Document:

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                                                                   EXHIBIT 10.14

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                          AGREEMENT AND PLAN OF MERGER

                                  by and among

                             FREEREALTIME.COM, INC.

                                       and

                                REDCHIP.COM, INC.

                            Dated as of June 6, 2000

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                                TABLE OF CONTENTS

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ARTICLE 1 DEFINITIONS...............................................................1

         1.1      Defined Terms.....................................................1
         1.2      Interpretation Provisions.........................................9
         1.3      Other Defined Terms...............................................9

ARTICLE 2 THE MERGER...............................................................11

         2.1      The Merger.......................................................11
         2.2      Effective Time...................................................12
         2.3      Effect of the Merger.............................................12
         2.4      Certificate of Incorporation; Bylaws.............................12
         2.5      Directors and Officers...........................................13
         2.6      Conversion of Securities.........................................13
         2.7      Surrender of Certificates........................................15
         2.8      No Further Ownership Rights in Shares of RedChip Stock...........16
         2.9      Lost, Stolen or Destroyed Certificates...........................16
         2.10     Escrow of Merger Shares..........................................17
         2.11     Tax Consequences.................................................17
         2.12     Taking of Necessary Action; Further Action.......................17

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF REDCHIP................................17

         3.1      Organization of RedChip..........................................17
         3.2      Capitalization of RedChip........................................18
         3.3      Stockholders' Agreements, etc....................................19
         3.4      Authorization....................................................19
         3.5      Officers and Directors...........................................19
         3.6      Bank Accounts....................................................19
         3.7      Subsidiaries, Etc................................................19
         3.8      Real Property....................................................19
         3.9      Personal Property................................................20
         3.10     Environmental Matters............................................21
         3.11     Contracts........................................................22
         3.12     Consents.........................................................23
         3.13     No Conflict or Violation.........................................24
         3.14     Permits..........................................................24
         3.15     Financial Statements; Books and Records..........................24
         3.16     Absence of Certain Changes or Events.............................25
         3.17     Liabilities......................................................27
         3.18     Litigation.......................................................27
         3.19     Labor Matters....................................................28
         3.20     Employee Benefit Plans...........................................29
         3.21     Transactions with Related Parties................................33
         3.22     Compliance with Law..............................................33
         3.23     Intellectual Property............................................33
         3.24     Tax Matters......................................................34
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                               TABLE OF CONTENTS
                                  (CONTINUED)

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         3.25     Insurance........................................................36
         3.26     Accounts Receivable..............................................36
         3.27     Purchase Commitments and Outstanding Bids........................36
         3.28     Suppliers........................................................37
         3.29     Brokers; Transaction Costs.......................................37
         3.30     No Other Agreements to Sell RedChip or the Assets................37
         3.31     Foreign Corrupt Practices Act....................................37
         3.32     Financial Report; Operating Plan.................................37
         3.33     Approvals........................................................37
         3.34     Takeover Statutes................................................38
         3.35     Material Misstatements Or Omissions..............................38

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF FRT....................................38

         4.1      Organization.....................................................38
         4.2      Capitalization...................................................38
         4.3      Stockholders' Agreements, etc....................................39
         4.4      Authorization....................................................39
         4.5      Contracts........................................................39
         4.6      Absence of Certain Changes or Events.............................41
         4.7      Liabilities......................................................42
         4.8      Litigation.......................................................43
         4.9      Labor Matters....................................................43
         4.10     Employee Benefit Plans...........................................44
         4.11     Transactions with Related Parties................................48
         4.12     Compliance with Law..............................................48
         4.13     Intellectual Property............................................48
         4.14     Tax Matters......................................................49
         4.15     Insurance........................................................51
         4.16     Accounts Receivable..............................................51
         4.17     Suppliers........................................................51
         4.18     Brokers; Transaction Costs.......................................52
         4.19     No Other Agreements to Sell FRT or the Assets....................52
         4.20     Foreign Corrupt Practices Act....................................52
         4.21     Approvals........................................................52
         4.22     Takeover Statutes................................................52
         4.23     Material Misstatements Or Omissions..............................52
         4.24     Officers and Directors...........................................52
         4.25     Bank Accounts....................................................52
         4.26     Subsidiaries, Etc................................................53
         4.27     Real Property....................................................53
         4.28     Personal Property................................................54
         4.29     Authorization....................................................55
         4.30     Reports and Financial Statements.................................55
         4.31     Environmental Matters............................................55
         4.32     Consents.........................................................56
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                               TABLE OF CONTENTS
                                  (CONTINUED)

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         4.33     No Conflict or Violation.........................................56
         4.34     Permits..........................................................56
         4.35     Reorganization Tax Matters.......................................57

ARTICLE 5 COVENANTS OF REDCHIP PRIOR TO THE CLOSING................................57

         5.1      Conduct of Business..............................................57
         5.2      Competing Proposals; Board Recommendation........................59
         5.3      Board Observer Rights............................................60
         5.4      FIRPTA Compliance................................................61
         5.5      RedChip's Auditors...............................................61
         5.6      RCP-Robins Agreement.............................................61

ARTICLE 6 COVENANTS OF FRT.........................................................61

         6.1      Conduct of Business..............................................61
         6.2      Competing Proposals; Board Recommendation........................63
         6.3      Increase Size of FRT Board of Directors..........................64

ARTICLE 7 RECIPROCAL COVENANTS OF REDCHIP, FRT AND SUB.............................65

         7.1      Access...........................................................65
         7.2      Notification of Certain Matters..................................65
         7.3      Closing Date.....................................................65
         7.4      Takeover Statutes................................................65
         7.5      Fairness Hearing; 3(a)(10) Exemption.............................65
         7.6      Further Assurances...............................................67
         7.7      Certain Tax Matters..............................................68
         7.8      Employment Agreements............................................68
         7.9      Private Placement................................................68

ARTICLE 8 CONDITIONS TO CLOSING....................................................68

         8.1      General Conditions to Closing....................................68
         8.2      Conditions to RedChip's Obligations..............................69
         8.3      Conditions to FRT's  Obligations.................................70

ARTICLE 9 CLOSING..................................................................71

         9.1      Deliveries by RedChip and RedChip Stockholders to FRT............71
         9.2      Deliveries by FRT to RedChip.....................................72

ARTICLE 10 INDEMNIFICATION.........................................................72

         10.1     Survival of Representations, etc.................................72
         10.2     Indemnification..................................................72
         10.3     No Right of Contribution.........................................74
         10.4     Escrow of Merger Shares..........................................74
         10.5     Threshold; Limitations on Indemnity..............................76
         10.6     Stockholder Representative; Power of Attorney....................77
         10.7     Characterization of Indemnity Payments...........................78
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                               TABLE OF CONTENTS
                                  (CONTINUED)

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ARTICLE 11 MISCELLANEOUS...........................................................78

         11.1     Termination......................................................78
         11.2     Termination Fees.................................................79
         11.3     Assignment.......................................................80
         11.4     Notices..........................................................80
         11.5     Choice of Law....................................................81
         11.6     Representation By Counsel........................................81
         11.7     Entire Agreement; Amendments and Waivers.........................82
         11.8     Counterparts.....................................................82
         11.9     Invalidity.......................................................82
         11.10    Expenses.........................................................82
         11.11    Publicity........................................................82
         11.12    No Third Party Beneficiaries.....................................82
         11.13    Dispute Resolution...............................................83
         11.14    Waiver of Jury Trial.............................................83
         11.15    Service of Process; Consent to Jurisdiction......................84
         11.16    Attorney Fees....................................................84
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                                TABLE OF EXHIBITS

Exhibit A       Form of Employment Agreement
Exhibit B       Form of Escrow Agreement
Exhibit C       RCP-Robins Agreement
Exhibit D       Opinion of Counsel - to RedChip from FRT
Exhibit E       Opinion of Counsel - to FRT from RedChip
Exhibit F       RedChip Stockholders to Execute Lock-up Agreement

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                          AGREEMENT AND PLAN OF MERGER

         This AGREEMENT AND PLAN OF MERGER is dated as of June 6, 2000 (the
"Agreement"), by and between Freerealtime.com, Inc., a Delaware corporation
("FRT") and RedChip.com, Inc., a Delaware corporation ("RedChip").

                                    RECITALS:

         A. The Boards of Directors of FRT and RedChip have determined that it
is advisable and in the best interests of their respective stockholders for FRT
and RedChip to enter into a business combination upon the terms and subject to
the conditions set forth herein.

         B. In furtherance of such combination, the Boards of Directors of FRT
and RedChip have each approved the merger of a wholly-owned subsidiary of FRT
which will be formed after the date hereof ("Sub") with and into RedChip (the
"Merger"), upon the terms and subject to the conditions set forth herein, in
accordance with the applicable provisions of the Delaware General Corporation
Law (the "DGCL").

         C. FRT and RedChip intend, by approving resolutions authorizing this
Agreement, to adopt this Agreement as a plan of reorganization and that the
Merger qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
promulgated thereunder.

         D. Pursuant to the Merger, each outstanding share of common stock, par
value $.01 per share, of RedChip ("RedChip Stock") shall be converted solely
into the right to receive .40195749 of a share of common stock, par value $.01
per share, of FRT, subject to adjustment and upon the terms and subject to the
conditions set forth herein.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, FRT and RedChip hereby agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1 Defined Terms.

         As used herein, the terms below shall have the following meanings:

                  "Affiliate" of a Person means any other Person which, directly
or indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and

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policies of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Ancillary Agreements" means the Employment Agreements, the
Escrow Agreement, and the RCP-Robins Agreement, and all other agreements
required hereunder to consummate the Merger.

                  "Assets" means the right, title and interest of RedChip or
FRT, as the case may be, in their respective properties, assets and rights of
any kind, whether tangible or intangible, real or personal, including without
limitation the right, title and interest in the following:

                  (a) all Contracts and Contract Rights;

                  (b) all Fixtures and Equipment;

                  (c) all Inventory;

                  (d) all Books and Records;

                  (e) all Proprietary Rights;

                  (f) all Permits;

                  (g) all return and other rights under or pursuant to all
warranties, representations and guarantees made by suppliers and other third
parties in connection with the Assets or services furnished to such Person;

                  (h) all cash, accounts receivable, deposits and prepaid
expenses; and

                  (i) all goodwill.

                  "Balance Sheet Date" means March 31, 2000.

                  "Benefit Arrangement" means any employment, consulting,
severance or other similar contract, arrangement or policy (written or oral) and
each plan, arrangement, program, agreement or commitment (written or oral)
providing for insurance coverage (including, without limitation, any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health or accident benefits (including, without limitation, any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (a) is not a Welfare Plan, Pension Plan or
Multiemployer Plan, (b) is entered into, maintained, contributed to or required
to be contributed to, as the case may be, by RedChip or any of their respective
ERISA Affiliate or under which RedChip or FRT, as the case may be, or any ERISA
Affiliate may incur any liability, and (c) covers any employee or former
employee of RedChip, or FRT, as the case may be, or any of their respective
ERISA Affiliate (with respect to their relationship with such any entity).

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                  "Books and Records" means with respect to FRT or RedChip, as
the case may be, (a) all product, business and marketing plans, sales and
promotional literature and artwork relating to the Assets or the Business, (b)
all books, records, lists, ledgers, financial data, files, reports, product and
design manuals, plans, drawings, technical manuals and operating records of
every kind relating to the Assets or the Business (including records and lists
of customers, distributors, suppliers and personnel) and (c) all telephone and
fax numbers used in the Business, in each case whether maintained as hard copy
or stored in computer memory and whether owned by either RedChip or FRT, as the
case may be, or any of their respective Affiliates.

                  "Closing Date" means the date of the Closing.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Consents" means any and all Permits and any and all consents,
approvals or waivers from third parties that are required for the consummation
of the transactions contemplated by this Agreement.

                  "Contract Rights" means all rights and obligations of FRT or
RedChip, as the case may be, under their respective Contracts.

                  "Contracts" means all agreements, contracts, leases (whether
for real or personal property), purchase orders, undertakings, covenants not to
compete, employment agreements, confidentiality agreements, licenses,
instruments, obligations and commitments to which RedChip or FRT, as the case
may be, is a party or by which RedChip or FRT, as the case may be, or any of
their respective Assets are bound or affected, whether written or oral.

                  "Court Order" means any judgment, decision, consent decree,
injunction, ruling or order of any foreign, federal, state or local court or
governmental agency, department or authority that is binding on any Person or
its property under applicable law.

                  "Default" means (a) a breach of or default under any Contract,
(b) the occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of or default under any Contract or (c)
the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right of termination,
renegotiation or acceleration under any Contract.

                  "Employee Plans" means all Benefit Arrangements, Multiemployer
Plans, Pension Plans and Welfare Plans.

                  "Employment Agreements" means the Amended and Restated
Employment Agreements to be entered into between FRT, RedChip, and each of
Restor Johnson, Thomas L. Peterson, Marcus W. Robins, Douglas M. Sherk, Brad
Gunn, Michael Neufeld, and Geoff Moore contemporaneously with the execution of
this Agreement to become effective at the Effective Time, and substantially in
the form of Exhibit A hereto.

                  "Encumbrance" means any claim, lien, pledge, option, charge,
easement, tax assessment, security interest, deed of trust, mortgage,
right-of-way, encroachment, building or use restriction, conditional sales
agreement, encumbrance or other right of third parties, whether

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voluntarily incurred or arising by operation of law, and includes any agreement
to give any of the foregoing in the future, and any contingent sale or other
title retention agreement or lease in the nature thereof.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "ERISA Affiliate" means any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, or
otherwise required to be aggregated with, RedChip or FRT, as the case may be, as
set forth in Section 414(b), (c), (m) or (o) of the Code.

                  "Escrow Agent" means an Escrow Agent under the Escrow
Agreement, as mutually agreed upon by FRT and RedChip, or any alternative or
successor agent which (a) shall be designated by FRT and RedChip if designated
prior to Closing and (b) shall be designated in accordance with the terms of the
Escrow Agreement if designated after Closing.

                  "Escrow Agreement" means the Escrow Agreement to be entered
into among FRT, RedChip and the Escrow Agent substantially in the form of
Exhibit B hereto.

                  "Escrow Shares" has the meaning set forth in Section 2.10.

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

                  "Facilities" means all plants, offices, manufacturing
facilities, stores, warehouses, administration buildings and all real property
and related facilities owned or leased by RedChip or FRT, as the case may be.

                  "Fixtures and Equipment" means all of the furniture, fixtures,
furnishings, machinery, computer hardware, and other tangible personal property
owned by RedChip or FRT, as the case may be, wherever located.

                  "Former Properties" means all plants, offices, manufacturing
facilities, stores, warehouses, administration buildings and all real property
and related facilities owned, leased or operated by RedChip or FRT, as the case
may be, or any respective predecessor prior to the date hereof, but excluding
the Facilities.

                  "FRT Business" means the business and operations of FRT,
consisting of its online stock price quotes, news, research, and related
products.

                  "FRT Employees" means all officers and directors of FRT and
all other Persons employed by FRT on a full or part-time basis together with all
persons retained as "independent contractors" as of the relevant date.

                  "FRT Material Adverse Effect" or "FRT Material Adverse Change"
means a Material Adverse Effect with respect to FRT, the FRT Business or its
Assets.

                  "FRT Stock" means the common stock, par value $.01 per share,
of FRT.

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                  "Funded Debt" means, without duplication, (a) all obligations
for borrowed money including, without limitation, all obligations for accrued
and unpaid interest thereon and any pre-payment premiums or penalties (and
associated expenses) with respect thereto, (b) any reimbursement obligations in
respect of any letters of credit, (c) any capitalized lease obligations (as
determined in accordance with GAAP), and (d) all guarantees issued in respect of
any obligations of any other Person of the type described in clauses (a) through
(c), above, all of which shall constitute obligations at Closing.

                  "GAAP" means generally accepted accounting principles as
applied in the United States.

                  "Liability" means any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any Person of any type, whether accrued, absolute,
contingent, matured, unmatured, liquidated, unliquidated, known or unknown.

                  "Material Adverse Effect" or "Material Adverse Change" or a
similar phrase means, with respect to any Person, (a) any material adverse
effect on or change with respect to (i) the business, operations, assets (taken
as a whole), liabilities (taken as a whole), condition (financial or otherwise),
results of operations, of such Person and its Subsidiaries, taken as a whole, or
(ii) the right or ability of such Person to consummate any of the transactions
contemplated hereby or (b) any event or condition which, with the passage of
time, the giving or receipt of notice or the occurrence or nonoccurrence of any
other circumstance, action or event, would reasonably be expected to constitute
a "Material Adverse Effect" on or "Material Adverse Change" with respect to such
Person.
                  "Multiemployer Plan" means any "multiemployer plan," as
defined in Section 4001(a)(3) or 3(37) of ERISA, which (a) RedChip, FRT, or any
of their respective ERISA Affiliates maintains, administers, contributes to or
is required to contribute to, or, after September 25, 1980, maintained,
administered, contributed to or was required to contribute to, or under which
RedChip, FRT, or any of their respective ERISA Affiliates may incur any
liability and (b) covers any employee or former employee of RedChip, FRT, or any
of their respective ERISA Affiliates (with respect to their relationship with
any such entity).

                  "Pension Plan" means any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) which (a)
RedChip, FRT, or any of their respective ERISA Affiliates maintains,
administers, contributes to or is required to contribute to, or, within the five
(5) years prior to the Closing Date, maintained, administered, contributed to or
was required to contribute to, or under which RedChip, FRT, or any of their
respective ERISA Affiliates may incur any liability (including, without
limitation, any contingent liability) and (b) covers any employee or former
employee of RedChip, FRT, or any employee of any of their respective ERISA
Affiliates (with respect to their relationship with any such entity).

                  "Permitted Encumbrances" means (a) statutory liens of
landlords, liens of carriers, warehousepersons, mechanics and materialpersons
incurred in the ordinary course of business for sums (i) not yet due and
payable, or (ii) being contested in good faith, if, in either such case, an
adequate reserve, shall have been made therefor in such Person's financial

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statements, (b) liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other similar types of social security
programs or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return of
money bonds and similar obligations, in each case in the ordinary course of
business, consistent with past practice, (c) easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case, which do
not interfere with the ordinary conduct of the respective businesses of RedChip
and/or FRT, as the case may be, and do not materially detract from the value of
the property upon which such encumbrance exists, and (d) liens securing taxes,
assessments and governmental charges not yet delinquent.

                  "Permits" means all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary or desirable for
the past, present or anticipated conduct or operation of the Business or
ownership of the Assets of such Person.

                  "Person" means any person or entity, whether an individual,
trustee, corporation, limited liability company, general partnership, limited
partnership, trust, unincorporated organization, business association, firm,
joint venture, governmental agency or authority or any similar entity.

                  "Proprietary Rights" means all (a) U.S. and foreign patents,
patent applications, patent disclosures and improvements thereto, including
petty patents and utility models and applications therefor, (b) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (c) U.S. and foreign copyrights and registrations and
applications for registration thereof, (d) U.S. and foreign mask work rights and
registrations and applications for registration thereof, (e) Trade Secrets, (f)
URL registrations, (g) other proprietary rights, (h) copies and tangible
embodiments thereof (in whatever form or medium) and (i) licenses granting any
rights with respect to any of the foregoing.

                  "RedChip Business" means the business and operations of
RedChip, consisting of its electronic stock research and analysis service and
related products.

                  "RedChip Employees" means all officers and directors of
RedChip and all other Persons employed by RedChip on a full or part-time basis
together with all persons retained as "independent contractors" as of the
relevant date.

                  "RedChip Funded Debt" means the liabilities of RedChip set
forth on Schedule 1.1(a).

                  "RedChip Financial Statements" means (a) the balance sheets of
RedChip (or its predecessor, as the case may be) as of December 31, 1999 and
1998 and the related statements of income, changes in stockholders' equity and
cash flows, of RedChip for the years ended December 31, 1999 and 1998, and in
the case of 1998, with the review of Arthur Andersen and in the case 1999, with
the report of Arthur Andersen thereon, (b) the balance sheets of RedChip as of
March 31, 2000 and the related statements of income, changes in stockholders'
equity and cash flows, of RedChip for the three (3) months then ended.

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                  "RedChip Material Adverse Effect" or "RedChip Material Adverse
Change" means a Material Adverse Effect with respect to RedChip, the RedChip
Business or its Assets.

                  "RedChip Options" means options to purchase shares of RedChip
Stock issued by RedChip pursuant to RedChip Stock Option Plan.

                  "RedChip Stockholder" means a holder of RedChip Stock
immediately prior to the Effective Time.

                  "RedChip Stock Option Plan" means the RedChip.com, Inc. 1999
Stock Incentive Plan.

                  "RedChip Warrants" means each of the warrants to purchase
RedChip Stock pursuant to the certain warrant agreements set forth on Schedule
3.2(c).

                  "Regulations" means any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines, and
orders of any foreign, federal, state or local government and any other
governmental department or agency, including without limitation energy, motor
vehicle safety, public utility, zoning, building and health codes, Environmental
Laws, occupational safety and health and laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours.

                  "Related Party" means (i) any of RedChip's or FRT's, as the
case may be, officers, directors and stockholders, and any officers, directors,
partners, associates or relatives of such officers, directors and stockholders,
(ii) any Person in which RedChip or FRT, as the case may be, or any stockholder
of RedChip or FRT or any Affiliate, associate or relative of any such Person has
any direct or indirect interest, and (iii) any direct or indirect trustee or
beneficiary of any stockholder of RedChip or FRT.

                  "Representative" of any Person means any officer, director,
principal, attorney, accountant, agent, employee or other representative of such
Person.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "Subsidiary" means, with respect to any Person, (a) any
corporation of which at least 50% of the securities or interests having, by
their terms, ordinary voting power to elect members to the board of directors,
or other persons performing similar functions with respect to such corporation,
is held, directly or indirectly, by such Person, (b) any partnership or limited
liability company of which (i) such Person is a general partner or managing
member or (ii) such person possesses a 50% or greater interest in the total
capital or total income of such partnership or limited liability company.

                  "Takeover Statute" means a "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or regulation
enacted under state or federal laws in the United States.

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                  "Tax Return" means any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) including information returns, and any
documents with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.

                  "Taxes" means any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, estimated, excise,
value-added, real or personal property, sales, withholding, social security,
retirement, unemployment, disability occupation, worker's compensation, use,
service, license, utility, net worth, payroll, ad valorem, franchise and
transfer and recording, imposed by the Internal Revenue Service or any taxing
authority or jurisdiction (whether domestic or foreign, including any federal,
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a U.S. possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis and whether disputed or not;
and such term shall include any interest, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such Taxes, charges,
fees, levies or other assessments.

                  "to the knowledge" or "knowledge" of a party (or similar
phrases) means to the extent of matters which are actually known by such party
and when used in respect of RedChip, the term "to the knowledge" or "knowledge"
shall mean the matters actually known by each officer or director of RedChip and
with respect to FRT, shall mean the matters actually known by each officer or
director of FRT.

                  "Trade Secrets" means all trade secrets and confidential
business information (including ideas, formulas, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, research and development information, software, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans marketing mailing and e-mail lists, and customer and
supplier mailing and e-mail lists and information).

                  "Trade Weighted Average Price" means the average of the "hi,"
"lo," and "closing" prices of FRT Stock on the Over-the-Counter-Bulletin-Board
("OTCBB") for the ten (10) Trading Days ending on the Trading Day immediately
prior to the Closing Date.

                  "Trading Day" means any day on which the OTCBB is open and
available for at least five (5) hours for the trading of securities.

                  "Welfare Plan" means any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, which (a) RedChip, FRT, or any of their
respective ERISA Affiliates maintains, administers, contributes to or is
required to contribute to, or under which RedChip, FRT, or any of their
respective ERISA Affiliates may incur any liability and (b) covers any employee
or former employee of RedChip, FRT, or any employee of their respective ERISA
Affiliates (with respect to their relationship with any such entity).

                                       8
<PAGE>   15

         1.2 Interpretation Provisions.

                  (a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement, and article, section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The terms "include" and
"including" are not limiting and mean "including without limitation."

                  (b) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications thereto.

                  (c) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.

                  (d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.

                  (e) The parties participated jointly in the negotiation and
drafting of this Agreement and the language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent.
If an ambiguity or question of intent or interpretation arises, then this
Agreement will accordingly be construed as drafted jointly by the parties to
this Agreement, and no presumption or burden of proof will arise favoring or
disfavoring any party to this Agreement by virtue of the authorship of any of
the provisions of this Agreement.

                  (f) The annexes, schedules and exhibits to this Agreement are
a material part hereof and shall be treated as if fully incorporated into the
body of the Agreement.

         1.3 Other Defined Terms. Each of the following terms is defined in the
Section set forth opposite such term.

         TERM                                     SECTION
         ----                                     -------

         Surviving Corporation                      2.1
         Closing                                    2.1
         Certificate of Merger                      2.2
         Effective Time                             2.2
         Dissenting Shares                          2.6
         Exchange Ratio                             2.6
         Merger Shares                              2.6
         Substitute Options                         2.6
         Substitute Warrant Agreements              2.6
         Transmittal Letter                         2.7
         Certificates                               2.7

                                       9
<PAGE>   16

         TERM                                     SECTION
         ----                                     -------

         Escrow Shares                              2.10
         General Escrow Fund                        2.10
         RedChip Leased Property                    3.8
         Environmental Laws                         3.10
         Hazardous Substance                        3.10
         Actions                                    3.17
         FRT Actions                                4.7
         FRT Leased Property                        4.29
         SEC Reports                                4.34
         FRT Options                                5.2
         Acquisition Proposal                       5.2
         FRT Counter Proposal                       5.2
         RedChip Superior Proposal                  5.2
         RedChip Equity Securities                  5.2
         Stockholder Note Conversion                5.7
         RCP-Robins Agreement                       5.10
         FRT Acquisition Proposal                   6.2
         RedChip Counter Proposal                   6.2
         FRT Superior Proposal                      6.2
         FRT Equity Securities                      6.2
         Permit                                     7.5
         California Law                             7.5
         Fairness Hearing                           7.5
         Department                                 7.5
         Permit Application                         7.5
         Information Statement                      7.5
         Registration Rights                        7.5
         FRT Closing Certificate                    8.2
         FRT Funded Debt Notice                     8.2
         RedChip Closing Certificate                8.3
         Maturity Date                              8.3
         Conversion Date                            8.3
         RedChip Funded Debt Notice                 8.3
         Survival Period                            10.1

                                       10
<PAGE>   17

         TERM                                     SECTION
         ----                                     -------

         FRT Indemnified Parties                    10.2
         Damages                                    10.2
         Claim                                      10.2
         Indemnified Party                          10.2
         Claim Notice                               10.2
         Indemnifying Party                         10.2
         Third-Party Claim                          10.2
         General Escrow Period                      10.4
         New Shares                                 10.4
         Officer's Certificate                      10.4
         Damage Threshold                           10.5
         Stockholder Representative                 10.6
         Outside Date                               11.1
         RedChip Termination Fee                    11.2
         RedChip Fee Triggering Event               11.2
         FRT Termination Fee                        11.2
         FRT Fee Triggering Event                   11.2
         Arbitrable Claim                           11.13
         JAMS                                       11.13

                                   ARTICLE 2
                                   THE MERGER

         2.1 The Merger.

                  (a) Effective Time. At the Effective Time (as defined in
Section 2.2 hereof), and upon the terms and subject to the conditions of this
Agreement and the DGCL, (i) Sub shall be merged with and into RedChip, the
separate corporate existence of Sub shall cease; (ii) RedChip shall continue as
the surviving corporation; (iii) RedChip shall continue to be governed by the
laws of the State of Delaware; and (iv) the separate corporate existence of
RedChip with all its rights privileges, immunities, powers and franchises shall
continue unaffected by the Merger. RedChip, as the surviving corporation after
the Merger, is hereinafter sometimes referred to as the "Surviving Corporation."

                  (b) Closing. Unless this Agreement shall have been terminated
pursuant to Section 11.1, and subject to the satisfaction (or to the extent
permitted, the waiver) of the conditions set forth in Article 8, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
(i) at the offices of Latham & Watkins, 650 Town Center Drive, Suite 2000, Costa
Mesa, California 92626, as promptly as practicable (and in any event within five
(5) business days) after satisfaction (or to the extent permitted, the waiver)
of the conditions

                                       11
<PAGE>   18

set forth in Article 8 or (ii) at such other time, date or place as FRT and
RedChip may mutually agree.

         2.2 Effective Time. As promptly as practicable after the satisfaction
(or to the extent permitted, the waiver) of the conditions set forth in Article
8, and provided that this Agreement has not been terminated pursuant to Section
11.1, the parties hereto shall cause the Merger to be consummated by executing
and filing a certificate of merger as contemplated by the DGCL (the "Certificate
of Merger"), with the Secretary of State of Delaware as provided in Section 251
of the DGCL. The Merger shall be effective at the time indicated in such
Certificate of Merger (the "Effective Time").

         2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all the properties, rights, privileges, powers
and franchises of RedChip and Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of RedChip and Sub shall become the debts,
liabilities and duties of the Surviving Corporation.

         2.4 Certificate of Incorporation; Bylaws.

                  (a) Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of Sub as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation (except that Surviving Corporation shall be named and operate as
"RedChip.com, Inc."), until duly amended in accordance with applicable law.

                  (b) Bylaws. At the Effective Time, the Bylaws of Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter duly amended in accordance with
applicable law, the Certificate of Incorporation of the Surviving Corporation
and such Bylaws.

         2.5 Directors and Officers. The directors of Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation, and the officers of RedChip immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation and in accordance with
applicable law. Upon request of FRT, RedChip shall cause each or any director
and officer of RedChip to tender his or her resignation prior to the Effective
Time, with each such resignation to be effective as of the Effective Time.

         2.6 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any further action on the part of FRT, Sub or RedChip:

                  (a) RedChip Stock. Subject to Section 2.6(h) and Section
2.6(i), each share of RedChip Stock issued and outstanding immediately prior to
the Effective Time, other than shares of RedChip Stock as to which dissenters'
rights have been properly asserted and not withdrawn or lost under Section 262
of the DGCL (such shares being hereinafter referred to as "Dissenting Shares"),
shall be converted into the right to receive, and become exchangeable for
 .40195749 of

                                       12
<PAGE>   19

a share (subject to adjustment, the "Exchange Ratio") of fully paid and
nonassessable FRT Stock. The shares of FRT Stock issued in connection with the
Merger as a result of the conversions provided for in this Section 2.6(a) are
sometimes referred to herein as the "Merger Shares."

                  (b) Dissenting Shares. Dissenting Shares shall not be
converted into or represent a right to receive the consideration set forth in
Section 2.6(a) but the holder of such shares of RedChip Stock shall be entitled
only to such rights as are provided by the DGCL, and FRT shall be solely
responsible for the payment of any amounts due in respect of such Dissenting
Shares pursuant to the DGCL. If any holder of RedChip Stock which theretofore
were Dissenting Shares effectively withdraws or loses (through failure to
perfect or otherwise) such holder's rights to appraisal under Section 262 of the
DGCL, then as of the occurrence of such withdrawal or loss such shares shall be
entitled to the treatment provided in Section 2.6(a).

