Subsidiary (other than Guarantor
        Subordinated Obligations or Disqualified Stock of any Wholly-Owned
        Subsidiary Guarantor) and the release of the Company or such Restricted
        Subsidiary from all liability on such Indebtedness in connection with
        such Asset Disposition (in which case the Company will, without further
        action, be deemed to have applied such deemed cash to Indebtedness in
        accordance with clause (a) or (b) above of this Section 3.5, as
        applicable); and

                (2)     securities, notes or other obligations received by the
        Company or any Restricted Subsidiary from the transferee that are
        promptly converted by the Company or such Restricted Subsidiary into
        cash.

                (d) The Company will not, and will not permit any Restricted
Subsidiary to, engage in any Asset Swaps, unless:

                (1)     at the time of entering into such Asset Swap and
        immediately after giving effect to such Asset Swap, no Default or Event
        of Default shall have occurred and be continuing or would occur as a
        consequence thereof;

<PAGE>

                                                                              74

                (2)     in the event such Asset Swap involves the transfer by
        the Company or any Restricted Subsidiary of assets having an aggregate
        fair market value, as determined by the Board of Directors of the
        Company in good faith for any such transaction, in excess of $5.0
        million, the terms of such Asset Swap have been approved by a majority
        of the members of the Board of Directors of the Company;

                (3)     in the event such Asset Swap involves the transfer by
        the Company or any Restricted Subsidiary of assets having an aggregate
        fair market value, as determined by the Board of Directors of the
        Company in good faith for any such transaction, in excess of $10.0
        million, the Company has received a written opinion from an independent
        investment banking firm of nationally recognized standing that such
        Asset Swap is fair to the Company or such Restricted Subsidiary, as the
        case may be, from a financial point of view; and

                (4)     in the event such Asset Swap involves the transfer by
        the Company or any Restricted Subsidiary of Collateral, (a) any Related
        Business Assets received by the Company or any Restricted Subsidiary
        shall be pledged as Collateral securing the Securities; provided,
        however, to the extent that the Credit Facility Collateral Documents
        restrict the Company's ability to pledge such Related Business Assets as
        Collateral, the Company shall either (i) pledge other property or assets
        as Collateral having a fair market value, as determined in good faith by
        the Board of Directors, at least equal to the fair market value of such
        Related Business Assets or (ii) deposit an amount of cash or Cash
        Equivalents into the Collateral Account having a value at least equal to
        the fair market value of such Related Business Assets (which Cash or
        Cash Equivalents may be withdrawn by the Company or such Restricted
        Subsidiary from the Collateral Account to be invested in Additional
        Assets in the manner set forth under subsection (a) above), and (b) any
        Net Available Cash received by the Company or any Restricted Subsidiary
        shall be deposited directly into the Collateral Account and may be
        withdrawn by the Company or such Restricted Subsidiary to be invested in
        Additional Assets in the manner set forth under subsection (a) above;
        provided, further, that prior to such pledge, deposit, investment or
        withdrawal, the Company shall have delivered to the Trustee an Officers'
        Certificate stating, as applicable, that (i) in accordance with this
        clause (4), other property or assets may be pledged as Collateral having
        the fair market value required by said clause, (ii) in accordance with
        this clause (4), cash or Cash Equivalents are to be deposited into the
        Collateral Account having the fair market value required by said clause
        or (iii) funds to be withdrawn from the Collateral Account are to be
        invested in Additional Assets in compliance with this clause (4) and
        that, in the case of clause (i), (ii) or (iii), all conditions precedent
        provided for in this Indenture to such pledge, deposit, investment or
        withdrawal have been complied with.

                The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.5, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue of any
conflict.

<PAGE>

                                                                              75

                SECTION 3.6.  Limitation on Liens. The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any
of its property or assets (including Capital Stock of Restricted Subsidiaries),
whether owned on the date of this Indenture or acquired after that date, which
Lien is securing any Indebtedness. Notwithstanding the foregoing, the Company
may Incur or permit the Incurrence of any such Lien with respect to any such
property or assets, other than with respect to the Collateral, if
contemporaneously with the Incurrence of such Liens effective provision is made
to secure the Indebtedness due under the Indenture and the Securities or, in
respect of Liens on any Restricted Subsidiary's property or assets, any
Subsidiary Guarantee of such Restricted Subsidiary, equally and ratably with (or
prior to in the case of Liens with respect to Subordinated Obligations or
Guarantor Subordinated Obligations, as the case may be) the Indebtedness secured
by such Lien for so long as such Indebtedness is so secured.

                SECTION 3.7.  Limitation on Sale/Leaseback Transactions. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any Sale/Leaseback Transaction unless:

                (1)     the Company or such Restricted Subsidiary, as the case
        may be, receives consideration at the time of such Sale/Leaseback
        Transaction at least equal to the fair market value (as evidenced by a
        resolution of the Board of Directors of the Company) of the property
        subject to such transaction;

                (2)     the Company or such Restricted Subsidiary could have
        Incurred Indebtedness in an amount equal to the Attributable
        Indebtedness in respect of such Sale/Leaseback Transaction pursuant to
        Section 3.2;

                (3)     the Company or such Restricted Subsidiary would be
        permitted to create a Lien on the property subject to such
        Sale/Leaseback Transaction without securing the Securities pursuant to
        Section 3.6; and

                (4)     the Sale/Leaseback Transaction is treated as an Asset
        Disposition and all of the conditions of this Indenture described under
        Section 3.5 (including the provisions concerning the application of Net
        Available Cash) are satisfied with respect to such Sale/Leaseback
        Transaction, treating all of the consideration received in such
        Sale/Leaseback Transaction as Net Available Cash for purposes of such
        Section.

                SECTION 3.8.  Limitation on Affiliate Transactions. The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless:

                (1)     the terms of such Affiliate Transaction are no less
        favorable to the Company or such Restricted Subsidiary, as the case may
        be, than those that could be obtained in a comparable transaction at the
        time of such transaction in arm's-length dealings with a Person who is
        not such an Affiliate;

                (2)     in the event such Affiliate Transaction involves an
        aggregate consideration in excess of $5.0 million, the terms of such
        transaction have been approved by a majority of

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                                                                              76

        the members of the Board of Directors of the Company and by a majority
        of the members of such Board having no personal stake in such
        transaction, if any (and such majority or majorities, as the case may
        be, determines that such Affiliate Transaction satisfies the criteria in
        clause (1) above); and

                (3)     in the event such Affiliate Transaction involves an
        aggregate consideration in excess of $10.0 million, the Company has
        received a written opinion from an independent investment banking,
        accounting or appraisal firm of nationally recognized standing that such
        Affiliate Transaction is not materially less favorable than those that
        might reasonably have been obtained in a comparable transaction at such
        time on an arm's-length basis from a Person that is not an Affiliate.

                The preceding paragraph will not apply to:

                (1)     any Restricted Payment (other than a Restricted
        Investment) permitted to be made pursuant to Section 3.3;

                (2)     any issuance of securities, or other payments, awards or
        grants in cash, securities or otherwise pursuant to, or the funding of,
        employment agreements and other compensation arrangements, options to
        purchase Capital Stock of the Company, restricted stock plans, long-term
        incentive plans, stock appreciation rights plans, participation plans or
        similar employee benefits plans and/or indemnity provided on behalf of
        officers and employees approved by the Board of Directors;

                (3)     loans or advances to employees, officers or directors in
        the ordinary course of business of the Company or any of its Restricted
        Subsidiaries, in each case only as permitted by applicable law, but in
        any event not to exceed $3.0 million in the aggregate outstanding at any
        one time with respect to all loans or advances made since the Issue
        Date;

                (4)     any transaction between the Company and a Restricted
        Subsidiary (other than a Receivables Entity) or between Restricted
        Subsidiaries (other than a Receivables Entity or Receivables Entities);

                (5)     Guarantees issued by the Company or a Restricted
        Subsidiary for the benefit of the Company or a Restricted Subsidiary, as
        the case may be, in accordance with Section 3.2;

                (6)     the payment of reasonable and customary compensation and
        fees paid to, and indemnity provided on behalf of, officers, directors,
        and employees of the Company or any Restricted Subsidiary;

                (7)     the performance of obligations of the Company or any of
        its Restricted Subsidiaries under the terms of any agreement to which
        the Company or any of its Restricted Subsidiaries is a party as of or on
        the Issue Date and identified on Schedule 3.8 to this Indenture on the
        Issue Date, as these agreements may be amended, modified, supplemented,
        extended or renewed from time to time; provided, however, that any
        future amendment, modification, supplement, extension or renewal entered
        into after the Issue

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                                                                              77

        Date will be permitted to the extent that its terms are not more
        disadvantageous to the Holders of the Securities than the terms of the
        agreements in effect on the Issue Date; and

                (8)     sales or other transfers or dispositions of accounts
        receivable and other related assets customarily transferred in an asset
        securitization transaction involving accounts receivable to a
        Receivables Entity in a Qualified Receivables Transaction, and
        acquisitions of Permitted Investments in connection with a Qualified
        Receivables Transaction.

                SECTION 3.9.  Limitation on Sale of Capital Stock of Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Voting
Stock of any Restricted Subsidiary or to issue any of the Voting Stock of a
Restricted Subsidiary (other than, if necessary, shares of its Voting Stock
constituting directors' qualifying shares) to any Person except:

                (1)     to the Company or a Wholly-Owned Subsidiary (other than
        a Receivables Entity); or

                (2)     in compliance with Section 3.5 and immediately after
        giving effect to such issuance or sale, such Restricted Subsidiary would
        continue to be a Restricted Subsidiary.

Notwithstanding the preceding paragraph, the Company or any Restricted
Subsidiary may sell all the Voting Stock of a Restricted Subsidiary as long as
the Company complies with the terms of Section 3.5. In that case, such
Restricted Subsidiary, if a Subsidiary Guarantor, will be automatically released
from all its obligations under this Indenture, its Subsidiary Guarantee, the
Registration Rights Agreement and the Collateral Documents and the Liens, if
any, on the Collateral pledged by such Subsidiary Guarantor pursuant to the
Collateral Documents shall be released with respect to the Securities if all the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee under
the Senior Secured Credit Agreement and related documentation terminate upon
consummation of such sale.

                SECTION 3.10. Change of Control. If a Change of Control occurs,
unless the Company has exercised its right to redeem all of the Securities
pursuant to Section 5.1, each Holder will have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount of the Securities plus accrued and unpaid interest, if any, to
the date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).

                Within 30 days following any Change of Control, unless the
Company has exercised its right to redeem the Securities pursuant to Section
5.1, the Company will mail a notice (the "Change of Control Offer") to each
Holder, with a copy to the Trustee, stating:

                (1)     that a Change of Control has occurred and that such
        Holder has the right to require the Company to purchase such Holder's
        Securities at a purchase price in cash equal to 101% of the principal
        amount of such Securities plus accrued and unpaid interest, if any, to
        the date of purchase (subject to the right of Holders of record on a

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                                                                              78

        record date to receive interest on the relevant interest payment date)
        (the "Change of Control Payment");

                (2)     the repurchase date (which shall be no earlier than 30
        days nor later than 60 days from the date such notice is mailed) (the
        "Change of Control Payment Date");

                (3)     that any Security not tendered or accepted for payment
        will continue to accrue interest;

                (4)     that, unless the Company defaults in making such
        payment, any Security accepted for payment pursuant to the Change of
        Control Offer will cease to accrue interest after the Change of Control
        Payment Date;

                (5)     that Holders electing to have a Security purchased
        pursuant to a Change of Control Offer may elect to have Securities
        purchased in integral multiples of $1,000 only;

                (6)     that Holders electing to have a Security purchased
        pursuant to any Change of Control Offer will be required to surrender
        the Security, with the form entitled "Option of Holder to Elect
        Purchase" attached to the Security completed, or transfer its interest
        in such Security by book-entry transfer, to the Company or a Paying
        Agent at the address specified in the notice at least three Business
        Days before the Change of Control Payment Date;

                (7)     that Holders will be entitled to withdraw their election
        if the Company or the Paying Agent, as the case may be, receives, by not
        later than the expiration of the Change of Control Offer, a telegram,
        telex, facsimile transmission or letter setting forth the name of the
        Holder, the principal amount of the Security the Holder delivered for
        purchase and a statement that such Holder is withdrawing his election to
        have such Security purchased; and

                (8)     that Holders whose Securities were purchased only in
        part will be issued new Securities equal in principal amount to the
        unpurchased portion of the Securities surrendered (or transferred by
        book-entry transfer).

                On the Change of Control Payment Date, the Company will, to the
extent lawful:

                (1)     accept for payment all Securities or portions of
        Securities (in integral multiples of $1,000) properly tendered pursuant
        to the Change of Control Offer;

                (2)     deposit with the Paying Agent an amount equal to the
        Change of Control Payment in respect of all Securities or portions of
        Securities so tendered; and

                (3)     deliver or cause to be delivered to the Trustee the
        Securities so accepted together with an Officers' Certificate stating
        the aggregate principal amount of Securities or portions of Securities
        being purchased by the Company.

                The Paying Agent will promptly mail to each Holder of Securities
so tendered the Change of Control Payment for such Securities, and the Trustee
will promptly authenticate and

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                                                                              79

mail (or cause to be transferred by book entry) to each Holder a new Security
equal in principal amount to any unpurchased portion of the Securities
surrendered, if any; provided that each such new Security will be in a principal
amount of $1,000 or an integral multiple thereof.

                If the Change of Control Payment Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest, if any, will be paid on such Change of Control Payment Date to
the Person in whose name a Security is registered at the close of business on
such record date, and no additional interest will be payable to Holders who
tender pursuant to the Change of Control Offer.

                Prior to mailing a Change of Control Offer, and as a condition
to such mailing (i) the requisite holders of each issue of Indebtedness issued
under an indenture or other agreement that may be violated by such payment shall
have consented to such Change of Control Offer being made and waived the event
of default, if any, caused under such indenture or other agreement by the Change
of Control or (ii) the Company will repay all outstanding Indebtedness issued
under an indenture or other agreement that may be violated by a payment to the
Holders of Securities under a Change of Control Offer or (iii) the Company must
offer to repay all such Indebtedness, and make payment to the holders of such
Indebtedness that accept such offer, and obtain waivers of any event of default
from the remaining holders of such Indebtedness.

                The Company covenants to effect such repayment or obtain such
consent and/or waiver within 30 days following any Change of Control.

                The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.

                The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 3.10. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations described in this Indenture by virtue of the
conflict.

                SECTION 3.11. SEC Reports. Notwithstanding that the Company may
not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, to the extent permitted by the Exchange Act, the Company will file
with the SEC, and make available to the Trustee and the registered Holders of
the Securities, the annual reports and the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) that are specified in Sections 13 and 15(d) of
the Exchange Act within the time periods specified therein. In the event that
the Company is not permitted to file such reports, documents and information
with the SEC pursuant to the Exchange Act, the Company will nevertheless make
available such Exchange Act information to the Trustee and to the Holders of the
Securities as if the Company were subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act within the time periods specified
therein.

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                                                                              80

                If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
to the financial statements and in Management's Discussion and Analysis of
Results of Operations and Financial Condition, of the financial condition and
results of operations of the Company and its Restricted Subsidiaries.

                SECTION 3.12. Future Subsidiary Guarantors. After the Issue
Date, the Company will, within a reasonable time after the creation or
acquisition thereof, cause each Restricted Subsidiary other than a Foreign
Subsidiary or Receivables Entity created or acquired by the Company or one or
more of its Restricted Subsidiaries to execute and deliver to the Trustee (i) a
Subsidiary Guarantee, in the form of a supplemental indenture substantially in
the form of Exhibit C hereto, pursuant to which such Subsidiary Guarantor will
unconditionally Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any, and interest on the Securities on
a senior basis and (ii) any additional Collateral Documents to the extent
required by this Indenture or the Collateral Documents.

                SECTION 3.13. Maintenance of Office or Agency. The Company will
maintain an office or agency where the Securities may be presented or
surrendered for payment, where, if applicable, the Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The corporate trust office of the Trustee, which initially shall be located at
JPMorgan Chase Bank, 4 New York Plaza, New York, New York 10004 shall be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the location of any
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the corporate trust office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.

                The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind any such
designation. The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any such other
office or agency.

                SECTION 3.14. Corporate Existence. Except as otherwise provided
in this Article III, Article IV and Section 10.2(b), the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership, limited liability
company or other existence of each Restricted Subsidiary and the rights (charter
and statutory), licenses and franchises of the Company and each Restricted
Subsidiary; provided, however, that the Company shall not be required to
preserve any such right, license or franchise or the corporate, partnership,
limited liability company or other existence of any Restricted Subsidiary if the
Board of Directors of the Company shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Company

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                                                                              81

and each of its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not, and will not be, disadvantageous in any material respect to the
Holders.