                  (c) Options. All outstanding RedChip Options as of the date of
this Agreement are set forth on Schedule 2.6(c) attached hereto. Each
outstanding RedChip Option granted under the RedChip Stock Option Plan shall, in
accordance with the terms of the RedChip Stock Option Plan, at the Effective
Time, become fully vested and exercisable at the exercise price and for the
number of shares of RedChip Stock set forth in the respective RedChip Stock
Option Agreements under which they were granted. Any shares of RedChip Stock for
which such RedChip Options are exercised prior to the Effective Time shall be
deemed to be issued and outstanding immediately prior to the Effective Time,
even if certificates evidencing such RedChip Stock have not been issued by
RedChip and, at the Effective Time, such shares of RedChip Stock shall be
converted into Merger Shares in accordance with Section 2.6 hereof, subject to
the provisions of Section 2.6(h) hereof, related to fractional shares. Except to
the extent exercised prior to the Effective Time as provided in the foregoing
sentence, at the Effective Time, each outstanding RedChip Option shall terminate
and shall cease to represent the right to acquire shares of RedChip Stock. FRT
shall grant to each holder of RedChip Options who did not exercise his or her
RedChip Options prior to the Effective Time (and which were terminated at the
Effective Time) options (the "Substitute Options") to purchase the number of
shares of FRT Stock as the holder of such RedChip Options would have been
entitled to receive pursuant to the Merger had such holder exercised such
RedChip Options in full immediately prior to the Effective Time, at a price per
share equal to the result of multiplying the per share exercise price of such
RedChip Option by the Exchange Ratio (rounded to the nearest full cent). The
Substitute Options shall vest as follows: (i) for the RedChip Options which were
vested immediately prior to the Effective Time (without regard to the
acceleration of vesting due to the Merger), the Substitute Options shall be
immediately exercisable at the time of grant and (ii) for the RedChip Options
which were unvested immediately prior to the Effective Time (without regard to
the acceleration of vesting due to the Merger), the Substitute Options shall
vest over the shorter period of (x) the two year period beginning at the
Effective Time and (y) the vesting schedule of the original RedChip Options
(without regard to any acceleration thereof). Notwithstanding the foregoing, the
number of and the per share exercise price of each RedChip Option which is an
"incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code, as
necessary in order for such RedChip Option to be an "incentive stock option."
Accordingly, with respect to any incentive stock options, fractional shares of
FRT Stock shall be rounded down to the nearest whole number of shares and, where
necessary, the per share exercise price shall be rounded up to the nearest cent.

                                       13
<PAGE>   20

                  (d) Warrants. Concurrently with the Closing, FRT shall deliver
Substitute Warrant Agreements to the holders of RedChip Warrants representing
the right to acquire, on terms and conditions reasonably acceptable to FRT, the
number of shares of FRT Stock as the holder of such RedChip Warrants who did not
exercise his or her RedChip Warrant prior to the Effective Time would have been
entitled to receive pursuant to the Merger had such holder exercised such
RedChip Warrant in full immediately prior to the Effective Time, at a price per
share equal to the result of multiplying the per share exercise price of such
RedChip Warrant by the Exchange Ratio (rounded to the nearest full cent).
Notwithstanding the above, in the event any holder of RedChip Warrants exercises
such Warrants prior to the Effective Time, such holder shall not be entitled to
receive a Substitute Warrant Agreement.

                  (e) Stockholder Note Conversion. Prior to the Effective Time,
RedChip and the noteholders identified on Schedule 2.6(e) may elect that any or
all indebtedness of RedChip due to the noteholders as identified on Schedule
2.6(e) (including any related accrued and unpaid interest, premium, costs or
other obligations under the respective promissory notes) be contributed to
RedChip solely in consideration for the issuance to such persons of shares of
RedChip Stock (the "Stockholder Note Conversion"). The shares of RedChip Stock
to be issued in the Stockholder Note Conversion will have a fair market value,
on the date of conversion, of not less than the aggregate principal amount,
accrued but unpaid interest, premium, fees and costs payable to the holders
under all such contributed indebtedness and RedChip will provide FRT with
documentary evidence which supports such determination in form and substance
satisfactory to FRT. RedChip represents that all indebtedness of RedChip for
borrowed money due to any Related Party of RedChip is identified on Schedule
3.21. Following any Stockholder Note Conversion, the Exchange Ratio shall be
adjusted in accordance with Sections 2.6(f) and 2.6(j).

                  (f) Number of Shares of FRT Stock Issuable. The number of
shares of FRT Stock to be issued in the Merger in exchange for the acquisition
by FRT of all outstanding shares of RedChip Stock, all other capital stock of
any class or series, and all outstanding options, warrants, or other securities
to acquire capital stock of RedChip (other than RedChip Options and RedChip
Warrants) shall not exceed 4,000,000 shares (plus any shares of FRT Stock issued
or issuable as a result of the exercise of RedChip Options and RedChip Warrants)
prior to the Closing Date. In the event that any outstanding indebtedness is
exchanged for RedChip Stock prior to Closing (including, without limitation,
pursuant to Section 2.6(e)), the Exchange Ratio shall be adjusted to equal the
quotient (carried out to seven decimal places) of (i) 4,000,000 divided by (ii)
number of outstanding shares of RedChip Stock outstanding immediately prior to
the Effective Time less any shares of RedChip Stock issued or issuable upon
exercise of RedChip Options and RedChip Warrants.

                  (g) Sub Stock. Each share of common stock, par value $.01 per
share, of Sub issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, automatically be converted into and thereafter represent one (1)
validly issued, fully paid and nonassessable common share, par value $.01 per
share, of the Surviving Corporation, so that thereafter FRT will be the sole and
exclusive owner of the capital stock of the Surviving Corporation.

                                       14
<PAGE>   21

                  (h) Cancellation. Each share of RedChip Stock held in the
treasury of RedChip immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of the holder thereof,
automatically cease to be outstanding, be canceled and retired without payment
of any consideration therefor and cease to exist.

                  (i) Fractional Shares. No certificates or scrip representing
fractional shares of FRT Stock shall be issued in connection with the Merger,
but in lieu thereof each RedChip Stockholder who would otherwise be entitled to
receive a fraction of a Merger Share shall receive from FRT an amount of cash
equal to the product of (i) the fraction of a share of a Merger Share to which
such holder would otherwise be entitled multiplied by (ii) the Trade Weighted
Average Price. The fractional share determination shall be made individually for
each RedChip Stockholder after giving effect to the delivery of the Escrow
Shares (as defined below) to the Escrow Agent, it being recognized that, as
provided in Section 2.10, only whole shares may be delivered to the Escrow
Agent.

                  (j) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted in accordance with the last sentence of Section 2.6(f) and shall be
equitably adjusted to reflect fully the effect of any stock split, reverse
split, stock combination, stock dividend, reorganization, reclassification,
recapitalization or other like change with respect to FRT Stock or RedChip Stock
after the date hereof and prior the Effective Time.

         2.7 Surrender of Certificates.

                  (a) Distribution of Transmittal Letter. As soon as practicable
after the Effective Time, FRT shall mail to each RedChip Stockholder a letter of
transmittal in customary form (the "Transmittal Letter") and instructions for
such holder's use in effecting the surrender of the certificate or certificates
evidencing RedChip Stock (the "Certificates") and the exercise of the rights of
such holder to obtain its Merger Shares.

                  (b) Delivery of Certificates. At the Effective Time, FRT shall
make available, and each RedChip Stockholder shall be entitled to receive, upon
surrender to FRT or its designated representative of any Certificates for
cancellation, together with a duly-executed and completed Transmittal Letter,
such number of shares of FRT Stock as equals such holder's pro rata portion of
the aggregate Merger Shares into which such RedChip Stock shall have been
converted in the Merger in accordance with Section 2.6 hereof multiplied by
0.90; all remaining Merger Shares (i.e., 400,000 shares) shall be delivered to
the Escrow Agent pursuant to Section 2.10.

                  (c) Cancellation of RedChip Stock. Upon surrender of each
Certificate and delivery by FRT of the Merger Shares to be delivered in exchange
therefor, such Certificate shall forthwith be canceled. Until so surrendered,
each Certificate shall be deemed for all corporate purposes to evidence only the
right to receive upon such surrender the aggregate number of Merger Shares into
which RedChip Stock represented thereby shall have been converted in accordance
with the terms and upon the conditions of this Agreement (including, without
limitation, the requirement that a portion of such Merger Shares be deposited
with the Escrow Agent).

                                       15
<PAGE>   22

                  (d) Distributions With Respect to Unexchanged Shares of
RedChip Stock. No dividends or other distributions with respect to FRT Stock
declared or made after the Effective Time and with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of FRT Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Subject to
applicable law, promptly following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of FRT Stock issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date
after the Effective Time, if any, theretofore payable with respect to such whole
shares of FRT Stock.

         2.8 No Further Ownership Rights in Shares of RedChip Stock. The shares
of FRT Stock delivered upon the surrender for exchange of RedChip Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of RedChip Stock, and there
shall be no further registration of transfers of RedChip Stock which were
outstanding immediately prior to the Effective Time on the records of the
Surviving Corporation. If, after the Effective Time, the Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article 2.

         2.9 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, FRT shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of FRT Stock as may be
required pursuant to Section 2.7; provided, however, that FRT may, in its sole
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against FRT with respect to the Certificates alleged to have been lost, stolen
or destroyed.

         2.10 Escrow of Merger Shares. Notwithstanding the other provisions of
this Article 2, FRT shall deliver to the Escrow Agent a number of shares of FRT
Stock equal to .10 multiplied by the number of Merger Shares (the "Escrow
Shares"). The Escrow Shares, shall be withheld from the FRT Stock otherwise
deliverable to the RedChip Stockholders (the "General Escrow Fund"). The Escrow
Shares shall be deposited with the Escrow Agent and disbursed in accordance with
Section 10.4.

         2.11 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Section 368(a) of
the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
U.S. Treasury Regulations.

         2.12 Taking of Necessary Action; Further Action. Each of FRT, Sub and
RedChip will take all such reasonable lawful action as may be necessary or
appropriate in order to effect the Merger in accordance with this Agreement as
promptly as practicable. If, at any time after the Effective Time, any such
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest FRT with full right, title and possession to all the
property, rights, privileges, power and franchises of RedChip, the officers and
directors of Sub, FRT and RedChip

                                       16
<PAGE>   23

immediately prior to the Effective Time are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action.

                                   ARTICLE 3
                    REPRESENTATIONS AND WARRANTIES OF REDCHIP

         As an inducement of FRT to enter into this Agreement, RedChip hereby
makes as of the date hereof and as of the Closing Date, the following
representations and warranties to FRT, except as otherwise set forth in written
disclosure schedules (the "Schedules") delivered to FRT prior to the date
hereof, a copy of which is attached hereto. The Schedules are numbered to
correspond to the various sections of this Article 3 setting forth certain
exceptions to one or more of the representations and warranties contained in
this Article 3 and certain other information called for by this Agreement. Any
disclosure made in any particular Schedule may be deemed made in any other
Schedule so long as the parties reasonably determine that the exception in one
Schedule is relevant or related to the disclosure in another Schedule.

         3.1 Organization of RedChip. RedChip is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with all requisite corporate power and authority to conduct the RedChip Business
as it is presently being conducted and to own or lease, as applicable, the
Assets owned or leased by it. RedChip is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law as a result of the conduct of
the RedChip Business or the ownership of its properties and where the failure to
be so qualified would have a RedChip Material Adverse Effect. Each jurisdiction
in which RedChip is qualified to do business as a foreign corporation is set
forth in Schedule 3.1.

         3.2 Capitalization of RedChip.

                  (a) Authorized Capitalization. As of the date of this
Agreement, the authorized capitalization of RedChip consists of (i) 19,000,000
shares of RedChip Stock, of which 9,951,301 shares are issued and outstanding
and (ii) 1,000,000 shares of preferred stock, none of which are issued and
outstanding, and no additional shares of capital stock of RedChip will be issued
after the date hereof except for (i) shares to be issued in connection with the
Stockholder Note Conversion in accordance with Section 2.6(e), (ii) shares
issued in respect of RedChip Options outstanding on the date hereof, (iii)
shares issued upon the exercise of the RedChip Warrants and (iv) RedChip Options
issued in the ordinary course of business but not to exceed a total of 50,000
options, nor to exceed 16,000 options issued to any one individual or entity
without the prior approval of FRT. RedChip has no other capital stock
authorized, issued or outstanding. Schedule 3.2(a) sets forth the name of each
holder of shares of RedChip Stock, as well as the number of shares of RedChip
Stock held by each such holder.

                  (b) Options. As of the date of this Agreement, 1,716,234
shares of RedChip Stock are reserved for issuance upon the exercise of
outstanding RedChip Options. Schedule 3.2(b) sets forth the name of each holder
of RedChip Options, as well as the number of RedChip Options held by each such
holder, the number of RedChip Shares for which each such RedChip Option is
exercisable, the date upon which each such RedChip Option becomes exercisable
and the price per share of RedChip Stock for which each such RedChip Option is

                                       17
<PAGE>   24

exercisable (without taking into account whether or not such RedChip Option is
in fact exercisable on the date hereof). Attached as Schedule 3.2(b) is a true
and correct copy of the plan document governing all RedChip Options, which
contains the forms of option agreement used in all cases.

                  (c) Warrants. As of the date of this Agreement 348,096 shares
of RedChip Stock are reserved for issuance upon the exercise of outstanding
RedChip Warrants. Schedule 3.2(c) sets forth the name of each holder of RedChip
Warrants, the number of shares of RedChip Stock for which each such RedChip
Warrant is exercisable and the price per share of RedChip Stock for which each
such RedChip Warrant is exercisable.

                  (d) No Other Capital Stock, Options, Warrants. Except for the
RedChip Options and the RedChip Warrants referred to above, there are no
outstanding options, warrants, convertible securities or rights of any kind to
purchase or otherwise acquire any shares of capital stock or other securities of
RedChip. Except for the aggregate of 2,064,330 shares of RedChip Stock reserved
for issuance upon exercise of RedChip Options or RedChip Warrants, no shares of
capital stock of RedChip are reserved for issuance.

                  (e) Valid Issuances. All outstanding shares of RedChip Stock
are, and any shares of RedChip Stock issued upon exercise of any RedChip Option
or RedChip Warrants will be, validly issued, fully paid and non-assessable and
not subject to any preemptive rights created by statute, RedChip's Certificate
of Incorporation or Bylaws, or any Contract. RedChip Options and RedChip
Warrants have been, and the shares of RedChip Stock have been or will be, issued
in compliance with all federal and state corporate and securities laws.

         3.3 Stockholders' Agreements, etc. Except as contemplated by this
Agreement and as set forth on Schedule 3.3, there are no stockholder agreements,
voting trusts, proxies or other agreements or understandings with respect to or
concerning the purchase, sale or voting of the capital stock of RedChip.

         3.4 Authorization. RedChip has all necessary corporate or other power
and authority to enter into this Agreement and the Ancillary Agreements to which
RedChip is a party, has taken all corporate or other action necessary to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. This Agreement has been duly executed and
delivered by RedChip, and this Agreement is, and upon execution and delivery
each of the Ancillary Agreements to which RedChip is a party will be, a valid
and binding obligation of RedChip, enforceable against RedChip in accordance
with its terms, except that enforceability may be limited by the effect of (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors or (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).

         3.5 Officers and Directors. Schedule 3.5 contains a true, correct and
complete list of all the officers and directors of RedChip.

         3.6 Bank Accounts. Schedule 3.6 contains a list of all of RedChip's
bank accounts, safe deposit boxes and persons authorized to draw thereon or have
access thereto.

                                       18
<PAGE>   25

         3.7 Subsidiaries, Etc. RedChip does not own or hold any equity interest
of any kind in any Person other than those listed on Schedule 3.7.

         3.8 Real Property.

                  (a) General. RedChip leases all real property necessary for
the conduct of its business as presently conducted. RedChip does not own, nor
has any RedChip predecessor owned, any Real Property.

                  (b) Leased Real Property. Schedule 3.8(b) sets forth all
Leases pursuant to which Facilities are leased by RedChip (as lessee), true and
correct copies of which have been delivered to FRT. Such Leases constitute all
Leases, subleases or other occupancy agreements pursuant to which RedChip
occupies or uses Facilities. Except as set forth on Schedule 3.8(b), RedChip has
good and valid leasehold title to, and enjoys peaceful and undisturbed
possession of, all leased property described in such Leases (the "RedChip Leased
Property"), free and clear of any and all Encumbrances other than any Permitted
Encumbrances which would not permit the termination of the Lease therefor by the
lessor. With respect to each such parcel of RedChip Leased Property (i) there
are no pending or, to the knowledge of RedChip, threatened condemnation
proceedings relating to, or any pending or, to the knowledge of RedChip,
threatened actions relating to, RedChip's leasehold interests in such RedChip
Leased Property or any portion thereof, (ii) neither RedChip nor, to the
knowledge of RedChip, any third party has entered into any sublease, license,
option, right, concession or other agreement or arrangement, written or oral,
granting to any person the right to use or occupy such RedChip Leased Property
or any portion thereof or interest therein, except in connection with a
Permitted Encumbrance, and (iii) RedChip has not received notice of any pending
or threatened special assessment relating to such RedChip Leased Property or
otherwise has any knowledge of any pending or threatened special assessment
relating thereto.

         With respect to each Lease listed on Schedule 3.8(b), (i) there has
been no material default under any such Lease by RedChip or, to the knowledge of
RedChip, by any other party, (ii) the execution, delivery and performance of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby will not cause a material default
under any such Lease, (iii) such Lease is a valid and binding obligation of the
lessor, is in full force and effect with respect to and is enforceable against
the lessor in accordance with its terms, except as the enforceability thereof
may be limited by (1) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or similar laws in effect which affect the
enforcement of creditors' rights generally or (2) general principles of equity,
whether considered in a proceeding at law or in equity, (iv) no action has been
taken by RedChip, and no event has occurred which, with notice or lapse of time
or both, would permit termination, modification or acceleration by a party
thereto other than RedChip without the consent of RedChip under any such Lease
that is material to RedChip, (v) no party has repudiated in writing to RedChip
any term thereof or threatened in writing to RedChip to terminate, cancel or not
renew any such Lease that is material to RedChip and (vi) RedChip has not
assigned, transferred, conveyed, mortgaged or encumbered any interest therein or
in any leased property subject thereto (or any portion thereof).

                                       19
<PAGE>   26

         3.9 Personal Property.

                  (a) General. RedChip owns or leases all personal property
Assets necessary for the conduct of its business as presently conducted, and the
personal property Assets (taken as a whole) are in such operating condition and
repair (subject to normal wear and tear) as is necessary for the conduct of its
business as presently conducted.

                  (b) Owned Personal Property. Except as set forth on Schedule
3.9(b), RedChip has good and marketable title to all such personal property
owned by it, free and clear of any and all Encumbrances other than Permitted
Encumbrances. With respect to each such item of personal property (i) there are
no Leases, subleases, licenses, options, rights, concessions or other
agreements, written or oral, granting to any party or parties the right of use
of any portion of such item of personal property, (ii) there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such item of personal property or any portion thereof or interest therein and
(iii) there are no parties (other than RedChip) who are in possession of or who
are using any such item of personal property.

                  (c) Leased Personal Property. RedChip has good and valid
leasehold title to all of such Fixtures and Equipment, vehicles and other
tangible personal property Assets leased by it from third parties, free and
clear of any and all Encumbrances other than Permitted Encumbrances which would
not permit the termination of the lease therefor by the lessor. Schedule 3.9(c)
sets forth all Leases for personal property involving annual payments in excess
of $15,000, true and correct copies of which have been delivered or made
available to FRT.

         With respect to each Lease listed on Schedule 3.9(c), (i) there has
been no material default under such Lease by RedChip or, to the knowledge of
RedChip, by any other party, (ii) the execution, delivery and performance of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby will not cause (with or without
notice and with or without the passage of time) a default under any such Lease,
(iii) such Lease is a valid and binding obligation of the applicable lessor, is
in full force and effect and is enforceable by RedChip in accordance with its
terms, except as the enforceability thereof may be limited by (1) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect which affect the enforcement of creditors' rights
generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, (iv) no action has been taken by RedChip and no
event has occurred which, with notice or lapse of time or both, would permit
termination, modification or acceleration by a party thereto other than by
RedChip without the consent of RedChip under any such Lease that is material to
RedChip, (v) no party has repudiated in writing any term thereof or threatened
in writing to terminate, cancel or not renew any such Lease that is material to
RedChip and (vi) RedChip has not assigned, transferred, conveyed, mortgaged or
encumbered any interest therein or in any leased property subject thereto (or
any portion thereof).

         3.10 Environmental Matters.

                  (a) Pending Claims; Compliance. Except for matters that are
specifically disclosed on Schedule 3.10(a), (with reference to a specifically
named site or claim) and except for such matters that, individually or in the
aggregate, are not reasonably likely to have a RedChip Material Adverse Effect:
(i) RedChip complies, and within all applicable statutes of limitations periods
has complied, with all applicable Environmental Laws (as defined in Section

                                       20
<PAGE>   27

3.10(b)); (ii) RedChip is not subject to liability for any Hazardous Substance
(as defined in Section 3.10(c)) disposal or contamination or any third party
property; (iii) RedChip is not subject to liability for any release of, or any
exposure of any person or property to, any Hazardous Substance; (iv) RedChip has
not received any notice, demand, letter, claim or request for information
alleging that RedChip may be in violation of or liable under any Environmental
Law; (v) RedChip has not released any other person from, or waived any rights
concerning, any claim under any Environmental Law; (vi) RedChip is not subject
to any orders, decrees or injunctions issued by, or other arrangements with, any
government authority (as defined in Section 3.10(d)) nor is RedChip subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (vii) there
are no circumstances or conditions involving RedChip or its Properties that
could reasonably be expected to cause RedChip to become subject to any claims,
liability, investigations or costs, or to restrictions on the ownership, use or
transfer of any property of RedChip, pursuant to any Environmental Law.

                  (b) Environmental Laws. As used herein, the term
"Environmental Law" means any federal, state, local or foreign law, regulation,
order, decree, permit, authorization, opinion, common law or agency requirement
relating to : (A) the protection, preservation, investigation, remediation or
restoration of environmental quality, health and safety, or natural resources,
or (B) noise, odor, wetlands, pollution, contamination or any injury or threat
of injury to persons or property.

                  (c) Hazardous Substances. As used herein, the term "Hazardous
Substance" means: (A) any substance that is listed, classified or regulated
pursuant to or that could result in liability under any Environmental Law; (B)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is the subject of
regulatory action by any government authority pursuant to any Environmental Law.

         3.11 Contracts.

                  (a) Disclosure. Schedule 3.11 sets forth a complete and
accurate list of all of the Contracts of the following categories:

                           (i) Contracts not made in the ordinary course of
business;

                           (ii) License agreements or royalty agreements,
whether RedChip is the licensor or licensee thereunder (excluding licenses that
are commonly available on standard commercial terms, such as software
"shrink-wrap" licenses);

                           (iii) Confidentiality and non-disclosure agreements
(whether RedChip is the beneficiary or the obligated party thereunder);

                           (iv) Contracts or commitments involving future
expenditures or Liabilities, actual or potential, in excess of $50,000 after the
date hereof or otherwise material to the RedChip Business or the Assets;

                                       21
<PAGE>   28

                           (v) Contracts or commitments relating to commission
arrangements with others that are material to the RedChip Business;

                           (vi) Employment contracts, consulting contracts,
severance agreements, "stay-bonus" agreements and similar arrangements,
including Contracts (A) to employ or terminate executive officers or other
personnel and other contracts with present or former officers or directors of
RedChip or (B) that will result in the payment by, or the creation of any
Liability of RedChip or FRT to pay any severance, termination, "golden
parachute," or other similar payments to any present or former personnel
following termination of employment or otherwise as a result of the consummation
of the transactions contemplated by this Agreement;

                           (vii) Indemnification agreements;

                           (viii) Promissory notes, loans, agreements,
indentures, evidences of indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation to pay money, whether RedChip shall be the
borrower, lender or guarantor thereunder ;

                           (ix) Contracts containing covenants limiting the
freedom of RedChip, or any RedChip Employee or Affiliate of RedChip, to engage
in any line of business or compete with any Person that relates directly or
indirectly to the RedChip Business;

                           (x) Any Contract with the federal, state or local
government or any agency or department thereof;

                           (xi) Any Contract or other arrangement with a Related
Party;

                           (xii) Leases of real or personal property involving
annual payments of more than $50,000; and

                           (xiii) Any other Contract under which the
consequences of a default or termination would reasonably be expected to have a
RedChip Material Adverse Effect, individually or in the aggregate.

         Complete and accurate copies of all of the Contracts listed on Schedule
3.11, including all amendments and supplements thereto, have been made available
to FRT. RedChip has included as part of Schedule 3.11 a brief summary of the
material terms of each oral Contract.

                  (b) Absence of Defaults. Except as set forth on Schedule
3.11(b), all of the Contracts are valid, binding and enforceable in accordance
with their terms with no existing (or to the knowledge of RedChip threatened)
material Default or dispute. RedChip has fulfilled, or taken all action
necessary to enable it to fulfill when due, all of its material obligations
under each of such Contracts. To the knowledge of RedChip, all parties to such
Contracts have complied in all material respects with the provisions thereof, no
party is in material Default thereunder and no notice of any claim of Default
has been given to RedChip.

                  (c) Product Warranty. RedChip has not committed any act, and
there has been no omission, which may result in, and there has been no
occurrence which may give rise to, product liability or Liability for breach of
warranty (whether covered by insurance or not) on the

                                       22
<PAGE>   29

part of RedChip, with respect to products designed, manufactured, assembled,
sold, repaired, maintained, delivered or installed or services rendered prior to
or on the Closing Date which could reasonably be expected to result in Liability
to RedChip exceeding $50,000 in the aggregate.

         3.12 Consents. Except as set forth on Schedule 3.12, no notices to,
declaration, filing or registration with, approvals or Consents of, or
assignments by, any Persons (including any federal, state or local governmental
or administrative authorities) are necessary to be made or obtained by RedChip
in connection with the execution, delivery or performance of this Agreement or
any Ancillary Agreement to which it is a party or the consummation of the
transactions contemplated hereby or thereby.

         3.13 No Conflict or Violation. Except as set forth on Schedule 3.13,
the execution, delivery and performance of this Agreement and the Ancillary
Agreements, the consummation of the transactions contemplated hereby or thereby,
and the compliance by RedChip with all of the provisions hereof or thereof, will
not:

                  (a) violate or conflict with any material provision of the
governing documents of RedChip or any RedChip Stockholder;

                  (b) violate, conflict with, or result in a breach of or
constitute a default (with or without notice or the passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any Contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which
RedChip is a party or by which RedChip or any Stockholder is bound or to which
any of its respective assets are subject, excluding those violations, conflicts,
breaches or defaults contemplated in this Section 3.13(b) that would not result
in a RedChip Material Adverse Effect;

                  (c) violate any applicable Regulation or Court Order; or

                  (d) impose any Encumbrance on any Assets or the RedChip
Business.

         3.14 Permits. Schedule 3.14 sets forth a complete list of all material
Permits, all of which are as of the date hereof, and will be as of the Closing
Date, in full force and effect. RedChip and its predecessors have, and at all
times have had, all material Permits required under any applicable Regulation in
its operation of the RedChip Business or in its ownership of the Assets, and
owns or possesses such Permits free and clear of all Encumbrances. RedChip is
not in default, nor, to the knowledge of RedChip, has RedChip received any
notice of any claim of default, with respect to any such Permit. Except as
otherwise governed by law, all such Permits are renewable by their terms or in
the ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees
and, except as set forth on Schedule 3.14, will not be adversely affected by the
completion of the transactions contemplated by this Agreement or the Ancillary
Agreements.

                                       23
<PAGE>   30

         3.15 Financial Statements; Books and Records.

                  (a) General. The RedChip Financial Statements are complete,
are in accordance with RedChip's Books and Records and fairly present in all
material respects the financial condition, results of operations and cash flows
of RedChip as of the dates and for the periods indicated thereby, in accordance
with GAAP consistently applied throughout the periods covered thereby (except as
otherwise expressly indicated in the notes to the RedChip Financial Statements
and, in the case of interim financial statements, for (i) the lack of footnotes
and (ii) year-end audit adjustments that are not material).

                  (b) Internal Controls. RedChip maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed with management's authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's authorization and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

                  (c) Books and Records. The Books and Records, in reasonable
detail, accurately and fairly reflect in all material respects the activities of
RedChip and the RedChip Business and have been provided to FRT for its
inspection.

                  (d) All Accounts Recorded. RedChip has not engaged in any
transaction, maintained any bank account or used any corporate funds except for
transactions, bank accounts or funds which have been and are reflected in the
normally maintained Books and Records.

                  (e) Corporate Records. The stock records and minute books of
RedChip (and its predecessor(s), if any,) that have been made available to FRT
fully reflect all minutes of meetings, resolutions and other material actions
and proceedings of its stockholders, trustees and board of directors and all
committees thereof, all issuances, transfers and redemptions of capital stock of
which RedChip is aware and contain true, correct and complete copies of their
respective Certificate of Incorporation and Bylaws and all amendments thereto
through the date hereof.

         3.16 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.16, since the Balance Sheet Date there has not been any:

                  (a) RedChip Material Adverse Change;

                  (b) failure to operate the RedChip Business in the ordinary
course so as to use all commercially reasonable efforts to preserve the RedChip
Business intact and to preserve the continued services of RedChip's employees
and the goodwill of suppliers, customers and others having business relations
with RedChip or its Representatives;

                  (c) resignation or termination of any officer, director or
manager, or any increase in the rate of compensation payable or to become
payable to any officer, director or manager or Representative of RedChip (other
than general, regularly-scheduled reviews), including the making of any loan to,
or the payment, grant or accrual of any bonus, incentive compensation, service
award or other similar benefit to, any such Person, or the addition to,
modification of, or contribution to any Employee Plan;

                                       24
<PAGE>   31

                  (d) any payment, loan or advance of any amount to or in
respect of, or the sale, transfer or lease of any properties or the Assets to,
or entering into of any Contract with, any Related Party except regular
compensation to RedChip Employees;

                  (e) sale, assignment, license, transfer or Encumbrance of any
of the Assets, tangible or intangible, singly or in the aggregate, other than
sales of products and services in the ordinary course of business and consistent
with past practice;

                  (f) new Contracts, or extensions, modifications, terminations
or renewals thereof, except for Contracts entered into, modified or terminated
in the ordinary course of business and consistent with past practice;

                  (g) actual or threatened termination of any material customer
account or group of accounts or actual or threatened material reduction in
purchases or royalties payable by any such customer or occurrence of any event
that is likely to result in any such termination or reduction;

                  (h) disposition or lapsing of any Proprietary Rights of
RedChip, in whole or in part, or any disclosure of any Trade Secret, process or
know-how to any Person not an Employee;

                  (i) change in accounting methods or practices by RedChip;

                  (j) revaluation by RedChip of any of the Assets, including
writing off or establishing reserves with respect to inventory, notes or
accounts receivable (other than for which adequate reserves have been previously
established;

                  (k) damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Assets, the RedChip Business or
the prospects of RedChip;

                  (l) declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of RedChip or any redemption,
purchase or other acquisition of any equity securities of RedChip;

                  (m) issuance or reservation for issuance by RedChip of, or
commitment of it to issue or reserve for issuance, any shares of capital stock
or other equity securities or obligations or securities convertible into or
exchangeable for shares of capital stock or other equity securities, excluding
those RedChip Options or RedChip Warrants issued in the ordinary course of
business and in accordance with Section 3.2, and excluding any shares of RedChip
Stock issued upon the exercise or conversion of any RedChip Option and/or
RedChip Warrant;

                  (n) increase, decrease or reclassification of the capital
stock of RedChip;

                  (o) amendment of the Certificate of Incorporation or Bylaws of
RedChip;

                  (p) capital expenditure or execution of any lease or any
incurring of liability therefor by RedChip, involving payments or obligations in
excess of $50,000 in the aggregate;

                                       25
<PAGE>   32

                  (q) failure to pay any material obligation of RedChip when
due;

                  (r) cancellation of any indebtedness or waiver of any rights
of substantial value to RedChip, except in the ordinary course of business and
consistent with past practice;

                  (s) indebtedness incurred by RedChip for borrowed money or any
commitment to borrow money entered into by RedChip, or any loans made or agreed
to be made by RedChip;

                  (t) liability incurred by RedChip except in the ordinary
course of business and consistent with past practice, or any increase or change
in any assumptions underlying or methods of calculating any bad debt,
contingency or other reserves;

                  (u) payment, discharge or satisfaction of any Liabilities of
RedChip other than the payment, discharge or satisfaction in the ordinary course
of business and consistent with past practice of Liabilities reflected or
reserved against in the RedChip Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date;

                  (v) acquisition of any equity interest in any other Person; or

                  (w) agreement by RedChip directly or indirectly to do any of
the foregoing.