                SECTION 3.15. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all material taxes, assessments and governmental charges
levied or imposed upon the Company or any Subsidiary or upon the income, profits
or property of the Company or any Subsidiary and (ii) all lawful claims for
labor, materials and supplies, which, if unpaid, might by law become a material
liability or lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which appropriate reserves, if necessary (in the
good faith judgment of management of the Company), are being maintained in
accordance with GAAP or where the failure to effect such payment will not be
disadvantageous to the Holders.

                SECTION 3.16. Payments for Consent. Neither the Company nor any
of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fees or otherwise, to any
Holder of any Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture, the Securities or
the Collateral Documents unless such consideration is offered to be paid or is
paid to all Holders of the Securities that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or amendment.

                SECTION 3.17. Compliance Certificate. The Company shall deliver
to the Trustee within 120 days after the end of each Fiscal Year of the Company
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during the previous Fiscal
Year. If they do, the certificate shall describe the Default or Event of
Default, its status and the action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).

                SECTION 3.18. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

                SECTION 3.19. Limitation on Lines of Business. The Company will
not, and will not permit any Restricted Subsidiary to, engage in any business
other than a Related Business.

                SECTION 3.20. Statement by Officers as to Default. The Company
shall deliver to the Trustee, as soon as possible and in any event within 10
days after the Company becomes aware of the occurrence of any Event of Default
or an event which, with notice or the lapse of time or both, would constitute an
Event of Default, an Officers' Certificate setting forth the details of such
Event of Default or default, its status and the actions which the Company is
taking or propose to take with respect thereto.

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                                                                              82

                SECTION 3.21. VAW-IMCO Redemption Payment. Upon or immediately
prior to the Issue Date, the Company shall deposit $27,376,000 into the
Collateral Account to repay substantially all amounts owing to Hydro Aluminium
Deutschland GmbH pursuant to the Redemption Agreement. The Company shall cause
VAW-IMCO Guss und Recycling GmbH to repay such redemption liability on or before
that date which is 45 days following the Issue Date. In order to cause such
repayment, the Company shall deliver to the Trustee an Officers' Certificate at
least three Business Days prior to the date such funds are needed, requesting
the Trustee to withdraw the foregoing deposit from the Collateral Account,
stating that such withdrawal is for the purpose of paying the foregoing
redemption liability, requesting the Trustee to transfer the withdrawn funds to
the payee designated in the request, which designation shall include suitable
wire transfer information, and certifying that no Event of Default has occurred
and is continuing.

                                   ARTICLE IV

                                SUCCESSOR COMPANY

                SECTION 4.1.  Merger and Consolidation. The Company will not
consolidate with or merge with or into, or convey, transfer or lease all of or
substantially all of its assets to, any Person, unless:

                (1)     the resulting, surviving or transferee Person (the
        "Successor Company") will be a corporation, organized and existing under
        the laws of the United States of America, any State of the United States
        or the District of Columbia and the Successor Company (if not the
        Company) will expressly assume, by supplemental indenture, executed and
        delivered to the Trustee, in form reasonably satisfactory to the
        Trustee, all the obligations of the Company under the Securities, this
        Indenture, the Registration Rights Agreement and the Collateral
        Documents (as applicable) and shall cause such amendments, supplements
        or other instruments to be executed, filed, and recorded in such
        jurisdictions as may be required by applicable law to preserve and
        protect the Lien on the Collateral owned by or transferred to the
        Successor Company, together with such financing statements as may be
        required to perfect any security interests in such Collateral which may
        be perfected by the filing of a financing statement under the Uniform
        Commercial Code of the relevant states;

                (2)     immediately after giving effect to such transaction (and
        treating any Indebtedness that becomes an obligation of the Successor
        Company or any Subsidiary of the Successor Company as a result of such
        transaction as having been Incurred by the Successor Company or such
        Subsidiary at the time of such transaction), no Default or Event of
        Default shall have occurred and be continuing;

                (3)     immediately after giving effect to such transaction, the
        Successor Company would be able to Incur at least an additional $1.00 of
        Indebtedness pursuant to Section 3.2(a);

<PAGE>

                                                                              83

                (4)     each Subsidiary Guarantor (unless it is the other party
        to the transactions above, in which case clause (1) shall apply) shall
        have by supplemental indenture confirmed that its Subsidiary Guarantee
        shall apply to such Person's obligations in respect of this Indenture
        and the Securities and its obligations under the Registration Rights
        Agreement and Collateral Documents shall continue to be in effect; and

                (5)     the Company shall have delivered to the Trustee an
        Officers' Certificate and an Opinion of Counsel, each stating that such
        consolidation, merger or transfer and such supplemental indenture (if
        any) comply with this Indenture.

                For purposes of this Section 4.1, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, in a single or
a series of related transactions, which properties and assets, if held by the
Company instead of such Subsidiaries, would constitute all or substantially all
of the properties and assets of the Company on a consolidated basis, shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company.

                The Successor Company will succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture and
the Collateral Documents, but, in the case of a lease of all or substantially
all of its assets, the predecessor Company will not be released from the
obligation to pay the principal of and interest on the Securities.

                Any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company and the Company
may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction without having to comply
with clause (3); and, in the case of a Restricted Subsidiary that merges into
the Company, the Company will not be required to comply with the preceding
clause (5).

                                   ARTICLE V

                            REDEMPTION OF SECURITIES

                SECTION 5.1.  Redemption. The Securities may be redeemed, as a
whole or from time to time in part, subject to the conditions and at the
redemption prices specified in paragraph 5 of the form of Securities set forth
in Exhibit A and Exhibit B hereto, which are hereby incorporated by reference
and made a part of this Indenture, together with accrued and unpaid interest to
the Redemption Date.

                SECTION 5.2.  Applicability of Article. Redemption of Securities
at the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.

                SECTION 5.3.  Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Securities pursuant to Section 5.1 shall
be evidenced by a Board Resolution of the Company. In case of any redemption at
the election of the Company, the Company shall, upon not later than 45 days
prior to the Redemption Date fixed by the Company

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                                                                              84

(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed and shall deliver to the Trustee such documentation and records as
shall enable the Trustee to select the Securities to be redeemed pursuant to
Section 5.4. Any such notice may be cancelled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no
effect.

                SECTION 5.4.  Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed at any time pursuant to an
optional redemption, the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
outstanding Securities not previously called for redemption, in compliance with
the requirements, as set forth in an Officers' Certificate delivered by the
Company to the Trustee, of the principal securities exchange, if any, on which
such Securities are listed, or, if such Securities are not so listed, on a pro
rata basis among the Securities, by lot or by such other method as the Trustee
shall deem fair and appropriate (and in such manner as complies with applicable
legal requirements) and which may provide for the selection for redemption of
portions of the principal of the Securities in denominations of $1,000 or
integral multiples thereof; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Security not redeemed to
less than $1,000.

                The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the method it has chosen for the selection of Securities
and the principal amount thereof to be redeemed.

                For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.

                SECTION 5.5.  Notice of Redemption. Notice of redemption shall
be given in the manner provided for in Section 12.2 not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed. At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at the Company's expense; provided, however, that the
Company shall deliver to the Trustee, at least 45 days prior to the Redemption
Date, an Officers' Certificate requesting that the Trustee give such notice at
the Company's expense and setting forth the information to be stated in such
notice as provided in the following items.

                All notices of redemption shall state:

                (1)     the Redemption Date,

                (2)     the redemption price and the amount of accrued interest
        to the Redemption Date payable as provided in Section 5.7, if any,

                (3)     if less than all outstanding Securities are to be
        redeemed, the identification of the particular Securities (or portion
        thereof) to be redeemed, as well as the aggregate

<PAGE>

                                                                              85

        principal amount of Securities to be redeemed and the aggregate
        principal amount of Securities to be outstanding after such partial
        redemption,

                (4)     in case any Security is to be redeemed in part only, the
        notice which relates to such Security shall state that on and after the
        Redemption Date, upon surrender of such Security, the Holder will
        receive, without charge, a new Security or Securities of authorized
        denominations for the principal amount thereof remaining unredeemed,

                (5)     that on the Redemption Date the redemption price (and
        accrued interest, if any, to the Redemption Date payable as provided in
        Section 5.7) will become due and payable upon each such Security, or the
        portion thereof, to be redeemed, and, unless the Company defaults in
        making the redemption payment, that interest on Securities called for
        redemption (or the portion thereof) will cease to accrue on and after
        said date,

                (6)     the place or places where such Securities are to be
        surrendered for payment of the redemption price and accrued interest, if
        any,

                (7)     the name and address of the Paying Agent,

                (8)     that Securities called for redemption must be
        surrendered to the Paying Agent to collect the redemption price,

                (9)     the CUSIP, Common Code and ISIN numbers, if applicable,
        and that no representation is made as to the accuracy or correctness of
        the CUSIP, Common Code and ISIN numbers, if applicable, if any, listed
        in such notice or printed on the Securities, and

                (10)    the paragraph of the Securities pursuant to which the
        Securities are to be redeemed.

                SECTION 5.6.  Deposit of Redemption Price. Prior to 10:00 a.m.,
New York City time, on any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company or any of the Company's
Subsidiaries is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.4) an amount of money sufficient to pay the redemption
price of, and accrued interest on, all the Securities which are to be redeemed
on that date, other than Securities or portions of Securities called for
redemption that are beneficially owned by the Company and have been delivered by
the Company to the Trustee for cancellation.

                SECTION 5.7.  Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities or portions of
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the redemption price therein specified (together with accrued
interest, if any, to the Redemption Date), and from and after such date (unless
the Company shall default in the payment of the redemption price and accrued
interest) such Securities shall cease to bear interest and the only right of the
Holders thereof will be to receive payment of the redemption price and, subject
to the next sentence, unpaid interest on such Securities to the Redemption Date.
Upon surrender of any such Security for redemption in

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                                                                              86

accordance with said notice, such Security shall be paid by the Company at the
redemption price, together with accrued interest, if any, to the Redemption
Date.

                If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the unpaid principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne by
the Securities.

                SECTION 5.8.  Securities Redeemed in Part. Any Security which is
to be redeemed only in part (pursuant to the provisions of this Article) shall
be surrendered at the office or agency of the Company maintained for such
purpose pursuant to Section 3.13 (with, if the Company or the Trustee so
require, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or such Holder's attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Security at the expense of the Company, a new Security or
Securities, of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered, provided, that each such new
Security will be in a principal amount of $1,000 or integral multiple thereof.

                                   ARTICLE VI

                              DEFAULTS AND REMEDIES

                SECTION 6.1.  Events of Default. Each of the following is an
"Event of Default":

                (1)     default in any payment of interest or additional
        interest, (as required by the Registration Rights Agreement) on any
        Security when the same becomes due and payable, and such default
        continues for a period of 30 days;

                (2)     default in the payment of principal of or premium, if
        any, on any Security when the same becomes due and payable at its Stated
        Maturity, upon optional redemption, upon required repurchase, upon
        declaration or otherwise;

                (3)     failure by the Company or any Subsidiary Guarantor to
        comply with its obligations under Article IV or Section 10.2;

                (4)     failure by the Company to comply with any of its
        obligations under Section 3.2, Section 3.3, Section 3.4, Section 3.5,
        Section 3.6, Section 3.7, Section 3.8, Section 3.9, Section 3.10,
        Section 3.11, Section 3.12, Section 3.16, Section 3.19 or Section 3.21
        (in each case, other than a failure to purchase Securities when required
        under this Indenture, which failure shall constitute an Event of Default
        under Section 6.1(2)) and such failure continues for 30 days after the
        notice specified below;

                (5)     failure by the Company to comply with any of its other
        agreements contained in this Indenture, the Collateral Documents or
        under the Securities (other than those

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                                                                              87

        referred to in (1), (2), (3) or (4) above) or failure by VAW-IMCO Guss
        und Recycling GmbH to comply with its agreements contained in the
        Intercompany Note, and such default continues for 60 days after the
        notice specified below;

                (6)     default under any mortgage, indenture or instrument
        under which there may be issued or by which there may be secured or
        evidenced any Indebtedness for money borrowed by the Company or any of
        its Restricted Subsidiaries (or the payment of which is guaranteed by
        the Company or any of its Restricted Subsidiaries), other than
        Indebtedness owed to the Company or a Restricted Subsidiary, whether
        such Indebtedness or guarantee now exists, or is created after the date
        of this Indenture, which default:

                (a)     is caused by a failure to pay any Indebtedness at
                        maturity prior to the expiration of the grace period
                        provided in such Indebtedness ("Payment Default") or

                (b)     results in the acceleration of such Indebtedness prior
                        to its final maturity (the "cross acceleration
                        provision");

        and, in each case, the principal amount of any such Indebtedness,
        together with the principal amount of any other such Indebtedness under
        which there has been a Payment Default or the maturity of which has been
        so accelerated, aggregates $10.0 million or more;

                (7)     the Company or a Significant Subsidiary or group of
        Restricted Subsidiaries that, taken together (as of the latest audited
        consolidated financial statements for the Company and its Restricted
        Subsidiaries), would constitute a Significant Subsidiary pursuant to or
        within the meaning of any Bankruptcy Law:

                (a)     commences a voluntary case or proceeding;

                (b)     consents to the entry of judgment, decree or order for
                        relief against it in an involuntary case or proceeding;

                (c)     consents to the appointment of a Custodian of it or for
                        any substantial part of its property;

                (d)     makes a general assignment for the benefit of its
                        creditors;

                (e)     consents to or acquiesces in the institution of a
                        bankruptcy or an insolvency proceeding against it;

                (f)     takes any corporate action to authorize or effect any of
                        the foregoing; or

                (g)     takes any comparable action under any foreign laws
                        relating to insolvency; or

<PAGE>

                                                                              88

                (8)     a court of competent jurisdiction enters an order or
        decree under any Bankruptcy Law that:

                (a)     is for relief in an involuntary case against the Company
                        or a Significant Subsidiary or group of Restricted
                        Subsidiaries that, taken together (as of the latest
                        audited consolidated financial statements for the
                        Company and its Restricted Subsidiaries), would
                        constitute a Significant Subsidiary pursuant to or
                        within the meaning of any Bankruptcy Law;

                (b)     appoints a Custodian for all or substantially all of the
                        property of the Company or a Significant Subsidiary or
                        group of Restricted Subsidiaries that, taken together
                        (as of the latest audited consolidated financial
                        statements for the Company and its Restricted
                        Subsidiaries), would constitute a Significant Subsidiary
                        pursuant to or within the meaning of any Bankruptcy Law;
                        or

                (c)     orders the winding up or liquidation of the Company or a
                        Significant Subsidiary or group of Restricted
                        Subsidiaries that, taken together (as of the latest
                        audited consolidated financial statements for the
                        Company and its Restricted Subsidiaries), would
                        constitute a Significant Subsidiary pursuant to or
                        within the meaning of any Bankruptcy Law; and

                (d)     in each case the order, decree or relief remains
                        unstayed and in effect for 90 days;

                (9)     failure by the Company or any Significant Subsidiary or
        group of Restricted Subsidiaries that, taken together (as of the latest
        audited consolidated financial statements for the Company and its
        Restricted Subsidiaries), would constitute a Significant Subsidiary to
        pay final judgments aggregating in excess of $10.0 million (net of any
        amounts that a reputable and creditworthy insurance company has
        acknowledged liability for in writing), which judgments are not paid,
        discharged, waived or stayed for a period of 60 days (the "judgment
        default provision");

                (10)    any Subsidiary Guarantee ceases to be in full force and
        effect (except as contemplated by the terms of this Indenture) or is
        declared null and void in a judicial proceeding or any Subsidiary
        Guarantor denies or disaffirms its obligations under this Indenture or
        its Subsidiary Guarantee; or

                (11)    with respect to any Collateral having a fair market
        value in excess of $10.0 million, individually or in the aggregate, (A)
        the security interest under the Collateral Documents, at any time,
        ceases to be in full force and effect for any reason other than in
        accordance with their terms and the terms of this Indenture and other
        than the satisfaction in full of all obligations under this Indenture
        and discharge of this Indenture, (B) any security interest created
        thereunder or under this Indenture is declared invalid or unenforceable,
        or (C) the Company or any Subsidiary Guarantor asserts, in any pleading
        in any court of competent jurisdiction, that any such security interest
        is invalid or unenforceable.

<PAGE>

                                                                              89

                The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.

                Notwithstanding the foregoing, a Default under clauses (4) or
(5) of this Section 6.1 will not constitute an Event of Default until the
Trustee or the Holders of 25% or more in principal amount of the outstanding
Securities notify the Company of the Default (and the Trustee in case of a
notice from Holders), in writing, which notice shall specify that it constitutes
a notice of Default, and the Company does not cure such Default within the time
specified in clauses (4) or (5) of this Section 6.1 after receipt of such
notice.

                The Company shall deliver to the Trustee, within 10 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Default or Event of Default under clauses (3), (4), (5), (6), (7), (8),
(9), (10) or (11) of this Section 6.1, which such notice shall contain the
status thereof and a description of the action being taken or proposed to be
taken by the Company in respect thereof.

                In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Securities
pursuant to the optional redemption provisions of this Indenture or were
required to repurchase the Securities, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Securities. If an Event of Default occurs prior to October
15, 2007 by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Securities prior to October 15, 2007, the premium specified in
this Indenture as of the earliest optional redemption date shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the Securities.

                SECTION 6.2.  Acceleration. If an Event of Default (other than
an Event of Default described in clause (7) or (8) of Section 6.1) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the outstanding Securities by notice to the Company and
the Trustee, may, and the Trustee at the request of such Holders shall, declare
the principal of, premium, if any, and accrued and unpaid interest, if any, on
all the Securities to be due and payable. Upon such a declaration, such
principal, premium and accrued and unpaid interest shall be due and payable
immediately.

                In the event of a declaration of acceleration of the Securities
because an Event of Default described in clause (6) of Section 6.1 has occurred
and is continuing, the declaration of acceleration of the Securities shall be
automatically annulled if the event of default or payment default triggering
such Event of Default pursuant to clause (6) shall be remedied or cured by the
Company or a Restricted Subsidiary or waived by the holders of the relevant
Indebtedness within 20 days after the declaration of acceleration with respect
thereto and if (1) the annulment of the acceleration of the Securities would not
conflict with any judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, except nonpayment of principal,

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                                                                              90

premium or interest on the Securities that became due solely because of the
acceleration of the Securities, have been cured or waived.

                If an Event of Default described in clause (7) or (8) of Section
6.1 occurs and is continuing, the principal of, premium, if any, and accrued and
unpaid interest on all the Securities will become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holders.

                SECTION 6.3.  Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy by proceeding at law
or in equity to collect the payment of principal of (or premium, if any) or
interest on the Securities or to enforce the performance of any provision of the
Securities, this Indenture or the Collateral Documents.

                The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.

                SECTION 6.4.  Waiver of Past Defaults. The Holders of a majority
in principal amount of the outstanding Securities by notice to the Trustee (with
a copy to the Company, but the applicable waiver or recission shall be effective
when the notice is given to the Trustee) may (a) waive, by their consent
(including, without limitation consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Securities), an existing Default or
Event of Default and its consequences except (i) a Default or Event of Default
in the payment of the principal of, or premium, if any, or interest on a
Security or (ii) a Default or Event of Default in respect of a provision that
under Section 9.2 cannot be amended without the consent of each Securityholder
affected and (b) rescind any acceleration with respect to the Securities and its
consequences if (1) such rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (2) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any, and
interest on the Securities that have become due solely by such declaration of
acceleration, have been cured or waived. When a Default or Event of Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any consequent right.

                SECTION 6.5.  Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or the
Collateral Documents or, subject to Sections 7.1 and 7.2, that the Trustee
determines is unduly prejudicial to the rights of other Securityholders or would
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any such action hereunder, the Trustee
shall be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses (including the fees and expenses of its counsel)
caused by taking or not taking such action.

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                                                                              91

                SECTION 6.6.  Limitation on Suits. Subject to Section 6.7, a
Securityholder may not pursue any remedy with respect to this Indenture or the
Securities unless:

                (1)     such Holder has previously given to the Trustee written
        notice stating that an Event of Default is continuing;

                (2)     Holders of at least 25% in principal amount of the
        outstanding Securities have requested that the Trustee to pursue the
        remedy;

                (3)     such Holders have offered to the Trustee reasonable
        security or indemnity against any loss, liability or expense;

                (4)     the Trustee has not complied with such request within 60
        days after receipt of the request and the offer of security or
        indemnity; and

                (5)     the Holders of a majority in principal amount of the
        outstanding Securities have not given the Trustee a direction that, in
        the opinion of the Trustee, is inconsistent with such request during
        such 60-day period.

                A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.

                SECTION 6.7.  Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture (including, without
limitation, Section 6.6), the right of any Holder to receive payment of
principal of, premium (if any) or interest on the Securities held by such
Holder, on or after the respective due dates expressed or provided for in the
Securities, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.

                SECTION 6.8.  Collection Suit by Trustee. If an Event of Default
specified in clauses (1) or (2) of Section 6.1 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.7.

                SECTION 6.9.  Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and the Securityholders allowed in any judicial
proceedings relative to the Company, its Subsidiaries or its or their respective
creditors or properties and, unless prohibited by law or applicable regulations,
may be entitled and empowered to participate as a member of any official
committee of creditors appointed in such matter and may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing
similar functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements

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                                                                              92

and advances of the Trustee, its agents and its counsel, and any other amounts
due the Trustee under Section 7.7.

                No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

                SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, or pursuant to the foreclosure or other
remedial provisions contained in the Collateral Documents (including any money
or property deposited into the Collateral Account in connection therewith), it
shall pay out the money or property in the following order:

                FIRST: to the Trustee for amounts due to it under Section 7.7 or
        under the Collateral Documents;

                SECOND: to any receiver for any amounts due under the Collateral
        Documents;

                THIRD: to Securityholders for amounts due and unpaid on the
        Securities for principal, premium, if any, and interest, ratably,
        without preference or priority of any kind, according to the amounts due
        and payable on the Securities for principal, premium, if any, and
        interest, respectively; and

                FOURTH: to the Company or, to the extent the Trustee collects
        any amount for any Subsidiary Guarantor, to such Subsidiary Guarantor.

                The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.

                SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in outstanding principal
amount of the Securities.

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                                                                              93

                                   ARTICLE VII

                                     TRUSTEE

                SECTION 7.1.  Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such person's own affairs; provided that the Trustee will be
under no obligation to exercise any of the rights or powers under this Indenture
or the Collateral Documents at the request or direction of any of the Holders
unless such Holders have offered the Trustee reasonable indemnity or security
against loss, liability or expense (including counsel fees and expenses).

                (b) Except during the continuance of an Event of Default:

                (1)     the Trustee undertakes to perform such duties and only
        such duties as are specifically set forth in this Indenture and no
        implied covenants or obligations shall be read into this Indenture
        against the Trustee; and

                (2)     in the absence of bad faith on its part, the Trustee may
        conclusively rely, as to the truth of the statements and the correctness
        of the opinions expressed therein, upon certificates, opinions or orders
        furnished to the Trustee and conforming to the requirements of this
        Indenture or the Collateral Documents. However, in the case of any such
        certificates or opinions which by any provisions hereof are specifically
        required to be furnished to the Trustee, the Trustee shall examine such
        certificates and opinions to determine whether or not they conform to
        the requirements of this Indenture or the Collateral Documents, as the
        case may be (but need not confirm or investigate the accuracy of
        mathematical calculations or other facts stated therein).

                (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                (1)     this paragraph does not limit the effect of paragraph
        (b) of this Section;

                (2)     the Trustee shall not be liable for any error of
        judgment made in good faith by a Trust Officer unless it is proved that
        the Trustee was negligent in ascertaining the pertinent facts;

                (3)     the Trustee shall not be liable with respect to any
        action it takes or omits to take in good faith in accordance with a
        direction received by it pursuant to Section 6.5; and

                (4)     No provision of this Indenture or the Collateral
        Documents shall require the Trustee to expend or risk its own funds or
        otherwise incur financial liability in the performance of any of its
        duties hereunder or thereunder or in the exercise of any of its rights
        or powers, if it shall have reasonable grounds to believe that repayment
        of such funds or adequate indemnity against such risk or liability is
        not reasonably assured to it.

<PAGE>

                                                                              94

                (d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

                (e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.

                (f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law, the Collateral Documents
or by Section 11.5.

                (g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.

                (h) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by one Officer of the Company.

                SECTION 7.2.  Rights of Trustee. Subject to Section 7.1:

                (a) The Trustee may conclusively rely on any document (whether
in its original or facsimile form) reasonably believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document. The Trustee shall receive
and retain financial reports and statements of the Company as provided herein,
but shall have no duty to review or analyze such reports or statements to
determine compliance with covenants or other obligations of the Company.

                (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and/or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on an Officers' Certificate or Opinion of Counsel.

                (c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.

                (d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers, unless the Trustee's conduct constitutes willful misconduct or
negligence.

                (e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture, the Collateral Documents or the Securities shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder or under the Collateral Documents in good
faith and in accordance with the advice or opinion of such counsel.

                (f) The Trustee shall not be deemed to have notice of any
Default or Event of Default or whether any entity or group of entities
constitutes a Significant Subsidiary unless a Trust Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a default or of any such Significant Subsidiary is received by the Trustee
at

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                                                                              95

the corporate trust office of the Trustee specified in Section 12.2, and such
notice references the Securities and this Indenture.

                (g) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.

                (h) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or the Collateral Documents
at the request, order or direction of any of the Holders pursuant to the
provisions of this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses (including
reasonable attorney's fee and expenses) and liabilities which may be incurred
therein or thereby.

                (i) The Trustee shall not be deemed to have knowledge of any
fact or matter unless such fact or matter is known to a Trust Officer of the
Trustee.

                (j) Whenever in the administration of this Indenture or the
Collateral Documents the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any action hereunder or
thereunder, the Trustee (unless other evidence be herein specifically
prescribed) may request, and in the absence of bad faith or willful misconduct
on its part, rely upon an Officers' Certificate.

                SECTION 7.3.  Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company, Subsidiary Guarantors or their
Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11. In
addition, the Trustee shall be permitted to engage in transactions with the
Company; provided, however, that if the Trustee acquires any conflicting
interest under the TIA the Trustee must (i) eliminate such conflict within 90
days of acquiring such conflicting interest, (ii) apply to the SEC for
permission to continue acting as Trustee or (iii) resign.

                SECTION 7.4.  Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Collateral Documents, the Securities, shall not be
accountable for the Company's use of the proceeds from the sale of the
Securities, shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee or any money paid to the
Company pursuant to the terms of this Indenture and shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.

                SECTION 7.5.  Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail by first class mail to each Securityholder at
the address set forth in the Securities Register notice of the Default or Event
of Default within 90 days after it is actually known to a Trust Officer. Except
in

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                                                                              96

the case of a Default or Event of Default in payment of principal of, premium
(if any), or interest on any Security (including payments pursuant to the
optional redemption or required repurchase provisions of such Security, if any),
the Trustee may withhold the notice if and so long as its board of directors, a
committee of its board of directors or a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.

                SECTION 7.6.  Reports by Trustee to Holders. Within 60 days
after each September 15 beginning September 15, 2004, the Trustee shall mail to
each Securityholder a brief report dated as of such September 15 that complies
with TIA Section 313(a) if and to the extent required thereby. The Trustee also
shall comply with TIA Section 313(b) and TIA Section 313(c).

                A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof and the Trustee shall comply with TIA Section 313(d).

                SECTION 7.7.  Compensation and Indemnity. The Company shall pay
to the Trustee from time to time reasonable compensation for its services
hereunder and under the Collateral Documents as the Company and the Trustee
shall from time to time agree in writing. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection,
costs of preparing and reviewing reports, certificates and other documents,
costs of preparation and mailing of notices to Securityholders and reasonable
costs of counsel retained by the Trustee in connection with the delivery of an
Opinion of Counsel or otherwise, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability, damages, claims or expense (including reasonable attorneys' fees and
expenses) incurred by it without willful misconduct, negligence or bad faith on
its part in connection with the administration of this trust and the performance
of its duties hereunder and under the Collateral Documents, including the costs
and expenses of enforcing this Indenture (including this Section 7.7) and the
Collateral Documents and of defending itself against any claims (whether
asserted by any Securityholder, the Company or otherwise). The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall provide reasonable cooperation at the Company's expense in the defense.
The Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel, provided that the Company shall not be required to pay
such fees and expenses if they assume the Trustee's defense, and, in the
reasonable judgment of outside counsel to the Trustee, there is no conflict of
interest between the Company and the Trustee in connection with such defense.

                  To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. Such lien shall survive
the satisfaction and discharge of this Indenture. The Trustee's right to

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                                                                              97

receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or Indebtedness of the Company.

                The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. Without prejudice to any other
rights available to the Trustee under applicable law, when the Trustee incurs
expenses after the occurrence of a Default specified in clause (7) or clause (8)
of Section 6.1, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law.

                SECTION 7.8.  Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company in writing. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
removed Trustee in writing and may appoint a successor Trustee with the
Company's written consent, which consent will not be unreasonably withheld. The
Company shall remove the Trustee if:

                (1) the Trustee fails to comply with Section 7.10 hereof;

                (2) the Trustee is adjudged bankrupt or insolvent;

                (3) a receiver or other public officer takes charge of the
        Trustee or its property; or

                (4) the Trustee otherwise becomes incapable of acting.

                If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee as described in the
preceding paragraph, or if a vacancy exists in the office of the Trustee for any
reason (the Trustee in such event being referred to herein as the retiring
Trustee), the Company shall promptly appoint a successor Trustee.

                A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.

                If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of at least 10% in principal amount of the Securities may petition, at the
Company's expense, any court of competent jurisdiction for the appointment of a
successor Trustee.

                If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any
Securityholder, who has been a bona fide holder of a Security for at least six
months, may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

                Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.

<PAGE>

                                                                              98

                SECTION 7.9.  Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.

                In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; provided that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities in the name
of any predecessor Trustee shall only apply to its successor or successors by
merger, consolidation or conversion.

                SECTION 7.10. Eligibility; Disqualification. This Indenture
shall always have a Trustee that satisfies the requirements of TIA Section
310(a)(1), (2) and (5) in every respect. The Trustee shall have a combined
capital and surplus of at least $100 million as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b); provided, however, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
or certificates of interest or participation in other securities of the Company
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. For purposes of the proviso to TIA Section 310(b)(1), the
following indentures (as each shall be amended and/or restated from time to
time) shall be excluded: Trust Indenture, dated as of May 1, 1996, between City
of Morgantown, Kentucky, as issuer, and Texas Commerce Bank National Association
(JPMorgan Chase Bank, successor by merger), as trustee, paying agent and bond
registrar, the bonds outstanding thereunder being supported by payments received
from the Company under the Loan Agreement, dated as of May 1, 1996, between the
City of Morgantown, Kentucky and IMCO Recycling Inc.; Trust Indenture, dated as
of April 15, 1997, between City of Morgantown, Kentucky, as issuer, and Texas
Commerce Bank National Association (JPMorgan Chase Bank, successor by merger),
as trustee, paying agent and bond registrar, the bonds outstanding thereunder
being supported by payments received from the Company under the Loan Agreement,
dated as of April 15, 1997, between the City of Morgantown, Kentucky and IMCO
Recycling Inc.; and Trust Indenture, dated as of June 15, 1998, between City of
Morgantown, Kentucky, as issuer, and Chase Bank of Texas, National Association
(JPMorgan Chase Bank, successor by merger), as trustee, paying agent and bond
registrar, the bonds outstanding thereunder being supported by payments received
from the Company under the Loan Agreement, dated as of June 15, 1998, between
the City of Morgantown, Kentucky and IMCO Recycling Inc.

                SECTION 7.11. Preferential Collection of Claims Against the
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.

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                                                                              99

                SECTION 7.12. Trustee's Application for Instruction from the
Company. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.