         3.17 Liabilities. RedChip has no Liabilities or obligations (absolute,
accrued, contingent or otherwise) except (i) Liabilities which are reflected and
properly reserved against in the RedChip Financial Statements, (ii) Liabilities
incurred in the ordinary course of business and consistent with past practice
since the Balance Sheet Date and (iii) Liabilities arising under the Contracts
(other than obligations which are required to be reflected on a balance sheet
prepared in accordance with GAAP) set forth on Schedule 3.11 or Liabilities
which are not required to be disclosed on such Schedule and which have arisen or
been incurred in the ordinary course of business. None of the Liabilities
described in this Section 3.17 relates to any breach of Contract, breach of
warranty, tort, infringement or violation of law or arose out of any action,
order writ, injunction, judgment or decree outstanding or claim, suit,
litigation, proceeding, investigation or dispute (collectively, "Actions").

         3.18 Litigation. Except as set forth on Schedule 3.18 or Schedule 3.24,
there is no Action, pending or, to the knowledge of RedChip, threatened or
anticipated (i) against, relating to or affecting RedChip, any of the Assets or
any of their respective officers and directors as such, (ii) which seeks to
enjoin or obtain damages in respect of the transactions contemplated hereby or
by the Ancillary Agreements or (iii) with respect to which there is a reasonable
likelihood of a determination which would prevent RedChip from consummating the
transactions contemplated hereby. None of the Actions, if adversely determined
against RedChip, its directors or officers, or any other Person could reasonably
be expected to result in a loss to RedChip, individually or in the aggregate, in
excess of $50,000. To the knowledge of RedChip, there is no basis for any
Action, which if adversely determined against RedChip, its directors or
officers, or any other Person could reasonably be expected to result in a loss
to RedChip, individually or in the aggregate, in excess of $50,000. There are
presently no outstanding judgments, decrees or orders of any court or any
governmental or administrative agency against or affecting RedChip, the

                                       26
<PAGE>   33

RedChip Business or any of the Assets. Schedule 3.18 contains a complete and
accurate description of all Actions since January 1, 1996 to which RedChip or
any predecessor of RedChip has been a party or which relate to any of the Assets
or RedChip's officers or directors as such, or any such Actions which were
settled prior to the institution of formal proceedings, other than Actions
brought by RedChip for collection of monies owed in the ordinary course of
business.

         3.19 Labor Matters.

                  (a) General. RedChip is not a party to any labor agreement
with respect to RedChip Employees with any labor organization, group or
association and has not experienced any attempt by organized labor or its
representatives to make RedChip conform to demands of organized labor relating
to RedChip Employees or to enter into a binding agreement with organized labor
that would cover the RedChip Employees. There is no unfair labor practice charge
or complaint against RedChip pending before the National Labor Relations Board
or any other governmental agency arising out of RedChip's activities, and
RedChip has no knowledge of any facts or information which would give rise
thereto; there is no labor strike or labor disturbance pending or threatened
against RedChip nor is any grievance currently being asserted against it; and
RedChip has not experienced a work stoppage or other labor difficulty. There are
no material controversies pending or, to the knowledge of RedChip, threatened
between RedChip and RedChip Employees, and RedChip is not aware of any facts
which could reasonably result in any such controversy.

                  (b) Compliance. RedChip is in material compliance with all
applicable Regulations respecting employment practices, terms and conditions of
employment, wages and hours, equal employment opportunity, and the payment of
social security and similar taxes and is not engaged in any unfair labor
practice. RedChip is not liable for any claims for past due wages or any
penalties for failure to comply with any of the foregoing.

                  (c) Severance Obligations. Except as set forth on Schedule
3.19(c), RedChip has not entered into any severance, "stay-bonus" or similar
arrangement in respect of any present or former Employee that will result in any
obligation (absolute or contingent) of FRT or RedChip to make any payment to any
present or former Employee following termination of employment or upon
consummation of the transactions contemplated by this Agreement (whether or not
employment is continued for any specified period after the Effective Time).
Except as set forth on Schedule 3.19(c), neither the execution and delivery of
this Agreement or any Ancillary Agreement nor the consummation of the
transactions contemplated hereby or thereby will result in the acceleration or
vesting of any other rights of any Person to benefits under any Employee Plans.

                  (d) Highly Compensated Employees. Attached hereto as Schedule
3.19(d) is a list of the names of all present RedChip Employees with total
compensation expected to exceed $100,000 in 2000 and their current compensation
payable by RedChip. Notwithstanding any provision of this Agreement or any
Schedule to the contrary, RedChip represents that from and after the Effective
Time no benefit or other compensation is payable to any Person identified on
Schedule 3.19(d) upon the voluntary resignation of such Person from employment
with FRT or RedChip as a result of the occurrence of the Effective Time.

                                       27
<PAGE>   34

         3.20 Employee Benefit Plans. Schedule 3.20 contains a complete list of
Employee Plans which cover or have covered employees of RedChip or any
predecessor (with respect to their relationship with RedChip or any
predecessor). True and complete copies of each of the following documents have
been delivered by RedChip to FRT: (i) Employee Plan (and, if applicable, related
trust agreements, annuity contracts or other funding instruments) which covers
or has covered employees of RedChip (with respect to their relationship with
RedChip) and all amendments thereto, all summary plan descriptions, summary of
material modifications (as defined in ERISA) and all written interpretations and
descriptions thereof which RedChip generally has distributed to participants
therein, the number of and a general description of the level of employees
covered by each Benefit Arrangement and a complete description of any Employee
Plan which is not in writing, (ii) the most recent determination letter issued
by the Internal Revenue Service and any opinion letter issued by the Department
of Labor with respect to each Pension Plan and each voluntary employees'
beneficiary association as defined under Section 501(c)(9) of the Code (other
than a Multiemployer Plan) which covers or has covered employees of RedChip
(with respect to their relationship with RedChip), (iii) for the three (3) most
recent plan years, Annual Reports on Form 5500 Series required to be filed with
any governmental agency for each Pension Plan or Welfare Plan which covers or
has covered employees of RedChip (with respect to their relationship with
RedChip), (iv) all actuarial reports prepared for the last three (3) plan years
for each Pension Plan which covers or has covered employees of RedChip (with
respect to their relationship with RedChip), (v) a description of complete age,
salary, service and related data as of the last day of the last plan year for
employees and former employees of RedChip, and (vi) a description setting forth
the amount of any liability of RedChip as of the Closing Date for payments more
than thirty (30) calendar days past due with respect to any Welfare Plan.

                  (i) Pension Plans.

                           i. No Pension Plan is subject to the minimum funding
requirements of ERISA. As of the last day of the last plan year of each Pension
Plan and as of the Closing Date, the "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA (but excluding from the definition of
"current value" of "assets" of such Pension Plan, accrued but unpaid
contributions) did not and will not exceed zero. Neither RedChip nor any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Section 4069 of ERISA. Neither
RedChip nor any ERISA Affiliate has, at any time, (1) ceased operations at a
facility so as to become subject to the provisions of Section 4062(e) of ERISA,
(2) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, or (3) ceased making contributions on or
before the Closing Date to any Pension Plan subject to Section 4064(a) of ERISA
to which RedChip or any ERISA Affiliate made contributions during the six (6)
years prior to the Closing Date.

                           ii. No "accumulated funding deficiency" (for which an
excise tax is due or would be due in the absence of a waiver) as defined in
Section 412 of the Code or as defined in Section 302(a)(2) of ERISA, whichever
may apply, has been incurred with respect to any Pension Plan with respect to
any plan year, whether or not waived. Neither RedChip nor any ERISA Affiliate
has failed to pay when due any "required installment," within the meaning of
Section 412(m) of the Code and Section 302(e) of ERISA, whichever may apply,
with respect to

                                       28
<PAGE>   35

any Pension Plan. Neither RedChip nor any ERISA Affiliate is subject to any lien
imposed under Section 412(n) of the Code or Section 302(f) of ERISA, whichever
may apply, with respect to any Pension Plan. Neither RedChip nor any ERISA
Affiliate has any liability for unpaid contributions with respect to any Pension
Plan.

                           iii. Neither RedChip nor any ERISA Affiliate is
required to provide security to a Pension Plan that covers or has covered
employees or former employees of RedChip or a Subsidiary under Section
401(a)(29) of the Code.

                           iv. Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of RedChip (with respect to their
relationship with RedChip) which has been operated as a qualified plan (1) has
received a favorable determination letter from the Internal Revenue Service
stating that such Pension Plan and each related trust is qualified and
tax-exempt under the provisions of Code Sections 401(a) (or 403(a), as
appropriate) and 501(a) and (2) has been so qualified during the period from its
adoption to date.

                           v. Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of RedChip (with respect to their
relationship with RedChip) currently complies in all material respects and has
been maintained in compliance in all material respects with its terms and, both
as to form and in operation, with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such plans,
including, without limitation, ERISA and the Code.

                  (ii) Multiemployer Plans. Neither RedChip nor any ERISA
Affiliate has any liability with respect to a Multiemployer Plan, and no
liability will arise or be imposed on RedChip or any ERISA Affiliate under, or
with respect to, any Multiemployer Plan.

                  (iii) Welfare Plans.

                           i. Each Welfare Plan which covers or has covered
employees or former employees of RedChip (with respect to their relationship
with RedChip) currently complies in all material respects and has been
maintained in compliance in all material respects with its terms and, both as to
form and operation, with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such Welfare Plan,
including, without limitation, ERISA and the Code.

                           ii. Except as required by Section 4980B of the Code
or Part 6 of Title 1, Subtitle B of ERISA, none of RedChip, any ERISA Affiliate
or any Welfare Plan has any present or future obligation to make any payment to,
or with respect to any present or former employee of RedChip or any ERISA
Affiliate pursuant to, any retiree medical benefit plan, or other retiree
Welfare Plan, and no condition exists which would prevent RedChip or an ERISA
Affiliate from amending or terminating any such benefit plan or such Welfare
Plan.

                           iii. Each Welfare Plan which covers or has covered
employees or former employees of RedChip (with respect to their relationship
with RedChip) and which is a "group health plan," as defined in Section 607(1)
of ERISA, presently complies in all material respects with and has been operated
in compliance in all material

                                       29
<PAGE>   36

respects with provisions of Part 6 of Title I, Subtitle B of ERISA and Sections
162(k) and 4980B of the Code at all times.

                           iv. Neither RedChip nor any ERISA Affiliate has, at
any time, maintained, contributed to or had any obligation to maintain or
contribute to any Welfare Plan that is a "multiemployer plan," as defined in
Section 3(37) of ERISA.

                           v. The insurance policies or other funding
instruments, if any, for each Welfare Plan provide coverage for each employee,
consultant, independent contractor or retiree of RedChip or any of its
Subsidiaries (and, if applicable, their respective dependents) who has been
advised by RedChip, whether through an Employee Plan or otherwise, that he or
she is covered by such Welfare Plan.

                  (iv) Benefit Arrangements. Each Benefit Arrangement which
covers or has covered employees or former employees of RedChip (with respect to
their relationship to RedChip) presently complies and has been maintained in
compliance in all material respects with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Benefit Arrangement, including, without limitation, the Code.
Except as provided by law or in any employment agreement set forth on Schedule
3.19, the employment of all persons presently employed or retained by RedChip is
terminable at will.

                  (v) Unrelated Business Taxable Income; Unpaid Contributions.
No Employee Plan (or trust or other funding vehicle pursuant thereto) has
incurred any liability under Code Section 511. Neither RedChip nor any ERISA
Affiliate has any liability for unpaid contributions under Section 515 of ERISA
with respect to any Employee Plan.

                  (vi) Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of
RedChip (with respect to such employee's relationship with RedChip) that,
individually or collectively, requires the payment by RedChip of any amount (i)
that is not deductible under Section 162(a)(1) or 404 of the Code or (ii) that
is an "excess parachute payment" pursuant to Section 280G of the Code.

                  (vii) Fiduciary Duties and Prohibited Transactions. Neither
RedChip nor any plan fiduciary of any Welfare Plan or Pension Plan which covers
or has covered employees or former employees of RedChip or any ERISA affiliate
has engaged in, or has any liability in respect of, any transaction in violation
of Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no exemption exists under Section 408
of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise violated the
provisions of Part 4 of Title I, Subtitle B of ERISA so as to create any
liability of RedChip or any of its Subsidiaries or any Employee Plan. RedChip
has not participated in a violation of Part 4 of Title I, Subtitle B of ERISA by
any plan fiduciary of any Welfare Plan or Pension Plan, and RedChip and its
Subsidiaries have not been assessed any civil penalty under Section 502(l) of
ERISA.

                  (viii) Litigation. There is no action, order, writ,
injunction, judgment or decree outstanding or claim (other than routine claims
for benefits), suit, litigation, proceeding, arbitration proceeding,
governmental audit or investigation relating to or seeking benefits under

                                       30
<PAGE>   37

any Employee Plan that is pending or, to the knowledge of RedChip, anticipated
or threatened against RedChip, any ERISA Affiliate or any Employee Plan.

                  (ix) No Amendments. Neither RedChip nor any ERISA Affiliate
has announced to employees, former employees, consultants or directors an
intention to create, or otherwise created, a legally binding commitment to adopt
any additional Employee Plan which is intended to cover employees or former
employees of RedChip (with respect to their relationship with RedChip) or to
amend or modify any existing Employee Plan which covers or has covered employees
or former employees of RedChip or any of its Subsidiaries (with respect to their
relationship with RedChip or any of its Subsidiaries).

                  (x) Unpaid Contributions. Neither RedChip nor any ERISA
Affiliate has any liability for unpaid contributions under Section 515 of ERISA
with respect to any Pension Plan, Multiemployer Plan or Welfare Plan.

                  (xi) Insurance Contracts. No Employee Plan (other than a
"multiemployer plan," as defined in Section 3(37) of ERISA) holds as an asset of
any Employee Plan any interest in any annuity contract, guaranteed investment
contract or any other investment or insurance contract issued by an insurance
company that is the subject of bankruptcy, conservatorship or rehabilitation
proceedings.

                  (xii) No Acceleration or Creation of Rights. Except as set
forth on Schedule 3.19(c), neither the execution and delivery of this Agreement
or the Ancillary Agreements by RedChip nor the consummation of the transactions
contemplated hereby or the related transactions will result in the acceleration
or creation of any rights of any person to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).

                  (xiii) No Other Material Liability. No event has occurred in
connection with which RedChip, any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any material liability (A) under any
statute, regulation or governmental order relating to any Employee Plan or (B)
pursuant to any obligation of RedChip to indemnify any person against liability
incurred under any such statute, regulation or order as they relate to the
Employee Plans.

         3.21 Transactions with Related Parties. Except for employment
agreements and other compensation arrangements disclosed on Schedule 3.21, no
Related Party has (a) borrowed or loaned money or other property to RedChip
which has not been repaid or returned, (b) any contractual relationship or other
claims, express or implied, of any kind whatsoever against RedChip or (c) any
interest in any property used by RedChip.

         3.22 Compliance with Law. RedChip and its predecessors have conducted
the RedChip Business in compliance with all applicable Regulations and Court
Orders, except as would not reasonably be expected to cause a RedChip Material
Adverse Effect. RedChip has not received any notice to the effect that, or has
otherwise been advised that, RedChip or any predecessor is

                                       31
<PAGE>   38

not in compliance with any such Regulations or Court Orders, and neither RedChip
nor any predecessor has any reason to anticipate that any existing circumstances
are likely to result in any material violation of any of the foregoing.

         3.23 Intellectual Property.

                  (a) General. Schedule 3.23(a) sets forth with respect to
Proprietary Rights of RedChip: (i) for each trademark, tradename or service
mark, whether or not registered, the date first used, the application serial
number or registration number, the class of goods covered, the nature of the
goods or services, the countries in which the names or mark is used and the
expiration date for each country in which a trademark has been registered, (ii)
for each copyright for which registration has been sought, whether or not
registered, the date of creation and first publication of the work, the number
and date of registration for each country in which a copyright application has
been registered, (iii) for each mask work (if any), whether or not registered,
the date of first commercial exploitation and if registered, the registration
number and date of registration, (iv) a description of all Trade Secrets that
are material to the RedChip Business and (v) all such Proprietary Rights in the
form of licenses. True and correct copies of all Proprietary Rights (including
all pending applications, application related documents and materials and
written materials relating to Trade Secrets) owned, controlled or used by or on
behalf of RedChip or in which RedChip has any interest whatsoever have been
provided or made available to FRT.

                  (b) Adequacy. The Proprietary Rights of RedChip are all those
necessary for the normal conduct of the RedChip Business as presently conducted
and as presently contemplated, including the design, manufacture and sale of all
products currently under development, planned for development or in production.

                  (c) Royalties and Licenses. Except as set forth on Schedule
3.23(c), RedChip has no obligation to compensate any Person for the use of any
of its Proprietary Rights nor has RedChip granted to any Person any license,
option or other rights to use in any manner any of its Proprietary Rights,
whether requiring the payment of royalties or not.

                  (d) Ownership. RedChip owns or has a valid right to use its
Proprietary Rights, and such Proprietary Rights will not cease to be valid
rights of RedChip by reason of the execution, delivery and performance of this
Agreement or the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby.

                  (e) Absence of Claims. Except as set forth in Schedule 3.18,
RedChip has not (A) received any notice alleging, or otherwise has knowledge of
facts that might give rise to, invalidity with respect to any of the Proprietary
Rights of RedChip or (B) received any notice of alleged infringement of any
rights of others due to any activity by RedChip. To the knowledge of RedChip,
RedChip's use of its Proprietary Rights in its past, current and planned
products do not and would not infringe upon or otherwise violate the valid
rights of any third party anywhere in the world. No other Person (i) has
notified RedChip that it is claiming any ownership of or right to use any of
RedChip's Proprietary Rights or (ii) to the knowledge of RedChip, is infringing
upon any such Proprietary Rights in any way.

                                       32
<PAGE>   39

                  (f) Protection of Proprietary Rights. RedChip has taken
reasonable steps necessary or appropriate (including, entering into appropriate
confidentiality and nondisclosure agreements with officers, directors,
subcontractors, RedChip Employees, licensees and customers in connection with
RedChip's Assets or the RedChip Business) to safeguard and maintain the secrecy
and confidentiality of, and the proprietary rights in, the Proprietary Rights
that are material to the RedChip Business. RedChip does not have any knowledge
of any breach of any such confidentiality or nondisclosure agreement by any
party thereto.

         3.24 Tax Matters.

                  (a) Filing of Tax Returns. RedChip has timely filed with the
appropriate taxing authorities all Tax Returns required to be filed through the
date hereof. Except as set forth on Schedule 3.24(a), the Tax Returns filed are
complete and accurate. Except as set forth on Schedule 3.24(a), RedChip has not
requested any extension of time within which to file any Tax Return. RedChip has
delivered to FRT complete and accurate copies of federal, state and local Tax
Returns of RedChip and its predecessors for the years ended December 31, 1999,
1998, 1997 and 1996.

                  (b) Payment of Taxes. All Taxes due from RedChip, in respect
of periods (or portions thereof) beginning before the Closing Date have been
timely paid or an adequate reserve (in conformity with GAAP) has been
established therefor, as set forth in the RedChip Financial Statements as such
reserve is adjusted for the passage of time through the Closing Date in
conformity with GAAP and in accordance with RedChip's past practice, and RedChip
has no Liability for Taxes in excess of the amounts so paid or reserves so
established, as so adjusted. All Taxes that RedChip or its predecessors is
required by law to withhold or collect have been duly withheld or collected and
have been timely paid over to the appropriate governmental authorities to the
extent due and payable.

                  (c) Audits, Investigations or Claims. No deficiencies for
Taxes of RedChip have been claimed, proposed or assessed by any taxing or other
governmental authority. There are no pending or, to the knowledge of RedChip,
threatened audits, assessments or other Actions for or relating to any Liability
in respect of Taxes of RedChip, and there are no matters under discussion with
any governmental authorities, or known to RedChip, with respect to Taxes that
are likely to result in an additional Liability for Taxes. Audits of federal,
state and local Tax Returns by the relevant taxing authorities have been
completed for the periods set forth on Schedule 3.24 and neither RedChip nor any
predecessor of RedChip has been notified that any taxing authority intends to
audit a Tax Return for any other period. No extension of a statute of
limitations relating to Taxes is in effect with respect to RedChip or any
predecessor of RedChip.

                  (d) Lien. There are no Encumbrances for Taxes on any of the
Assets (other than Encumbrances for Taxes not yet due and payable) or, to the
knowledge of RedChip, any shares of RedChip Stock.

                  (e) Tax Elections. All elections with respect to Taxes
affecting RedChip, or the Assets, as of the date hereof are set forth on
Schedule 3.24. RedChip has not (i) consented at any time under Section 341(f)(1)
of the Code to have the provisions of Section 341(f)(2) of the Code apply to any
disposition of any RedChip Assets; (ii) agreed, or is required, to make any

                                       33
<PAGE>   40

adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise; (iii) made an election, or is required, to treat any Asset
as owned by another Person pursuant to the provisions of Section 168(f) of the
Code or as tax-exempt bond financed property or tax-exempt use property within
the meaning of Section 168 of the Code; (iv) acquired and does not own any
assets that directly or indirectly secure any debt the interest on which is tax
exempt under Section 103(a) of the Code; or (v) made any of the foregoing
elections or is required to apply any of the foregoing rules under any
comparable state or local Tax provision.

                  (f) Prior Affiliated Groups. RedChip is not and has never been
a member of an affiliated group of corporations within the meaning of Section
1504 of the Code or any group that has filed a combined consolidated or unitary
state or local return.

                  (g) Tax Sharing Agreements. There are no Tax-sharing
agreements or similar arrangements (including indemnity arrangements) with
respect to or involving RedChip, RedChip Assets, or the RedChip Business and,
after the Closing Date, none of RedChip, the RedChip Assets or the RedChip
Business shall be bound by any such Tax-sharing agreements or similar
arrangements entered into prior to the Closing or have any Tax Liability
thereunder for amounts due in respect of periods prior to the Closing Date.

                  (h) Partnerships. RedChip has no interest in nor is it subject
to any joint venture, partnership, or other arrangement or contract which is
treated as a partnership for federal income tax purposes.

                  (i) No Withholding. The transaction contemplated herein is not
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.

                  (j) USRPC. RedChip is not and has not been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in section 897(c)(1)(A)(ii) of the
Code.

                  (k) Other Entity Liability. RedChip does not have any
Liability for the Taxes of any Person (other than Taxes of RedChip) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract or otherwise.

                  (l) Correspondence. RedChip has made available to FRT all
correspondence to or from RedChip or its predecessors or Affiliates (or their
respective Representatives) on the one hand and the Internal Revenue Service
("IRS") or any state Tax authority on the other hand.

                  (m) Reorganization.

                           (i) Prior to the Closing, RedChip shall not have
taken, nor have any plan or intention to take, any action that could reasonably
be expected to cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368(a) of the Code.

                                       34
<PAGE>   41

                           (ii) RedChip is not aware of any fact or circumstance
that could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.

         3.25 Insurance. Schedule 3.25 contains a complete and accurate list of
all policies or binders of insurance (showing as to each policy or binder the
carrier, policy number, coverage limits, expiration dates, annual premiums, a
general description of the type of coverage provided and any pending claims
thereunder) of which RedChip is the owner, insured or beneficiary. All of such
policies are sufficient for (i) compliance with all Regulations and all of the
Contracts, (ii) covering all reasonably foreseeable damage to and liabilities or
contingencies relating to RedChip's conduct of the RedChip Business and (iii)
providing replacement cost insurance coverage for all of the Assets, Fixtures
and Equipment and all leasehold improvements. RedChip is not in default under
any of such policies or binders, and has not failed to give any notice or to
present any material claim under any such policy or binder in a due and timely
fashion. There are no facts known to RedChip upon which an insurer might be
justified in reducing or denying coverage or increasing premiums on existing
policies or binders. There are no outstanding unpaid claims under any such
policies or binders. Such policies and binders are in full force and effect on
the date hereof and shall be kept in full force and effect by RedChip through
the Closing Date.

         3.26 Accounts Receivable. Except as contemplated by Schedule 3.26, the
accounts and notes receivable reflected in the RedChip balance sheet as of March
31, 2000, and all accounts or notes receivable arising since the Balance Sheet
Date, represent bona fide claims against debtors for sales, services performed
or other charges arising on or before the date of recording thereof, and all the
goods delivered and services performed which gave rise to said accounts were
delivered or performed in accordance with the applicable orders, Contracts or
customer requirements.

         3.27 Purchase Commitments and Outstanding Bids. As of the date of this
Agreement, the aggregate of all Contracts for the purchase of Inventory by
RedChip, other than in the ordinary course of business, does not exceed $40,000.
No outstanding purchase or outstanding lease commitment of RedChip presently is
in excess of the normal, ordinary and usual requirements of the RedChip Business
or was made at any price in excess of the now current market price or contains
terms and conditions more onerous than those usual and customary in RedChip's
business. There are no pending obligations to lease real property in addition to
those identified on Schedule 3.8(b).

         3.28 Suppliers. Schedule 3.28 sets forth a complete and accurate list
of key suppliers and service providers, showing approximate purchases or fees
paid by RedChip during the current fiscal year. Since the Balance Sheet Date,
there has been no RedChip Material Adverse Change in the business relationship
of RedChip with any supplier named on Schedule 3.28. RedChip has not received
any written communication from any supplier named on Schedule 3.28 of any
intention to return, terminate or materially reduce purchases from or supplies
to RedChip.

         3.29 Brokers; Transaction Costs. Except as set forth on Schedule 3.29,
RedChip has not entered into or will enter into any contract, agreement,
arrangement or understanding with any Person which will result in the obligation
of FRT or RedChip to pay any finder's fee, brokerage

                                       35
<PAGE>   42

commission, legal, accounting, or similar payment in connection with the
transactions contemplated hereby.

         3.30 No Other Agreements to Sell RedChip or the Assets. Neither RedChip
nor any Stockholder has any legal obligation, absolute or contingent, to any
other Person to sell the Assets (other than Inventory in the ordinary course of
business) or to sell any capital stock of RedChip or to effect any merger,
consolidation or other reorganization of RedChip or to enter into any agreement
with respect thereto, except pursuant to this Agreement.

         3.31 Foreign Corrupt Practices Act. Neither RedChip nor any
predecessor, nor to the knowledge of RedChip, any agent, employee or other
Person associated with or acting on behalf of RedChip or any predecessor has,
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds, violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback
or other similar unlawful payment.

         3.32 Financial Report; Operating Plan. RedChip has made available to
FRT that certain Financial Report for 1999 Stub Period and Q1 2000 report dated
as of April 27, 2000, with respect to the RedChip Business which was prepared
for internal use only. RedChip represents and warrants that such report was
prepared in good faith in accordance with GAAP in all material respects, are
based on assumptions believed by it to be reasonable as of the date of this
Agreement and, with respect to the historical information contained in such
report (as opposed to any forward looking statements or projections), fairly
presents in all material respects the financial condition, results of operations
and cash flows and RedChip as of the date and for the periods indicated.

         3.33 Approvals. Schedule 3.33 contains a list of all material approvals
or consents relating to the business conducted by RedChip which are required to
be given to or obtained by RedChip from any Person in connection with the
consummation of the transactions contemplated by this Agreement.

         3.34 Takeover Statutes. No Takeover Statute applicable to RedChip is
applicable to the Merger or the transactions contemplated hereby.

         3.35 Material Misstatements Or Omissions. To the knowledge of RedChip,
no representations or warranties by RedChip in this Agreement or any Ancillary
Agreement to which it is a party or in any document, written information,
exhibit, statement, certificate or schedule heretofore or hereinafter furnished
by RedChip or any of its Representatives to FRT or Sub pursuant hereto, or in
connection with the transactions contemplated by this Agreement or by such
Ancillary Agreements contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary to make the
statements or facts contained therein not misleading.

                                       36
<PAGE>   43

                                   ARTICLE 4
                      REPRESENTATIONS AND WARRANTIES OF FRT

         As an inducement of RedChip to enter into this Agreement, FRT hereby
makes as of the date hereof and as of the Closing Date, the following
representations and warranties to RedChip, except as otherwise set forth in
written disclosure schedules (the "Schedules") delivered to RedChip prior to the
date hereof, a copy of which is attached hereto. The Schedules are numbered to
correspond to the various sections of this Article 4 setting forth certain
exceptions to one or more of the representations and warranties contained in
this Article 4 and certain other information called for by this Agreement. Any
disclosure made in any particular Schedule may be deemed made in any other
Schedule so long as the parties reasonably determine that the exception in one
Schedule is relevant or related to the disclosure in another Schedule.

         4.1 Organization. FRT is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. FRT has full
corporate power and authority to conduct the FRT Business as it is presently
being conducted and to own or lease, as applicable, the Assets owned or leased
by it. FRT is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which such qualification is necessary
under applicable law as a result of the conduct of its business or the ownership
of its properties and where the failure to be so qualified would have a Material
Adverse Effect on FRT. Sub is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware. Sub has not engaged in
any business (other than in connection with this Agreement and the transactions
contemplated hereby) since the date of its incorporation.

         4.2 Capitalization.

                  (a) FRT has authorized under its Certificate of Incorporation
fifty million (50,000,000) shares of FRT Stock and five million (5,000,000)
shares of preferred stock, par value $.01 per share of which, as of the date
hereof, 6,811,265 shares of FRT Stock and no shares of preferred stock were
issued and outstanding. FRT has no other stock authorized, issued or
outstanding.

                  (b) There are 2,500,000 shares of FRT Stock reserved for
issuance upon the exercise of options granted or available for grant under FRT's
Freerealtime.com 1999 Equity Incentive Plan, and 187,500 shares reserved for
issuance upon exercise of warrants (collectively, the "FRT Options").

                  (c) No additional shares of capital stock of FRT will be
issued and outstanding, and no additional shares of capital stock of FRT shall
be issued prior to the issuance of the Merger Shares except for: (i) shares
issued upon the exercise of any of the FRT Options, (ii) FRT Options issued in
the ordinary course of business and (iii) FRT Stock issued in capital financing
transactions.

                  (d) The Merger Shares to be issued pursuant to the terms of
this Agreement have been duly authorized and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable.

         4.3 Stockholders' Agreements, etc. Except as contemplated by this
Agreement and as set forth on Schedule 4.3, there are no stockholder agreements,
voting trusts, proxies or other

                                       37
<PAGE>   44

agreements or understandings with respect to or concerning the purchase, sale or
voting of the capital stock of FRT.

         4.4 Authorization. FRT has all necessary corporate or other power and
authority to enter into this Agreement and the Ancillary Agreements to which FRT
is a party and, has taken all corporate or other action necessary to consummate
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. This Agreement has been duly executed and delivered by
FRT, and this Agreement is, upon execution and delivery by each of the other
parties hereto, will be, a valid and binding obligation of FRT, enforceable
against FRT in accordance with its terms, except that enforceability may be
limited by the effect of (a) bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors or (b)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).