                                  ARTICLE VIII

                       DISCHARGE OF INDENTURE; DEFEASANCE

                SECTION 8.1.  Discharge of Liability on Securities; Defeasance.
(a) Subject to Section 8.1(c), when (i)(x) the Company delivers to the Trustee
all outstanding Securities (other than Securities replaced or paid pursuant to
Section 2.9) for cancellation or (y) all outstanding Securities not theretofore
delivered for cancellation have become due and payable, whether at maturity or
upon redemption or will become due and payable within one year or are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption pursuant to Article V hereof and
the Company or any Subsidiary Guarantor irrevocably deposits or causes to be
deposited with the Trustee as trust funds in trust solely for the benefit of the
Holders money in U.S. dollars in an amount, non-callable U.S. Government
Obligations, which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than the
due date of any payment, money in an amount, or a combination of U.S. dollars
and such U.S. Government Obligations, sufficient without consideration of any
reinvestment of interest to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation for
principal, premium, if any, and accrued interest to the date of maturity or
redemption; (ii) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company or any
Subsidiary Guarantor is a party or by which the Company or any Subsidiary
Guarantor is bound; (iii) the Company or any Subsidiary Guarantor have paid or
caused to be paid all sums payable under this Indenture, the Collateral
Documents and the Securities; and (iv) the Company has delivered irrevocable
instructions to the Trustee under this Indenture to apply the deposited money
toward the payment of such Securities at maturity or the Redemption Date, as the
case may be, then the Trustee shall acknowledge satisfaction and discharge of
this Indenture and release of all Liens on the Collateral with respect to the
Securities on demand of the Company (accompanied by an Officers' Certificate and
an Opinion of Counsel stating that all conditions precedent specified herein
relating to the satisfaction and discharge of this Indenture have been complied
with) and at the cost and expense of the Company. If U.S. Government Obligations
shall have been deposited in connection with such satisfaction and discharge,
then as a further condition to such

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                                                                             100

satisfaction and discharge, the Trustee shall have received a certificate from a
nationally recognized firm of independent accountants to the effect set forth in
Section 8.2(2).

                (b) Subject to Sections 8.1(c) and 8.2, the Company at any time
may terminate (i) all its obligations under the Securities, this Indenture and
the Collateral Documents (including all Liens on the Collateral) ("legal
defeasance option"), and after giving effect to such legal defeasance, any
omission to comply with such obligations shall no longer constitute a Default or
Event of Default or (ii) its obligations under Section 3.2, Section 3.3, Section
3.4, Section 3.5, Section 3.6, Section 3.7, Section 3.8, Section 3.9, Section
3.10, Section 3.11, Section 3.12, Section 3.16, Section 3.19, Section 3.21 and
Section 4.1(3), and the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply with such covenants shall no longer constitute a Default or an Event of
Default under Section 6.1(4) and the operation of Section 6.1(5) (to the extent
applicable to such defeased covenants and to the extent based on any failure by
VAM-IMCO Guss und Recycling GmbH to comply with its agreements contained in the
Intercompany Note), Section 6.1(6), Section 6.1(7) (with respect to Significant
Subsidiaries), Section 6.1(8) (with respect to Significant Subsidiaries),
Section 6.1(9) and Section 6.1(10), and the events specified in such Sections
shall no longer constitute an Event of Default (clause (ii) being referred to as
the "covenant defeasance option"), but except as specified above, the remainder
of this Indenture, the Collateral Documents and the Securities shall be
unaffected thereby. The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option. If the
Company exercises its legal defeasance option, the Subsidiary Guarantees in
effect at such time shall terminate and the Liens on the Collateral shall
terminate and shall be released with respect to the Securities.

                If the Company exercises its legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.1(4)
(as such Section relates to Section 3.2, Section 3.3, Section 3.4, Section 3.5,
Section 3.6, Section 3.7, Section 3.8, Section 3.9, Section 3.10, Section 3.11,
Section 3.12, Section 3.16, Section 3.19 and Section 3.21), Section 6.1(5) (to
the extent applicable to such defeased covenants and to the extent based on any
failure by VAM-IMCO Guss und Recycling GmbH to comply with its agreements
contained in the Intercompany Note), Section 6.1(6), Section 6.1(7) (with
respect only to Significant Subsidiaries), Section 6.1(8) (with respect only to
Significant Subsidiaries), Section 6.1(9) or Section 6.1(10), or because of the
failure of the Company to comply with Section 4.1(3).

                Upon satisfaction of the conditions set forth herein and upon
request and expense of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.

                (c) Notwithstanding the provisions of Sections 8.1(a) and (b) to
the extent relating to a legal defeasance, the Company's obligations in Sections
2.2, 2.3, 2.4, 2.5, 2.6, 2.9, 2.10, 2.11, 2.12, 3.13, 3.14, 3.15, 3.17, 3.18,
6.7, 7.7 and 7.8 and in this Article VIII shall survive

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                                                                             101

until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.7, 8.4 and 8.5 shall survive.

                SECTION 8.2.  Conditions to Defeasance. The Company may exercise
its legal defeasance option or its covenant defeasance option only if:

                (1) the Company irrevocably deposits in trust with the Trustee
        for the benefit of the Holders money in U.S. dollars in an amount, or
        U.S. Government Obligations, which through the scheduled payment of
        principal and interest in respect thereof in accordance with their terms
        will provide, not later than the due date of any payment, money in an
        amount, or a combination of U.S. dollars or such U.S. Government
        Obligations, sufficient without consideration of any reinvestment of
        interest, to pay and discharge the principal, premium, if any, and
        interest on the Securities to maturity or redemption, as the case may
        be;

                (2) the Company delivers to the Trustee a certificate from a
        nationally recognized firm of independent accountants expressing their
        opinion that the payments of principal and interest when due and without
        reinvestment on the deposited U.S. Government Obligations plus any
        deposited money without investment will provide cash at such times and
        in such amounts as will be sufficient to pay principal, premium, if any,
        and interest when due on all the Securities to maturity or redemption,
        as the case may be;

                (3) no Default or Event of Default shall have occurred and be
        continuing on the date of such deposit or, with respect to Events of
        Default under Sections 6.1(7) and (8), on the later of (i) the 91st day
        after such date of deposit or (ii) the day ending on the day following
        the expiration of the longest preference period under any bankruptcy law
        applicable to the Company in respect of such deposit;

                (4) such deposit shall not result in a breach or violation of,
        or constitute a Default under, this Indenture, the Collateral Documents
        or any other agreement or instrument to which the Company or any of its
        Subsidiaries is a party or by which the Company or any of its
        Subsidiaries is bound;

                (5) the Company shall have delivered to the Trustee an Opinion
        of Counsel (subject to customary assumptions and exclusions) to the
        effect that (A) the Securities and (B) assuming no intervening
        bankruptcy of the Company between the date of deposit and the 91st day
        following the deposit and that no Holder of the Securities is an insider
        of the Company, after the 91st day following the deposit, the trust
        funds will not be subject to the effect of any applicable bankruptcy,
        insolvency, reorganization or similar laws affecting creditors' right
        generally;

                (6) the Company delivers to the Trustee an Opinion of Counsel
        (subject to customary assumptions and exclusions) to the effect that the
        trust resulting from the deposit does not constitute, or is qualified
        as, a regulated investment company under the Investment Company Act of
        1940;

                (7) the Company shall have delivered to the Trustee an Opinion
        of Counsel (subject to customary assumptions and exclusions) stating
        that (i) the Securityholders will

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                                                                             102

        not recognize income, gain or loss for U.S. Federal income tax purposes
        as a result of such deposit and defeasance and will be subject to U.S.
        Federal income tax on the same amounts, in the same manner and at the
        same times as would have been the case if such deposit and defeasance
        had not occurred and (ii) in the case of the legal defeasance option,
        such Opinion of Counsel must be based on a ruling by the Internal
        Revenue Service or other change in the applicable U.S. law;

                (8) If the Securities are to be redeemed prior to Stated
        Maturity, notice of such redemption shall have been duly given pursuant
        to this Indenture or provision therefor satisfactory to the Trustee
        shall have been made; and

                (9) the Company delivers to the Trustee an Officers' Certificate
        and an Opinion of Counsel, each stating that all conditions precedent
        provided for herein relating to either the legal defeasance or covenant
        defeasance, as the case may be, as contemplated by this Article VIII
        have been complied with.

                SECTION 8.3.  Application of Trust Money. The Trustee shall hold
in trust all money or U.S. Government Obligations (including proceeds thereof)
deposited with it pursuant to this Article VIII. It shall apply the deposited
money and the money from U.S. Government Obligations through the Paying Agent
and in accordance with this Indenture and the Securities to the Holders of the
Securities of all sums due in respect of the payment of principal of, premium,
if any, and accrued interest on the Securities.

                SECTION 8.4.  Repayment to the Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money, U.S. Government Obligations or securities held by them upon payment of
all the obligations under this Indenture.

                Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal of or premium, if any, or interest on the
Securities that remains unclaimed by the Holders thereof for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as unsecured general creditors and the Trustee and the Paying Agent
shall have no further liability with respect to such money.

                SECTION 8.5.  Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.

                SECTION 8.6.  Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company and each
Subsidiary Guarantor under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article VIII;
provided, however, that, if the Company or the

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                                                                             103

Subsidiary Guarantors have made any payment of principal, premium, if any, or
interest on any Securities because of the reinstatement of their obligations,
the Company or Subsidiary Guarantors, as the case may be, shall be subrogated to
the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.

                The Trustee's rights under this Article VIII shall survive
termination of this Indenture.

                                   ARTICLE IX

                                   AMENDMENTS

                SECTION 9.1.  Without Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Collateral Documents or the Securities without notice to or consent of any
Securityholder:

                (1) to cure any ambiguity, omission, defect or inconsistency;

                (2) to comply with (i) Article IV in respect of the assumption
        by a Successor Company of the obligations of the Company under this
        Indenture, the Securities, the Registration Rights Agreement and the
        Collateral Documents and (ii) Article X in respect of the assumption by
        a Person of the obligations of a Subsidiary Guarantor under its
        Subsidiary Guarantee, this Indenture, the Registration Rights Agreement
        and the Collateral Documents;

                (3) to provide for uncertificated Securities in addition to or
        in place of certificated Securities; provided, however, that the
        uncertificated Securities are issued in registered form for purposes of
        Section 163(f) of the Code or in a manner such that the uncertificated
        Securities are described in Section 163(f)(2)(B) of the Code;

                (4) to add Guarantees with respect to the Securities or release
        a Subsidiary Guarantor from its Subsidiary Guarantee, in each case as
        provided in accordance with this Indenture;

                (5) to pledge or grant a security interest in favor of the
        Trustee as additional security for the payment and performance of the
        Company's and Subsidiary Guarantors' obligations with respect to the
        Securities and the Subsidiary Guarantees thereof, in any property or
        assets, including any that are required to be mortgaged, pledged or
        hypothecated or in which a security interest is required to be granted,
        to the Trustee pursuant to the Collateral Documents or otherwise;

                (6) to release Liens in favor of the Trustee in the Collateral
        as provided in accordance with Section 11.3;

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                                                                             104

                (7) to add to the covenants of the Company for the benefit of
        the Holders or to surrender any right or power herein conferred upon the
        Company;

                (8) to comply with any requirement of the SEC in connection with
        the qualification of this Indenture under the TIA;

                (9) to make any change that does not materially adversely affect
        the rights of any Securityholder; or

                (10) to provide for the issuance of the Exchange Securities,
        which will have terms substantially identical in all respects to the
        Initial Securities or the Additional Securities, as the case may be
        (except that the transfer restrictions contained in the Initial
        Securities or the Additional Securities, if any, will be modified or
        eliminated, as appropriate), and which will be treated, together with
        any outstanding Initial Securities or Additional Securities, as a single
        class of securities.

                After an amendment or supplement under this Section becomes
effective, the Company shall mail to Securityholders a notice briefly describing
such amendment or supplement. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment or supplement under this Section.

                SECTION 9.2.  With Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Collateral Documents or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Securities). Any past default or compliance with the provisions of
this Indenture or the Collateral Documents may be waived with the written
consent of the Holders of at least a majority in principal amount of the
Securities then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for,
Securities). However, without the consent of each Securityholder affected, an
amendment, supplement or waiver may not:

                (1) reduce the principal amount of Securities outstanding whose
        Holders must consent to an amendment;

                (2) reduce the stated rate of or extend the stated time for
        payment of interest or additional interest on any Security;

                (3) reduce the principal of or extend the Stated Maturity of any
        Security;

                (4) reduce the premium payable upon the redemption or repurchase
        of any Security or change the time at which any Security may or shall be
        redeemed or repurchased as described under Section 3.5, Section 3.10
        (including an amendment to the definition of "Change of Control") or
        Article V or any similar provision, whether through an amendment or
        waiver of Section 3.5, Section 3.10 or Article V, definitions or
        otherwise;

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                                                                             105

                (5) make any Security payable in money other than that stated in
        the Security;

                (6) impair the right of any Holder to receive payment of,
        premium, if any, principal of and interest on such Holder's Securities
        on or after the due dates therefor or to institute suit for the
        enforcement of any payment on or with respect to such Holder's
        Securities;

                (7) make any change to this Section 9.2;

                (8) modify the Subsidiary Guarantees in any manner adverse to
        the Holders; or

                (9) make any change in any Collateral Document or the provisions
        in the Indenture dealing with Collateral Documents or application of
        trust moneys that would materially and adversely affect the first
        priority Lien and security interest of the Securityholders in the
        Collateral.

                It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof. A consent to any amendment, supplement or waiver under this
Indenture by any Holder of the Securities given in connection with a tender or
exchange of such Holder's Securities will not be rendered invalid by such tender
or exchange.

                After an amendment or supplement under this Section becomes
effective, the Company shall mail to Securityholders a notice briefly describing
such amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.

                SECTION 9.3.  Compliance with Trust Indenture Act. Every
amendment or supplement to this Indenture or the Securities shall comply with
the TIA as then in effect.

                SECTION 9.4.  Revocation and Effect of Consents and Waivers. A
consent to an amendment, supplement or a waiver by a Holder of a Security shall
bind the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent or waiver is not made on the Security. Any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes effective
or otherwise in accordance with any related solicitation documents. After an
amendment, supplement or waiver becomes effective, it shall bind every
Securityholder unless it makes a change described in any of clauses (1) through
(8) of Section 9.2, in that case the amendment, supplement, waiver or other
action shall bind each Securityholder who has consented to it and every
subsequent Securityholder that evidences the same debt as the consenting
Holder's Securities. An amendment, supplement or waiver shall become effective
upon receipt by the Trustee of the requisite number of written consents under
Section 9.1 or 9.2 as applicable.

                The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action

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                                                                             106

described above or required or permitted to be taken pursuant to this Indenture.
If a record date is fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Securityholders at such record date (or their
duly designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date. No
such consent shall become valid or effective more than 120 days after such
record date.

                SECTION 9.5.  Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee. The Trustee may
place an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determine, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.

                SECTION 9.6.  Trustee To Sign Amendments. The Trustee shall sign
any amendment, supplement or waiver authorized pursuant to this Article IX if
the amendment, supplement or waiver does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee may
but need not sign it. In signing such amendment, supplement or waiver the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel stating that
such amendment, supplement or waiver is authorized or permitted by this
Indenture and that such amendment, supplement or waiver is the legal, valid and
binding obligation of the Company and any Subsidiary Guarantors, enforceable
against them in accordance with its terms, subject to customary exceptions, and
complies with the provisions hereof (including Section 9.3).

                                    ARTICLE X

                              SUBSIDIARY GUARANTEE

                SECTION 10.1. Subsidiary Guarantee. Subject to the provisions of
this Article X, each Subsidiary Guarantor hereby fully, unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety, jointly and
severally with each other Subsidiary Guarantor, to each Holder of the
Securities, to the extent lawful, and the Trustee the full and punctual payment
when due, whether at maturity, by acceleration, by redemption or otherwise, of
the principal of, premium, if any, and interest on the Securities and all other
obligations and liabilities of the Company under this Indenture (including
without limitation interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Company or any Subsidiary Guarantor whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding
and the obligations under Section 7.7) (all the foregoing being hereinafter
collectively called the "Obligations"). Each Subsidiary Guarantor agrees that
the Obligations will rank equally in right of payment with other Indebtedness of
such Subsidiary Guarantor, except to the extent such other Indebtedness is
subordinate to the Obligations. Each Subsidiary Guarantor further agrees

<PAGE>

                                                                             107

(to the extent permitted by law) that the Obligations may be extended or
renewed, in whole or in part, without notice or further assent from it, and that
it will remain bound under this Article X notwithstanding any extension or
renewal of any Obligation.

                Each Subsidiary Guarantor waives presentation to, demand of
payment from and protest to the Company of any of the Obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Obligations.

                Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a Guarantee of payment when due (and not a
Guarantee of collection) and waives any right to require that any resort be had
by any Holder to any security held for payment of the Obligations.

                Except as set forth in Section 10.2, the obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than payment of the
Obligations in full), including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense of setoff,
counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Subsidiary Guarantor herein shall not be discharged or impaired or otherwise
affected by (a) the failure of any Holder to assert any claim or demand or to
enforce any right or remedy against the Company or any other person under this
Indenture, the Securities or any other agreement or otherwise; (b) any extension
or renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee for
the Obligations or any of them; (e) the failure of any Holder to exercise any
right or remedy against any other Subsidiary Guarantor, or (f) any change in the
ownership of the Company; (g) by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or (h) by any other act or
thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of any Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.

                Each Subsidiary Guarantor agrees that its Subsidiary Guarantee
herein shall remain in full force and effect until payment in full of all the
Obligations or such Subsidiary Guarantor is released from its Subsidiary
Guarantee upon the merger or the sale of all the Capital Stock or assets of the
Subsidiary Guarantor or otherwise in compliance with Section 10.2 or Article
VIII. Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of, premium, if any, or
interest on any of the Obligations is rescinded or must otherwise be restored by
any Holder upon the bankruptcy or reorganization of the Company or otherwise.

                In furtherance of the foregoing and not in limitation of any
other right which any Holder has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Company to pay any of the
Obligations when and as the same shall become due, whether

<PAGE>

                                                                             108

at maturity, by acceleration, by redemption or otherwise, each Subsidiary
Guarantor hereby promises to and will, upon receipt of written demand by the
Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the
Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid
amount of such Obligations then due and owing and (ii) accrued and unpaid
interest on such Obligations then due and owing (but only to the extent not
prohibited by law).

                Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x)
the maturity of the Obligations guaranteed hereby may be accelerated as provided
in this Indenture for the purposes of its Subsidiary Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby and (y) in the
event of any such declaration of acceleration of such Obligations, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Subsidiary Guarantor for the purposes of this Subsidiary
Guarantee.

                Each Subsidiary Guarantor also agrees to pay any and all
reasonable costs and expenses (including reasonable attorneys' fees) incurred by
the Trustee or the Holders in enforcing any rights under this Section.

                Neither the Company nor the Subsidiary Guarantors shall be
required to make a notation on the Securities to reflect any Subsidiary
Guarantee or any release, termination or discharge thereof and any such notation
shall not be a condition to the validity of any Subsidiary Guarantee.

                SECTION 10.2. Limitation on Liability; Termination, Release and
Discharge.

                (a) Any term or provision of this Indenture to the contrary
notwithstanding, the obligations of each Subsidiary Guarantor hereunder will be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any guarantees under the Senior Secured Credit Agreement)
and after giving effect to any collections from or payments made by or on behalf
of any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law and not
otherwise being void or voidable under any similar laws affecting the rights of
creditors generally.

                (b)     The Company will not permit any Subsidiary Guarantor to
consolidate with or merge with or into any Person (other than the Company or
another Subsidiary Guarantor), or convey, transfer or lease all or substantially
all of the assets of any Subsidiary Guarantor (other than to the Company or
another Subsidiary Guarantor), unless:

                (1) (a) the resulting, surviving or transferee Person will be a
        corporation, partnership, trust or limited liability company organized
        or formed and existing under the laws of the United States of America,
        any State of the United States or the District of

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                                                                             109

        Columbia and such Person (if not such Subsidiary Guarantor) will
        expressly assume, by supplemental indenture, executed and delivered to
        the Trustee, in form satisfactory to the Trustee, all the obligations of
        such Subsidiary Guarantor under its Subsidiary Guarantee, this
        Indenture, the Registration Rights Agreement and the Collateral
        Documents and shall cause such amendments, supplements or other
        instruments to be executed, filed, and recorded in such jurisdictions as
        may be required by applicable law to preserve and protect the Lien on
        the Collateral owned by or transferred to the surviving entity, together
        with such financing statements as may be required to perfect any
        security interests in such Collateral which may be perfected by the
        filing of a financing statement under the Uniform Commercial Code of the
        relevant states; (b) immediately after giving effect to such transaction
        (and treating any Indebtedness that becomes an obligation of the
        resulting, surviving or transferee Person or any Restricted Subsidiary
        as a result of such transaction as having been Incurred by such Person
        or such Restricted Subsidiary at the time of such transaction), no
        Default of Event of Default shall have occurred and be continuing; and
        (c) the Company will have delivered to the Trustee an Officers'
        Certificate and an Opinion of Counsel, each stating that such
        consolidation, merger or transfer and such supplemental indenture (if
        any) comply with this Indenture; or

                (2) the transaction is made in compliance with Section 3.5.

                Upon the sale or disposition of a Subsidiary Guarantor (by
merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets) and whether or not the Subsidiary Guarantor is
the surviving corporation in such transaction, to a Person which is not the
Company or a Restricted Subsidiary, which sale or disposition is otherwise in
compliance with this Indenture, such Subsidiary Guarantor will be automatically
released from all its obligations under this Indenture and its Subsidiary
Guarantee, the Registration Rights Agreement and the Collateral Documents, such
Subsidiary Guarantee will terminate and the Liens, if any, on the Collateral
pledged by such Subsidiary Guarantor pursuant to the Collateral Documents shall
be released with respect to the Securities if all the obligations of such
Subsidiary Guarantor under the Senior Secured Credit Agreement and related
documentation terminate upon consummation of such transaction.

                (c) Each Subsidiary Guarantor will be deemed released from all
its obligations under this Indenture, its Collateral Documents, its Subsidiary
Guarantee and the Registration Rights Agreement and such Subsidiary Guarantee
will terminate upon the legal defeasance of the Securities pursuant to the
provisions of Article VIII hereof.

                (d) Each Subsidiary Guarantor will be released from its
obligations under this Indenture, its Collateral Documents, its Subsidiary
Guarantee and the Registration Rights Agreement if the Company designates such
Subsidiary Guarantor as an Unrestricted Subsidiary and such designation complies
with the other applicable provisions of this Indenture.

                SECTION 10.3. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that any Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made on the obligations under
the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek
and receive contribution from and against the Company or any other Subsidiary
Guarantor who has not paid its proportionate share of such

<PAGE>

                                                                             110

payment. The provisions of this Section 10.3 shall in no respect limit the
obligations and liabilities of each Subsidiary Guarantor to the Trustee and the
Holders and each Subsidiary Guarantor shall remain liable to the Trustee and the
Holders for the full amount guaranteed by such Subsidiary Guarantor hereunder.

                SECTION 10.4. No Subrogation. Notwithstanding any payment or
payments made by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor
shall be entitled to be subrogated to any of the rights of the Trustee or any
Holder against the Company or any other Subsidiary Guarantor or any collateral
security or guarantee or right of offset held by the Trustee or any Holder for
the payment of the Obligations, nor shall any Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
any Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by such Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.

                                   ARTICLE XI

                             COLLATERAL AND SECURITY

                SECTION 11.1. The Collateral.

                (a) The due and punctual payment of the principal of, premium,
if any, and interest on the Securities and the Guarantees thereof when and as
the same shall be due and payable, whether on an interest payment date, at
maturity, by acceleration, repurchase, redemption or otherwise, interest on the
overdue principal of and interest (to the extent permitted by law), if any, on
the Securities and the Guarantees thereof and performance of all other
obligations under this Indenture, including, without limitation, the obligations
of the Company set forth in Section 7.7 and Section 8.5 herein, and the
Securities and the Guarantees thereof and the Collateral Documents, shall be
secured by first-priority Liens and security interests subject to Permitted
Liens as provided in the Collateral Documents which the Company and the
Subsidiary Guarantors, as the case may be, have entered into simultaneously with
the execution of this Indenture and will be secured by all Collateral Documents
hereafter delivered as required or permitted by this Indenture and the
Collateral Documents. The Company and the Subsidiary Guarantors hereby agree
that the Trustee shall hold the Collateral in trust for the benefit of all of
the Holders and the Trustee, in each case pursuant to the terms of the
Collateral Documents and the Trustee is hereby authorized to execute and deliver
the Collateral Documents.

<PAGE>

                                                                             111

                (b) Each Holder, by its acceptance of any Securities and the
Guarantees thereof, consents and agrees to the terms of the Collateral Documents
(including, without limitation, the provisions providing for foreclosure) as the
same may be in effect or may be amended from time to time in accordance with
their terms and authorizes and directs the Trustee to perform its obligations
and exercise its rights under the Collateral Documents in accordance therewith.

                (c) The Trustee and each Holder, by accepting the Securities and
the Guarantees thereof, acknowledges that, as more fully set forth in the
Collateral Documents, the Collateral as now or hereafter constituted shall be
held for the benefit of all the Holders and the Trustee, and that the Lien of
this Indenture and the Collateral Documents in respect of the Trustee and the
Holders is subject to and qualified and limited in all respects by the
Collateral Documents and actions that may be taken thereunder.

                SECTION 11.2. Further Assurances.

                (a) The Company will, and will cause each of its Subsidiaries
to, do or cause to be done all acts and things which may be required, or which
the Trustee from time to time may request, which request the Trustee shall not
be obligated to make, to assure and confirm that the Trustee holds, for the
benefit of the Holders of the Securities and the Guarantees thereof and the
Trustee, duly created, enforceable and perfected first priority Liens and
security interest upon the Collateral (subject to Permitted Prior Liens) as
contemplated by the Collateral Documents.

                (b) Upon request of the Trustee, which request the Trustee shall
not be obligated to make, or at any time and from time to time, the Company
will, and will cause each of its Subsidiaries to, promptly execute, acknowledge
and deliver such Collateral Documents, instruments, certificates, notices and
other documents and take such other actions as shall be required or which the
Trustee may reasonably request to create, perfect, protect, assure or enforce
the Liens and benefits intended to be conferred as contemplated by this
Indenture and the Collateral Documents for the benefit of the Holders of the
Securities and the Guarantees thereof and the Trustee. If the Company or such
Subsidiary fails to do so, the Trustee is hereby irrevocably authorized and
empowered, with full power of substitution, to execute, acknowledge and deliver
such Collateral Documents, instruments, certificates, notices and other
documents and, subject to the provisions of the Collateral Documents, take such
other actions in the name, place and stead of the Company or such Subsidiary,
but the Trustee will have no obligation to do so and no liability for any action
taken or omitted by it in good faith in connection therewith.

                (c) The Company will otherwise comply with the provisions of TIA
Section314(b).

                (d) To the extent applicable, the Company will cause TIA
Section 313(b), relating to reports, and TIA Section 314(d), relating to the
release of property and the substitution therefore of any property to be pledged
as Collateral for the Securities and the Guarantees thereof, to be complied
with. Any certificate or opinion required by TIA Section 314(d) may be made by
an officer of the Company except in cases where TIA Section 314(d) requires that
such certificate or opinion be made by an independent Person, which Person will
be an independent engineer, appraiser or other expert selected or reasonably
satisfactory to the Trustee. Notwithstanding anything to the contrary in this
paragraph, the Company will not be required to comply with all or any portion of
TIA Section 314(d) if it determines, in good faith based on advice of counsel,
that under the terms of TIA

<PAGE>

                                                                             112

Section 314(d) and/or any interpretation or guidance as to the meaning thereof
of the SEC and its staff, including "no action" letters or exemptive orders, all
or any portion of TIA Section 314(d) is inapplicable to one or a series of
released Collateral.

                SECTION 11.3. Release of Liens on the Collateral.

                (a) The Liens on the Collateral will be released with respect to
the Securities:

                (1) in whole, upon payment in full of the principal of, accrued
        and unpaid interest and premium, if any, on the Securities;

                (2) in whole, upon satisfaction and discharge of this Indenture
        as set forth in Section 8.1(a) hereof;

                (3) in whole, upon a legal defeasance as set forth in Section
        8.1(b) hereof;

                (4) in part, as to any property constituting Collateral (A) that
        is sold or otherwise disposed of by the Company or any of its Restricted
        Subsidiaries in a transaction permitted by Section 3.5 of this Indenture
        or the Collateral Documents, to the extent of the interest sold or
        disposed of, (B) that is cash or Net Available Cash withdrawn from the
        Collateral Account for any one or more purposes permitted by Section
        3.5(a); (C) that is of the nature described in clause (4), clause (10)
        or clause (11) of the proviso in the definition of "Asset Disposition,"
        and is subject to a disposition as therein provided, (D) that constitute
        Excess Collateral Proceeds that remain unexpended after the conclusion
        of a Collateral Disposition Offer conducted in accordance with the
        Indenture, (E) that is owned or at any time acquired by a Subsidiary of
        the Company that has been released from its Subsidiary Guarantee in
        accordance with this Indenture, concurrently with the release thereof,
        or (F) otherwise in accordance with Article II or Article X;

                (5) in part, as to any Intercompany Note Payments applied in
        accordance with Section 3.1, 3.5 or 11.5(a); and

                (6) with the consent of each Holder affected thereby (including,
        without limitation, consents obtained in connection with a tender offer
        or exchange offer for, or purchase of, Securities);

provided, that, in the case of any release in whole pursuant to this subsection
(a), all amounts owing to the Trustee under this Indenture and the Collateral
Documents have been paid.

                (b) To the extent applicable, the Company and each Subsidiary
will furnish to the Trustee, prior to each proposed release of Collateral
pursuant to the Collateral Documents and the Indenture (other than payments
received from the Intercompany Note and applied in accordance with Section
11.5(a)):

                (1) an Officers' Certificate requesting such release;

<PAGE>

                                                                             113

                (2) an Officers' Certificate and an Opinion of Counsel to the
        effect that all conditions precedent provided for in the Indenture and
        the Collateral Documents to such release have been complied with;

                (3) a form of such release (which release shall be in form
        reasonably satisfactory to the Trustee and shall provide that the
        requested release is without recourse or warranty to the Trustee);

                (4) all documents required by TIA Section314(d), the Collateral
        Documents and this Indenture; and

                (5) an Opinion of Counsel to the effect that such accompanying
        documents constitute all documents required by TIA Section314(d), the
        Collateral Documents and this Indenture.

                Upon compliance by the Company or its Subsidiaries as the case
may be, with the conditions precedent set forth above, and upon delivery by the
Company or such Subsidiary to the Trustee of an Opinion of Counsel to the effect
that such conditions precedent have been complied with, the Trustee shall
promptly, but in no event later than five Business Days, cause to be released
and reconveyed to the Company, or its Subsidiaries, as the case may be, the
released Collateral. (c) For purposes of the TIA, the release of any Collateral
from the terms of the Collateral Documents will not be deemed to impair the
security under this Indenture in contravention of the provisions hereof or
affect the Lien of this Indenture or the Collateral Documents if and to the
extent the Collateral is released pursuant to the Indenture or the Collateral
Documents or upon the termination of this Indenture.

                SECTION 11.4. Authorization of Actions to be Taken by the
Trustee Under the Collateral Documents.

                (a) Subject to the provisions of the Collateral Documents, the
Trustee may, in its sole discretion and without the consent of the Holders, on
behalf of the Holders, take all actions it deems necessary or appropriate in
order to (a) enforce any of its rights or any of the rights of the Holders under
the Collateral Documents and the Intercompany Note and (b) collect and receive
any and all amounts payable in respect of the Collateral in respect of the
obligations of the Company and the Subsidiaries hereunder and thereunder.
Subject to the provisions of the Collateral Documents, the Trustee shall have
the power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts that may be
unlawful or in violation of the Collateral Documents or this Indenture, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interest and the interests of the Holders in the Collateral (including power
to institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders or the
Trustee).

<PAGE>

                                                                             114

                (b) The Trustee shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder, except to the extent such action or omission constitutes
negligence, bad faith or willful misconduct on the part of the Trustee, for the
validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of the Company to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of
the Collateral. The Trustee shall have no responsibility for recording, filing,
re-recording or refiling any financing statement, continuation statement,
document, instrument or other notice in any public office at any time or times
or to otherwise take any action to perfect or maintain the perfection of any
security interest granted to it under the Collateral Documents or otherwise.

                (c) Where any provision of this Indenture requires that
additional property or assets be added to the Collateral, the Company and each
Subsidiary Guarantor shall deliver to the Trustee the following:

                        (i)     a request from the Company that such Collateral
                                be added;

                        (ii)    the form of instrument adding such Collateral,
                                which, based on the type and location of the
                                property subject thereto, shall be in
                                substantially the form of the applicable
                                Collateral Documents entered into on the date of
                                this Indenture, with such changes thereto as the
                                Company shall consider appropriate, or in such
                                other form as the Company shall deem proper,
                                provided that any such changes or such form are
                                administratively satisfactory to the Trustee;

                        (iii)   an Officers' Certificate to the effect that the
                                Collateral being added is in the form, consists
                                of the assets and is in the amount or otherwise
                                has the fair market value required by the
                                Indenture;

                        (iv)    an Officers' Certificate and Opinion of Counsel
                                to the effect that all conditions precedent
                                provided for in this Indenture to the addition
                                of such Collateral have been complied with,
                                which Opinion of Counsel shall also opine as to
                                the creation and perfection of the Trustee's
                                Lien on such Collateral and as to the due
                                authorization, execution, delivery, validity and
                                enforceability of the Collateral Document being
                                entered into; and

                        (v)     such financing statements, if any, as the
                                Company shall deem necessary to perfect the
                                Trustee's security interest in such Collateral.