         4.5 Contracts.

                  (a) Disclosure. Schedule 4.5 sets forth a complete and
accurate list of all of the Contracts of the following categories:

                           (i) Contracts not made in the ordinary course of
business;

                           (ii) License agreements or royalty agreements,
whether FRT is the licensor or licensee thereunder (excluding licenses that are
commonly available on standard commercial terms, such as software "shrink-wrap"
licenses);

                           (iii) Confidentiality and non-disclosure agreements
(whether FRT is the beneficiary or the obligated party thereunder);

                           (iv) Contracts or commitments involving future
expenditures or Liabilities, actual or potential, in excess of $50,000 after the
date hereof or otherwise material to the FRT Business or the Assets of FRT;

                           (v) Contracts or commitments relating to commission
arrangements with others that are material to the FRT Business;

                           (vi) Employment contracts, consulting contracts,
severance agreements, "stay-bonus" agreements and similar arrangements,
including Contracts (A) to employ or terminate executive officers or other
personnel and other contracts with present or former officers or directors of
FRT or (B) that will result in the payment by, or the creation of any Liability
of FRT or RedChip to pay any severance, termination, "golden parachute," or
other similar payments to any present or former personnel following termination
of employment or otherwise as a result of the consummation of the transactions
contemplated by this Agreement;

                           (vii) Indemnification agreements;

                           (viii) Promissory notes, loans, agreements,
indentures, evidences of indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation to pay money, whether FRT shall be the
borrower, lender or guarantor thereunder;

                                       38
<PAGE>   45

                           (ix) Contracts containing covenants limiting the
freedom of FRT, or any officer, director, Employee or Affiliate of FRT, to
engage in any line of business or compete with any Person that relates directly
or indirectly to the FRT Business;

                           (x) Any Contract with the federal, state or local
government or any agency or department thereof;

                           (xi) Any Contract or other arrangement with a Related
Party;

                           (xii) Leases of real or personal property involving
annual payments of more than $50,000; and

                           (xiii) Any other Contract under which the
consequences of a default or termination would reasonably be expected to have a
Material Adverse Effect on FRT, individually or in the aggregate.

         Complete and accurate copies of all of the Contracts listed on Schedule
4.5, including all amendments and supplements thereto, have been made available
to RedChip. FRT has included as part of Schedule 4.5 a brief summary of the
material terms of each oral Contract.

                  (b) Absence of Defaults. Except as set forth on Schedule
4.5(b), all of the Contracts are valid, binding and enforceable in accordance
with their terms with no existing (or to the knowledge of FRT threatened)
material Default or dispute. FRT has fulfilled, or taken all action necessary to
enable it to fulfill when due, all of its material obligations under each of
such Contracts. To the knowledge of FRT, all parties to such Contracts have
complied in all material respects with the provisions thereof, no party is in
material Default thereunder and no notice of any claim of Default has been given
to FRT or any of the Stockholders.

                  (c) Product Warranty. FRT has not committed any act, and there
has been no omission, which may result in, and there has been no occurrence
which may give rise to, product liability or Liability for breach of warranty
(whether covered by insurance or not) on the part of FRT, with respect to
products designed, manufactured, assembled, sold, repaired, maintained,
delivered or installed or services rendered prior to or on the Closing Date
which could reasonably be expected to result in Liability to FRT exceeding
$50,000 in the aggregate.

         4.6 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.6, since the Balance Sheet Date there has not been any:

                  (a) FRT Material Adverse Change;

                  (b) failure to operate the FRT Business in the ordinary course
so as to use all commercially reasonable efforts to preserve the FRT Business
intact and to preserve the continued services of FRT's employees and the
goodwill of suppliers, customers and others having business relations with FRT
or its Representatives;

                  (c) resignation or termination of any officer, director or
manager, or any increase in the rate of compensation payable or to become
payable to any officer, director or manager or Representative of FRT (other than
general, regularly-scheduled reviews), including

                                       39
<PAGE>   46

the making of any loan to, or the payment, grant or accrual of any bonus,
incentive compensation, service award or other similar benefit to, any such
Person, or the addition to, modification of, or contribution to any Employee
Plan;

                  (d) any payment, loan or advance of any amount to or in
respect of, or the sale, transfer or lease of any properties or the Assets to,
or entering into of any Contract with, any Related Party except regular
compensation to FRT Employees;

                  (e) sale, assignment, license, transfer or Encumbrance of any
of the Assets, tangible or intangible, singly or in the aggregate, other than
sales of products and services in the ordinary course of business and consistent
with past practice;

                  (f) new material Contracts, or material extensions,
modifications, terminations or renewals thereof, except for material Contracts
entered into, modified or terminated in the ordinary course of business and
consistent with past practice;

                  (g) actual or threatened termination of any material customer
account or group of accounts or actual or threatened material reduction in
purchases or royalties payable by any such customer or occurrence of any event
that is likely to result in any such termination or reduction;

                  (h) disposition or lapsing of any Proprietary Rights of FRT,
in whole or in part, or any disclosure of any Trade Secret, process or know-how
to any Person not an Employee;

                  (i) change in accounting methods or practices by FRT;

                  (j) revaluation by FRT of any of the Assets, including writing
off or establishing reserves with respect to inventory, notes or accounts
receivable (other than for which adequate reserves have been previously
established;

                  (k) damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Assets, the FRT Business or the
prospects of FRT;

                  (l) declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of FRT or any redemption, purchase
or other acquisition of any equity securities of FRT;

                  (m) issuance or reservation for issuance by FRT of, or
commitment of it to issue or reserve for issuance, any shares of capital stock
or other equity securities or obligations or securities convertible into or
exchangeable for shares of capital stock or other equity securities, excluding
those FRT Options issued in the ordinary course of business, and excluding any
shares of FRT Stock issued upon the exercise or conversion of any FRT Option;

                  (n) increase, decrease or reclassification of the capital
stock of FRT;

                  (o) amendment of the Certificate of Incorporation or Bylaws of
FRT;

                                       40
<PAGE>   47

                  (p) capital expenditure or execution of any lease or any
incurring of liability therefor by FRT, involving payments or obligations in
excess of $50,000 in the aggregate;

                  (q) failure to pay any material obligation of FRT when due;

                  (r) cancellation of any indebtedness or waiver of any rights
of substantial value to FRT, except in the ordinary course of business and
consistent with past practice;

                  (s) indebtedness incurred by FRT for borrowed money or any
commitment to borrow money entered into by FRT, or any loans made or agreed to
be made by FRT;

                  (t) liability incurred by FRT except in the ordinary course of
business and consistent with past practice, or any increase or change in any
assumptions underlying or methods of calculating any bad debt, contingency or
other reserves;

                  (u) payment, discharge or satisfaction of any Liabilities of
FRT other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of Liabilities reflected or reserved
against in the Financial Statements or incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date;

                  (v) acquisition of any equity interest in any other Person; or

                  (w) agreement by FRT directly or indirectly to do any of the
foregoing.

         4.7 Liabilities. FRT has no Liabilities or obligations (absolute,
accrued, contingent or otherwise) except (i) Liabilities which are reflected and
properly reserved against in the FRT Financial Statements, (ii) Liabilities
incurred in the ordinary course of business and consistent with past practice
since the Balance Sheet Date and (iii) Liabilities arising under the Contracts
(other than obligations which are required to be reflected on a balance sheet
prepared in accordance with GAAP) set forth on Schedule 4.5 or Liabilities which
are not required to be disclosed on such Schedule and which have arisen or been
incurred in the ordinary course of business. None of the Liabilities described
in this Section 4.7 relates to any breach of Contract, breach of warranty, tort,
infringement or violation of law or arose out of any action, order writ,
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, investigation or dispute (collectively, "FRT Actions").

         4.8 Litigation. Except as set forth on Schedule 4.8 or Schedule 4.14,
there is no FRT Action, pending or, to the knowledge of FRT, threatened or
anticipated (i) against, relating to or affecting FRT, any of the Assets or any
of their respective officers and directors as such, (ii) which seeks to enjoin
or obtain damages in respect of the transactions contemplated hereby or by the
Ancillary Agreements or (iii) with respect to which there is a reasonable
likelihood of a determination which would prevent FRT from consummating the
transactions contemplated hereby. None of the FRT Actions, if adversely
determined against FRT, its directors or officers, or any other Person could
reasonably be expected to result in a loss to FRT, individually or in the
aggregate, in excess of $50,000. To the knowledge of FRT, there is no basis for
any FRT Action, which if adversely determined against FRT, its directors or
officers, or any other Person could reasonably be expected to result in a loss
to FRT, individually or in the aggregate, in excess of $50,000. There are
presently no outstanding judgments, decrees or orders of any court

                                       41
<PAGE>   48

or any governmental or administrative agency against or affecting FRT, the FRT
Business or any of the Assets of FRT. Schedule 4.8 contains a complete and
accurate description of all FRT Actions since January 1, 1996 to which FRT or
any predecessor of FRT has been a party or which relate to any of the Assets or
FRT's officers or directors as such, or any such FRT Actions which were settled
prior to the institution of formal proceedings, other than FRT Actions brought
by FRT for collection of monies owed in the ordinary course of business.

         4.9 Labor Matters.

                  (a) General. FRT is not a party to any labor agreement with
respect to the FRT Employees with any labor organization, group or association
and has not experienced any attempt by organized labor or its representatives to
make FRT conform to demands of organized labor relating to its Employees or to
enter into a binding agreement with organized labor that would cover the
Employees of FRT. There is no unfair labor practice charge or complaint against
FRT pending before the National Labor Relations Board or any other governmental
agency arising out of FRT's activities, and FRT does not have any knowledge of
any facts or information which would give rise thereto; there is no labor strike
or labor disturbance pending or threatened against FRT nor is any grievance
currently being asserted against it; and FRT has not experienced a work stoppage
or other labor difficulty. There are no material controversies pending or, to
the knowledge of FRT, threatened between FRT and its Employees, and FRT is not
aware of any facts which could reasonably result in any such controversy.

                  (b) Compliance. FRT is in material compliance with all
applicable Regulations respecting employment practices, terms and conditions of
employment, wages and hours, equal employment opportunity, and the payment of
social security and similar taxes and is not engaged in any unfair labor
practice. FRT is not liable for any claims for past due wages or any penalties
for failure to comply with any of the foregoing.

                  (c) Severance Obligations. Except as set forth on Schedule
4.9(c), FRT has not entered into any severance, "stay-bonus" or similar
arrangement in respect of any present or former Employee that will result in any
obligation (absolute or contingent) of RedChip or FRT to make any payment to any
present or former Employee following termination of employment or upon
consummation of the transactions contemplated by this Agreement (whether or not
employment is continued for any specified period after the Effective Time).
Except as set forth on Schedule 4.9(c), neither the execution and delivery of
this Agreement or any Ancillary Agreement nor the consummation of the
transactions contemplated hereby or thereby will result in the acceleration or
vesting of any other rights of any Person to benefits under any Employee Plans.

                  (d) Highly Compensated Employees. Attached hereto as Schedule
4.9(d) is a list of the names of all present FRT Employees with total
compensation expected to exceed $100,000 in 2000 and their current compensation
payable by FRT. Notwithstanding any provision of this Agreement or any Schedule
to the contrary, FRT represents that from and after the Effective Time no
benefit or other compensation is payable to any Person identified on Schedule
4.9(d) upon the voluntary resignation of such Person from employment with
RedChip or FRT as a result of the occurrence of the Effective Time.

                                       42
<PAGE>   49

         4.10 Employee Benefit Plans. Schedule 4.10 contains a complete list of
Employee Plans which cover or have covered employees of FRT or any predecessor
(with respect to their relationship with FRT or any predecessor). True and
complete copies of each of the following documents have been made available by
FRT to RedChip: (i) Employee Plan (and, if applicable, related trust agreements,
annuity contracts or other funding instruments) which covers or has covered
employees of FRT (with respect to their relationship with FRT) and all
amendments thereto, all summary plan descriptions, summary of material
modifications (as defined in ERISA) and all written interpretations and
descriptions thereof which FRT generally has distributed to participants
therein, the number of and a general description of the level of employees
covered by each Benefit Arrangement and a complete description of any Employee
Plan which is not in writing, (ii) the most recent determination letter issued
by the Internal Revenue Service and any opinion letter issued by the Department
of Labor with respect to each Pension Plan and each voluntary employees'
beneficiary association as defined under Section 501(c)(9) of the Code (other
than a Multiemployer Plan) which covers or has covered employees of FRT (with
respect to their relationship with FRT), (iii) for the three (3) most recent
plan years, Annual Reports on Form 5500 Series required to be filed with any
governmental agency for each Pension Plan or Welfare Plan which covers or has
covered employees of FRT (with respect to their relationship with FRT), (iv) all
actuarial reports prepared for the last three (3) plan years for each Pension
Plan which covers or has covered employees of FRT (with respect to their
relationship with FRT), (v) a description of complete age, salary, service and
related data as of the last day of the last plan year for employees and former
employees of FRT, and (vi) a description setting forth the amount of any
liability of FRT as of the Closing Date for payments more than thirty (30)
calendar days past due with respect to any Welfare Plan.

                  (i) Pension Plans.

                           i. No Pension Plan is subject to the minimum funding
requirements of ERISA. As of the last day of the last plan year of each Pension
Plan and as of the Closing Date, the "amount of unfunded benefit liabilities" as
defined in Section 4001(a)(18) of ERISA (but excluding from the definition of
"current value" of "assets" of such Pension Plan, accrued but unpaid
contributions) did not and will not exceed zero. Neither FRT nor any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Section 4069 of ERISA. Neither
FRT nor any ERISA Affiliate has, at any time, (1) ceased operations at a
facility so as to become subject to the provisions of Section 4062(e) of ERISA,
(2) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA, or (3) ceased making contributions on or
before the Closing Date to any Pension Plan subject to Section 4064(a) of ERISA
to which FRT or any ERISA Affiliate made contributions during the six (6) years
prior to the Closing Date.

                           ii. No "accumulated funding deficiency" (for which an
excise tax is due or would be due in the absence of a waiver) as defined in
Section 412 of the Code or as defined in Section 302(a)(2) of ERISA, whichever
may apply, has been incurred with respect to any Pension Plan with respect to
any plan year, whether or not waived. Neither FRT nor any ERISA Affiliate has
failed to pay when due any "required installment," within the meaning of Section
412(m) of the Code and Section 302(e) of ERISA, whichever may apply, with
respect to any Pension Plan. Neither FRT nor any ERISA Affiliate is subject to
any lien imposed under Section 412(n) of the Code or Section 302(f) of ERISA,
whichever may apply, with respect to

                                       43
<PAGE>   50

any Pension Plan. Neither FRT nor any ERISA Affiliate has any liability for
unpaid contributions with respect to any Pension Plan.

                           iii. Neither FRT nor any ERISA Affiliate is required
to provide security to a Pension Plan that covers or has covered employees or
former employees of FRT or a Subsidiary under Section 401(a)(29) of the Code.

                           iv. Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of FRT (with respect to their relationship
with FRT) which has been operated as a qualified plan (1) has received a
favorable determination letter from the Internal Revenue Service stating that
such Pension Plan and each related trust is qualified and tax-exempt under the
provisions of Code Sections 401(a) (or 403(a), as appropriate) and 501(a) and
(2) has been so qualified during the period from its adoption to date.

                           v. Each Pension Plan and each related trust
agreement, annuity contract or other funding instrument which covers or has
covered employees or former employees of FRT (with respect to their relationship
with FRT) currently complies in all material respects and has been maintained in
compliance in all material respects with its terms and, both as to form and in
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such plans, including, without
limitation, ERISA and the Code.

                  (ii) Multiemployer Plans. Neither FRT nor any ERISA Affiliate
has any liability with respect to a Multiemployer Plan, and no liability will
arise or be imposed on FRT or any ERISA Affiliate under, or with respect to, any
Multiemployer Plan.

                  (iii) Welfare Plans.

                           i. Each Welfare Plan which covers or has covered
employees or former employees of FRT (with respect to their relationship with
FRT) currently complies in all material respects and has been maintained in
compliance in all material respects with its terms and, both as to form and
operation, with the requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Welfare Plan, including,
without limitation, ERISA and the Code.

                           ii. Except as required by Section 4980B of the Code
or Part 6 of Title 1, Subtitle B of ERISA, none of FRT, any ERISA Affiliate or
any Welfare Plan has any present or future obligation to make any payment to, or
with respect to any present or former employee of FRT or any ERISA Affiliate
pursuant to, any retiree medical benefit plan, or other retiree Welfare Plan,
and no condition exists which would prevent FRT or an ERISA Affiliate from
amending or terminating any such benefit plan or such Welfare Plan.

                           iii. Each Welfare Plan which covers or has covered
employees or former employees of FRT (with respect to their relationship with
FRT) and which is a "group health plan," as defined in Section 607(1) of ERISA,
presently complies in all material respects with and has been operated in
compliance in all material respects with provisions of Part 6 of Title I,
Subtitle B of ERISA and Sections 162(k) and 4980B of the Code at all times.

                                       44
<PAGE>   51

                           iv. Neither FRT nor any ERISA Affiliate has, at any
time, maintained, contributed to or had any obligation to maintain or contribute
to any Welfare Plan that is a "multiemployer plan," as defined in Section 3(37)
of ERISA.

                           v. The insurance policies or other funding
instruments, if any, for each Welfare Plan provide coverage for each employee,
consultant, independent contractor or retiree of FRT or any of its Subsidiaries
(and, if applicable, their respective dependents) who has been advised by FRT,
whether through an Employee Plan or otherwise, that he or she is covered by such
Welfare Plan.

                  (iv) Benefit Arrangements. Each Benefit Arrangement which
covers or has covered employees or former employees of FRT (with respect to
their relationship to FRT) presently complies and has been maintained in
compliance in all material respects with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such Benefit Arrangement, including, without limitation, the Code.

                  (v) Unrelated Business Taxable Income; Unpaid Contributions.
No Employee Plan (or trust or other funding vehicle pursuant thereto) has
incurred any liability under Code Section 511. Neither FRT nor any ERISA
Affiliate has any liability for unpaid contributions under Section 515 of ERISA
with respect to any Employee Plan.

                  (vi) Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of FRT
(with respect to such employee's relationship with FRT) that, individually or
collectively, requires the payment by FRT of any amount (i) that is not
deductible under Section 162(a)(1) or 404 of the Code or (ii) that is an "excess
parachute payment" pursuant to Section 280G of the Code.

                  (vii) Fiduciary Duties and Prohibited Transactions. Neither
FRT nor any plan fiduciary of any Welfare Plan or Pension Plan which covers or
has covered employees or former employees of FRT or any ERISA affiliate has
engaged in, or has any liability in respect of, any transaction in violation of
Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no exemption exists under Section 408
of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise violated the
provisions of Part 4 of Title I, Subtitle B of ERISA so as to create any
liability of FRT or any of its Subsidiaries or any Employee Plan. FRT has not
participated in a violation of Part 4 of Title I, Subtitle B of ERISA by any
plan fiduciary of any Welfare Plan or Pension Plan, and FRT and its Subsidiaries
have not been assessed any civil penalty under Section 502(l) of ERISA.

                  (viii) Litigation. There is no action, order, writ,
injunction, judgment or decree outstanding or claim (other than routine claims
for benefits), suit, litigation, proceeding, arbitration proceeding,
governmental audit or investigation relating to or seeking benefits under any
Employee Plan that is pending or, to the knowledge of FRT, anticipated or
threatened against FRT, any ERISA Affiliate or any Employee Plan.

                  (ix) No Amendments. Neither FRT nor any ERISA Affiliate has
announced to employees, former employees, consultants or directors an intention
to create, or otherwise created, a legally binding commitment to adopt any
additional Employee Plan which is

                                       45
<PAGE>   52

intended to cover employees or former employees of FRT (with respect to their
relationship with FRT) or to amend or modify any existing Employee Plan which
covers or has covered employees or former employees of FRT or any of its
Subsidiaries (with respect to their relationship with FRT or any of its
Subsidiaries).

                  (x) Unpaid Contributions. Neither FRT nor any ERISA Affiliate
has any liability for unpaid contributions under Section 515 of ERISA with
respect to any Pension Plan, Multiemployer Plan or Welfare Plan.

                  (xi) Insurance Contracts. No Employee Plan (other than a
"multiemployer plan," as defined in Section 3(37) of ERISA) holds as an asset of
any Employee Plan any interest in any annuity contract, guaranteed investment
contract or any other investment or insurance contract issued by an insurance
company that is the subject of bankruptcy, conservatorship or rehabilitation
proceedings.

                  (xii) No Acceleration or Creation of Rights. Neither the
execution and delivery of this Agreement or the Ancillary Agreements by FRT nor
the consummation of the transactions contemplated hereby or the related
transactions will result in the acceleration or creation of any rights of any
person to benefits under any Employee Plan (including, without limitation, the
acceleration of the vesting or exercisability of any stock options, the
acceleration of the vesting of any restricted stock, the acceleration of the
accrual or vesting of any benefits under any Pension Plan or the acceleration or
creation of any rights under any severance, parachute or change in control
agreement).

                  (xiii) No Other Material Liability. No event has occurred in
connection with which FRT, any ERISA Affiliate or any Employee Plan, directly or
indirectly, could be subject to any material liability (A) under any statute,
regulation or governmental order relating to any Employee Plan or (B) pursuant
to any obligation of FRT to indemnify any person against liability incurred
under any such statute, regulation or order as they relate to the Employee
Plans.

         4.11 Transactions with Related Parties. Except for employment
agreements and other compensation arrangements disclosed on Schedule 4.11, no
Related Party has (a) borrowed or loaned money or other property to FRT which
has not been repaid or returned, (b) any contractual relationship or other
claims, express or implied, of any kind whatsoever against FRT or (c) any
interest in any property used by FRT.

         4.12 Compliance with Law. FRT and its predecessors have conducted the
FRT Business in compliance with all applicable Regulations and Court Orders,
except as would not reasonably be expected to cause a FRT Material Adverse
Effect. FRT has not received any notice to the effect that, or has otherwise
been advised that, FRT or any predecessor is not in compliance with any such
Regulations or Court Orders, and neither FRT nor any predecessor has any reason
to anticipate that any existing circumstances are likely to result in any
material violation of any of the foregoing.

         4.13 Intellectual Property.

                  (a) General. Schedule 4.13(a) sets forth with respect to
Proprietary Rights of FRT: (i) for each trademark, tradename or service mark,
whether or not registered, (ii) for each

                                       46
<PAGE>   53

copyright for which registration has been sought, whether or not registered, the
date of creation and first publication of the work, the number and date of
registration for each country in which a copyright application has been
registered, (iii) for each mask work (if any), whether or not registered, the
date of first commercial exploitation and if registered, the registration number
and date of registration and (iv) all such Proprietary Rights in the form of
licenses. True and correct copies of all Proprietary Rights (including all
pending applications, application related documents and materials and written
materials relating to Trade Secrets) owned, controlled or used by or on behalf
of FRT or in which FRT has any interest whatsoever have been provided or made
available to RedChip.

                  (b) Adequacy. The Proprietary Rights of FRT are all those
necessary for the normal conduct of the FRT Business as presently conducted and
as presently contemplated, including the design, manufacture and sale of all
products currently under development, planned for development or in production.

                  (c) Royalties and Licenses. Except as set forth on Schedule
4.13(c), FRT has no obligation to compensate any Person for the use of any of
its Proprietary Rights nor has FRT granted to any Person any license, option or
other rights to use in any manner any of its Proprietary Rights, whether
requiring the payment of royalties or not.

                  (d) Ownership. FRT owns or has a valid right to use its
Proprietary Rights, and such Proprietary Rights will not cease to be valid
rights of FRT by reason of the execution, delivery and performance of this
Agreement or the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby.

                  (e) Absence of Claims. Except as set forth in Schedule 4.13,
FRT has not (A) received any notice alleging, or otherwise has knowledge of
facts that might give rise to, invalidity with respect to any of the Proprietary
Rights of FRT or (B) received any notice of alleged infringement of any rights
of others due to any activity by FRT. To the knowledge of FRT, FRT's use of its
Proprietary Rights in its past, current and planned products do not and would
not infringe upon or otherwise violate the valid rights of any third party
anywhere in the world. No other Person (i) has notified FRT that it is claiming
any ownership of or right to use any of FRT's Proprietary Rights or (ii) to the
knowledge of FRT, is infringing upon any such Proprietary Rights in any way.

                  (f) Protection of Proprietary Rights. FRT has taken reasonable
steps necessary or appropriate (including, entering into appropriate
confidentiality and nondisclosure agreements with officers, directors,
subcontractors, FRT Employees, licensees and customers in connection with the
Assets or the FRT Business) to safeguard and maintain the secrecy and
confidentiality of, and the proprietary rights in, the Proprietary Rights that
are material to the Business. FRT has no knowledge of any breach of any such
confidentiality or nondisclosure agreement by any party thereto.

         4.14 Tax Matters.

                  (a) Filing of Tax Returns. FRT has timely filed with the
appropriate taxing authorities all Tax Returns required to be filed through the
date hereof. The Tax Returns filed

                                       47
<PAGE>   54

are complete and accurate. Except as set forth on Schedule 4.14(a), FRT has not
requested any extension of time within which to file any Tax Return. FRT has
delivered to RedChip complete and accurate copies of federal, state and local
Tax Returns of FRT and its predecessors for the years ended March 31, 2000, 1999
and 1998.

                  (b) Payment of Taxes. All Taxes due from FRT, or for which it
could under any circumstances be liable, in respect of periods (or portions
thereof) beginning before the Closing Date have been timely paid or an adequate
reserve (in conformity with GAAP) has been established therefor, as set forth in
the FRT Financial Statements, and FRT has no Liability for Taxes in excess of
the amounts so paid or reserves so established. Except as set forth on Schedule
4.14, all Taxes that FRT or its predecessors is required by law to withhold or
collect have been duly withheld or collected and have been timely paid over to
the appropriate governmental authorities to the extent due and payable.

                  (c) Audits, Investigations or Claims. No deficiencies for
Taxes of FRT have been claimed, proposed or assessed by any taxing or other
governmental authority. Except as set forth on Schedule 4.14, there are no
pending or, to the knowledge of FRT, threatened audits, assessments or other FRT
Actions for or relating to any Liability in respect of Taxes of FRT, and there
are no matters under discussion with any governmental authorities, or known to
FRT, with respect to Taxes that are likely to result in an additional Liability
for Taxes. Audits of federal, state and local Tax Returns by the relevant taxing
authorities have been completed for the periods set forth on Schedule 4.14 and,
except as set forth in such Schedule, neither FRT, any predecessor or any
Stockholder has been notified that any taxing authority intends to audit a Tax
Return for any other period. Except as set forth on Schedule 4.14, no extension
of a statute of limitations relating to Taxes is in effect with respect to FRT
or any predecessor.

                  (d) Lien. There are no Encumbrances for Taxes on any of the
Assets or any shares of FRT Stock.

                  (e) Tax Elections. All elections with respect to Taxes
affecting FRT, or the Assets, as of the date hereof are set forth on Schedule
4.14. FRT has not (i) consented at any time under Section 341(f)(1) of the Code
to have the provisions of Section 341(f)(2) of the Code apply to any disposition
of any Assets; (ii) agreed, or is required, to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise;
(iii) made an election, or is required, to treat any Asset as owned by another
Person pursuant to the provisions of Section 168(f) of the Code or as tax-exempt
bond financed property or tax-exempt use property within the meaning of Section
168 of the Code; (iv) acquired and does not own any assets that directly or
indirectly secure any debt the interest on which is tax exempt under Section
103(a) of the Code; or (v) made any of the foregoing elections or is required to
apply any of the foregoing rules under any comparable state or local Tax
provision.

                  (f) Prior Affiliated Groups. FRT is not and has never been a
member of an affiliated group of corporations within the meaning of Section 1504
of the Code or any group that has filed a combined consolidated or unitary state
or local return.

                  (g) Tax Sharing Agreements. There are no Tax-sharing
agreements or similar arrangements (including indemnity arrangements) with
respect to or involving FRT, the Assets

                                       48
<PAGE>   55

or the FRT Business and, after the Closing Date, none of FRT, its Assets or the
FRT Business shall be bound by any such Tax-sharing agreements or similar
arrangements or have any Liability thereunder for amounts due in respect of
periods prior to the Closing Date.

                  (h) Partnerships. FRT has no interest in nor is it subject to
any joint venture, partnership, or other arrangement or contract which is
treated as a partnership for federal income tax purposes.

                  (i) No Withholding. The transaction contemplated herein is not
subject to the tax withholding provisions of Section 3406 of the Code, or of
Subchapter A of Chapter 3 of the Code or of any other provision of law.

                  (j) USRPC. FRT is not and has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in section 897(c)(1)(A)(ii) of the Code.

                  (k) Other Entity Liability. FRT does not have any Liability
for the Taxes of any Person (other than Taxes of FRT (without regard to the
activities of any predecessor)) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise.

                  (l) Correspondence. FRT has made available to RedChip all
correspondence to or from FRT or its predecessors or Affiliates (or their
respective Representatives) on the one hand and the Internal Revenue Service
("IRS") or any state Tax authority on the other hand.

         4.15 Insurance. Schedule 4.15 contains a complete and accurate list of
all material policies or binders of insurance (showing as to each policy or
binder the carrier, policy number, coverage limits, expiration dates, annual
premiums, a general description of the type of coverage provided and any pending
claims thereunder) of which FRT is the owner, insured or beneficiary. All of
such policies are sufficient for (i) compliance with all Regulations and all of
the Contracts, (ii) covering all reasonably foreseeable damage to and
liabilities or contingencies relating to FRT's conduct of the FRT Business and
(iii) providing replacement cost insurance coverage for all of the FRT Assets,
Fixtures and Equipment and all leasehold improvements. FRT is not in default
under any of such policies or binders, and has not failed to give any notice or
to present any material claim under any such policy or binder in a due and
timely fashion. There are no facts known to FRT upon which an insurer might be
justified in reducing or denying coverage or increasing premiums on existing
policies or binders. There are no outstanding unpaid claims under any such
policies or binders. Such policies and binders are in full force and effect on
the date hereof and shall be kept in full force and effect by FRT through the
Closing Date.

         4.16 Accounts Receivable. Except as contemplated by Schedule 4.16, the
accounts and notes receivable reflected in the Balance Sheet, and all accounts
or notes receivable arising since the Balance Sheet Date, represent bona fide
claims against debtors for sales, services performed or other charges arising on
or before the date of recording thereof, and all the goods delivered and
services performed which gave rise to said accounts were delivered or performed
in accordance with the applicable orders, Contracts or customer requirements.

                                       49
<PAGE>   56

         4.17 Suppliers. Schedule 4.17 sets forth a complete and accurate list
of the names and addresses of the ten (10) suppliers with the greatest dollar
volume of sales to FRT during the last fiscal year and during the last fiscal
quarter, showing the approximate total purchases in dollars by FRT from each
such supplier during such fiscal year. Since the Balance Sheet Date, there has
been no FRT Material Adverse Change in the business relationship of FRT with any
supplier named on Schedule 4.17. FRT has not received any written communication
from any supplier named on Schedule 4.17 of any intention to return, terminate
or materially reduce purchases from or supplies to FRT.

         4.18 Brokers; Transaction Costs. Except as set forth on Schedule 4.18,
FRT has not entered into or will enter into any contract, agreement, arrangement
or understanding with any Person which will result in the obligation of RedChip
or FRT to pay any finder's fee, brokerage commission, legal, accounting, or
similar payment in connection with the transactions contemplated hereby.

         4.19 No Other Agreements to Sell FRT or the Assets. FRT does not have
any legal obligation, absolute or contingent, to any other Person to sell its
Assets (other than Inventory in the ordinary course of business) or to sell any
capital stock of FRT or to effect any merger, consolidation or other
reorganization of FRT or to enter into any agreement with respect thereto,
except pursuant to this Agreement.

         4.20 Foreign Corrupt Practices Act. Neither FRT nor any predecessor,
nor to the knowledge of FRT, any agent, employee or other Person associated with
or acting on behalf of FRT or any predecessor has, directly or indirectly, used
any corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds, violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, or made any bribe,
rebate, payoff, influence payment, kickback or other similar unlawful payment.

         4.21 Approvals. Schedule 4.21 contains a list of all material approvals
or consents relating to the business conducted by FRT which are required to be
given to or obtained by FRT from any Person in connection with the consummation
of the transactions contemplated by this Agreement.

         4.22 Takeover Statutes. No Takeover Statute applicable to FRT is
applicable to the Merger or the transactions contemplated hereby.

         4.23 Material Misstatements Or Omissions. To the knowledge of FRT, no
representations or warranties by FRT in this Agreement or any Ancillary
Agreement to which it is a party or in any document, written information,
exhibit, statement, certificate or schedule heretofore or hereinafter furnished
by FRT or any of its Representatives to RedChip pursuant hereto, or in
connection with the transactions contemplated by this Agreement or by such
Ancillary Agreements contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary to make the
statements or facts contained therein not misleading.

                                       50
<PAGE>   57

         4.24 Officers and Directors. Schedule 4.24 contains a true, correct and
complete list of all the officers and directors of FRT.

         4.25 Bank Accounts. Schedule 4.25 contains a list of all of FRT's bank
accounts, safe deposit boxes and persons authorized to draw thereon or have
access thereto.

         4.26 Subsidiaries, Etc. FRT does not own or hold any equity interest of
any kind in any Person other than those listed on Schedule 4.26.

         4.27 Real Property.

                  (a) General. FRT owns or leases all real property necessary
for the conduct of its business as presently conducted.

                  (b) Owned Real Property. Schedule 4.27(b) hereto sets forth
all Facilities owned by FRT or to be acquired by it prior to the Effective Time.
With respect to each parcel of owned real property, except as set forth on
Schedule 4.27(b), (i) FRT has good and marketable fee simple title to such
parcel of real property, free and clear of any and all Encumbrances other than
Permitted Encumbrances, (ii) there are no Leases, subleases, licenses, options,
rights, concessions or other agreements, written or oral, granting to any party
or parties the right of use or occupancy of any portion of such parcel of real
property, except for those which constitute a Permitted Encumbrance, (iii) there
are no outstanding options or rights of first refusal in favor of any other
party to purchase any such parcel of real property or any portion thereof or
interest therein, (iv) there are no parties (other than FRT) who are in
possession of or who are using any such parcel of real property, except in
connection with a Permitted Encumbrance, and (v) there is no (A) pending or, to
the knowledge of FRT, threatened condemnation proceeding relating to such parcel
of real property, (B) pending or, to the knowledge of FRT, threatened action
relating to such parcel of real property, or (C) other matter adversely
affecting the current or currently proposed use, occupancy or value of, such
parcel of real property in any material respect.

                  (c) Leased Real Property. Schedule 4.27(c) sets forth all
Leases pursuant to which Facilities are leased by FRT (as lessee), true and
correct copies of which have been made available to RedChip. Such Leases
constitute all Leases, subleases or other occupancy agreements pursuant to which
FRT occupies or uses Facilities. Except as set forth on Schedule 4.27(c), FRT
has good and valid leasehold title to, and enjoys peaceful and undisturbed
possession of, all leased property described in such Leases (the "FRT Leased
Property"), free and clear of any and all Encumbrances other than any Permitted
Encumbrances which would not permit the termination of the Lease therefor by the
lessor. With respect to each such parcel of FRT Leased Property (i) there are no
pending or, to the knowledge of FRT, threatened condemnation proceedings
relating to, or any pending or, to the knowledge of FRT, threatened actions
relating to, FRT's leasehold interests in such FRT Leased Property or any
portion thereof, (ii) neither FRT nor, to the knowledge of FRT, any third party
has entered into any sublease, license, option, right, concession or other
agreement or arrangement, written or oral, granting to any person the right to
use or occupy such FRT Leased Property or any portion thereof or interest
therein, except in connection with a Permitted Encumbrance, and (iii) FRT has
not received notice of any pending or threatened special assessment relating to
such FRT Leased

                                       51
<PAGE>   58

Property or otherwise has any knowledge of any pending or threatened special
assessment relating thereto.

         With respect to each Lease listed on Schedule 4.27(c), (i) there has
been no material default under any such Lease by FRT or, to the knowledge of
FRT, by any other party, (ii) the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby will not cause a material default under any such
Lease, (iii) such Lease is a valid and binding obligation of the lessor, is in
full force and effect with respect to and is enforceable against the lessor in
accordance with its terms, except as the enforceability thereof may be limited
by (1) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors'
rights generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, (iv) no action has been taken by FRT, and no
event has occurred which, with notice or lapse of time or both, would permit
termination, modification or acceleration by a party thereto other than FRT
without the consent of FRT under any such Lease that is material to FRT, (v) no
party has repudiated in writing to FRT any term thereof or threatened in writing
to FRT to terminate, cancel or not renew any such Lease that is material to FRT
and (vi) FRT has not assigned, transferred, conveyed, mortgaged or encumbered
any interest therein or in any leased property subject thereto (or any portion
thereof).

         4.28 Personal Property.

                  (a) General. FRT owns or leases all personal property Assets
necessary for the conduct of its business as presently conducted, and the
personal property Assets (taken as a whole) are in such operating condition and
repair (subject to normal wear and tear) as is necessary for the conduct of its
business as presently conducted.

                  (b) Owned Personal Property. Except as set forth on Schedule
4.28(b), FRT has good and marketable title to all such personal property owned
by it, free and clear of any and all Encumbrances other than Permitted
Encumbrances. With respect to each such item of personal property (i) there are
no Leases, subleases, licenses, options, rights, concessions or other
agreements, written or oral, granting to any party or parties the right of use
of any portion of such item of personal property, (ii) there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such item of personal property or any portion thereof or interest therein and
(iii) there are no parties (other than FRT) who are in possession of or who are
using any such item of personal property.

                  (c) Leased Personal Property. FRT has good and valid leasehold
title to all of such Fixtures and Equipment, vehicles and other tangible
personal property Assets leased by it from third parties, free and clear of any
and all Encumbrances other than Permitted Encumbrances which would not permit
the termination of the lease therefor by the lessor. Schedule 4.28(c) sets forth
all Leases for personal property involving annual payments in excess of $15,000,
true and correct copies of which have been delivered or made available to
RedChip.

         With respect to each Lease listed on Schedule 4.28(c), (i) there has
been no material default under such Lease by FRT or, to the knowledge of FRT, by
any other party, (ii) the execution, delivery and performance of this Agreement
and the Ancillary Agreements and the

                                       52
<PAGE>   59

consummation of the transactions contemplated hereby and thereby will not cause
(with or without notice and with or without the passage of time) a default under
any such Lease, (iii) such Lease is a valid and binding obligation of the
applicable lessor, is in full force and effect and is enforceable by FRT in
accordance with its terms, except as the enforceability thereof may be limited
by (1) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors'
rights generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, (iv) no action has been taken by FRT and no
event has occurred which, with notice or lapse of time or both, would permit
termination, modification or acceleration by a party thereto other than by FRT
without the consent of FRT under any such Lease that is material to FRT, (v) no
party has repudiated in writing any term thereof or threatened in writing to
terminate, cancel or not renew any such Lease that is material to FRT and (vi)
FRT has not assigned, transferred, conveyed, mortgaged or encumbered any
interest therein or in any leased property subject thereto (or any portion
thereof).

         4.29 Authorization. Each of FRT and Sub has all necessary corporate
power and authority to enter into this Agreement and the Ancillary Agreements to
which it is a party and has taken all action necessary to consummate the
transactions contemplated hereby and thereby and to perform its respective
obligations hereunder and thereunder. This Agreement has been duly executed and
delivered by each FRT and Sub, and this Agreement is, and upon execution and
delivery each of the Ancillary Agreements to which each of FRT and Sub is a
party will be, a valid and binding obligation of each of FRT and Sub enforceable
against each of FRT and Sub in accordance with its terms, except that
enforceability may be limited by the effect of (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors or (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).

         4.30 Reports and Financial Statements. FRT has timely filed all reports
required to be filed with the SEC pursuant to the Exchange Act or the Securities
Act, and has previously provided or made available to RedChip true and complete
copies of all reports filed by FRT with the SEC since January 1, 2000 (the "SEC
Reports"). Such SEC Reports, as of their respective dates, complied in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and none of such SEC Reports, as of its date,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of FRT, including the notes thereto, included in the SEC
Reports have been prepared in accordance with GAAP consistently applied (except
as otherwise stated in the footnotes to the financial statements) and fairly
present in all material respects the consolidated financial condition of FRT as
at the dates thereof and consolidated results of operations and cash flows for
the periods then ended.

         4.31 Environmental Matters. Except for matters that are specifically
disclosed on Schedule 4.31, (with reference to a specifically named site or
claim) and except for such matters that, individually or in the aggregate, are
not reasonably likely to have a FRT Material Adverse Effect: (i) FRT complies,
and within all applicable statutes of limitations periods has complied, with all
applicable Environmental Laws; (ii) FRT is not subject to liability for any
Hazardous Substance disposal or contamination or any third party property; (iii)
FRT is not subject to

                                       53
<PAGE>   60

liability for any release of, or any exposure of any person or property to, any
Hazardous Substance; (iv) FRT has not received any notice, demand, letter, claim
or request for information alleging that FRT may be in violation of or liable
under any Environmental Law; (v) FRT has not released any other person from, or
waived any rights concerning, any claim under any Environmental Law; (vi) FRT is
not subject to any orders, decrees or injunctions issued by, or other
arrangements with, any Governmental Entity nor is FRT subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (vii) there are no
circumstances or conditions involving FRT or its Properties that could
reasonably be expected to cause FRT to become subject to any claims, liability,
investigations or costs, or to restrictions on the ownership, use or transfer of
any property of FRT, pursuant to any Environmental Law.

         4.32 Consents. Except as set forth on Schedule 4.32, no notices to,
declaration, filing or registration with, approvals or Consents of, or
assignments by, any Persons (including any federal, state or local governmental
or administrative authorities) are necessary to be made or obtained by FRT in
connection with the execution, delivery or performance of this Agreement or any
Ancillary Agreement to which it is a party or the consummation of the
transactions contemplated hereby or thereby.

         4.33 No Conflict or Violation. Except as set forth on Schedule 4.33,
the execution, delivery and performance of this Agreement and the Ancillary
Agreements, the consummation of the transactions contemplated hereby or thereby,
and the compliance by FRT with all of the provisions hereof or thereof, will
not:

                  (a) violate or conflict with any provision of the governing
documents of FRT;

                  (b) violate, conflict with, or result in a breach of or
constitute a default (with or without notice or the passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate, modify or cancel under, or require a
notice under, or result in the creation of any Encumbrance upon any of its
respective assets under, any Contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest or other arrangement to which FRT
is a party or by which FRT is bound or to which any of its respective assets are
subject, excluding those violations, conflicts, breaches or defaults
contemplated in this Section 4.33(b) that would not result in a FRT Material
Adverse Effect;

                  (c) violate any applicable Regulation or Court Order; or

                  (d) impose any Encumbrance on any Assets or the FRT Business.

         4.34 Permits. Schedule 4.34 sets forth a complete list of all material
Permits, all of which are as of the date hereof, and will be as of the Closing
Date, in full force and effect. FRT and its predecessors have, and at all times
have had, all material Permits required under any applicable Regulation in its
operation of the FRT Business or in its ownership of the FRT Assets, and owns or
possesses such Permits free and clear of all Encumbrances. FRT is not in
default, nor, to the knowledge of FRT, has FRT received any notice of any claim
of default, with respect to any such Permit. Except as otherwise governed by
law, all such Permits are renewable by

                                       54
<PAGE>   61

their terms or in the ordinary course of business without the need to comply
with any special qualification procedures or to pay any amounts other than
routine filing fees and, except as set forth on Schedule 4.34, will not be
adversely affected by the completion of the transactions contemplated by this
Agreement or the Ancillary Agreements.

         4.35 Reorganization Tax Matters.

                  (a) Neither FRT nor Sub have taken, and neither of them has
any plan or intention to take, any action that could reasonably be expected to
cause the Merger to fail to qualify as a reorganization within the meaning of
Section 368(a) of the Code.

                  (b) Neither FRT nor Sub is aware of any fact or circumstance
that could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.

                                   ARTICLE 5
                    COVENANTS OF REDCHIP PRIOR TO THE CLOSING

         RedChip covenants as follows for the period from the date hereof
through the Closing Date:

         5.1 Conduct of Business. From the date hereof through the Closing Date,
RedChip shall, except as otherwise expressly contemplated by this Agreement, or
as consented to by FRT in writing, operate the RedChip Business solely in the
ordinary course of business and in accordance with past practice and will not,
in any event, take any action inconsistent with this Agreement, the Ancillary
Agreements or the consummation of the Closing. Without limiting the generality
of the foregoing, RedChip shall not, except as specifically contemplated by this
Agreement or as consented to by FRT in writing (which consent shall not be
unreasonably withheld or delayed):

                  (a) incur any indebtedness for borrowed money, or assume,
guarantee, endorse (other than endorsements for deposit or collection in the
ordinary course of business), or otherwise become responsible for obligations of
any other Person in excess of $50,000;

                  (b) issue or commit to issue any shares of its capital stock
or any other securities or any securities convertible into shares of its capital
stock or any other securities, including, without limitation, any options to
acquire capital stock (except pursuant to RedChip Options or RedChip Warrants
outstanding on the date of this Agreement and disclosed on Schedule 3.2(b) or
Schedule 3.2(c), or pursuant to RedChip Options issued in the ordinary course of
business in accordance with Section 3.2(a));

                  (c) declare, pay or incur any obligation to pay any dividend
on its capital stock or declare, make or incur any obligation to make any
distribution or redemption with respect to capital stock;

                  (d) make any change to RedChip's Certificate of Incorporation
or Bylaws;

                                       55
<PAGE>   62

                  (e) mortgage, pledge or otherwise encumber any RedChip Assets
or sell, transfer, license or otherwise dispose of any RedChip Assets except for
sales in the ordinary course of business and consistent with past practice;

                  (f) cancel, release or assign any indebtedness owed to it or
any claims or rights held by it except as required by existing contracts;

                  (g) make any investment or commitment of a capital nature
either by purchase of stock or securities, contributions to capital, property
transfer or otherwise, or by the purchase of any property or assets of any other
Person in excess of $30,000;

                  (h) terminate any material Contract or make any material
change in any material Contract;

                  (i) enter into or modify any employment Contract, (ii) pay any
compensation to or for any Employee, officer or director other than in the
ordinary course of business and pursuant to existing employment arrangements,
(iii) pay or agree to pay any bonus, incentive compensation, service award,
severance, "stay bonus" or other like benefit, (iv) enter into or modify any
other Employee Plan, or (v) modify the RedChip Stock Option Plan;

                  (j) enter into or modify any Contract or other arrangement
with a Related Party;

                  (k) make any change in any method of accounting or accounting
practice except as required by changes in GAAP or by Regulation S-X of the
Exchange Act, as concurred by RedChip's independent public accountants;

                  (l) fail to comply with all Regulations applicable to the
Assets (except as would not reasonably be expected to result in a RedChip
Material Adverse Effect) and the RedChip Business consistent with past
practices;

                  (m) fail to use its commercially reasonable efforts to (i)
maintain the RedChip Business, (ii) retain the RedChip Employees so that such
RedChip Employees will remain available to the Surviving Corporation on and
after the Closing Date except to the extent that the loss of such RedChip
Employees would not have a RedChip Material Adverse Effect, (iii) maintain
existing relationships with material suppliers and customers and others having
business dealings with RedChip and/or FRT and (iv) otherwise to preserve the
goodwill of the RedChip Business so that such relationships and goodwill will be
preserved on and after the Closing Date;

                  (n) make or change any election in respect of Taxes, adopt or
change any material accounting method in respect of Taxes, enter into any tax
allocation agreement, tax sharing agreement, tax indemnity agreement or closing
agreement, settle or compromise any claim, notice, audit report or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;

                  (o) commence any Action or other legal proceeding;

                                       56
<PAGE>   63

                  (p) do any other act which would cause any representation or
warranty of RedChip in this Agreement to be or become untrue in any material
respect or that is not in the ordinary course of business consistent with past
practice; or

                  (q) directly or indirectly take, agree to take or otherwise
permit to occur any of the actions described in Sections 5.1(a) through 5.1(p).

         5.2 Competing Proposals; Board Recommendation.

                  (a) Neither RedChip nor any of its representatives will,
directly or indirectly, (i) solicit any inquiries or proposals or enter into or
continue any discussions, negotiations or agreements relating to (A) the sale or
exchange of RedChip's capital stock, or (B) the merger of RedChip with, or the
direct or indirect disposition of a significant amount of the Assets or the
Business to, any Person other than FRT; or (ii) provide any assistance or any
information to or otherwise cooperate with any Person in connection with any
such inquiry, proposal or transaction. RedChip hereby represents that neither
RedChip nor any of its representatives is now engaged in discussions or
negotiations with any party other than FRT with respect to any transaction of
the kind described in clauses (a)(i)(A) or (a)(i)(B) of the preceding sentence
(an "Acquisition Proposal"). RedChip agrees not to release any third party from,
or waive any provision of, any confidentiality or standstill agreement to which
any of them is a party. RedChip and the Stockholders shall (w) immediately
notify FRT (orally and in writing) if any offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal or contact is
made or any information is requested with respect to any Acquisition Proposal,
(x) promptly notify FRT of the terms of any proposal which it may receive in
respect of any such Acquisition Proposal, including, without limitation, the
identity of the prospective purchaser or soliciting party, (y) promptly provide
FRT with a copy of any such offer, if written, or a written summary (in
reasonable detail) of such offer, if not in writing, and (z) keep FRT informed
of the status of such offer and the offeror's efforts and activities with
respect thereto.

                  (b) Notwithstanding the foregoing, nothing contained in this
Section 5.2 shall prohibit the Board of Directors of RedChip from furnishing
information to or entering into discussions or negotiations with, any Person
that makes a bona fide proposal or offer with respect to RedChip that
constitutes an Acquisition Proposal for RedChip, if: (A) the Board of Directors
of RedChip determines in good faith, taking into account the advice of outside
counsel, that such action is reasonably likely to be required for the Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law; (B) prior to furnishing such information to, or entering into discussions
or negotiations with, such Person, RedChip provides written notice to FRT of the
identity of the Person making the Acquisition Proposal for RedChip and that it
intends to furnish information to, or intends to enter into discussions or
negotiations with, such Person; (C) RedChip keeps FRT informed on a timely basis
of the status of such negotiations and all material terms and conditions thereof
and promptly provides FRT with copies of any and all written inquiries or
proposals relating thereto, and (D) such Acquisition Proposal was not solicited
in violation of Section 5.2(a).

                  (c) Notwithstanding any other provision of this Agreement, in
the event that an Acquisition Proposal for RedChip constitutes a RedChip
Superior Proposal (as defined below), the Board of Directors of RedChip may
recommend such RedChip Superior Proposal to

                                       57
<PAGE>   64

its stockholders (i) if, but only if, RedChip (A) complies fully with this
Section 5.2 and (B) provides FRT with at least four (4) business days' prior
written notice of its intent to withdraw its recommendations of this Agreement
and (ii) if, in the event that during such four (4) business days FRT makes a
counter proposal to such RedChip Superior Proposal (the "FRT Counter Proposal"),
the RedChip Board of Directors in good faith, taking into account the advice of
its outside financial advisors, determines that the FRT Counter Proposal is not
at least as favorable to RedChip's stockholders as the RedChip Superior Proposal
(taking into account all financial and strategic considerations and other
relevant factors, including relevant legal, financial, regulatory and other
aspects of such proposals, and the conditions, prospects and time required for
completion of such proposal).

                  (d) For the purpose of this Agreement, a "RedChip Superior
Proposal" means a bona fide Acquisition Proposal, having no financing
contingency, for more than seventy-five percent (75%) of the aggregate voting
power of the RedChip Equity Securities and made by a Person other than an
affiliate of RedChip that the Board of Directors of RedChip believes in good
faith, (x) taking into account the advice of its outside financial advisors, to
be superior, from a financial point of view, to the stockholders of RedChip than
the proposal set forth in this Agreement and (y) to be more favorable generally
to the stockholders of RedChip (taking into account all financial and strategic
considerations and other relevant factors, including relevant legal, financial,
regulatory and other aspects of such proposals, and the conditions, prospects
and time required for completion of such proposal); provided that the Board of
Directors of RedChip has determined in good faith, taking into account the
advice of its outside legal counsel, that it is reasonably likely to be required
to recommend such proposal to the RedChip stockholders to comply with its
fiduciary duties to stockholders under applicable law.

                  (e) For the purpose of this Agreement, "RedChip Equity
Securities" means: (i) any RedChip common stock; (ii) any debt or equity
securities of RedChip convertible into or exchangeable for RedChip common stock
(on a fully-converted basis); and (iv) any options, warrants or rights (or any
other similar securities) issued by RedChip to acquire RedChip common stock (on
a fully-converted basis).

                  (f) Nothing in this Section 5.2 shall (i) permit RedChip to
terminate this Agreement (except as specifically provided in Article 11 hereof)
or (ii) affect any other obligation of RedChip under this Agreement.

         5.3 Board Observer Rights. From the date hereof to the first to occur
of (a) the Effective Time or (b) the termination of this Agreement in accordance
with Section 11.1, FRT will be invited to have a representative of FRT attend
all meetings of RedChip's Board of Directors and any board committees as an
observer and to receive copies of all materials and communications provided to
RedChip's Board of Directors and board committees when so distributed. FRT's
representatives will not be excluded from any portion of such meetings or
discussions except only for those portions (i) in which RedChip's position on
issues with FRT is considered, (ii) in which RedChip's counsel communicates with
RedChip's Board of Directors on matters where FRT's attendance might jeopardize
the maintenance of the corporate attorney-client privilege for RedChip and (iii)
in which, in the good faith judgment of counsel to RedChip, participation by FRT
is not appropriate under applicable law, including, but not limited to,

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<PAGE>   65

portions involving data which is not appropriate for dissemination to FRT under
applicable antitrust or trade regulation laws.

         5.4 FIRPTA Compliance. On or prior to the Closing Date, RedChip shall
deliver to FRT a properly executed statement in a form reasonably acceptable to
FRT for purposes of satisfying FRT's obligations under Treasury Regulation
Section 1.1445-2(c)(3).

         5.5 RedChip's Auditors. RedChip will use commercially reasonable
efforts to cause its management and RedChip's independent accountants, Arthur
Andersen, to facilitate on a timely basis the preparation of financial
statements (including pro forma financial statements if required) as required by
FRT to comply with applicable SEC regulations.

         5.6 RCP-Robins Agreement. In order to assure RedChip Shareholder
Approval of the Merger, the parties agree that Roth Capital Partners ("RCP") and
Marc Robins shall enter into an agreement, substantially in the form attached
hereto as Exhibit C, to vote all capital stock controlled by RCP and Marc Robins
in favor of the Merger and associated transactions at the RedChip Stockholder
Meeting convened to obtain RedChip Shareholder Approval of the Merger (the
"RCP-Robins Agreement").

                                    ARTICLE 6
                                COVENANTS OF FRT

         FRT covenants, as to itself and where applicable, as to Sub, as follows
for the period from the date hereof through the Closing Date:

         6.1 Conduct of Business. From the date hereof through the Closing Date,
FRT and Sub shall, except as otherwise expressly contemplated by this Agreement
or as set forth on Schedule 6.1, or as consented to by RedChip in writing,
operate the FRT Business solely in the ordinary course of business and in
accordance with past practice and will not, in any event, take any action
inconsistent with this Agreement, the Ancillary Agreements or the consummation
of the Closing. Without limiting the generality of the foregoing, FRT shall not,
nor shall FRT cause Sub to, except as specifically contemplated by this
Agreement or as consented to by RedChip in writing (which consent shall not be
unreasonably withheld or delayed):

                  (a) incur any indebtedness for borrowed money, or assume,
guarantee, endorse (other than endorsements for deposit or collection in the
ordinary course of business), or otherwise become responsible for obligations of
any other Person in excess of $50,000;

                  (b) except as set forth on Schedule 6.1, issue or commit to
issue any shares of their capital stock or any other securities or any
securities convertible into shares of their capital stock or any other
securities, including, without limitation, any options to acquire capital stock;

                  (c) declare, pay or incur any obligation to pay any dividend
on its capital stock or declare, make or incur any obligation to make any
distribution or redemption with respect to capital stock;

                  (d) make any change to their Certificates of Incorporation or
Bylaws;

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<PAGE>   66

                  (e) mortgage, pledge or otherwise encumber any Assets or sell,
transfer, license or otherwise dispose of any Assets except for sales in the
ordinary course of business and consistent with past practice;

                  (f) cancel, release or assign any indebtedness owed to them or
any claims or rights held by them;

                  (g) except as set forth on Schedule 6.1, make any investment
or commitment of a capital nature either by purchase of stock or securities,
contributions to capital, property transfer or otherwise, or by the purchase of
any property or assets of any other Person in excess of $30,000;

                  (h) terminate any material Contract or make any material
change in any material Contract;

                  (i) other than any actions taken in connection with the
Employment Agreements, enter into or modify any other employment Contract, (ii)
pay any compensation to or for any Employee, officer or director other than in
the ordinary course of business and pursuant to existing employment
arrangements, (iii) pay or agree to pay any bonus, incentive compensation,
service award, severance, "stay bonus" or other like benefit, (iv) enter into or
modify any other Employee Plan, or (v) modify the FRT Stock Option Plan;

                  (j) enter into or modify any Contract or other arrangement
with a Related Party;

                  (k) make any change in any method of accounting or accounting
practice except as required by changes in GAAP or by Regulation S-X of the
Exchange Act, as concurred by FRT's independent public accountants;

                  (l) fail to comply with all Regulations applicable to the
Assets (except as would not reasonably be expected to result in a FRT Material
Adverse Effect) and the Business consistent with past practices;

                  (m) fail to use its commercially reasonable efforts to (i)
maintain the FRT Business, (ii) retain the FRT Employees so that such Employees
will remain available to the Surviving Corporation on and after the Closing Date
except to the extent that the loss of such FRT Employees would not have a FRT
Material Adverse Effect, (iii) maintain existing relationships with material
suppliers and customers and others having business dealings with FRT and (iv)
otherwise to preserve the goodwill of the FRT Business so that such
relationships and goodwill will be preserved on and after the Closing Date;

                  (n) make or change any election in respect of Taxes, adopt or
change any material accounting method in respect of Taxes, enter into any tax
allocation agreement, tax sharing agreement, tax indemnity agreement or closing
agreement, settle or compromise any claim, notice, audit report or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes;

                  (o) commence any Action or other legal proceeding;

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<PAGE>   67

                  (p) do any other act which would cause any representation or
warranty of FRT in this Agreement to be or become untrue in any material respect
or that is not in the ordinary course of business consistent with past practice;
or

                  (q) directly or indirectly take, agree to take or otherwise
permit to occur any of the actions described in Sections 6.1(a) through 6.1(p).

         6.2 Competing Proposals; Board Recommendation.

                  (a) Neither FRT nor any of its representatives will, directly
or indirectly, (i) solicit any inquiries or proposals or enter into or continue
any discussions, negotiations or agreements relating to (A) the sale or exchange
of FRT's capital stock, or (B) the merger of FRT with, or the direct or indirect
disposition of a significant amount of the Assets or the FRT Business to, any
Person other than RedChip; or (ii) provide any assistance or any information to
or otherwise cooperate with any Person in connection with any such inquiry,
proposal or transaction. FRT hereby represents that neither FRT nor any of its
representatives is now engaged in discussions or negotiations with any party
other than RedChip with respect to any transaction of the kind described in
clauses (a)(i)(A) or (a)(i)(B) of the preceding sentence (an "FRT Acquisition
Proposal"). FRT agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which any of them
is a party. FRT shall (w) immediately notify RedChip (orally and in writing) if
any offer is made, any discussions or negotiations are sought to be initiated,
any inquiry, proposal or contact is made or any information is requested with
respect to any Acquisition Proposal, (x) promptly notify RedChip of the terms of
any proposal which it may receive in respect of any such Acquisition Proposal,
including, without limitation, the identity of the prospective purchaser or
soliciting party, (y) promptly provide RedChip with a copy of any such offer, if
written, or a written summary (in reasonable detail) of such offer, if not in
writing, and (z) keep RedChip informed of the status of such offer and the
offeror's efforts and activities with respect thereto.

                  (b) Notwithstanding the foregoing, nothing contained in this
Section 6.2 shall prohibit the Board of Directors of FRT from furnishing
information to or entering into discussions or negotiations with, any Person
that makes a bona fide proposal or offer with respect to FRT that constitutes an
Acquisition Proposal for FRT, if: (A) the Board of Directors of FRT determines
in good faith, taking into account the advice of outside counsel, that such
action is reasonably likely to be required for the Board of Directors to comply
with its fiduciary duties to stockholders under applicable law; (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such Person, FRT provides written notice to RedChip of the identity of the
Person making the Acquisition Proposal for FRT and that it intends to furnish
information to, or intends to enter into discussions or negotiations with, such
Person; (C) FRT keeps RedChip informed on a timely basis of the status of such
negotiations and all material terms and conditions thereof and promptly provides
RedChip with copies of any and all written inquiries or proposals relating
thereto, and (D) such Acquisition Proposal was not solicited in violation of
Section 6.2(a).

                  (c) Notwithstanding any other provision of this Agreement, in
the event that an Acquisition Proposal for FRT constitutes a FRT Superior
Proposal (as defined below), the Board of Directors of FRT may recommend such
FRT Superior Proposal to its stockholders

                                       61
<PAGE>   68

(i) if, but only if, FRT (A) complies fully with this Section 6.2 and (B)
provides RedChip with at least four (4) business days' prior written notice of
its intent to withdraw its recommendations of this Agreement and (ii) if, in the
event that during such four (4) business days RedChip makes a counter proposal
to such FRT Superior Proposal (the "RedChip Counter Proposal"), the FRT Board of
Directors in good faith, taking into account the advice of its outside financial
advisors, determines that the RedChip Counter Proposal is not at least as
favorable to FRT's stockholders as the FRT Superior Proposal (taking into
account all financial and strategic considerations and other relevant factors,
including relevant legal, financial, regulatory and other aspects of such
proposals, and the conditions, prospects and time required for completion of
such proposal).

                  (d) For the purpose of this Agreement, a "FRT Superior
Proposal" means a bona fide Acquisition Proposal, having no financing
contingency, for more than seventy-five percent (75%) of the aggregate voting
power of the FRT Equity Securities and made by a Person other than an affiliate
of FRT that the Board of Directors of FRT believes in good faith, (x) taking
into account the advice of its outside financial advisors, to be superior, from
a financial point of view, to the stockholders of FRT than the proposal set
forth in this Agreement and (y) to be more favorable generally to the
stockholders of FRT (taking into account all financial and strategic
considerations and other relevant factors, including relevant legal, financial,
regulatory and other aspects of such proposals, and the conditions, prospects
and time required for completion of such proposal); provided that the Board of
Directors of FRT has determined in good faith, taking into account the advice of
its outside legal counsel, that it is reasonably likely to be required to
recommend such proposal to the FRT stockholders to comply with its fiduciary
duties to stockholders under applicable law.