                (d) Except during the continuance of an Event of Default, the
Trustee, in giving any consent or approval under the Collateral Documents or
with respect to the Intercompany Note, shall be entitled to receive, as a
condition to such consent or approval, an Officers'

<PAGE>

                                                                             115

Certificate and an Opinion of Counsel to the effect that the action or omission
for which consent or approval is to be given does not adversely affect the
interests of the Holders or impair the security of the Holders in contravention
of the provisions of the Indenture and the Collateral Documents, and the Trustee
shall be fully protected in giving such consent or approval on the basis of such
Officers' Certificate and Opinion of Counsel.

                SECTION 11.5. Collateral Account.

                (a) The Trustee is authorized to receive any funds for the
benefit of the Holders distributed under the Collateral Documents, and to make
further distributions of such funds to the Holders according to the provisions
of this Indenture and the Collateral Documents. Any principal and interest
payments on the Intercompany Note that have been deposited into the Collateral
Account shall be transferred to the Paying Agent for payment of the
corresponding payment on the Securities.

                (b) Prior to the Issue Date, the Trustee shall have established
the Collateral Account, which shall at all times hereafter until this Indenture
shall have terminated, be maintained with, and under the sole control of, the
Trustee. The Collateral Account shall be a trust account and shall be
established and maintained by the Trustee at one of its corporate trust offices
(which may include the New York corporate trust office) and all Collateral shall
be credited thereto. All cash and Cash Equivalents received by the Trustee from
Asset Dispositions of Collateral, Recovery Events, Asset Swaps involving the
transfer of Collateral, Intercompany Note Payments, foreclosures of or sales of
the Collateral, the VAW-IMCO Redemption Payment, issuances of Additional
Securities and other awards or proceeds pursuant to the Collateral Documents,
including earnings, revenues, rents, issues, profits and income from the
Collateral received pursuant to the Collateral Documents, shall be deposited in
the Collateral Account and thereafter shall be held, applied and/or disbursed by
the Trustee in accordance with the terms of this Indenture (including, without
limitation, Section 2.1(a), Section 3.5, Section 6.10 and Section 11.5(a).

                (c) Pending the distribution of funds in the Collateral Account
in accordance with the provisions hereof and provided that no Event of Default
shall have occurred and be continuing, the Company may direct the Trustee to
invest such funds in Cash Equivalents specified in such direction, such
investments to mature by the times such funds are needed hereunder, such
direction to certify that such funds constitute Cash Equivalents and that no
Event of Default shall have occurred and be continuing. Provided that no Event
of Default shall have occurred and be continuing, the Company may direct the
Trustee to sell, liquidate or cause the redemption of any such investments, such
direction to certify that no Event of Default shall have occurred and be
continuing. Any gain or income on any investment of funds in the Collateral
Account shall be credited to the Collateral Account. The Trustee shall have no
liability for any loss incurred in connection with any investment or any sale,
liquidation or redemption thereof made in accordance with the provisions of this
Section 11.5(c).

<PAGE>

                                                                             116

                                  ARTICLE XII

                                  MISCELLANEOUS

                SECTION 12.1. Trust Indenture Act Controls. If and to the extent
that any provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
provision required by the TIA shall control. Each Subsidiary Guarantor in
addition to performing its obligations under its Subsidiary Guarantee shall
perform such other obligations as may be imposed upon it with respect to this
Indenture under the TIA.

                SECTION 12.2. Notices. Any notice or communication shall be in
writing and delivered in person, sent by facsimile, delivered by commercial
courier service or mailed by first-class mail, postage prepaid, addressed as
follows:

                        if to the Company:

                        IMCO Recycling Inc.
                        5215 North O'Connor Blvd.
                        Suite 1500
                        Irving, Texas 75039

                        with a copy to:

                        Fulbright & Jaworski L.L.P.
                        1301 McKinney
                        Suite 5100
                        Houston, Texas 77010-3095
                        Attention:  Marc Folladori

                        if to the Trustee, at its corporate trust office,
                        which corporate trust office for purposes of this
                        Indenture is at the date hereof located at:

                        JPMorgan Chase Bank
                        600 Travis, Suite 1100
                        Houston, Texas 77002
                        Attention: Institutional Trust Services

                The Company or the Trustee by written notice to the other may
designate additional or different addresses for subsequent notices or
communications.

                Any notice or communication to the Company or the Subsidiary
Guarantors shall be deemed to have been given or made as of the date so
delivered if personally delivered; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and five calendar days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of

<PAGE>

                                                                             117

change of address shall not be deemed to have been given until actually received
by the addressee). Any notice or communication to the Trustee shall be deemed
delivered upon receipt.

                Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears in
the Securities Register and shall be sufficiently given if so mailed within the
time prescribed.

                Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it, except that
notices to the Trustee shall be effective only upon receipt.

                In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.

                SECTION 12.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).

                SECTION 12.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture or the Collateral
Documents (except in connection with the original issuance of Securities on the
date hereof), the Company shall furnish to the Trustee:

                (1) an Officers' Certificate in form reasonably satisfactory to
        the Trustee stating that, in the opinion of the signers, all conditions
        precedent, if any, provided for in this Indenture and the Collateral
        Documents relating to the proposed action have been complied with; and

                (2) an Opinion of Counsel in form reasonably satisfactory to the
        Trustee stating that, in the opinion of such counsel, all such
        conditions precedent have been complied with.

                SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:

                (1) a statement that the individual making such certificate or
        opinion has read such covenant or condition;

                (2) a brief statement as to the nature and scope of the
        examination or investigation upon which the statements or opinions
        contained in such certificate or opinion are based;

<PAGE>

                                                                             118

                (3) a statement that, in the opinion of such individual, he has
        made such examination or investigation as is necessary to enable him to
        express an informed opinion as to whether or not such covenant or
        condition has been complied with; and

                (4) a statement as to whether or not, in the opinion of such
        individual, such covenant or condition has been complied with.

                In giving such Opinion of Counsel, counsel may rely as to
factual matters on an Officers' Certificate or on certificates of public
officials.

                SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required aggregate principal amount of Securities
have concurred in any direction, waiver or consent, Securities owned by the
Company, any Subsidiary Guarantor or any Affiliate of them shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee actually knows are so owned shall
be so disregarded. Also, subject to the foregoing, only Securities outstanding
at the time shall be considered in any such determination.

                SECTION 12.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by, or at meetings of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.

                SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York, New York. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.

                SECTION 12.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
STATE COURTS OF, AND THE FEDERAL COURTS LOCATED IN, THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE
SECURITIES OR THE SUBSIDIARY GUARANTEES.

                SECTION 12.10. No Recourse Against Others. An incorporator,
director, officer, employee, member, partner, Affiliate or stockholder of the
Company or any Subsidiary Guarantor, solely by reason of this status, shall not
have any liability for any obligations of the Company or any Subsidiary
Guarantor under the Securities, this Indenture, the Collateral Documents or the
Subsidiary Guarantees or for any claim based on, in respect of or by reason of
such obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are a part of the
consideration for the issuance of the Securities.

<PAGE>

                                                                             119

                SECTION 12.11. Successors. All agreements of the Company and
each Subsidiary Guarantor in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.

                SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.

                SECTION 12.13. Qualification of Indenture. The Company has
agreed to qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement and to pay all reasonable costs
and expenses (including attorneys' fees and expenses for the Company, the
Trustee and the Holders) incurred in connection therewith, including, but not
limited to, costs and expenses of qualification of this Indenture and the
Securities and printing this Indenture and the Securities. The Trustee shall be
entitled to receive from the Company any such Officers' Certificates, Opinions
of Counsel or other documentation as it may reasonably request in connection
with any such qualification of this Indenture under the TIA.

                SECTION 12.14. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

<PAGE>

                IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed all as of the date and year first written above.

                                    IMCO RECYCLING INC.

                                    By
                                      ----------------------------------
                                      Name:
                                      Title:

                                    IMCO INVESTMENT COMPANY
                                    IMCO ENERGY CORP.
                                    IMCO RECYCLING OF INDIANA INC.
                                    IMCO RECYCLING OF ILLINOIS INC.
                                    ALCHEM ALUMINUM, INC.
                                    IMSAMET, INC.
                                    ROCK CREEK ALUMINUM, INC.
                                    ALCHEM ALUMINUM SHELBYVILLE INC.
                                    INTERAMERICAN ZINC, INC.
                                    U.S. ZINC CORPORATION
                                    IMCO RECYCLING OF CALIFORNIA, INC.
                                    IMCO RECYCLING OF OHIO INC.
                                    IMCO RECYCLING SERVICES COMPANY
                                    IMCO OPERATIONS SERVICES COMPANY
                                    IMCO INTERNATIONAL, INC.
                                    PITTSBURG ALUMINUM, INC.
                                    IMCO RECYCLING OF IDAHO INC.
                                    IMCO RECYCLING OF UTAH INC.
                                    INDIANA ALUMINUM INC.
                                    GULF REDUCTION CORPORATION
                                    MIDWEST ZINC CORPORATION
                                    METALCHEM, INC.
                                    WESTERN ZINC CORPORATION
                                    U.S. ZINC EXPORT CORPORATION

                                    By
                                      ----------------------------------
                                      Name:
                                      Title:

<PAGE>

                                    IMCO RECYCLING OF MICHIGAN L.L.C.

                                    By: IMCO Recycling Inc., its manager

                                    By
                                      ----------------------------------
                                      Name:
                                      Title:

                                    IMCO MANAGEMENT PARTNERSHIP L.P.

                                    By: IMCO Recycling Inc., its general partner

                                    By
                                      ----------------------------------
                                      Name:
                                      Title:

                                    By: IMCO Investment Company, its limited
                                        partner

                                    By
                                      ----------------------------------
                                      Name:
                                      Title:

                                    IMCO INDIANA PARTNERSHIP L.P.

                                    By: IMCO Energy Corp., its general partner

                                    By
                                      ----------------------------------
                                      Name:
                                      Title:

                                    By: IMCO Recycling of Indiana, Inc., its
                                        limited partner

                                    By:
                                       ---------------------------------
                                      Name:
                                      Title:

<PAGE>

                                    JPMORGAN CHASE BANK, as Trustee

                                    By:
                                       ---------------------------------
                                      Name:
                                      Title:

<PAGE>

                                                                       EXHIBIT A

                             [FORM OF FACE OF NOTE]

                    [Applicable Restricted Securities Legend]
                       [Depository Legend, if applicable]

No. [___]                                   Principal Amount $[___________]
                                            CUSIP NO. __________________________

                               IMCO RECYCLING INC.

                 10 3/8% Senior Secured Note, Series A, due 2010

                IMCO Recycling Inc., a Delaware corporation, promises to pay to
[Cede & Co.],* or its registered assigns, the principal sum of _______________
Dollars, [as revised by the Schedule of Increases and Decreases in Global
Security attached hereto],* on October 15, 2010.

                Interest Payment Dates: April 15 and October 15
                Record Dates: April 1 and October 1

                Additional provisions of this Security are set forth on the
other side of this Security.

                                    IMCO RECYCLING INC.

                                    By:
                                       ---------------------------------
                                       Name:
                                       Title:

TRUSTEE'S CERTIFICATE OF
 AUTHENTICATION

JPMORGAN CHASE BANK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.

By
  -----------------------------
         Authorized Officer                              Date: ________ __, 20__

----------

*       Insert in Global Securities only

                                       A-1

<PAGE>

                         [FORM OF REVERSE SIDE OF NOTE]
                               IMCO RECYCLING INC.

                 10 3/8% Senior Secured Note, Series A, due 2010

1. Interest

                IMCO Recycling Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.

                The Company will pay interest semiannually on April 15 and
October 15 of each year commencing April 15, 2004. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Securities or, if no interest has been paid, from October 6, 2003. The Company
shall pay interest on overdue principal, and on overdue premium, if any (plus
interest on such interest to the extent lawful), at the rate borne by the
Securities to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

                If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated or a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Securities is not declared effective by the SEC on or before the date that is
210 days after the Issue Date (the "Target Registration Date") in accordance
with the terms of the Registration Rights Agreement dated October 6, 2003 among
the Company, the Subsidiary Guarantors and the Initial Purchasers, the annual
interest rate borne by the Securities shall be increased from the rate shown
above by (i) 0.25% per annum for the first 90-day period immediately following
the Target Registration Date and (ii) an additional 0.25% per annum with respect
to each subsequent 90-day period, in each case until the Exchange Offer is
completed or the Shelf Registration Statement, if required hereby, is declared
effective by the SEC or the Securities become freely tradable under the
Securities Act, up to a maximum of 1.00% per annum of additional interest. The
Holder of this Note is entitled to the benefits of such Registration Rights
Agreement. Additional Interest shall be paid to the same Persons, in the same
manner and at the same times as regular interest.

2. Method of Payment

                By no later than 10:00 a.m. (New York City time) on the date on
which any principal of, premium, if any, or interest on any Security is due and
payable, the Company shall irrevocably deposit with the Trustee or the Paying
Agent money sufficient to pay such principal, premium, if any, and/or interest.
The Company will pay interest (except Defaulted Interest) to the Persons who are
registered Holders of Securities at the close of business on the April 1 or
October 1 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment

                                       A-2

<PAGE>

is legal tender for payment of public and private debts. Payments in respect of
Securities represented by a Global Security (including principal, premium, if
any, and interest) will be made by the transfer of immediately available funds
to the accounts specified by The Depository Trust Company or any successor
depository. The Company will make all payments in respect of a Definitive
Security (including principal, premium, if any, and interest) by mailing a check
to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 15
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).

3. Paying Agent and Registrar

                Initially, JPMorgan Chase Bank (the "Trustee") will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically organized, wholly owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.

4. Indenture

                The Company issued the Securities under an Indenture dated as of
October 6, 2003 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on
the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all terms and provisions of the Indenture, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.

                The Securities are secured senior obligations of the Company.
The aggregate principal amount of Securities that may be authenticated and
delivered under the Indenture is unlimited provided that at least 80% of the net
cash proceeds from any issuance of Additional Securities are invested in
Additional Assets in accordance with the Indenture. This Security is one of the
10 3/8% Senior Secured Notes, Series A, due 2010 referred to in the Indenture.
The Securities include (i) $210,000,000 aggregate principal amount of the
Company's 10 3/8% Senior Secured Notes, Series A, due 2010 issued under the
Indenture on October 6, 2003 (herein called "Initial Securities"), (ii) if and
when issued, additional 10 3/8% Senior Secured Notes, Series A, due 2010 or 10
3/8% Senior Secured Notes, Series B, due 2010 of the Company that may be issued
from time to time under the Indenture subsequent to October 6, 2003 (herein
called "Additional Securities") as provided in Section 2.1(a) of the Indenture
and (iii) if and when issued, the Company's 10 3/8% Senior Secured Notes, Series
B, due 2010 that may be issued from time to time under the Indenture in exchange
for Initial Securities or Additional Securities in an offer registered under the
Securities Act as provided in the Registration Rights Agreement (herein called
"Exchange Securities"). The Initial Securities, Additional Securities

                                       A-3

<PAGE>

and Exchange Securities are treated as a single class of securities under the
Indenture and shall be secured by first-priority Liens and security interests,
subject to Permitted Liens, in the Collateral. The Indenture imposes certain
limitations on the incurrence of indebtedness, the making of restricted
payments, the sale of assets and subsidiary stock, the incurrence of certain
liens, sale-leaseback transactions, the sale of capital stock of restricted
subsidiaries, the making of payments for consents, the entering into of
agreements that restrict distribution from restricted subsidiaries and the
consummation of mergers and consolidations. The Indenture also imposes
requirements with respect to the provision of financial information and the
provision of guarantees of the Securities by certain subsidiaries.

                To guarantee the due and punctual payment of the principal,
premium, if any, and interest (including post-filing or post-petition interest)
on the Securities and all other amounts payable by the Company under the
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Subsidiary Guarantors have unconditionally
guaranteed (and future guarantors, together with the Subsidiary Guarantors, will
unconditionally Guarantee), jointly and severally, such obligations on a senior
basis pursuant to the terms of the Indenture.