                  (e) For the purpose of this Agreement, "FRT Equity Securities"
means: (i) any FRT common stock; (ii) any debt or equity securities of FRT
convertible into or exchangeable for FRT common stock (on a fully-converted
basis); and (iv) any options, warrants or rights (or any other similar
securities) issued by FRT to acquire FRT common stock (on a fully-converted
basis).

                  (f) Nothing in this Section 6.2 shall (i) permit FRT to
terminate this Agreement (except as specifically provided in Section 11.1
hereof) or (ii) affect any other obligation of FRT under this Agreement.

         6.3 Increase Size of FRT Board of Directors. Prior to the Closing Date
and effective as of the Effective Time, FRT shall increase the size of the FRT
Board of Directors to eleven (11) and appoint Byron Roth, Jonathan Mork, Marcus
Robins, and a director to be mutually agreed upon by FRT and RedChip, as members
of the Board of Directors.

                                   ARTICLE 7
                  RECIPROCAL COVENANTS OF REDCHIP, FRT AND SUB

         7.1 Access. From the date hereof through the Closing Date, each party
to this Agreement shall, and shall cause their respective officers, Employees
and Representatives to afford the other party's Representatives and the
Representatives of their lenders access upon reasonable notice and at all
reasonable times to their respective Businesses for the purpose of inspecting
the same, and to their officers, Employees and Representatives, properties,
Books and

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<PAGE>   69

Records, Contracts and other Assets. Each party to this Agreement shall furnish
the other and the other's Representatives and the representatives of their
lenders, upon reasonable notice and in a timely manner, all financial, operating
and other data and information as may reasonably be requested.

         7.2 Notification of Certain Matters. Each party to this Agreement shall
promptly notify the other party of (i) the occurrence, or failure to occur, of
any event which occurrence or failure would be likely to cause any of their
respective representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect and (ii) any material failure of
each respective party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that such disclosure shall not be deemed to cure any breach of a representation,
warranty, covenant or agreement or to satisfy any condition. Each party to this
Agreement shall promptly notify the other respective party of any Default, the
threat or commencement of any Action, or any development that occurs before the
Closing Date that could reasonably be expected to result in a Material Adverse
Effect.

         7.3 Closing Date. Each party to this Agreement shall use all reasonable
commercial efforts to cause the Closing to occur on or before September 1, 2000.

         7.4 Takeover Statutes. If any Takeover Statute is or may become
applicable to the transactions contemplated hereby, the Board of Directors of
RedChip, or the Board of Directors of FRT, as the case may be, will grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate the effects of any Takeover
Statute on any of the transactions contemplated hereby.

         7.5 Fairness Hearing; 3(a)(10) Exemption.

                  (a) Subject to the provisions of Section 7.5(b) below, the
issuance of the shares of FRT Stock, the Substitute Options and the Substitute
Warrant Agreements to be issued in the Merger will be qualified by a permit (the
"Permit") to be issued under Sections 25121 and 25142 of the California
Corporate Securities Law of 1968, as amended (the "California Law"), after a
fairness hearing (the "Fairness Hearing") before the California Commissioner of
Corporations pursuant to Section 25142 of the California Law, with the intent
that the issuance of the shares of FRT Stock, the Substitute Options and the
Substitute Warrant Agreements in the Merger (but not the issuance of FRT Stock
upon exercise of Substitute Options and Substitute Warrant Agreements issued in
the Merger) will, to the extent permitted by applicable law, thereby be exempt
under Sections 3(a)(10) of the 1933 Act from the registration requirements of
the 1933 Act. As promptly as practicable after the date of this Agreement, FRT
(with RedChip's full and prompt best efforts cooperation) will prepare and file
with the California Department of Corporations (the "Department") an application
for qualification of the shares of FRT Stock and the FRT Options to be issued in
the Merger at the Closing and an application for the Fairness Hearing to be held
in connection therewith (collectively, the "Permit Application"), together with
any information or proxy statement included therein (the "Information
Statement"), and any other documents required by the California Law in
connection with the Merger. FRT and RedChip will use their best efforts to have
the Permit issued under the California Law as promptly as practicable after such
filing. FRT and RedChip shall also take any action required to

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<PAGE>   70

be taken under any applicable state securities or "blue sky" laws in connection
with the issuance of the shares of FRT Stock, the Substitute Options and the
Substitute Warrant Agreements in the Merger. RedChip shall timely furnish to FRT
all information concerning RedChip, its financial condition, its officers,
directors, stockholders, option holders and other security holders, as may be
reasonably requested in connection with any action contemplated by this Section.
FRT will bear all expenses incurred by FRT with respect to the Permit
Application or the Fairness Hearing, including, without limitation, (i) any
filing fees or other fees payable to the California Department of Corporations
with respect to the Permit Application and the Fairness Hearing and (ii) the
costs of any court reporter or stenographer selected by FRT's counsel incurred
in connection with the Permit and the Fairness Hearing.

                  (b) Notwithstanding the provisions of Section 7.5(a) above, if
despite FRT's and RedChip's good faith best efforts to obtain the Permit as a
result of the Application and the Fairness Hearing:

                           (i) (A) the Department affirmatively denies FRT's
Permit Application and refuses to issue the Permit; or (B) the Permit has not
been issued by the date immediately prior to August 15, 2000 (the "Deadline
Date"), such date as may be extended by mutual agreement of FRT and RedChip; and

                           (ii) FRT is legally able to issue to the holders of
RedChip Stock and to the holders of RedChip Options, the FRT Stock, the
Substitute Options and the Substitute Warrant Agreements, respectively, that are
issuable to them in the Merger upon the conversion of their shares of RedChip
Stock and the RedChip Options and RedChip Warrants as provided herein in
compliance with all applicable securities laws without qualifying or registering
such offer or issuance of FRT Stock, the Substitute Options and the Substitute
Warrant Agreements in the Merger under (A) the Securities Act and the rules and
regulations promulgated thereunder, by virtue of the exemptions(s) provided by
Section 4(2) and/or Regulation D promulgated under the Securities Act, and (B)
the qualification requirements of the California Law, and any registration or
qualification provisions of any other "blue sky" or securities law of any
jurisdiction that are applicable to the Merger by virtue of available exemptions
from such requirements;

         Then, provided that each holder of any shares of RedChip Stock and any
RedChip Options or RedChip Warrants executes and delivers to FRT an investment
representation letter in a form to be mutually agreed upon (and, if requested by
FRT's counsel, an investor questionnaire,) in which such holder makes certain
representations and warranties to FRT that FRT's legal counsel deems reasonably
necessary to enable FRT to avail itself of the exemptions from all the
securities registration and qualification requirements described above, FRT will
issue the FRT Stock, the Substitute Options and the Substitute Warrant
Agreements that are issuable to the holders of RedChip Stock, RedChip Options
and RedChip Warrants in the Merger pursuant to the aforementioned exemptions and
FRT will grant to the persons and entities who are holders of outstanding shares
of RedChip Stock immediately prior to the Effective Time certain registration
rights (the "Registration Rights") with respect to any FRT Stock issued to them
in the Merger.

                  (c) If despite FRT's and RedChip's good faith best efforts to
obtain the Permit as a result of the Application and Fairness Hearing or to
issue the FRT Stock, the Substitute

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<PAGE>   71

Options and the Substitute Warrant Agreements without qualifying or registering
such offer or issuance of the FRT Stock, the Substitute Options and the
Substitute Warrant Agreements, then FRT and RedChip shall use their good faith
best efforts to qualify and register the offer or issuance of the FRT Stock, the
Substitute Options and the Substitute Warrant Agreements under the Securities
Act and in compliance with all requirements of state securities or other "blue
sky" laws or any applicable jurisdiction.

         7.6 Further Assurances. Upon the terms and subject to the conditions
contained herein, the parties agree, in each case both before and after the
Closing, (i) to use all commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements, (ii) to use their respective
commercially reasonable efforts to cause the Merger to qualify, and will not
take any actions which to their knowledge could reasonably be expected to
prevent the Merger from qualifying, as a reorganization under the provisions of
Section 368(a) of the Code or for the pooling of interests method of accounting
under APB 16, (iii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder and thereunder and (iv) to cooperate with
each other in connection with the foregoing. Without limiting the foregoing, the
parties agree to use their respective reasonable commercial efforts (A) to
obtain any necessary Consents (B) to give all notices to, and make all
registrations and filings with third parties, including submissions of
information requested by governmental authorities and (C) to fulfill all other
conditions to this Agreement. Notwithstanding the foregoing, (y) no amendment or
modification shall be made to any Contract to obtain any required Consent
without the prior written consent of FRT and (z) no party hereto or any of their
respective Affiliates shall be required to sell, transfer, divest or otherwise
dispose of any of its respective business, assets or properties in connection
with this Agreement or any of the transactions contemplated hereby. Each party
shall deliver customary closing certificates and representations for the purpose
of facilitating delivery of the opinions of counsel and the outside independent
accountants contemplated by this Agreement.

         7.7 Certain Tax Matters. FRT and RedChip shall each use, and FRT shall
cause Sub to use, its commercially reasonable best efforts to cause the Merger
to be treated as a reorganization within the meaning of Section 368(a) of the
Code. FRT and RedChip will not take, and FRT will not cause RedChip to take,
prior to, in connection with or following the Merger, any action that would
disqualify the Merger as a reorganization under Section 368(a) of the Code, and
each agrees to treat the Merger consistent therewith, including but not limited
to, complying with U.S. Treasury Regulations Sections 1.368-3, except as may
otherwise be required by a final determination by a relevant taxing authority.

         7.8 Employment Agreements. FRT and RedChip shall each use its
commercially reasonable best efforts to enter into, and to cause each of their
respective employees identified in Section 1.1 under the definition of
"Employment Agreements" to enter into, the Employment Agreements.

         7.9 Private Placement. FRT and RedChip shall each use its commercially
reasonable best efforts to secure up to $10,000,000 in capital financing for FRT
(the "Private Placement"). Such capital financing shall be accomplished through
a private placement of FRT equity

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<PAGE>   72

securities. Notwithstanding any other provision in this Agreement to the
contrary, any action taken by FRT or RedChip in furtherance of this covenant in
this Section 7.9 shall not breach any other covenant contained in Articles 5, 6
or 7. In the event that FRT receives any proceeds from the Private Placement
prior to the Closing Date, FRT shall loan to RedChip 35% of such proceeds (the
"Bridge Loan") to fund RedChip's operating expenses until the Closing. If the
Merger is not consummated as contemplated by this Agreement, the principal
amount of the Bridge Loan, together with interest at the rate of 10% per annum,
or if securities are sold in the Private Placement which include any interest
rate or mandatory dividend then at that applicable interest or dividend rate,
shall become due and payable within one year following the termination of this
Agreement; provided, however, that in the event that this Agreement is
terminated as a result of a breach by RedChip, then the Bridge Loan, together
with interest at the rate of 10% per annum, or if the Private Placement involves
securities with an interest rate or mandatory dividend then at that applicable
interest or dividend rate shall become due and payable upon the termination of
this Agreement.

                                    ARTICLE 8
                              CONDITIONS TO CLOSING

         8.1 General Conditions to Closing. The obligations of all the parties
to this Agreement to effect the Merger and complete the related transactions
contemplated by this Agreement are subject to the satisfaction on or by the
Closing Date of each of the following conditions:

                  (a) Consents. All Consents, approvals and waivers from
governmental authorities necessary to permit consummation of the Merger as
contemplated herein shall have been obtained. All approvals required under any
Regulations necessary to permit the parties to consummate the Merger and the
related transactions contemplated by this Agreement, as well as those Consents,
approvals and waivers necessary for the operation of their respective Businesses
after the Closing, shall have been obtained.

                  (b) No Court Orders. There shall not be any Regulation or
Court Order that makes the transactions contemplated hereby and by the Ancillary
Agreements illegal or otherwise prohibited.

                  (c) Material Adverse Change. There shall not have been any
RedChip Material Adverse Change, or any FRT Material Adverse Change.

                  (d) Permit Issued or Exemption Available. Either (a) the
Commissioner shall have issued the Permit with respect to the Merger, (b) if the
provisions of Section 7.5 apply, FRT is legally able to issue to the holders of
RedChip Stock and to holders of RedChip Options, the FRT Shares and FRT Options
as provided herein in compliance with all applicable securities laws without
qualifying or registering such issuance of such FRT Shares and FRT Options in
the Merger under (i) the Securities Act and rules and regulations promulgated
thereunder by virtue of the exemption(s) provided by Section 4(2) and/or
Regulation D, and (ii) any registration or qualification provision for any other
"blue sky" or securities law of any jurisdiction applicable to the Merger by
virtue of available exemptions from such requirement, or (c) if an exemption
from registration under the Securities Act is unavailable, the issuance of the
FRT Shares and FRT

                                       66
<PAGE>   73

Options shall be registered under the Securities Act in compliance with all
applicable securities laws.

         8.2 Conditions to RedChip's Obligations. The obligations of RedChip to
effect the Merger and complete the related transactions contemplated by this
Agreement are subject, in the discretion of RedChip, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions:

                  (a) Closing Documents. FRT shall have delivered to RedChip the
documents and other items described in this Agreement (other than the Employment
Agreement, the delivery of which shall not be a condition to Closing).

                  (b) Representations, Warranties and Covenants. All
representations and warranties of FRT and Sub contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date
(except to the extent that they relate to a particular date), and FRT and Sub
shall have performed in all material respects all agreements and covenants
required hereby to be performed by it prior to or at the Closing Date. There
shall be delivered to RedChip a certificate of FRT and Sub signed by their
President and Chief Financial Officer to the foregoing effect (the "FRT Closing
Certificate").

                  (c) No Funded Debt. On or before the date that is three (3)
business days prior to the date scheduled for the Closing, FRT shall have
provided RedChip with a written certificate executed by their respective Chief
Executive Officers and Presidents (the "FRT Funded Debt Notice") which
certificate shall affirm that FRT has no Funded Debt as of that date.

                  (d) Opinion of Counsel. RedChip shall have received an opinion
of Latham & Watkins, counsel to FRT and Sub, substantially in the form attached
hereto as Exhibit D, dated as of the Closing.

         8.3 Conditions to FRT's Obligations. The obligations of FRT to effect
the Merger and complete the related transactions contemplated by this Agreement
are subject, in the discretion of FRT, to the satisfaction, on or prior to the
Closing Date, of each of the following conditions:

                  (a) Closing Documents. RedChip shall have delivered to FRT the
documents and other items described in this Agreement (other than the Employment
Agreements, the delivery of which shall not be a condition to Closing).

                  (b) Representations, Warranties and Covenants. All
representations and warranties of RedChip contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date
(except to the extent that they relate to a particular date), and RedChip
stockholders shall have performed in all material respects all agreements and
covenants required hereby to be performed prior to or at the Closing Date. There
shall be delivered to FRT a certificate of RedChip signed by its Chief Executive
Officer and its President to the foregoing effect (the "RedChip Closing
Certificate").

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<PAGE>   74

                  (c) RedChip Stockholder Approval. This Agreement and the
Merger shall have been duly approved by the holders of a majority of the holders
of the outstanding shares of RedChip Stock in accordance with applicable law and
the Certificate of Incorporation and Bylaws of RedChip.

                  (d) Dissenting Shares. The sum of Dissenting Shares
immediately prior to the Effective Time shall not exceed 10% of the sum of the
issued and outstanding shares of RedChip immediately prior to the Effective
Time.

                  (e) FIRPTA Compliance. The statement in the form reasonably
acceptable to FRT for purposes of satisfying FRT's obligations under Treasury
Regulation Section 1.1445-2(c)(3) shall be executed and delivered.

                  (f) Notes Receivable. All notes receivable (the "Notes") from
RedChip officers and RedChip Stockholders, including Marcus Robins, Douglas
Sherk and Thomas Peterson (collectively the "Note Shareholders") shall be
amended and restated to provide that, at the Closing, each Note Shareholder
shall deliver to FRT a number of shares of FRT Stock, which such Note
Shareholders shall have received as Merger Shares, equal to the amount of the
Note divided by the average of the "last sale" prices of FRT Stock on the OTCBB
(or any exchange on which such FRT Stock may then be listed) for the ten (10)
Trading Days ending on the Trading Day immediately prior to the Closing (the
"Settlement Shares"); provided, however, that in no event shall the number of
the Settlement Shares exceed the number of shares of FRT Stock received at the
Closing by the Note Shareholder in exchange for the RedChip Stock acquired by
such Note Shareholder pursuant to the Note. The amended and restated Notes shall
be repaid in full and the obligation shall have final settlement pursuant to
this repayment with Merger Shares. At the Closing, the Note Shareholders and FRT
shall enter a contingent payment agreement which shall provide that upon the
earlier of (i) March 30, 2001, (ii) at any time at the option of the Note
Shareholder or (iii) upon the consummation by FRT of an underwritten public
offering (each a "Contingent Payment Date") either FRT or the Note Shareholders,
as determined below, will be obligated to deliver a contingent amount of shares
of FRT Stock to the other party based on the following calculation: a number of
shares of FRT Stock equal to (i) the amount of the note payable which was repaid
in full at Closing divided by (ii) the average of the "last sale" prices of FRT
Stock on the OTCBB (or any exchange on which such FRT Stock may then be listed)
for the ten (10) Trading Days ending on the Trading Day immediately prior to the
Contingent Payment Date (the "Contingent Shares"). If the Settlement Shares are
greater than the Contingent Shares, then FRT shall deliver to the Note
Shareholder an amount of shares of FRT Stock equal to the difference between the
two numbers. If the Settlement Shares are less than the Contingent Shares, then
the Note Shareholder shall deliver to FRT an amount of shares of FRT Stock equal
to the difference between the two numbers; provided, however, that in no event
shall such additional shares plus the Settlement Shares exceed the number of
shares of FRT Stock received at the Closing by the Note Shareholder in exchange
for the RedChip Stock acquired by such Note Shareholder pursuant to the Note.
Notwithstanding the foregoing, the parties will use their best efforts to permit
the repayment of any of the obligations under the Notes in cash rather than FRT
Stock.

                  (g) No RedChip Funded Debt. On or before the date that is
three (3) business days prior to the date scheduled for the Closing, RedChip
shall have provided FRT with a written

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<PAGE>   75

certificate executed by its Chief Executive Officer and President (the "RedChip
Funded Debt Notice") which certificate shall affirm that, as of that date, none
of the RedChip Funded Debt is outstanding, payable or a liability of RedChip.

                  (h) Opinion of Counsel. FRT shall have received an opinion of
Stradling, Yocca, Carlson and Rauth, counsel to RedChip, substantially in the
form attached hereto as Exhibit E, dated as of the Closing.

                  (i) Lock-up Agreements. FRT shall have received lock-up
agreements from the RedChip Stockholders listed on Exhibit H in the form
mutually agreed upon pursuant to which each such RedChip Stockholder agrees not
to sell the FRT Stock for a period of time equal to the holding period under
Rule 144 of the Securities Act and subject to the other limitations of Rule 144
of the Securities Act.

                  (j) Private Placement. FRT shall have completed the Private
Placement of FRT Stock or other equity securities of FRT for aggregate gross
proceeds of a minimum of $5,000,000.

                                    ARTICLE 9
                                     CLOSING

         9.1 Deliveries by RedChip and RedChip Stockholders to FRT. RedChip and
each Stockholder, as applicable, shall deliver (or cause to be delivered) on the
Closing Date to FRT:

                  (a) any Consents required to be obtained by RedChip or the
Stockholders;

                  (b) the RedChip Closing Certificate;

                  (c) the RedChip Funded Debt Notice, as provided for in Section
8.3(h);

                  (d) an opinion of Stradling, Yocca, Carlson and Rauth, counsel
to RedChip and the Stockholders, dated as of the Closing Date, as provided for
in Section 8.3(i);

                  (e) all share certificates representing the shares of RedChip
Stock to be canceled in connection with the Merger.

         9.2 Deliveries by FRT to RedChip. FRT shall deliver to RedChip on the
Closing Date:

                  (a) any Consents required to be obtained by FRT;

                  (b) the FRT Closing Certificate;

                  (c) the FRT Funded Debt Notice as provided for in Section
8.2(d);

                  (d) an opinion of Latham & Watkins, counsel to FRT and Sub,
dated as of the Closing Date, as provided for in Section 8.2(e); and

                  (e) the Merger Shares to be issued to the Stockholders and the
Escrow Agent as provided for herein.

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<PAGE>   76

                                    ARTICLE 10
                                 INDEMNIFICATION

         10.1 Survival of Representations, etc. The representations and
warranties of FRT contained in this Agreement shall terminate at the Effective
Time; provided, however, that the representations and warranties of FRT
contained in Sections 4.2, 4.6, 4.7, 4.8, 4.13 and 4.30 herein shall survive the
Closing Date (and claims based upon or arising out of such representations and
warranties may be asserted at any time before the date which shall be) until the
first anniversary of the execution of this Agreement (the "Survival Period").
The representations and warranties of RedChip contained herein shall survive the
Closing Date through the Survival Period and claims based upon or arising out of
such representations and warranties, as well as any claims based upon or arising
out of any covenants and agreements herein or made hereunder, may be asserted at
any time during the Survival Period. No investigation made by any of the parties
hereto (whether prior to, on or after the Closing Date) shall in any way limit
the representations and warranties of the parties. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any claim made by such party in a writing in accordance with
this Article 10 received by the other party prior to the expiration of the
applicable survival period provided herein.

         10.2 Indemnification.

                  (a) General.

                           (i) Subject to the provisions of Sections 10.5(b)
and 10.5(c) below, subsequent to the Closing, the holders immediately prior to
the Effective Time of shares of RedChip Stock shall jointly and severally
indemnify FRT, its Affiliates, and each of their respective officers, directors,
employees, stockholders and agents ("FRT Indemnified Parties") against, and hold
each of the FRT Indemnified Parties harmless from, any damage, claim, loss,
cost, Tax, Liability or expense, including without limitation, interest,
penalties, reasonable attorneys' fees and expenses (collectively "Damages")
incurred by any such FRT Indemnified Party, that are incident to, arise out of,
in connection with, or related to, the breach of any warranty, representation,
covenant or agreement of RedChip or any such holder contained in this Agreement
or any schedule hereto.

                           (ii) Subsequent to the Closing, FRT shall indemnify
the RedChip Stockholders, their Affiliates, and each of their respective
partners, officers, directors, employees, stockholders and agents, as the case
may be ("Stockholder Indemnified Parties"), against, and hold each of the
Stockholder Indemnified Parties harmless from, any Damages incurred by such
Stockholder Indemnified Party, that are incident to, arise out of, in connection
with, or related to, whether directly or indirectly, the breach of any
representation or warranty of FRT contained in Sections 4.2, 4.6, 4.7, 4.8,
4.13, 4.30 or 4.35 herein.

         The term "Damages" as used in this Section 10.2 is not limited to
matters asserted by third parties against FRT Indemnified Parties, but includes
Damages incurred or sustained by such persons in the absence of third party
claims. The right to obtain indemnification provided in this Section 10.2(a) is
in addition to any other remedy at contract or in the law (but without
duplication of recovery).

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<PAGE>   77

                  (b) Procedure for Claims. If a claim for Damages (a "Claim")
is to be made by a person entitled to indemnification hereunder, the person
claiming such indemnification (the "Indemnified Party") shall give written
notice (a "Claim Notice") to the indemnifying person (the "Indemnifying Party")
promptly after the Indemnified Party becomes aware of any fact, condition or
event which may give rise to Damages for which indemnification may be sought
under this Section 10.2 provided, that if the Indemnified Party is an FRT
Indemnified Party, such Claim Notice shall be valid if it is delivered to the
Stockholder Representative. The failure of any Indemnified Party to give timely
notice hereunder shall not affect rights to indemnification hereunder, except
and only to the extent that, the Indemnifying Party demonstrates actual material
damage caused by such failure, and then only to the extent thereof. In the case
of a Claim involving the assertion of a claim by a third party (whether pursuant
to a lawsuit, other legal action or otherwise, a "Third-Party Claim"), if the
Indemnifying Party shall acknowledge in writing to the Indemnified Party that
the Indemnifying Party shall be obligated to indemnify the Indemnified Party
under the terms of its indemnity hereunder in connection with such Third-Party
Claim, then (A) the Indemnifying Party shall be entitled and, if it so elects,
shall be obligated at its own cost, risk and expense, (1) to take control of the
defense and investigation of such Third-Party Claim and (2) to pursue the
defense thereof in good faith by appropriate actions or proceedings promptly
taken or instituted and diligently pursued, including, without limitation, to
employ and engage attorneys of its own choice reasonably acceptable to the
Indemnified Party to handle and defend the same, and (B) the Indemnifying Party
shall be entitled (but not obligated), if it so elects, to compromise or settle
such claim, which compromise or settlement shall be made only with the written
consent of the Indemnified Party, such consent not to be unreasonably withheld.
In the event the Indemnifying Party elects to assume control of the defense and
investigation of such lawsuit or other legal action in accordance with this
Section 10.2(b), the Indemnified Party may, at its own cost and expense,
participate in the investigation, trial and defense of such Third-Party Claim;
provided that, if the named persons to a lawsuit or other legal action include
both the Indemnifying Party and the Indemnified Party and the Indemnified Party
has been advised in writing by counsel that there may be one or more legal
defenses available to such Indemnified Party that are different from or
additional to those available to the Indemnifying Party, the Indemnified Party
shall be entitled, at the Indemnifying Party's cost, risk and expense, to retain
one firm of separate counsel of its own choosing. If the Indemnifying Party
fails to assume the defense of such Third-Party Claim in accordance with this
Section 10.2 within ten (10) calendar days after receipt of the Claim Notice,
the Indemnified Party against which such Third-Party Claim has been asserted
shall (upon delivering notice to such effect to the Indemnifying Party) have the
right to undertake, at the Indemnifying Party's cost, risk and expense, the
defense, compromise and settlement of such Third-Party Claim on behalf of and
for the account of the Indemnifying Party; provided that such Third-Party Claim
shall not be compromised or settled without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. In the
event the Indemnifying Party assumes the defense of the claim, the Indemnifying
Party shall keep the Indemnified Party reasonably informed of the progress of
any such defense, compromise or settlement, and in the event the Indemnified
Party assumes the defense of the claim, the Indemnified Party shall keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. The Indemnifying Party shall be liable for any
settlement of any Third-Party Claim effected pursuant to and in accordance with
this Section 10.2 and for any final judgment (subject to any right of appeal),
and the Indemnifying Party agrees to indemnify and hold harmless each

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<PAGE>   78

Indemnified Party from and against any and all Damages by reason of such
settlement or judgment.

         10.3 No Right of Contribution. After the Closing, no RedChip
Stockholder shall have any right of contribution against the Surviving
Corporation for any breach of any representation, warranty, covenant or
agreement of RedChip. FRT shall be entitled to specific performance and
injunctive relief, without posting bond or other security, for the purpose of
asserting their respective rights under this Article 10. The remedies described
in this Article 10 shall be in addition to, and not in lieu of, any other
remedies at law or in equity that the parties may elect to pursue, but without
duplication of recovery.

         10.4 Escrow of Merger Shares.

                  (a) Establishment of the Escrow Fund. To provide a fund
against which an FRT Indemnified Party may assert a claim for Damages during the
Survival Period, as soon as practicable after the Effective Time, the Escrow
Shares (the General Escrow Fund), without any act of any RedChip Stockholder,
will be deposited by FRT with the Escrow Agent, such deposit to be governed by
the terms set forth herein or in the Escrow Agreement and at FRT's sole cost and
expense. The portion of the Escrow Shares contributed on behalf of each RedChip
Stockholder shall be in proportion to the aggregate number of shares of FRT
Stock to which such holder would otherwise be entitled under Section 2.6(a).

                  (b) Recourse to the Escrow Shares. The General Escrow Fund
shall be available to compensate each FRT Indemnified Party for (i) all Damages
(whether or not involving a Third Party Claim), incurred or sustained by such
FRT Indemnified Party as a result of any inaccuracy or breach of any
representation, warranty, covenant or agreement of RedChip or any Stockholder
contained herein or in any instrument delivered by RedChip or any Stockholder
pursuant to this Agreement which survived the Effective Time in accordance with
this Agreement; provided, however, that any such claim against the General
Escrow Fund shall be subject to the limitations set forth in Section 10.5. FRT,
Sub and RedChip each acknowledge that any such Damages would relate to
unresolved contingencies existing at the Effective Time, which if resolved at
the Effective Time would have led to a reduction in the aggregate Merger
consideration to be paid to the RedChip Stockholders.

                  (c) Escrow Periods; Distribution of Escrow Shares and Cash
upon Termination of Escrow Period. Subject to the following requirements, the
General Escrow Fund shall be in existence immediately following the Effective
Time and shall terminate upon the expiration of the Survival Period (the
"General Escrow Period"); and all shares of FRT Stock remaining in the General
Escrow Fund shall be distributed as set forth in the last sentence of this
Section 10.4(c); provided, however, that the General Escrow Period shall not
terminate with respect to such amount (or some portion thereof) that is
necessary in the reasonable judgment of FRT, subject to the objection of the
Stockholder Representative and the subsequent arbitration of the matter in the
manner as provided in this Agreement, to satisfy any unsatisfied written claims
under this Article 10 concerning facts and circumstances existing prior to the
termination of such General Escrow Period which claims are specified in any
Officer's Certificate delivered to the Escrow Agent prior to termination of such
General Escrow Period. As soon as all such claims, if any, have been resolved,
the Escrow Agent shall deliver to the Stockholder Representative for

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<PAGE>   79

distribution to the RedChip Stockholders the remaining portion of the General
Escrow Fund not required to satisfy such claims. FRT shall use its commercially
reasonable efforts to have such shares delivered within five (5) business days.

                  (d) Protection of Escrow Funds. The Escrow Agent shall hold
and safeguard the Escrow Shares (and any cash proceeds) during the General
Escrow Periods, shall treat such fund as a trust fund in accordance with the
terms of this Agreement and not as the property of FRT and shall hold and
dispose of the Escrow Shares (and any cash proceeds) only in accordance with the
terms hereof.

         Cash dividends paid or any shares of FRT Stock or other equity
equivalent securities issued or distributed by FRT in respect of FRT Stock in
the General Escrow Fund shall not be added to the General Escrow Fund but shall
be distributed to the record holders of the FRT Stock on the record date set for
any such dividend. Each RedChip Stockholder immediately prior to the Effective
Time shall have voting rights with respect to the shares of FRT Stock
contributed to the General Escrow Fund by such RedChip Stockholder (and on any
voting securities added to the General Escrow Fund in respect of such shares of
FRT Stock).

                  (e) Claims Upon Escrow Funds. Upon receipt by the Escrow Agent
at any time on or before the last day of the General Escrow Period of a
certificate signed by any officer of FRT (an "Officer's Certificate"): (A)
stating that an FRT Indemnified Party has paid or properly accrued or reasonably
anticipates that it will have to pay or accrue Damages as a result of any
inaccuracy or breach of any representation, warranty, covenant or agreement of
RedChip contained herein or in any instrument delivered pursuant to this
Agreement, and (B) specifying in reasonable detail the individual items of
Damages included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, the Escrow Agent
shall, subject to the provisions of Section 10.4(f) hereof, deliver to FRT out
of the appropriate Escrow Fund(s), as promptly as practicable, shares of FRT
Stock and/or cash held in the applicable Escrow Fund in an amount equal to such
Damages.

         For the purposes of determining the number of shares of FRT Stock to be
delivered to a FRT Indemnified Party out of an Escrow Fund pursuant to Section
10.4(e), the shares of FRT Stock shall be valued at the closing price of the FRT
Stock on the Closing Date as reported on the OTCBB. In the event an Escrow Fund
also contains cash, the election to receive cash or FRT Stock shall be made by
the FRT Indemnified Party entitled to receive Damages.

                  (f) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Stockholder Representative and for a period of thirty
(30) days after such delivery, the Escrow Agent shall make no delivery to FRT of
any Escrow Shares pursuant to Section 10.4(e) hereof unless the Escrow Agent
shall have received written authorization from the Stockholder Representative to
make such delivery. After the expiration of such thirty (30) day period, the
Escrow Agent shall make delivery of shares of FRT Stock from the appropriate
Escrow Fund in accordance with Section 10.4(e) hereof, provided that no such
payment or delivery may be made if the Stockholder Representative shall object
in a written statement to the claim made in the Officer's Certificate, and such
statement shall have been delivered to the Escrow Agent prior to the expiration
of such thirty (30) day period.

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<PAGE>   80

                  (g) Resolution of Conflicts; Arbitration. In case the
Stockholder Representative shall object in writing to any claim or claims made
in any Officer's Certificate, the Stockholder Representative and FRT shall
attempt in good faith to agree upon the rights of the respective parties with
respect to each of such claims. If the Stockholder Representative and FRT should
so agree, joint written instructions setting forth such agreement shall be
prepared and signed by both parties and shall be furnished to the Escrow Agent.
The Escrow Agent shall be entitled to rely on any such instructions and
distribute shares of FRT Stock from an Escrow Fund in accordance with the terms
thereof. If no such agreement can be reached after good faith negotiation,
either FRT or the Stockholder Representative may demand arbitration of the
dispute pursuant to Section 11.13, unless the amount of the damage or loss is at
issue in a pending Action or Proceeding involving a Third Party Claim, in which
event arbitration shall not be commenced until such amount is ascertained or
both parties agree to arbitration.

         10.5 Threshold; Limitations on Indemnity.

                  (a) The FRT Indemnified Parties shall not be entitled to
recover for any Damages from the General Escrow Fund until such time as the
Damages claimed by the FRT Indemnified Parties in the aggregate exceed $100,000
(the "Damage Threshold"), at which time the FRT Indemnified Parties shall be
entitled to be indemnified against and compensated and reimbursed for all such
Damages, including the initial $100,000 thereof.

                  (b) The RedChip Indemnified Parties shall not be entitled to
recover for any Damages until such time as the Damages claimed by the RedChip
Indemnified Parties in the aggregate exceed the Damage Threshold, at which time
the FRT Indemnified Parties shall be entitled to be indemnified against and
compensated and reimbursed for all such Damages, including the initial $100,000
thereof.

                  (c) Notwithstanding any other provision of this Agreement to
the contrary, the General Escrow Fund shall be the sole and exclusive remedy of
the FRT Indemnified Parties, and no RedChip Stockholder shall have any personal
liability whatsoever with respect to any claim for Damages pursuant to the
indemnification provision of this Article 10. Neither the Escrow Agent nor the
Stockholder Representative shall transfer any other property other than the FRT
Stock held in the General Escrow Fund in satisfaction of any claim for damages
under this Article 10.

                  (d) Notwithstanding any other provision of this Agreement to
the contrary, additional shares of FRT Stock shall be the sole and exclusive
remedy of the RedChip Indemnified Parties, and FRT shall not have any liability
whatsoever in excess of a number of FRT Shares equal to the number of FRT Shares
in the General Escrow Fund. The issuance of the additional shares of FRT Stock
by FRT in satisfaction of its indemnification obligations under this Article 10
shall be subject to compliance with applicable federal or state securities laws.
FRT shall not transfer any other property other than additional shares of FRT
Stock in satisfaction of any claim for damages under this Article 10.

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<PAGE>   81

         10.6 Stockholder Representative; Power of Attorney.

                  (a) Stockholder Representative. Byron Roth shall be appointed
as agent and attorney-in-fact (the "Stockholder Representative") for each
RedChip Stockholder, to take all actions and make any decisions required or
permitted to be taken by him under this Agreement and the Escrow Agreement,
including the exercise of the poser to (i) execute the Escrow Agreement, (ii)
authorize delivery to FRT Indemnified Parties any amount of the General Escrow
Fund in satisfaction of any claims for Damages during the Survival Period, (iii)
agree to, negotiate, enter into settlements and compromises of and comply with
orders of courts and awards of arbitrators with respect to any claims for
Damages during the Survival Period, (iv) resolve any claims for Damages during
the Survival Period, (v) take all actions necessary in the judgment of the
Stockholder Representative for the accomplishment of the foregoing and all of
the other terms, conditions and limitations of this Agreement and the Escrow
Agreement. Accordingly, the Stockholder Representative has unlimited authority
and power to act on behalf of each RedChip Stockholder with respect to this
Agreement and the Escrow Agreement and the disposition, settlement or other
handling of all claims for Damages during the Survival Period, rights or
obligations arising from and taken pursuant to each such agreement. Such agency
may be changed by the Stockholders from time to time upon not less than thirty
(30) days prior written notice to RedChip; provided, however, that the
Stockholder Representative may not be removed unless holders of a two-thirds
interest in all shares held in the General Escrow Fund agree to such removal and
to the identity of the substituted Stockholder Representative. Any vacancy in
the position of Stockholder Representative may be filled by approval of the
holders of a majority in interest of all shares held in the General Escrow Fund.
No bond shall be required of the Stockholder Representative, and the Stockholder
Representative shall not receive compensation for his services. Notices or
communications to or from the Stockholder Representative shall constitute notice
to or from each of the RedChip Stockholders.

                  (b) Exculpation. The Stockholder Representative shall not be
liable for any act done or omitted hereunder as Stockholder Representative while
acting in good faith and in the exercise of reasonable judgment.

                  (c) Actions of the Stockholder Representative. A decision,
act, consent or instruction of the Stockholder Representative shall constitute a
decision for all of the RedChip Stockholders for whom a portion of the Escrow
Shares otherwise issuable to them are deposited in an Escrow Fund, and shall be
final, binding and conclusive upon each of such Stockholders, and the Escrow
Agent and FRT may rely exclusively upon any such decision, act, consent or
instruction of the Stockholder Representative as being the decision, act,
consent or instruction of every such RedChip Stockholder. The Escrow Agent and
FRT are hereby relieved from any liability to any person for any acts done by
them in accordance with such decision, act, consent or instruction of the
Stockholder Representative.

         10.7 Characterization of Indemnity Payments. The parties agree that any
indemnification payments made (and/or any payments or adjustments) made under
this Agreement shall be treated for all Tax purposes as an adjustment to the
aggregate Merger consideration to be paid by FRT, unless otherwise required by
applicable law.

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                                    ARTICLE 11
                                  MISCELLANEOUS

11.1     Termination.

                  (a) Termination. This Agreement may be terminated at any time
prior to the Effective Time by written notice by the terminating party to the
other party (except with respect to Termination pursuant to Section 11.1(a)(i))
in the following circumstances:

                           (i) By the written agreement of FRT and RedChip;

                           (ii) By FRT or RedChip if the Closing shall not have
occurred on or before December 31, 2000 ("the Outside Date"), other than due to
a breach of this Agreement by the party seeking to terminate;

                           (iii) By FRT or RedChip if any governmental authority
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties shall have used their
reasonable efforts to resist, resolve or lift, as applicable,) permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement, and such order, decree, ruling or other action shall have become
final and nonappealable;

                           (iv) by RedChip or FRT if it has become reasonably
certain that any of the conditions to the other party's obligations to close the
transactions contemplated by the Agreement will not be satisfied on or prior to
the Outside Date and not waived;

                           (v) by RedChip, on the one hand, or by FRT, on the
other hand, if there shall have been a breach of any of the representations and
warranties set forth in this Agreement on the part of the other, which breach
would, under Section 8.2(b) (in the case of a breach of representation and
warranty by FRT or Sub) or Section 8.3(b) (in the case of a breach of
representation and warranty of RedChip), entitle the party receiving such
representations and warranties not to consummate the transactions contemplated
hereby and which breach by its nature cannot be cured prior to the Outside Date;

                           (vi) by RedChip, on the one hand, or FRT, on the
other hand, if there shall have been a material breach of any of the covenants
or agreements set forth in this Agreement on the part of RedChip (in the case of
termination by FRT) or on the part of FRT (in the case of termination by
RedChip), which breach shall not have been cured within 30 days following
receipt by the breaching party of written notice of such breach from the other;

                           (vii) by RedChip or FRT if RedChip's Board of
Directors shall have withdrawn its recommendation of this Agreement pursuant to
Section 5.2(c); and

                           (viii) by FRT or RedChip if FRT's Board of Directors
shall have withdrawn its recommendation of this Agreement pursuant to Section
6.2(c).

                           (ix) By FRT, upon the failure of RCP or its
Affiliates to fund an amount equal to the lesser of (i) $2.5 million of the
Private Placement or (ii) an amount sufficient for the Private Placement to
reach aggregate gross proceeds of $5,000,000.

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<PAGE>   83

                  (b) In the event of termination of this Agreement as provided
in Section 11.1, this Agreement (excluding Article 11) shall become void and
have no effect except that no party shall be relieved or released from any
liabilities or damages arising out of its willful breach of, or knowing
misrepresentation made in, this Agreement.

         11.2 Termination Fees.

                  (a) RedChip Termination Fee. Upon the occurrence of a RedChip
Fee Triggering Event (as defined below), RedChip agrees to pay to FRT, and FRT
shall be entitled to payment of, a fee of $1,000,000 (the "RedChip Termination
Fee"). The term "RedChip Fee Triggering Event" shall mean any one of the
following events or transactions occurring on or after the date hereof:

                           (i) if this Agreement is terminated by FRT or RedChip
pursuant to Section 11.1(vii); or

                           (ii) if there has been a breach by RedChip of any
covenant, representation, warrant or agreement contained in this Agreement that
would (a) entitle FRT to assert that the conditions to its obligations hereunder
set forth in Section 8.3 have not been satisfied and (b) the breach is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by FRT to RedChip.

                  (b) FRT Termination Fee. Upon the occurrence of a FRT Fee
Triggering Event (as defined below), FRT agrees to pay to RedChip, and RedChip
shall be entitled to payment of, a fee of $1,000,000 (the "FRT Termination
Fee"). The term "FRT Fee Triggering Event" shall mean any one of the following
events or transactions occurring on or after the date hereof:

                           (i) if this Agreement is terminated by RedChip or FRT
pursuant to Section 11.1(viii); or

                           (ii) if there has been a breach by FRT of any
covenant, representation, warrant or agreement contained in this Agreement that
would (a) entitle RedChip to assert that the conditions to its obligations
hereunder set forth in Section 8.2 have not been satisfied and (b) the breach is
not curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by RedChip to FRT.

                  (c) The payment of the Termination Fee pursuant to Section
11.2(a) or (b) shall be the exclusive remedy that may be available in law or
equity for the termination of this Agreement pursuant to Section 11.1(vii) or
(viii). The parties agree that such amount represents a reasonable fee for the
time, expenses and damages in such event to be adequate and sufficient
consideration for such fee. In the event that one party fails to pay to the
other promptly the Termination Fee, the defaulting party shall pay all costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of the Termination Fee and
expenses at rate of nine percent (9%) per annum from the date the fee was
required to be paid to the date it is paid.

                                       77
<PAGE>   84

         11.3 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by RedChip or any Stockholder without the
prior written consent of FRT, or by FRT or Sub without the prior written consent
of RedChip.

         11.4 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
shall be in writing and delivered in person or by courier, telegraphed, telexed,
sent by facsimile transmission, sent via overnight delivery service or mailed by
registered or certified mail (such notice to be effective upon receipt), as
follows:

         If prior to the Closing, to RedChip:

                  RedChip.com, Inc.
                  Suite 2340, Plaza VII
                  45 South Seventh Street
                  Minneapolis, MN  55402

         With a copy to:

                  STRADLING, YOCCA, CARLSON & RAUTH
                  Attention: David E. Lafitte, Esq.
                  302 Olive Street
                  Santa Barbara, CA  91301

         If to the Stockholder Representative:

                  Byron Roth
                  24 Corporate Plaza
                  Newport Beach, CA 92660

         If to FRT or Sub or, if after the Closing, to the Surviving
         Corporation:

                  Freerealtime.com, Inc.
                  Attention: Brad Gunn
                  3333 Michelson Drive
                  Suite 430
                  Irvine, CA 92612

         With a copy to:

                  Latham & Watkins
                  650 Town Center Drive, Suite 2000
                  Costa Mesa, CA  92626
                  Attention:  Cary K. Hyden
                  Fax:  (714) 755-8290

or to such other place and with such other copies as any party may designate as
to itself by written notice to the others.

                                       78
<PAGE>   85

         11.5 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the laws of the State of
Delaware.

         11.6 Representation By Counsel. Each party hereto represents and agrees
with each other that it has been represented by or had the opportunity to be
represented by, independent counsel of its own choosing, and that it has had the
full right and opportunity to consult with its respective attorney(s), that to
the extent, if any, that it desired, it availed itself of this right and
opportunity, that it or its authorized officers (as the case may be) have
carefully read and fully understand this Agreement in its entirety and have had
it fully explained to them by such party's respective counsel, that each is
fully aware of the contents thereof and its meaning, intent and legal effect,
and that it or its authorized officer (as the case may be) is competent to
execute this Agreement and has executed this Agreement free from coercion,
duress or undue influence.

         11.7 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules hereto including the Escrow Agreement,
constitute the entire agreement among the parties pertaining to the subject
matter hereof and supersede all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.

         11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         11.9 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.

         11.10 Expenses. Except as otherwise provided in this Agreement, all
fees and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.

         11.11 Publicity. Except as required by law or on advice of counsel,
neither party shall issue any press release or make any public statement
regarding the transactions contemplated hereby without the prior approval of the
other parties, and the parties hereto shall issue a mutually acceptable press
release as soon as practicable after the date hereof and after the Closing Date.
Notwithstanding the foregoing, FRT shall be permitted to make any public
statement without obtaining the consent of any other party hereto if (i) the
disclosure is required by law or the requirements of the OTCBB and FRT has first
used its reasonable efforts to consult with (but not to obtain the consent of)
the other parties about the form and substance of such disclosure; or (ii) the
other party hereto has consented to such public statement.

                                       79
<PAGE>   86

         11.12 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, including, without limitation, by way of subrogation, except
as specifically set forth in Article 10 hereof.

         11.13 Dispute Resolution. The parties hereby agree that, in order to
obtain prompt and expeditious resolution of any disputes under this Agreement,
each claim, dispute or controversy of whatever nature, arising out of, in
connection with, or in relation to the interpretation, performance or breach of
this Agreement or the transactions contemplated hereby, including without
limitation any claim based on contract, tort or statute, or the arbitrability of
any claim hereunder (an "Arbitrable Claim"), shall be settled by final and
binding arbitration conducted in Orange County, California. All such Arbitrable
Claims shall be settled by three (3) arbitrators in accordance with the
Commercial Arbitration Rules then in effect of the American Arbitration
Association. Such arbitrators shall be provided through the JAMS Endispute
("JAMS") by mutual agreement of the parties; provided, that, absent such
agreement, the arbitrators shall be appointed by JAMS. In either event, such
arbitrators may not have any preexisting, direct or indirect relationship with
any party to the dispute. EACH PARTY HERETO EXPRESSLY CONSENTS TO, AND WAIVES
ANY FUTURE OBJECTION TO, SUCH FORUM AND ARBITRATION RULES. Judgment upon any
award may be entered by any state or federal court having jurisdiction thereof.
Except as required by law (including, without limitation, the rules and
regulations of the SEC and the OTCBB if applicable), neither party nor the
arbitrators shall disclose the existence, content, or results of any arbitration
hereunder without the prior written consent of all parties. Except as provided
herein, the Federal Arbitration Act shall govern the interpretation, enforcement
and all proceeding pursuant to this section.

         Adherence to this dispute resolution process shall not limit the right
of the parties hereto to obtain any provisional remedy, including without
limitation, injunctive or similar relief, from any court of competent
jurisdiction as may be necessary to protect their respective rights and
interests pending arbitration. NOTWITHSTANDING THE FOREGOING SENTENCE, THIS
DISPUTE RESOLUTION PROCEDURE IS INTENDED TO BE THE EXCLUSIVE METHOD OF RESOLVING
ANY ARBITRABLE CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT. The
arbitration procedures shall follow the substantive law of the State of
Delaware, including the provisions of statutory law dealing with arbitration, as
it may exist at the time of the demand for arbitration, insofar as said
provisions are not in conflict with this Agreement and specifically excepting
therefrom sections of any such statute dealing with discovery and sections
requiring notice of the hearing date by registered or certified mail. The
arbitrators shall determine the prevailing party and shall include in their
award that party's reasonable attorneys' fees and costs.

         11.14 Waiver of Jury Trial.

                  (a) Consistent with the intention of Section 11.13, each
signatory to this Agreement hereby waives its respective right to a jury trial
of any permitted claim or cause of action arising out of this agreement, any of
the transactions contemplated hereby, or any dealings between any of the
signatories hereto relating to the subject matter of this agreement or any of
the transactions contemplated hereby. The scope of this waiver is intended to be
all encompassing of any and all disputes that may be filed in any court and that
relate the subject

                                       80
<PAGE>   87

matter of this agreement or any of the transactions contemplated hereby,
including, without limitation, contract claims, tort claims, and all other
common law and statutory claims. This waiver is irrevocable, meaning that it may
not be modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this agreement, any
of the transactions contemplated hereby or to any other document or agreement
relating to the transactions contemplated hereby.

         11.15 Service of Process; Consent to Jurisdiction.

                  (a) SERVICE OF PROCESS. EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY PROCESS, PLEADING, NOTICES OR OTHER PAPERS BY THE
MAILING OF COPIES THEREOF BY REGISTERED, CERTIFIED OR FIRST CLASS MAIL, POSTAGE
PREPAID, TO SUCH PARTY AT SUCH PARTY'S ADDRESS SET FORTH HEREIN, OR BY ANY OTHER
METHOD PROVIDED OR PERMITTED UNDER CALIFORNIA LAW.

                  (b) CONSENT AND JURISDICTION. EACH PARTY HERETO IRREVOCABLY
AND UNCONDITIONALLY (I) AGREES THAT ANY SUIT, ACTION OR OTHER LEGAL PROCEEDING
ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA OR, IF SUCH COURT DOES NOT HAVE
JURISDICTION OR WILL NOT ACCEPT JURISDICTION, IN ANY COURT OF GENERAL
JURISDICTION IN THE COUNTY OF ORANGE, CALIFORNIA; (II) CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING; AND (III)
WAIVES ANY OBJECTION WHICH SUCH PARTY MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT.

         11.6 Attorney Fees. If any party to this Agreement brings an action to
enforce its rights under this Agreement in accordance with the provisions
hereof, the prevailing party shall be entitled to recover its actual
out-of-pocket costs and expenses, including without limitation reasonable
attorneys' fees reasonably incurred in connection with such action, including
any appeal of such action.

                                   * * * * * *

                                       81
<PAGE>   88

         IN WITNESS WHEREOF, each party hereto has executed this Agreement or
caused this Agreement to be duly executed on its behalf by its officer thereunto
duly authorized, as of the day and year first above written.

                                       FREEREALTIME.COM, INC.,
                                       a Delaware corporation

                                       By: /s/ BRAD G. GUNN
                                          --------------------------------------
                                       Name:   Brad G. Gunn
                                            ------------------------------------
                                       Title:  President and Co-Chief Executive
                                               Officer
                                             -----------------------------------

                                       REDCHIP.COM, INC.,
                                       a Delaware corporation

                                       By: /s/ BYRON ROTH
                                          --------------------------------------
                                       Name:   Byron Roth
                                            ------------------------------------
                                       Title:  Chairman of the Board
                                             -----------------------------------

IN HIS CAPACITY AS THE
STOCKHOLDER REPRESENTATIVE:

/s/ BYRON ROTH
-------------------------------------
    Byron Roth

                                      S-1<PAGE>   1
                                                                     EXHIBIT 4-A
--------------------------------------------------------------------------------

                              HERCULES INCORPORATED

                             THE GUARANTORS LISTED
                              ON SCHEDULE I HERETO

                          11 1/8% SENIOR NOTES DUE 2007

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

                                    INDENTURE

                          Dated as of November 14, 2000

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

                        Wells Fargo Bank Minnesota, N.A.

                                     Trustee

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

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

<PAGE>   2

                             CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>

        Trust Indenture
        Act Section                                                                       Indenture Section
        ---------------                                                                   -----------------
<S>                                                                                       <C>
        310(a)(1)...................................................................             7.10
             (a)(2).................................................................             7.10
             (a)(3).................................................................             N.A.
             (a)(4).................................................................             N.A.
             (a)(5).................................................................             7.10
             (b)....................................................................             7.10
             (c)....................................................................             N.A.
        311(a)......................................................................             7.11
             (b)....................................................................             7.11
             (c)....................................................................             N.A.
        312(a)......................................................................             2.05
             (b)....................................................................            12.03
             (c)....................................................................            12.03
        313(a)......................................................................             7.06
             (b)(1).................................................................             N.A.
             (b)(2).................................................................          7.06;7.07
             (c)....................................................................          7.06;12.02
             (d)....................................................................             7.06
        314(a)......................................................................       4.03;12.02;12.05
             (b)....................................................................             N.A.
             (c)(1).................................................................       8.04;10.01;12.04
             (c)(2).................................................................       8.04;10.01;12.04
             (c)(3).................................................................             N.A.
             (d)....................................................................             N.A.
             (e)....................................................................            12.05
             (f)....................................................................             N.A.
        315(a)......................................................................             7.01
             (b)....................................................................          7.05,12.02
             (c)....................................................................             7.01
             (d)....................................................................             7.01
             (e)....................................................................             6.11
        316(a)(last sentence).......................................................             2.09
             (a)(1)(A)..............................................................             6.05
             (a)(1)(B)..............................................................             6.04
             (a)(2).................................................................             N.A.
             (b)....................................................................             6.07
             (c)....................................................................             2.12
        317(a)(1)...................................................................             6.08
             (a)(2).................................................................             6.09
             (b)....................................................................             2.04
        318(a)......................................................................            12.01
             (b)....................................................................             N.A.
             (c)....................................................................            12.01
</TABLE>

N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.

<PAGE>   3

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                     Page
                                                                                     ----

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

<S>               <C>                                                                <C>
   Section 1.01.   Definitions.......................................................  1
   Section 1.02.   Other Definitions................................................. 18
   Section 1.03.   Incorporation by Reference of Trust Indenture Act................. 18
   Section 1.04.   Rules of Construction............................................. 19

                                    ARTICLE 2.
                                    THE NOTES

   Section 2.01.   Form and Dating................................................... 19
   Section 2.02.   Execution and Authentication...................................... 20
   Section 2.03.   Registrar and Paying Agent........................................ 20
   Section 2.04.   Paying Agent to Hold Money in Trust............................... 21
   Section 2.05.   Holder Lists...................................................... 21
   Section 2.06.   Transfer and Exchange............................................. 21
   Section 2.07.   Replacement Notes................................................. 32
   Section 2.08.   Outstanding Notes................................................. 32
   Section 2.09.   Treasury Notes.................................................... 33
   Section 2.10.   Temporary Notes................................................... 33
   Section 2.11.   Cancellation...................................................... 33
   Section 2.12.   Defaulted Interest................................................ 33

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

   Section 3.01.   Notices to Trustee................................................ 33
   Section 3.02.   Selection of Notes to Be Redeemed................................. 34
   Section 3.03.   Notice of Redemption.............................................. 34
   Section 3.04.   Effect of Notice of Redemption.................................... 35
   Section 3.05.   Deposit of Redemption Price....................................... 35
   Section 3.06.   Notes Redeemed in Part............................................ 35
   Section 3.07.   Optional Redemption............................................... 35
   Section 3.08.   Mandatory Redemption.............................................. 36
   Section 3.09.   Offer to Purchase by Application of Excess Proceeds............... 36

                                   ARTICLE 4.
                                   COVENANTS

   Section 4.01.   Payment of Notes.................................................. 37
   Section 4.02.   Maintenance of Office or Agency................................... 38
   Section 4.03.   Reports........................................................... 38
   Section 4.04.   Compliance Certificate............................................ 39
   Section 4.05.   Taxes............................................................. 40
   Section 4.06.   Stay, Extension and Usury Laws.................................... 40
   Section 4.07.   Restricted Payments............................................... 40
   Section 4.08.   Dividend and Other Payment Restrictions Affecting Subsidiaries.... 42
   Section 4.09.   Incurrence of Indebtedness and Issuance of Preferred Stock........ 43

</TABLE>
                                        i

<PAGE>   4
<TABLE>
<S>               <C>                                                                <C>
   Section 4.10.   Asset Sales....................................................... 46
   Section 4.11.   Transactions with Affiliates...................................... 47
   Section 4.12.   Liens............................................................. 48
   Section 4.13.   Business Activities............................................... 48
   Section 4.14.   Corporate Existence............................................... 48
   Section 4.15.   Change of Control................................................. 49
   Section 4.16.   No Senior Subordinated Debt....................................... 50
   Section 4.17.   Sale and Leaseback Transactions................................... 50
   Section 4.18.   Note Guarantees................................................... 50
   Section 4.19.   Payments for Consent.............................................. 51
   Section 4.20.   Additional Note Guarantees........................................ 51
   Section 4.21.   Designation of Restricted and Unrestricted Subsidiaries........... 52

                                   ARTICLE 5.
                                   SUCCESSORS

   Section 5.01.   Merger, Consolidation, or Sale of Assets.......................... 52
   Section 5.02.   Successor Corporation Substituted................................. 53

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

   Section 6.01.   Events of Default................................................. 53
   Section 6.02.   Acceleration...................................................... 55
   Section 6.03.   Other Remedies.................................................... 55
   Section 6.04.   Waiver of Past Defaults........................................... 55
   Section 6.05.   Control by Majority............................................... 55
   Section 6.06.   Limitation on Suits............................................... 55
   Section 6.07.   Rights of Holders of Notes to Receive Payment..................... 56
   Section 6.08.   Collection Suit by Trustee........................................ 56
   Section 6.09.   Trustee May File Proofs of Claim.................................. 56
   Section 6.10.   Priorities........................................................ 57
   Section 6.11.   Undertaking for Costs............................................. 57

                                   ARTICLE 7.
                                    TRUSTEE

   Section 7.01.   Duties of Trustee................................................. 57
   Section 7.02.   Rights of Trustee................................................. 58
   Section 7.03.   Individual Rights of Trustee...................................... 59
   Section 7.04.   Trustee's Disclaimer.............................................. 59
   Section 7.05.   Notice of Defaults................................................ 59
   Section 7.06.   Reports by Trustee to Holders of the Notes........................ 59
   Section 7.07.   Compensation and Indemnity........................................ 60
   Section 7.08.   Replacement of Trustee............................................ 60
   Section 7.09.   Successor Trustee by Merger, etc.................................. 61
   Section 7.10.   Eligibility; Disqualification..................................... 61
   Section 7.11.   Preferential Collection of Claims Against Company................. 61

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

   Section 8.01.   Option to Effect Legal Defeasance or Covenant Defeasance.......... 62
   Section 8.02.   Legal Defeasance and Discharge.................................... 62
   Section 8.03.   Covenant Defeasance............................................... 62
</TABLE>

                                       ii
<PAGE>   5
<TABLE>

<S>               <C>                                                                <C>
   Section 8.04.   Conditions to Legal or Covenant Defeasance........................ 63
   Section 8.05.   Deposited Money and Government Securities to be Held in Trust;
                   Other Miscellaneous Provisions.................................... 64
   Section 8.06.   Repayment to Company.............................................. 64
   Section 8.07.   Reinstatement..................................................... 64

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

   Section 9.01.   Without Consent of Holders of Notes............................... 65
   Section 9.02.   With Consent of Holders of Notes.................................. 65
   Section 9.03.   Compliance with Trust Indenture Act............................... 67
   Section 9.04.   Revocation and Effect of Consents................................. 67
   Section 9.05.   Notation on or Exchange of Notes.................................. 67
   Section 9.06.   Trustee to Sign Amendments, etc................................... 67

                                   ARTICLE 10.
                                 NOTE GUARANTEES

   Section 10.01.     Guarantee...................................................... 67
   Section 10.02.     Limitation on Guarantor Liability.............................. 68
   Section 10.03.     Execution and Delivery of Note Guarantee....................... 68
   Section 10.04.     Guarantors May Consolidate, etc., on Certain Terms............. 69
   Section 10.05.     Releases Following Sale of Assets.............................. 70

                                   ARTICLE 11.
                           satisfaction and discharge

   Section 11.01.     Satisfaction and Discharge..................................... 70
   Section 11.02.     Application of Trust Money..................................... 71

                                   ARTICLE 12.
                                  MISCELLANEOUS

   Section 12.01.     Trust Indenture Act Controls................................... 71
   Section 12.02.     Notices........................................................ 71
   Section 12.03.     Communication by Holders of Notes with Other Holders of Notes.. 72
   Section 12.04.     Certificate and Opinion as to Conditions Precedent............. 73
   Section 12.05.     Statements Required in Certificate or Opinion.................. 73
   Section 12.06.     Rules by Trustee and Agents.................................... 73
   Section 12.07.     No Personal Liability of Directors, Officers, Employees
                      and Stockholders............................................... 73
   Section 12.08.     Governing Law.................................................. 73
   Section 12.09.     No Adverse Interpretation of Other Agreements.................. 74
   Section 12.10.     Successors..................................................... 74
   Section 12.11.     Severability................................................... 74
   Section 12.12.     Counterpart Originals.......................................... 74
   Section 12.13.     Table of Contents, Headings, etc............................... 74
</TABLE>

                             EXHIBITS AND SCHEDULES

Exhibit A         FORM OF NOTE
Exhibit B         FORM OF CERTIFICATE OF TRANSFER
Exhibit C         FORM OF CERTIFICATE OF EXCHANGE
Exhibit D         FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
                  INVESTOR

                                      iii
<PAGE>   6
Exhibit E         FORM OF NOTE GUARANTEE
Exhibit F         FORM OF SUPPLEMENTAL INDENTURE
Schedule I        SCHEDULE OF GUARANTORS

                                       iv
<PAGE>   7

         INDENTURE dated as of November 14, 2000 by and among Hercules
Incorporated, a Delaware corporation (the "Company"), the guarantors listed on
Schedule I hereto (the "Guarantors") and Wells Fargo Bank Minnesota, N.A., as
trustee (the "Trustee").

         The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 11 1/8% Series A Senior Notes due 2007 (the "Series A Notes") and the 11
1/8% Series B Senior Notes due 2007 (the "Series B Notes" and, together with the
Series A Notes, the "Notes"):

                                   ARTICLE 1.
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.01.     Definitions.

         "144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.

         "Acquired Debt" means, with respect to any specified Person:

         (1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and

         (2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.

         "Additional Notes" means up to $100.0 million aggregate principal
amount of Notes (other than the Initial Notes) issued under this Indenture in
accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the
Initial Notes.

         "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 purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.

         "Agent" means any Registrar, Paying Agent or co-registrar.

         "Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.