5. Redemption

                Except as set forth below, the Securities will not be redeemable
at the option of the Company prior to October 15, 2007. On and after such date,
the Securities will be redeemable, at the Company's option, in whole or in part,
at any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):

                If redeemed during the 12-month period commencing on October 15
of the years set forth below:

                                                                     REDEMPTION
     PERIOD                                                          PRICE
     ------                                                          ----------
     2007                                                            105.188%
     2008                                                            102.594%
     2009 and thereafter                                             100.000%

                In addition, at any time and from time to time prior to October
15, 2006, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings at a redemption price (expressed as a percentage of principal
amount) of 110.375% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, that:

                                       A-4

<PAGE>

                1.      there is a Public Market at the time of such redemption;

                2.      at least 65% of the original principal amount of the
Securities must remain outstanding after each such redemption; and

                3.      each such redemption occurs within 60 days of the date
of closing of such Equity Offering.

                If the optional redemption date is on or after an interest
record date and on or before the related interest payment date, the accrued and
unpaid interest, if any, will be paid on the optional redemption date to the
Person in whose name the Security is registered at the close of business on such
record date, and no additional interest will be payable to Holders whose
Securities will be subject to redemption by the Company.

                In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities are listed or, if the Securities are not listed, then on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no Securities of $1,000 in
original principal amount or less will be redeemed in part. Any such notice to
the Trustee may be cancelled at any time prior to notice of such redemption
being mailed to any Holder and shall thereby be void and of no effect. If any
Security is to be redeemed in part only, the notice of redemption relating to
such Security shall state the portion of the principal amount thereof to be
redeemed. A new Security in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Security. On and after the redemption date, interest will cease to
accrue on Securities or portions thereof called for redemption as long as the
Company has deposited with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to the Indenture.

                Prior to the mailing of any notice of redemption of the
Securities, the Company shall deliver to the Trustee an Officers' Certificate
stating that the Company is entitled to effect such redemption, accompanied by
an opinion of counsel satisfactory to the Trustee, acting reasonably, that the
conditions precedent to the right of redemption have occurred. The Company will
be bound to redeem the Securities on the date fixed for redemption.

                The Company is not required to make any mandatory redemption
payments or sinking fund payments with respect to the Securities.

6. Repurchase Provisions

                If a Change of Control occurs, unless the Company has exercised
its right to redeem all of the Securities as described under paragraph 5 of the
Securities, then such Change of Control shall constitute a triggering event
which shall trigger the obligation of the Company to offer to repurchase from
each Holder all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) as provided
in, and subject to the terms of, the Indenture.

                                       A-5

<PAGE>

7. Denominations; Transfer; Exchange

                The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay a sum sufficient to cover any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange of any Security (A) for a period
beginning (1) 15 days before the mailing of a notice of an offer to repurchase
or redeem Securities and ending at the close of business on the day of such
mailing or (2) 15 days before an interest payment date and ending on such
interest payment date or (B) called for redemption, except the unredeemed
portion of any Security being redeemed in part.

8. Persons Deemed Owners

                The registered Holder of this Security may be treated as the
owner of it for all purposes.

9. Unclaimed Money

                If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the money
must look only to the Company for payment as general creditors unless an
abandoned property law designates another person and not to the Trustee for
payment.

10. Defeasance

                Subject to certain exceptions and conditions set forth in the
Indenture, the Company at any time may terminate some or all of its obligations
under the Securities, the Indenture and the Collateral Documents if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal, premium, if any, and interest on the Securities to redemption or
maturity, as the case may be.

11. Amendment, Supplement, Waiver

                Subject to certain exceptions set forth in the Indenture, (i)
the Indenture, the Securities or the Collateral Documents may be amended or
supplemented by the Company, Subsidiary Guarantors and Trustee with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Securities and (ii) any default (other than with respect to
nonpayment or in respect of a provision that cannot be amended without the
written consent of each Securityholder affected) or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount of the then outstanding Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company, Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture, the Securities or the Collateral Documents to cure any
ambiguity, omission, defect or inconsistency, to comply with Article IV or
Article X of the Indenture, to provide for

                                       A-6

<PAGE>

uncertificated Securities in addition to, or in place of, certificated
Securities, to add guarantees with respect to the Securities, to release
Subsidiary Guarantors upon their designation as Unrestricted Subsidiaries or
otherwise in accordance with the Indenture, to secure the Securities, to release
Liens in favor of the Trustee in the Collateral as provided under the Collateral
release provisions, to add additional covenants of the Company, to surrender
rights and powers conferred on the Company, to comply with any requirement of
the SEC in connection with qualifying the Indenture under the Act, to make any
change that does not materially adversely affect the rights of any
Securityholder, or to provide for the issuance of Exchange Securities.

12. Defaults and Remedies

                Under the Indenture, Events of Default include (each of which
are more specially described in the Indenture) (i) default for 30 days in
payment of interest when due on the Securities; (ii) default in payment of
principal or premium, if any, on the Securities at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraph 5 of the
Securities, upon declaration or otherwise; (iii) the failure by the Company or
any Subsidiary Guarantor to comply with its obligations under Article IV or
Section 10.2 of the Indenture; (iv) failure by the Company to comply for 30 days
after written notice with any of their obligations under the covenants described
under Sections 3.2 through 3.12 inclusive, Section 3.16, Section 3.19 and
Section 3.21 of the Indenture (in each case, other than a failure to purchase
Securities when required under the Indenture, which failure shall constitute an
Event of Default under clause (ii) above); (v) the failure by the Company or
VAW-IMCO Guss und Recycling GmbH and Hydro Aluminium Deutschland GmbH to comply
for 60 days after written notice with its other agreements contained in the
Indenture, the Intercompany Note, the Collateral Documents, or under the
Securities (other than those referred to in (i), (ii), (iii) or (iv) above);
(vi) default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries), other than Indebtedness owed to the Company or a Restricted
Subsidiary, whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (a) is caused by a failure to pay
any Indebtedness at maturity prior to the expiration of the grace period
provided in such Indebtedness ("payment default") or (b) results in the
acceleration of such Indebtedness prior to its final maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a payment default or the maturity of which has been
so accelerated, aggregates $10.0 million or more; (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law (the "bankruptcy provisions");
(viii) failure by the Company or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary to pay final judgments
aggregating in excess of $10.0 million (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in writing), which
judgments are not paid, discharged, waived or stayed for a period of 60 days
(the "judgment default provision"); (ix) any Subsidiary Guarantee ceases to be
in full force and effect

                                       A-7

<PAGE>

(except as contemplated by the terms of the Indenture) or is declared null and
void in a judicial proceeding or any Subsidiary Guarantor denies or disaffirms
its obligations under the Indenture or its Subsidiary Guarantee; or (x) with
respect to any Collateral having a fair market value in excess of $10.0 million,
individually or in the aggregate, (A) the security interest under the Collateral
Documents, at any time, ceases to be in full force and effect for any reason
other than in accordance with their terms and the terms of the Indenture and
other than the satisfaction in full of all obligations under the Indenture and
discharge of the Indenture, (B) any security interest created thereunder or
under the Indenture is declared invalid or unenforceable, or (C) the Company or
any Subsidiary Guarantor asserts, in any pleading in any court of competent
jurisdiction, that any such security interest is invalid or unenforceable.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify the Company of the default and the Company
does not cure such default within the time specified in clauses (iv) and (v)
hereof after receipt of such notice.

                If an Event of Default (other than an Event of Default described
in (vii) hereof) occurs and is continuing, the Trustee by notice to the Company
or the Holders of at least 25% in principal amount of the outstanding Securities
by notice to the Company and the Trustee may declare all the Securities by
notice to the Company to be due and payable immediately. If an Event of Default
described in (vii) hereof occurs and is continuing, the principal of, premium,
if any, and accrued and unpaid interest on all the Securities will become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders.

                Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.

13. Trustee Dealings with the Company

                Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or their Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

14. No Recourse Against Others

                An incorporator, director, officer, employee, Affiliate or
stockholder, of each of the Company or any Subsidiary Guarantor, solely by
reason of this status, shall not have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Securities, the Indenture, the
Collateral Documents, any Subsidiary Guarantees or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each

                                       A-8

<PAGE>

Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.

15. Authentication

                This Security shall not be valid until an authorized officer of
the Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.

16. Abbreviations

                Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (=
tenants by the entirety), JT TEN (= joint tenants with rights of survivorship
and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to
Minors Act).

17. CUSIP, Common Code and ISIN Numbers

                The Company has caused CUSIP, Common Code and ISIN numbers, if
applicable, to be printed on the Securities and has directed the Trustee to use
CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption or
purchase as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption or purchase and reliance may be placed only on the
other identification numbers placed thereon.

18. Governing Law

                This Security shall be governed by, and construed in accordance
with, the laws of the State of New York.

                The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture, which
has in it the text of this Security in larger type. Requests may be made to:

                               IMCO Recycling Inc.
                            5215 North O'Connor Road
                                   Suite 1500
                               Dallas, Texas 75039
                                   Attention:

                                      A-9

<PAGE>

                                 ASSIGNMENT FORM

                To assign this Security, fill in the form below:

                I or we assign and transfer this Security to:

--------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)

--------------------------------------------------------------------------------
              (Insert assignee's social security or tax I.D. No.)

        and irrevocably appoint ___________ agent to transfer this Security on
        the books of the Company. The agent may substitute another to act for
        him.

Date:____________________                     Your Signature:___________________

Signature Guarantee:____________________________________________________________
                         (Signature must be guaranteed)

--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

        In connection with any transfer or exchange of any of the Securities
evidenced by this certificate occurring prior to the date that is two years
after the later of the date of original issuance of such Securities and the last
date, if any, on which such Securities were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Securities are
being:

CHECK ONE BOX BELOW:

        1[ ]    acquired for the undersigned's own account, without transfer;
                or

        2[ ]     transferred to the Company; or

        3[ ]    transferred pursuant to and in compliance with Rule 144A under
                the Securities Act of 1933, as amended (the "Securities Act");
                or

        4[ ]    transferred pursuant to an effective registration statement
                under the Securities Act; or

        5[ ]    transferred pursuant to and in compliance with Regulation S
                under the Securities Act; or

                                      A-10

<PAGE>

        6[ ]    transferred to an institutional "accredited investor" (as
                defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
                Act), that has furnished to the Trustee a signed letter
                containing certain representations and agreements (the form of
                which letter appears as Section 2.7 of the Indenture); or

        7[ ]    transferred pursuant to another available exemption from the
                registration requirements of the Securities Act of 1933, as
                amended.

Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Company may require, prior to registering any such transfer
of the Securities, in its sole discretion, such legal opinions, certifications
and other information as the Company may reasonably request to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended, such as the exemption provided by Rule 144 under such Act.

                                                  ------------------------------
                                                  Signature
Signature Guarantee:

------------------------------                    ------------------------------
(Signature must be guaranteed)                    Signature

--------------------------------------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

                                                  ------------------------------
                                                  Dated:

                                      A-11

<PAGE>

                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

                The following increases or decreases in this Global Security
have been made:

<TABLE>
<CAPTION>
                                                            Principal Amount of    Signature of
           Amount of decrease in   Amount of increase in    this Global Security   authorized signatory
Date of    Principal Amount of     Principal Amount of      following such         of Trustee or
Exchange   this Global Security    this Global Security     decrease or increase   Securities Custodian
--------   ---------------------   ---------------------    --------------------   ---------------------
<S>        <C>                     <C>                      <C>                    <C>

</TABLE>

                                      A-12

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

                If you elect to have this Security purchased by the Company
Pursuant to Section 3.5 or 3.10 of the Indenture, check either box:

                                    [ ]   [ ]
                                    3.5   3.10

                If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 3.5 or Section 3.10 of the
Indenture, state the amount in principal amount (must be integral multiple of
$1,000): $____________________________________________ and specify the
denomination or denominations (which shall not be less than the minimum
authorized denomination) of the Securities to be issued to the Holder for the
portion of the within Security not being repurchased (in the absence of any such
specification, one such Security will be issued for the portion not being
repurchased); _________________.

Date: __________ Your Signature ________________________________________________
                                (Sign exactly as your name appears on the other
                                  side of the Security)

Signature Guarantee: ___________________________________________________________
                                (Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      A-13

<PAGE>

                                                                       EXHIBIT B

                         [FORM OF FACE OF SERIES B NOTE]

                       [Depository Legend, if applicable]

No. [___]                                   Principal Amount $[___________]
                                            CUSIP NO. __________________________

                               IMCO RECYCLING INC.

                 10 3/8% Senior Secured Note, Series B, due 2010

                IMCO Recycling Inc., a Delaware corporation, promises to pay to
[Cede & Co.],* or its registered assigns, the principal sum of [_______________]
Dollars[, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto],* on October 15, 2010.

                Interest Payment Dates: April 15 and October 15

                Record Dates: April 1 and October 1

                Additional provisions of this Security are set forth on the
other side of this Security.

                                             IMCO RECYCLING INC.

                                             By:
                                                ------------------------------
                                                Name:
                                                Title:

TRUSTEE'S CERTIFICATE OF
 AUTHENTICATION

JPMORGAN CHASE BANK as Trustee, certifies that this is one of the Securities
referred to in the Indenture.

By
  -------------------------------
         Authorized Officer                              Date: ________ __, 20__

----------
*       Insert in Global Securities only

                                       B-1

<PAGE>

                     [FORM OF REVERSE SIDE OF SERIES B NOTE]
                               IMCO RECYCLING INC.

                 10 3/8% Senior Secured Note, Series B, due 2010

1. Interest

                IMCO Recycling Inc., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.

                The Company will pay interest semiannually on April 15 and
October 15 of each year commencing April 15, 2004. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Securities or, if no interest has been paid, from October 6, 2003. The Company
shall pay interest on overdue principal, and on overdue premium, if any (plus
interest on such interest to the extent lawful), at the rate borne by the
Securities to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.

2. Method of Payment

                By no later than 10:00 a.m. (New York City time) on the date on
which any principal of, premium, if any, or interest on any Security is due and
payable, the Company shall irrevocably deposit with the Trustee or the Paying
Agent money sufficient to pay such principal, premium, if any, and/or interest.
The Company will pay interest (except Defaulted Interest) to the Persons who are
registered Holders of Securities at the close of business on the April 1 or
October 1 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of
Securities represented by a Global Security (including principal, premium, if
any, and interest) will be made by the transfer of immediately available funds
to the accounts specified by The Depository Trust Company or any successor
depository. The Company will make all payments in respect of a Definitive
Security (including principal, premium, if any, and interest) by mailing a check
to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 15
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).

                                       B-2

<PAGE>

3. Paying Agent and Registrar

                Initially, JPMorgan Chase Bank (the "Trustee") will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
The Company or any of its domestically organized, wholly owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.

4. Indenture

                The Company issued the Securities under an Indenture dated as of
October 6, 2003 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on
the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all terms and provisions of the Indenture, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.

                The Securities are secured senior obligations of the Company.
The aggregate principal amount of Securities that may be authenticated and
delivered under the Indenture is unlimited provided that at least 80% of the net
cash proceeds from any issuance of Additional Securities are invested in
Additional Assets in accordance with the Indenture. This Security is one of the
10 3/8% Senior Secured Notes, Series A, due 2010 referred to in the Indenture.
The Securities include (i) $210,000,000 aggregate principal amount of the
Company's 10 3/8% Senior Secured Notes, Series A, due 2010 issued under the
Indenture on October 6, 2003 (herein called "Initial Securities"), (ii) if and
when issued, additional 10 3/8% Senior Secured Notes, Series A, due 2010 or 10
3/8% Senior Secured Notes, Series B, due 2010 of the Company that may be issued
from time to time under the Indenture subsequent to October 6, 2003 (herein
called "Additional Securities") as provided in Section 2.1(a) of the Indenture
and (iii) if and when issued, the Company's 10 3/8% Senior Secured Notes, Series
B, due 2010 that may be issued from time to time under the Indenture in exchange
for Initial Securities or Additional Securities in an offer registered under the
Securities Act as provided in the Registration Rights Agreement (herein called
"Exchange Securities"). The Initial Securities, Additional Securities and
Exchange Securities are treated as a single class of securities under the
Indenture and shall be secured by first-priority Liens and security interests,
subject to Permitted Liens, in the Collateral. The Indenture imposes certain
limitations on the incurrence of indebtedness, the making of restricted
payments, the sale of assets and subsidiary stock, the incurrence of certain
liens, sale-leaseback transactions, the sale of capital stock of restricted
subsidiaries, the making of payments for consents, the entering into of
agreements that restrict distribution from restricted subsidiaries and the
consummation of mergers and consolidations. The Indenture also imposes
requirements with respect to the provision of financial information and the
provision of guarantees of the Securities by certain subsidiaries.

                To guarantee the due and punctual payment of the principal,
premium, if any, and interest (including post-filing or post-petition interest)
on the Securities and all other amounts payable by the Company under the
Indenture and the Securities when and as the same shall be

                                       B-3

<PAGE>

due and payable, whether at maturity, by acceleration or otherwise, according to
the terms of the Securities and the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed (and future guarantors, together with the Subsidiary
Guarantors, will unconditionally Guarantee), jointly and severally, such
obligations on a senior basis pursuant to the terms of the Indenture.

5. Redemption

                Except as set forth below, the Securities will not be redeemable
at the option of the Company prior to October 15, 2007. On and after such date,
the Securities will be redeemable, at the Company's option, in whole or in part,
at any time upon not less than 30 nor more than 60 days prior notice mailed by
first-class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):

                If redeemed during the 12-month period commencing on October 15
of the years set forth below:

                                                                     REDEMPTION
     PERIOD                                                          PRICE
     ------                                                          ----------
     2007                                                            105.188%
     2008                                                            102.594%
     2009 and thereafter                                             100.000%

                In addition, at any time and from time to time prior to October
15, 2006, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the Net Cash Proceeds of one or more
Equity Offerings at a redemption price (expressed as a percentage of principal
amount) of 110.375% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, that:

                1.      there is a Public Market at the time of such redemption;

                2.      at least 65% of the original principal amount of the
Securities must remain outstanding after each such redemption; and

                3.      each such redemption occurs within 60 days of the date
of closing of such Equity Offering.

                If the optional redemption date is on or after an interest
record date and on or before the related interest payment date, the accrued and
unpaid interest, if any, will be paid on the optional redemption date to the
Person in whose name the Security is registered at the close of business on such
record date, and no additional interest will be payable to Holders whose
Securities will be subject to redemption by the Company.

                                       B-4

<PAGE>

                In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities are listed or, if the Securities are not listed, then on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no Securities of $1,000 in
original principal amount or less will be redeemed in part. Any such notice to
the Trustee may be cancelled at any time prior to notice of such redemption
being mailed to any Holder and shall thereby be void and of no effect. If any
Security is to be redeemed in part only, the notice of redemption relating to
such Security shall state the portion of the principal amount thereof to be
redeemed. A new Security in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Security. On and after the redemption date, interest will cease to
accrue on Securities or portions thereof called for redemption as long as the
Company has deposited with the Paying Agent funds in satisfaction of the
applicable redemption price pursuant to the Indenture.

                Prior to the mailing of any notice of redemption of the
Securities, the Company shall deliver to the Trustee an Officers' Certificate
stating that the Company is entitled to effect such redemption, accompanied by
an opinion of counsel satisfactory to the Trustee, acting reasonably, that the
conditions precedent to the right of redemption have occurred. The Company will
be bound to redeem the Securities on the date fixed for redemption.

                The Company is not required to make any mandatory redemption
payments or sinking fund payments with respect to the Securities.

6. Repurchase Provisions

                If a Change of Control occurs, unless the Company has exercised
its right to redeem all of the Securities as described under paragraph 5 of the
Securities, then such Change of Control shall constitute a triggering event
which shall trigger the obligation of the Company to offer to repurchase from
each Holder all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) as provided
in, and subject to the terms of, the Indenture.

7. Denominations; Transfer; Exchange

                The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay a sum sufficient to cover any
taxes and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange of any Security (A) for a period
beginning (1) 15 days before the mailing of a notice of an offer to repurchase
or redeem Securities and ending at the close of business on the day of such
mailing or (2) 15 days before an interest payment date and ending on such
interest payment date or (B) called for redemption, except the unredeemed
portion of any Security being redeemed in part.

                                       B-5

<PAGE>

8. Persons Deemed Owners

                The registered Holder of this Security may be treated as the
owner of it for all purposes.

9. Unclaimed Money

                If money for the payment of principal premium, if any, or
interest remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the money
must look only to the Company for payment as general creditors unless an
abandoned property law designates another person and not to the Trustee for
payment.

10. Defeasance

                Subject to certain exceptions and conditions set forth in the
Indenture, the Company at any time may terminate some or all of its obligations
under the Securities and the Indenture if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of principal, premium, if
any, and interest on the Securities to redemption or maturity, as the case may
be.

11. Amendment, Supplement, Waiver

                Subject to certain exceptions set forth in the Indenture, (i)
the Indenture, the Securities or the Collateral Documents may be amended or
supplemented by the Company, Subsidiary Guarantors and Trustee with the written
consent of the Holders of at least a majority in principal amount of the then
outstanding Securities and (ii) any default (other than with respect to
nonpayment or in respect of a provision that cannot be amended without the
written consent of each Securityholder affected) or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount of the then outstanding Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company, Subsidiary Guarantors and the Trustee may amend or
supplement the Indenture, the Securities or the Collateral Documents to cure any
ambiguity, omission, defect or inconsistency, to comply with Article IV or
Article X of the Indenture, to provide for uncertificated Securities in addition
to, or in place of, certificated Securities, to add guarantees with respect to
the Securities, to release Subsidiary Guarantors upon their designation as
Unrestricted Subsidiaries or otherwise in accordance with the Indenture, to
secure the Securities, to release Liens in favor of the Trustee in the
Collateral as provided under the Collateral release provisions, to add
additional covenants of the Company, to surrender rights and powers conferred on
the Company, to comply with any requirement of the SEC in connection with
qualifying the Indenture under the Act, to make any change that does not
materially adversely affect the rights of any Securityholder, or to provide for
the issuance of Exchange Securities.

12. Defaults and Remedies

                Under the Indenture, Events of Default include (each of which
are more specially described in the Indenture) (i) default for 30 days in
payment of interest when due on the

                                       B-6

<PAGE>

Securities; (ii) default in payment of principal or premium, if any, on the
Securities at Stated Maturity, upon required repurchase or upon optional
redemption pursuant to paragraph 5 of the Securities, upon declaration or
otherwise; (iii) the failure by the Company or any Subsidiary Guarantor to
comply with its obligations under Article IV or Section 10.2 of the Indenture;
(iv) failure by the Company to comply for 30 days after written notice with any
of their obligations under the covenants described under Sections 3.2 through
3.12 inclusive, Section 3.16, Section 3.19 and Section 3.21 of the Indenture (in
each case, other than a failure to purchase Securities when required under the
Indenture, which failure shall constitute an Event of Default under clause (ii)
above); (v) the failure by the Company or VAW-IMCO Guss und Recycling GmbH and
Hydro Aluminium Deutschland GmbH to comply for 60 days after written notice with
its other agreements contained in the Indenture, the Intercompany Note, the
Collateral Documents, or under the Securities (other than those referred to in
(i), (ii), (iii) or (iv) above); (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries), other than Indebtedness owed to the Company
or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay any Indebtedness at maturity prior to the expiration of the grace
period provided in such Indebtedness ("payment default") or (b) results in the
acceleration of such Indebtedness prior to its final maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a payment default or the maturity of which has been
so accelerated, aggregates $10.0 million or more; (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and its
Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law (the "bankruptcy provisions");
(viii) failure by the Company or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary to pay final judgments
aggregating in excess of $10.0 million (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in writing), which
judgments are not paid, discharged, waived or stayed for a period of 60 days
(the "judgment default provision"); (ix) any Subsidiary Guarantee ceases to be
in full force and effect (except as contemplated by the terms of the Indenture)
or is declared null and void in a judicial proceeding or any Subsidiary
Guarantor denies or disaffirms its obligations under the Indenture or its
Subsidiary Guarantee; or (x) with respect to any Collateral having a fair market
value in excess of $10.0 million, individually or in the aggregate, (A) the
security interest under the Collateral Documents, at any time, ceases to be in
full force and effect for any reason other than in accordance with their terms
and the terms of the Indenture and other than the satisfaction in full of all
obligations under the Indenture and discharge of the Indenture, (B) any security
interest created thereunder or under the Indenture is declared invalid or
unenforceable, or (C) the Company or any Subsidiary Guarantor asserts, in any
pleading in any court of competent jurisdiction, that any such security interest
is invalid or unenforceable. However, a default under clauses (iv) and (v) will
not constitute an Event of Default until the Trustee or the Holders of at least
25% in principal amount of the outstanding Securities notify the Company of the
default

                                       B-7

<PAGE>

and the Company does not cure such default within the time specified in clauses
(iv) and (v) hereof after receipt of such notice.

                If an Event of Default (other than an Event of Default described
in (vii) hereof) occurs and is continuing, the Trustee by notice to the Company
or the Holders of at least 25% in principal amount of the outstanding Securities
by notice to the Company and the Trustee may declare all the Securities by
notice to the Company to be due and payable immediately. If an Event of Default
described in (vii) hereof occurs and is continuing, the principal of, premium,
if any, and accrued and unpaid interest on all the Securities will become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders.

                Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.

13. Trustee Dealings with the Company

                Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

14. No Recourse Against Others

                An incorporator, director, officer, employee, Affiliate or
stockholder, of each of the Company or any Subsidiary Guarantor, solely by
reason of this status, shall not have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Securities, the Indenture, the
Collateral Documents, any Subsidiary Guarantees or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.

15. Authentication

                This Security shall not be valid until an authorized officer of
the Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.

16. Abbreviations

                Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (=
tenants by the entirety), JT

                                       B-8

<PAGE>

TEN (= joint tenants with rights of survivorship and not as tenants in common),
CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors Act).

17. CUSIP, Common Code and ISIN Numbers

                The Company has caused CUSIP, Common Code and ISIN numbers, if
applicable, to be printed on the Securities and has directed the Trustee to use
CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption or
purchase a convenience to Securityholders. No representation is made as to the
accuracy of such numbers either as printed on the Securities or as contained in
any notice of redemption or purchase and reliance may be placed only on the
other identification numbers placed thereon.

18. Governing Law

                This Security shall be governed by, and construed in accordance
with, the laws of the State of New York.

                The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:

                               IMCO Recycling Inc.
                            5215 North O'Connor Road
                                   Suite 1500
                               Dallas, Texas 75039
                                   Attention:

                                       B-9

<PAGE>

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:

--------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)

--------------------------------------------------------------------------------
               (Insert assignee's social security or tax I.D. No.)

and irrevocably appoint ____________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.

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

Date: _______________  Your Signature __________________________________________

Signature Guarantee: ___________________________________________________________
                              (Signature must be guaranteed)

--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      B-10

<PAGE>

                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

                The following increases or decreases in this Global Security
have been made:

<TABLE>
<CAPTION>
                                                            Principal Amount of    Signature of
           Amount of decrease in   Amount of increase in    this Global Security   authorized signatory
Date of    Principal Amount of     Principal Amount of      following such         of Trustee or
Exchange   this Global Security    this Global Security     decrease or increase   Securities Custodian
--------   ---------------------   ---------------------    --------------------   --------------------
<S>        <C>                     <C>                      <C>                    <C>

</TABLE>

                                      B-11

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE

                If you elect to have this Security purchased by the Company
pursuant to Section 3.5 or 3.10 of the Indenture, check either box:

                                    [ ]   [ ]
                                    3.5   3.10

                If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 3.5 or Section 3.10 of the
Indenture, state the amount in principal amount (must be integral multiple of
$1,000): $____________________________________________ and specify the
denomination or denominations (which shall not be less than the minimum
authorized denomination) of the Securities to be issued to the Holder for the
portion of the within Security not being repurchased (in the absence of any such
specification, one such Security will be issued for the portion not being
repurchased); _________________.

Date: _______________      Your Signature: _____________________________________
                                           (Sign exactly as your name appears on
                                             the other side of the Security)

Signature Guarantee: ___________________________________________________________
                               (Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      B-12

<PAGE>

                                                                       EXHIBIT C

            FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS

                This Supplemental Indenture, dated as of [_______ __], 20__
(this "Supplemental Indenture" or "Guarantee"), among [name of future Subsidiary
Guarantor] (the "Guarantor"), IMCO Recycling Inc. (together with its successors
and assigns, the "Company"), each other then existing Subsidiary Guarantor under
the Indenture referred to below, and JPMorgan Chase Bank, as Trustee under the
Indenture referred to below.

                              W I T N E S S E T H:

                WHEREAS, the Company, the Subsidiary Guarantors and the Trustee
have heretofore executed and delivered an Indenture, dated as of October 6, 2003
(as amended, supplemented, waived or otherwise modified, the "Indenture"),
providing for the issuance of an aggregate principal amount of $210.0 million of
10 3/8% Senior Secured Notes due 2010 of the Company (the "Securities");

                WHEREAS, Section 3.12 of the Indenture provides that the Company
is required to cause each Restricted Subsidiary other than a Foreign Subsidiary
or Receivables Entity created or acquired by the Company or one or more
Restricted Subsidiaries to execute and deliver to the Trustee a supplemental
indenture pursuant to which such Subsidiary Guarantor will unconditionally
Guarantee, on a joint and several basis with the other Subsidiary Guarantors,
the full and prompt payment of the principal of, premium, if any, and interest
on the Securities on a senior basis; and

                WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee
and the Company are authorized to execute and deliver this Supplemental
Indenture to amend or supplement the Indenture, without the consent of any
Securityholder;

                NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guarantor, the Company, the other Subsidiary Guarantors and the Trustee
mutually covenant and agree for the equal and ratable benefit of the Holders of
the Securities as follows:

                                   ARTICLE I

                                   Definitions

                SECTION 1.1   Defined Terms. As used in this Supplemental
Indenture, terms defined in the Indenture or in the preamble or recital hereto
are used herein as therein defined. The words "herein," "hereof" and "hereby"
and other words of similar import used in this

                                       C-1

<PAGE>

Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.

                                   ARTICLE II

                        Agreement to be Bound; Guarantee

                SECTION 2.1   Agreement to be Bound. The Guarantor hereby
becomes a party to the Indenture as a Subsidiary Guarantor and as such will have
all of the rights and be subject to all of the obligations and agreements of a
Subsidiary Guarantor under the Indenture. The Guarantor agrees to be bound by
all of the provisions of the Indenture applicable to a Subsidiary Guarantor and
to perform all of the obligations and agreements of a Subsidiary Guarantor under
the Indenture.

                SECTION 2.2   Guarantee. The Guarantor agrees, on a joint and
several basis with all the existing Subsidiary Guarantors, to fully,
unconditionally and irrevocably Guarantee to each Holder of the Securities and
the Trustee the Obligations pursuant to Article X of the Indenture on a senior
basis.

                                  ARTICLE III

                                  Miscellaneous

                SECTION 3.1   Notices. All notices and other communications to
the Guarantor shall be given as provided in the Indenture to the Guarantor, at
its address set forth below, with a copy to the Company as provided in the
Indenture for notices to the Company.

                SECTION 3.2   Parties. Nothing expressed or mentioned herein is
intended or shall be construed to give any Person, firm or corporation, other
than the Holders and the Trustee, any legal or equitable right, remedy or claim
under or in respect of this Supplemental Indenture or the Indenture or any
provision herein or therein contained.

                SECTION 3.3   Governing Law. This Supplemental Indenture shall
be governed by, and construed in accordance with, the laws of the State of New
York.

                SECTION 3.4   Severability Clause. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.

                SECTION 3.5   Ratification of Indenture; Supplemental Indentures
Part of Indenture. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture shall
form a part of the Indenture for all purposes, and every

                                       C-2

<PAGE>

Holder of Securities heretofore or hereafter authenticated and delivered shall
be bound hereby. The Trustee makes no representation or warranty as to the
validity or sufficiency of this Supplemental Indenture or with respect to the
recitals contained herein, all of which recitals are made solely by the other
parties hereto.

                SECTION 3.6   Counterparts. The parties hereto may sign one or
more copies of this Supplemental Indenture in counterparts, all of which
together shall constitute one and the same agreement.

                SECTION 3.7   Headings. The headings of the Articles and the
sections in this Guarantee are for convenience of reference only and shall not
be deemed to alter or affect the meaning or interpretation of any provisions
hereof.

                                       C-3

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.

                                              [SUBSIDIARY GUARANTOR],
                                              as a Guarantor

                                              By:_______________________________
                                                 Name:
                                                 Title:
                                                 [Address]

                                              JPMORGAN CHASE BANK, as Trustee

                                              By:_______________________________
                                                 Name:
                                                 Title:

                                              IMCO RECYCLING INC.

                                              By:_______________________________
                                                 Name:
                                                 Title:

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