<PAGE>   8
         "Asset Sale" means:

         (1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of business;
provided that the sale, conveyance or other disposition of all or substantially
all of the assets of the Company and its Subsidiaries taken as a whole will be
governed by the provisions of this Indenture described in Section 4.15 hereof
and/or the provisions described in Section 5.01 hereof and not by the provisions
of Section 4.10 hereof; and

         (2) the issuance of Equity Interests by any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.

         Notwithstanding the preceding, the following items will not be deemed
to be Asset Sales:

         (1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $5.0 million;

         (2) a transfer of assets between or among the Company and its
Subsidiaries,

         (3) an issuance of Equity Interests by a Subsidiary to the Company or
to another Subsidiary;

         (4) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business;

         (5) the sale or other disposition of cash or Cash Equivalents; and

         (6) a Restricted Payment or Permitted Investment that is permitted by
Section 4.07 hereof.

         "Asset Swap" means an exchange of assets by the Company or one or more
of its Restricted Subsidiaries for:

         (1) one or more Permitted Businesses;

         (2) a controlling interest in any Person whose assets consist primarily
of one or more Permitted Businesses; and/or

         (3) long-term assets that are used in a Permitted Business in a
like-kind exchange pursuant to Section 1031 of the Internal Revenue Code or any
similar or successor provision to the Internal Revenue Code.

         "Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

         "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.

         "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13 (d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial

                                       2
<PAGE>   9

ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" have a
corresponding meaning.

         "Board of Directors" means:

         (1) with respect to a corporation, the board of directors of the
corporation;

         (2) with respect to a partnership, the board of directors of the
general partner of the partnership; and

         (3) with respect to any other Person, the board or committee of such
Person serving a similar function.

         "Borrowing Base" means, as of any date, an amount equal to:

         (1) 85% of the face amount of all accounts receivable owned by the
Company and its Subsidiaries as of the end of the most recent fiscal quarter
preceding such date that were not more than 90 days past due; plus

         (2) 50% of the book value of all inventory (whether raw material,
in-process finished product or other) owned by the Company and its Subsidiaries
as of the end of the most recent fiscal quarter preceding such date; minus

         (3) the aggregate amount of trade payables of the Company and its
Subsidiaries outstanding as of the end of the most recent fiscal quarter
preceding such date to the extent that such amount is incurred to acquire
inventory, all calculated on a consolidated basis and in accordance with GAAP.

         "Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.

         "Business Day" means any day other than a Legal Holiday.

         "Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.

         "Capital Stock" means:

         (1) in the case of a corporation, corporate stock;

         (2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;

         (3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and

         (4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

                                       3
<PAGE>   10

         "Cash Equivalents" means:

         (1) United States dollars;

         (2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality of the United
States government (provided that the full faith and credit of the United States
is pledged in support of those securities) having maturities of not more than
six months from the date of acquisition;

         (3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or with
any domestic commercial bank having capital and surplus in excess of $500.0
million or a Thomson Bank Watch Rating of "B" or better;

         (4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications specified
in clause (3) above;

         (5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each case
maturing within six months after the date of acquisition; and

         (6) money market funds at least 90% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.

         "Cedel" means Cedel Bank, SA.

         "Change of Control" means the occurrence of any of the following:

         (1) the direct or indirect sale, 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 all of the properties or assets
of the Company and its Restricted Subsidiaries taken as a whole to any "person"
(as that term is used in Section 13 (d)(3) of the Exchange Act);

         (2) the adoption of a plan relating to the liquidation or dissolution
of the Company;

         (3) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above), becomes the Beneficial Owner, directly or indirectly, of more
than 50% of the Voting Stock of the Company, measured by voting power rather
than number of shares; or

         (4) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.

         "Company" means Hercules Incorporated, and any and all successors
thereto.

         "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:

                                       4
<PAGE>   11

         (1) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in connection with
an Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus

         (2) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such provision
for taxes was deducted in computing such Consolidated Net Income; plus

         (3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus

         (4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; minus

         (5) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business,

         in each case, on a consolidated basis and determined in accordance with
GAAP.

         "Consolidated Lease Expense" means, with respect to any specified
Person for any period, the aggregate rental obligations of the specified Person
and its consolidated Restricted Subsidiaries determined on a consolidated basis
in accordance with GAAP payable in respect of such period under leases of real
and/or personal property (net of income from subleases of such properties, but
including taxes, insurance, maintenance and similar expenses that the lessee is
obligated to pay under the terms of such leases), whether or not such
obligations are reflected as liabilities or commitments on a consolidated
balance sheet of the specified Person and its Restricted Subsidiaries or in the
notes thereto.

         "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:

         (1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or a Wholly Owned Restricted
Subsidiary of the Person;

         (2) the Net Income of any Restricted Subsidiary will be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement,

                                       5
<PAGE>   12

instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;

         (3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition will be
excluded;

         (4) the cumulative effect of a change in accounting principles will be
excluded;

         (5) the Net Income (but not loss) of any Unrestricted Subsidiary will
be excluded, whether or not distributed to the specified Person or one of its
Subsidiaries.

         "Consolidated Net Worth" means, with respect to any specified Person as
of any date, the sum of:

         (1) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date; plus

         (2) the respective amounts reported on such Person's balance sheet as
of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock.

         "Consolidated Tangible Assets" means, as of any date of determination,
the total assets, less goodwill, deferred financing costs and other intangibles
(in each case net of accumulated amortization) shown on the balance sheet of the
Company and its Restricted Subsidiaries as of the most recent date for which
such balance sheet is available, determined on a consolidated basis in
accordance with GAAP.

         "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 this
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.

         "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.

         "Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of April 19, 1999, as amended from time to time, by and
among the Company, the subsidiaries of the Company as may from time to time be
borrowers and/or guarantors thereunder in accordance with the provisions
thereof, the several banks and other financial institutions from time to time
parties thereto, Bank of America, N.A., as administrative agent for the lenders,
Bank of America Canada, as Canadian administrative agent for the lenders, and
The Chase Manhattan Bank, Morgan Guaranty Trust Company of New York and
Citibank, N.A., as Co-Syndication Agents, providing for term and revolving
credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.

         "Credit Facilities" means, one or more debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities, in
each case with banks or other institutional lenders

                                       6
<PAGE>   13
providing for revolving credit loans, term loans, 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.

         "Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.

         "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

         "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.

         "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

         "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require the
Company to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Company may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.07 hereof.

         "Domestic Subsidiary" means any Subsidiary of the Company that was
formed under the laws of the United States or any state of the United States or
the District of Columbia or that guarantees or otherwise provides direct credit
support for any Indebtedness of the Company.

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.

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

         "Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.

         "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.

                                       7
<PAGE>   14
         "Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.

         "Existing Indebtedness" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of this Indenture, until such amounts are repaid.

         "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:

         (1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus

         (2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus

         (3) any 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, whether or
not such Guarantee or Lien is called upon; plus

         (4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or any
of its Restricted Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock) or to
the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person and
its Restricted Subsidiaries, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.

         "Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.

         In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:

         (1) acquisitions that have been made by the specified Person or any of
its Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or

                                       8
<PAGE>   15
prior to the Calculation Date will be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period will be calculated on a pro forma basis
under the Securities Act, but without giving effect to clause (3) of the proviso
set forth in the definition of Consolidated Net Income;

         (2) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, will be excluded; and

         (3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, will be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Restricted Subsidiaries following the Calculation
Date.

         "GAAP" means generally accepted accounting principles set forth in the
opinions and 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 have been approved by a significant segment of the accounting
profession, which are in effect from time to time.

         "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.

         "Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.

         "Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.

         "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

         "Guarantors" means each of:

         (1) the wholly owned Domestic Restricted Subsidiaries of the Company;
and

         (2) any other subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of this Indenture;

         and their respective successors and assigns.

         "Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:

         (1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and

                                       9
<PAGE>   16
         (2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.

         "IAI Global Note" means the global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

         "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:

         (1) in respect of borrowed money;

         (2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);

         (3) in respect of banker's acceptances;

         (4) representing Capital Lease Obligations;

         (5) representing the balance deferred and unpaid of the purchase price
of any property, except any such balance that constitutes an accrued expense or
trade payable; or

         (6) representing any Hedging Obligations,

         if and to the extent any of the preceding items (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.

         The amount of any Indebtedness outstanding as of any date will be:

         (1) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount; and

         (2) the principal amount of the Indebtedness, together with any
interest on the Indebtedness that is more than 30 days past due, in the case of
any other Indebtedness.

         "Indenture" means this Indenture, as amended or supplemented from time
to time.

         "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

         "Initial Notes" means the first $400 million aggregate principal amount
of Notes issued under this Indenture on the date hereof.

         "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.

                                       10
<PAGE>   17

         "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company will be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair market value of
the Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.07 hereof. The
acquisition by the Company or any Subsidiary of the Company of a Person that
holds an Investment in a third Person will be deemed to be an Investment by the
Company or such Subsidiary in such third Person in an amount equal to the fair
market value of the Investment held by the acquired Person in such third Person
in an amount determined as provided in the final paragraph of Section 4.07
hereof.

         "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.

         "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

         "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

         "Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement

         "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:

         (1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with: (a) any Asset Sale; or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and

         (2) any extraordinary gain or loss, together with any related provision
for taxes on such extraordinary gain or loss.

         "Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking

                                       11
<PAGE>   18
fees, and sales commissions, and any relocation expenses incurred as a result of
the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt/Indebtedness under a Credit Facility,
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.

         "Non-Recourse Debt" means Indebtedness:

         (1) as to which neither the Company nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is directly or
indirectly liable as a guarantor or otherwise, or (c) constitutes the lender;

         (2) no default with respect to which (including any rights that the
holders of the Indebtedness 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 of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment of the Indebtedness to be accelerated or payable prior to its stated
maturity; and

         (3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.

         "Non-U.S. Person" means a Person who is not a U.S. Person.

         "Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.

         "Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes shall be treated as a
single class for all purposes under this Indenture.

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

         "Offering" means the offering of the Notes by the Company.

         "Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.

         "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.

         "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.

         "Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).

                                       12

<PAGE>   19
         "Permitted Business" means the research, development, distribution,
manufacturing, sales and/or marketing of chemicals and/or related products,
services and businesses.

         "Permitted Investments" means:

         (1) any Investment in the Company or in a Restricted Subsidiary of the
Company;

         (2) any Investment in Cash Equivalents;

         (3) any Investment by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment:

         (a) such Person becomes a Subsidiary of the Company; or

         (b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Subsidiary of the Company that is a Guarantor;

         (4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof;

         (5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;

         (6) any Investments received in compromise of obligations of such
persons incurred in the ordinary course of trade creditors or customers that
were incurred in the ordinary course of business, including pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency of
any trade creditor or customer;

         (7) Investments made after the original issuance of the Notes in a
Permitted Business in the form of joint ventures, operating agreements,
partnership agreements or other similar or customary agreements, interests or
arrangements with unaffiliated third parties, the aggregate outstanding amount
of which does not exceed 5.0% of Consolidated Tangible Assets at any time;

         (8) Hedging Obligations; and

         (9) other Investments in any Person that is not also a Subsidiary of
the Company having an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this
clause (9) since the date of this Indenture not to exceed $50.0 million.

         "Permitted Liens" means:

         (1) Liens securing Indebtedness and other Obligations under Credit
Facilities that were permitted by clause (a) of the second paragraph of Section
4.09;

         (2) Liens securing Indebtedness outstanding with respect to (a) that
certain Indenture dated May 15, 1993 evidencing 6.625% Notes due 2003 issued by
the Company in the original face amount of $125 million and evidencing 6.60%
Notes due 2007 issued by the Company in the original face amount of $100 million
and (b) that certain Note Purchase Agreement dated as of June 19, 1989
evidencing 9.48% Guaranteed ESOT Notes due June 19, 2009 issued by The

                                       13
<PAGE>   20
Betz Laboratories, Inc. Employee Stock Ownership Trust established by the Betz
Laboratories, Inc. Employee Stock Ownership Plan, and guaranteed by Betz
laboratories, Inc., in the original face amount of $100,000,000;

         (3) Liens in favor of the Company or the Guarantors;

         (4) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or the Subsidiary;

         (5) Liens on property existing at the time of acquisition of the
property by the Company or any Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition;

         (6) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business;

         (7) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (d) and (l) of the second paragraph of Section 4.09 covering
only the assets acquired with such Indebtedness;

         (8) Liens existing on the date of this Indenture;

         (9) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as is required in conformity with GAAP
has been made therefor;

         (10) Liens incurred in the ordinary course of business of the Company
or any Subsidiary of the Company with respect to obligations that do not exceed
$5.0 million at any one time outstanding; and

         (11) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries.

         "Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:

         (1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest on the
Indebtedness and the amount of all expenses and premiums incurred in connection
therewith);

         (2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;

                                       14
<PAGE>   21

         (3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and

         (4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.

         "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

         "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

         "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

         "Qualified Proceeds" means cash, Cash Equivalents and the fair market
value of other property, the fair market value of which will be determined by
(A) for property valued at less than $5.0 million, the Board of Directors, which
determination shall be evidenced by a resolution of the Board of Directors set
forth in an Officer's Certificate delivered to the Trustee and (B) for property
valued at $5.0 million or more, an accounting, appraisal or investment banking
firm of national standing and evidenced by an opinion or appraisal issued by
such accounting, appraisal or investment banking firm.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 14, 2000, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act."

         "Regulation S" means Regulation S promulgated under the Securities Act.

         "Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

         "Related Party" means:

         (1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or

         (2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (1).

         "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above

                                       15
<PAGE>   22
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

         "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

         "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

         "Restricted Investment" means an Investment other than a Permitted
Investment.

         "Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.

         "Rule 144" means Rule 144 promulgated under the Securities Act.

         "Rule 144A" means Rule 144A promulgated under the Securities Act.

         "Rule 903" means Rule 903 promulgated under the Securities Act.

         "Rule 904" means Rule 904 promulgated the Securities Act.

         "SEC" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.

         "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.

         "Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

         "Subsidiary" means, with respect to any specified Person:

         (1) any corporation, association or other business entity of which more
than 50% of the total 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 of the corporation, association or other
business entity is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and

         (2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are that Person or one or more Subsidiaries
of that Person (or any combination thereof).

         "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.

                                      16
<PAGE>   23

         "Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.

         "Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.

         "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.

         "Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:

         (1) has no Indebtedness other than Non-Recourse Debt;

         (2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company;

         (3) 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 Equity Interests or (b) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results;

         (4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and

         (5) has at least one director on its Board of Directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries.

         Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary will be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 of this Indenture, the Company will
be in default of such covenant. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation will be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (1) such Indebtedness is permitted under Section 4.09 of this
Indenture, calculated on a pro forma basis as if such designation had occurred
at the beginning of the four-quarter reference period; and (2) no Default or
Event of Default would be in existence following such designation.

         "U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.

                                       17
<PAGE>   24

         "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

         "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:

         (1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect of the
Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by

         (2)  the then outstanding principal amount of such Indebtedness.

         "Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
will at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.

Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
                                                                                                Defined in
        Term                                                                                      Section
        ----                                                                                      -------
        <S>                                                                                       <C>
        "Affiliate Transaction".............................................................       4.11
        "Asset Sale"........................................................................       4.10
        "Asset Sale Offer"..................................................................       3.09
        "Authentication Order"..............................................................       2.02
        "Bankruptcy Law"....................................................................       4.01
        "Change of Control Offer"...........................................................       4.15
        "Change of Control Payment".........................................................       4.15
        "Change of Control Payment Date"....................................................       4.15
        "Covenant Defeasance"...............................................................       8.03
        "Event of Default"..................................................................       6.01
        "Excess Proceeds"...................................................................       4.10
        "incur".............................................................................       4.09
        "Legal Defeasance"..................................................................       8.02
        "Offer Amount"......................................................................       3.09
        "Offer Period"......................................................................       3.09
        "Paying Agent"......................................................................       2.03
        "Permitted Debt"....................................................................       4.09
        "Purchase Date".....................................................................       3.09
        "Registrar".........................................................................       2.03
        "Restricted Payments"...............................................................       4.07
        "Unit Legend".......................................................................       2.06
</TABLE>

Section 1.03. Incorporation by Reference of Trust Indenture Act.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

         The following TIA terms used in this Indenture have the following
meanings:

                                       18
<PAGE>   25

         "indenture securities" means the Notes;

         "indenture security Holder" means a Holder of a Note;

         "indenture to be qualified" means this Indenture;

         "indenture trustee" or "institutional trustee" means the Trustee; and

         "obligor" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.

         All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

Section 1.04. Rules of Construction.

         Unless the context otherwise requires:

         (a)  a term has the meaning assigned to it;

         (b)  an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;

         (c)  "or" is not exclusive;

         (d)  words in the singular include the plural, and in the plural
include the singular;

         (e)  provisions apply to successive events and transactions; and

         (f)  references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.

                                   ARTICLE 2.
                                   THE NOTES

Section 2.01. Form and Dating.

         (a)  General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.

         The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.

         (b)  Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of

                                       19
<PAGE>   26
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

         (c)  Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.

Section 2.02. Execution and Authentication.

         Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.

         If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.

         A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

         The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.

         The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03. Registrar and Paying Agent.

         The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

                                       20
<PAGE>   27

         The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

         The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04. Paying Agent to Hold Money in Trust.

         The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.

Section 2.05. Holder 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
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
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 the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).

Section 2.06. Transfer and Exchange.

         (a)  Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary, (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee or (iii) there has occurred and is
continuing for a period of 120 days a Default or Event of Default with respect
to the Notes. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes shall be issued in such names as the Depositary
shall instruct the Trustee. Global Notes also may be exchanged or replaced, in
whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

                                       21
<PAGE>   28

         (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

             (i) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Restricted Global Note may be transferred
         to Persons who take delivery thereof in the form of a beneficial
         interest in the same Restricted Global Note in accordance with the
         transfer restrictions set forth in the Private Placement Legend;
         provided, however, that prior to the expiration of the Restricted
         Period, transfers of beneficial interests in the Regulation S Global
         Note may not be made to a U.S. Person or for the account or benefit of
         a U.S. Person (other than an Initial Purchaser). Beneficial interests
         in any Unrestricted Global Note may be transferred to Persons who take
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note. No written orders or instructions shall be
         required to be delivered to the Registrar to effect the transfers
         described in this Section 2.06(b)(i).

             (ii) All Other Transfers and Exchanges of Beneficial Interests in
         Global Notes. In connection with all transfers and exchanges of
         beneficial interests that are not subject to Section 2.06(b)(i) above,
         the transferor of such beneficial interest must deliver to the
         Registrar either (A)(1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to credit or cause to be
         credited a beneficial interest in another Global Note in an amount
         equal to the beneficial interest to be transferred or exchanged and (2)
         instructions given in accordance with the Applicable Procedures
         containing information regarding the Participant account to be credited
         with such increase or (B)(1) a written order from a Participant or an
         Indirect Participant given to the Depositary in accordance with the
         Applicable Procedures directing the Depositary to cause to be issued a
         Definitive Note in an amount equal to the beneficial interest to be
         transferred or exchanged and (2) instructions given by the Depositary
         to the Registrar containing information regarding the Person in whose
         name such Definitive Note shall be registered to effect the transfer or
         exchange referred to in (1) above. Upon consummation of an Exchange
         Offer by the Company in accordance with Section 2.06(f) hereof, the
         requirements of this Section 2.06(b)(ii) shall be deemed to have been
         satisfied upon receipt by the Registrar of the instructions contained
         in the Letter of Transmittal delivered by the Holder of such beneficial
         interests in the Restricted Global Notes. Upon satisfaction of all of
         the requirements for transfer or exchange of beneficial interests in
         Global Notes contained in this Indenture and the Notes or otherwise
         applicable under the Securities Act, the Trustee shall adjust the
         principal amount of the relevant Global Note(s) pursuant to Section
         2.06(h) hereof.

             (iii) Transfer of Beneficial Interests to Another Restricted Global
         Note. A beneficial interest in any Restricted Global Note may be
         transferred to a Person who takes delivery thereof in the form of a
         beneficial interest in another Restricted Global Note if the transfer
         complies with the requirements of Section 2.06(b)(ii) above and the
         Registrar receives the following:

                   (A) if the transferee will take delivery in the form of a
             beneficial interest in the 144A Global Note, then the transferor
             must deliver a certificate in the form of Exhibit B hereto,
             including the certifications in item (1) thereof;

                                       22

<PAGE>   29
                   (B) if the transferee will take delivery in the form of a
             beneficial interest in the Regulation S Global Note, then the
             transferor must deliver a certificate in the form of Exhibit B
             hereto, including the certifications in item (2) thereof; and

                   (C) if the transferee will take delivery in the form of a
             beneficial interest in the IAI Global Note, then the transferor
             must deliver a certificate in the form of Exhibit B hereto,
             including the certifications and certificates and Opinion of
             Counsel required by item (3) thereof, if applicable.

             (iv) Transfer and Exchange of Beneficial Interests in a Restricted
         Global Note for Beneficial Interests in the Unrestricted Global Note. A
         beneficial interest in any Restricted Global Note may be exchanged by
         any holder thereof for a beneficial interest in an Unrestricted Global
         Note or transferred to a Person who takes delivery thereof in the form
         of a beneficial interest in an Unrestricted Global Note if the exchange
         or transfer complies with the requirements of Section 2.06(b)(ii) above
         and:

                  (A) such exchange or transfer is effected pursuant to the
             Exchange Offer in accordance with the Registration Rights Agreement
             and the holder of the beneficial interest to be transferred, in the
             case of an exchange, or the transferee, in the case of a transfer,
             certifies in the applicable Letter of Transmittal that it is not
             (1) a broker-dealer, (2) a Person participating in the distribution
             of the Exchange Notes or (3) a Person who is an affiliate (as
             defined in Rule 144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
             Registration Statement in accordance with the Registration Rights
             Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
             the Exchange Offer Registration Statement in accordance with the
             Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                      (1) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a beneficial interest in an Unrestricted Global
                  Note, a certificate from such holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(a) thereof;
                  or

                      (2) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of a beneficial interest in an Unrestricted Global Note,
                  a certificate from such holder in the form of Exhibit B
                  hereto, including the certifications in item (4) thereof;

             and, in each such case set forth in this subparagraph (D), if the
             Registrar so requests or if the Applicable Procedures so require,
             an Opinion of Counsel in form reasonably acceptable to the
             Registrar to the effect that such exchange or transfer is in
             compliance with the Securities Act and that the restrictions on
             transfer contained herein and in the Private Placement Legend are
             no longer required in order to maintain compliance with the
             Securities Act.

         If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an

                                       23
<PAGE>   30
Authentication Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.

         Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.

         (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

             (i) Beneficial Interests in Restricted Global Notes to Restricted
         Definitive Notes. If any holder of a beneficial interest in a
         Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note or to transfer such beneficial
         interest to a Person who takes delivery thereof in the form of a
         Restricted Definitive Note, then, upon receipt by the Registrar of the
         following documentation:

                  (A) if the holder of such beneficial interest in a Restricted
             Global Note proposes to exchange such beneficial interest for a
             Restricted Definitive Note, a certificate from such holder in the
             form of Exhibit C hereto, including the certifications in item
             (2)(a) thereof;

                  (B) if such beneficial interest is being transferred to a QIB
             in accordance with Rule 144A under the Securities Act, a
             certificate to the effect set forth in Exhibit B hereto, including
             the certifications in item (1) thereof;

                  (C) if such beneficial interest is being transferred to a
             Non-U.S. Person in an offshore transaction in accordance with Rule
             903 or Rule 904 under the Securities Act, a certificate to the
             effect set forth in Exhibit B hereto, including the certifications
             in item (2) thereof;

                  (D) if such beneficial interest is being transferred pursuant
             to an exemption from the registration requirements of the
             Securities Act in accordance with Rule 144 under the Securities
             Act, a certificate to the effect set forth in Exhibit B hereto,
             including the certifications in item (3)(a) thereof;

                  (E) if such beneficial interest is being transferred to an
             Institutional Accredited Investor in reliance on an exemption from
             the registration requirements of the Securities Act other than
             those listed in subparagraphs (B) through (D) above, a certificate
             to the effect set forth in Exhibit B hereto, including the
             certifications, certificates and Opinion of Counsel required by
             item (3) thereof, if applicable;

                  (F) if such beneficial interest is being transferred to the
             Company or any of its Subsidiaries, a certificate to the effect set
             forth in Exhibit B hereto, including the certifications in item
             (3)(b) thereof; or

                  (G) if such beneficial interest is being transferred pursuant
             to an effective registration statement under the Securities Act, a
             certificate to the effect set forth in Exhibit B hereto, including
             the certifications in item (3)(c) thereof,

         the Trustee shall cause the aggregate principal amount of the
         applicable Global Note to be reduced accordingly pursuant to Section
         2.06(h) hereof, and the Company shall execute and the Trustee shall
         authenticate and deliver to the Person designated in the instructions a
         Definitive

                                       24
<PAGE>   31

         Note in the appropriate principal amount. Any Definitive Note issued in
         exchange for a beneficial interest in a Restricted Global Note pursuant
         to this Section 2.06(c) shall be registered in such name or names and
         in such authorized denomination or denominations as the holder of such
         beneficial interest shall instruct the Registrar through instructions
         from the Depositary and the Participant or Indirect Participant. The
         Trustee shall deliver such Definitive Notes to the Persons in whose
         names such Notes are so registered. Any Definitive Note issued in
         exchange for a beneficial interest in a Restricted Global Note pursuant
         to this Section 2.06(c)(i) shall bear the Private Placement Legend and
         shall be subject to all restrictions on transfer contained therein.

             (ii) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note or may transfer such beneficial interest
         to a Person who takes delivery thereof in the form of an Unrestricted
         Definitive Note only if:

                  (A) such exchange or transfer is effected pursuant to the
             Exchange Offer in accordance with the Registration Rights Agreement
             and the holder of such beneficial interest, in the case of an
             exchange, or the transferee, in the case of a transfer, certifies
             in the applicable Letter of Transmittal that it is not (1) a
             broker-dealer, (2) a Person participating in the distribution of
             the Exchange Notes or (3) a Person who is an affiliate (as defined
             in Rule 144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
             Registration Statement in accordance with the Registration Rights
             Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
             the Exchange Offer Registration Statement in accordance with the
             Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                      (1) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to exchange such beneficial
                  interest for a Definitive Note that does not bear the Private
                  Placement Legend, a certificate from such holder in the form
                  of Exhibit C hereto, including the certifications in item
                  (1)(b) thereof; or

                      (2) if the holder of such beneficial interest in a
                  Restricted Global Note proposes to transfer such beneficial
                  interest to a Person who shall take delivery thereof in the
                  form of a Definitive Note that does not bear the Private
                  Placement Legend, a certificate from such holder in the form
                  of Exhibit B hereto, including the certifications in item (4)
                  thereof;

             and, in each such case set forth in this subparagraph (D), if the
             Registrar so requests or if the Applicable Procedures so require,
             an Opinion of Counsel in form reasonably acceptable to the
             Registrar to the effect that such exchange or transfer is in
             compliance with the Securities Act and that the restrictions on
             transfer contained herein and in the Private Placement Legend are
             no longer required in order to maintain compliance with the
             Securities Act.

             (iii) Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes. If any holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for a Definitive Note or to transfer such beneficial interest
         to a Person who takes delivery thereof in the form of a Definitive
         Note, then, upon satisfaction of the

                                       25

<PAGE>   32
         conditions set forth in Section 2.06(b)(ii) hereof, the Trustee
         shall cause the aggregate principal amount of the applicable Global
         Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and
         the Company shall execute and the Trustee shall authenticate and
         deliver to the Person designated in the instructions a Definitive Note
         in the appropriate principal amount. Any Definitive Note issued in
         exchange for a beneficial interest pursuant to this Section
         2.06(c)(iii) shall be registered in such name or names and in such
         authorized denomination or denominations as the holder of such
         beneficial interest shall instruct the Registrar through instructions
         from the Depositary and the Participant or Indirect Participant. The
         Trustee shall deliver such Definitive Notes to the Persons in whose
         names such Notes are so registered. Any Definitive Note issued in
         exchange for a beneficial interest pursuant to this Section
         2.06(c)(iii) shall not bear the Private Placement Legend.

         (d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

             (i) Restricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. If any Holder of a Restricted Definitive Note
         proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                  (A) if the Holder of such Restricted Definitive Note proposes
             to exchange such Note for a beneficial interest in a Restricted
             Global Note, a certificate from such Holder in the form of Exhibit
             C hereto, including the certifications in item (2)(b) thereof;

                  (B) if such Restricted Definitive Note is being transferred to
             a QIB in accordance with Rule 144A under the Securities Act, a
             certificate to the effect set forth in Exhibit B hereto, including
             the certifications in item (1) thereof;

                  (C) if such Restricted Definitive Note is being transferred to
             a Non-U.S. Person in an offshore transaction in accordance with
             Rule 903 or Rule 904 under the Securities Act, a certificate to the
             effect set forth in Exhibit B hereto, including the certifications
             in item (2) thereof;

                  (D) if such Restricted Definitive Note is being transferred
             pursuant to an exemption from the registration requirements of the
             Securities Act in accordance with Rule 144 under the Securities
             Act, a certificate to the effect set forth in Exhibit B hereto,
             including the certifications in item (3)(a) thereof;

                  (E) if such Restricted Definitive Note is being transferred to
             an Institutional Accredited Investor in reliance on an exemption
             from the registration requirements of the Securities Act other than
             those listed in subparagraphs (B) through (D) above, a certificate
             to the effect set forth in Exhibit B hereto, including the
             certifications, certificates and Opinion of Counsel required by
             item (3) thereof, if applicable;

                  (F) if such Restricted Definitive Note is being transferred to
             the Company or any of its Subsidiaries, a certificate to the effect
             set forth in Exhibit B hereto, including the certifications in item
             (3)(b) thereof; or

                  (G) if such Restricted Definitive Note is being transferred
             pursuant to an effective registration statement under the
             Securities Act, a certificate to the effect set forth in Exhibit B
             hereto, including the certifications in item (3)(c) thereof,

                                       26
<PAGE>   33

         the Trustee shall cancel the Restricted Definitive Note, increase or
         cause to be increased the aggregate principal amount of, in the case of
         clause (A) above, the appropriate Restricted Global Note, in the case
         of clause (B) above, the 144A Global Note, in the case of clause (C)
         above, the Regulation S Global Note, and in all other cases, the IAI
         Global Note.

                  (ii) Restricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
         exchange such Note for a beneficial interest in an Unrestricted Global
         Note or transfer such Restricted Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

                  (A) such exchange or transfer is effected pursuant to the
             Exchange Offer in accordance with the Registration Rights Agreement
             and the Holder, in the case of an exchange, or the transferee, in
             the case of a transfer, certifies in the applicable Letter of
             Transmittal that it is not (1) a broker-dealer, (2) a Person
             participating in the distribution of the Exchange Notes or (3) a
             Person who is an affiliate (as defined in Rule 144) of the Company;

                  (B) such transfer is effected pursuant to the Shelf
             Registration Statement in accordance with the Registration Rights
             Agreement;

                  (C) such transfer is effected by a Broker-Dealer pursuant to
             the Exchange Offer Registration Statement in accordance with the
             Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                      (1) if the Holder of such Definitive Notes proposes to
                  exchange such Notes for a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (1)(c) thereof; or

                      (2) if the Holder of such Definitive Notes proposes to
                  transfer such Notes to a Person who shall take delivery
                  thereof in the form of a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit B hereto, including the certifications in
                  item (4) thereof;

             and, in each such case set forth in this subparagraph (D), if the
             Registrar so requests or if the Applicable Procedures so require,
             an Opinion of Counsel in form reasonably acceptable to the
             Registrar to the effect that such exchange or transfer is in
             compliance with the Securities Act and that the restrictions on
             transfer contained herein and in the Private Placement Legend are
             no longer required in order to maintain compliance with the
             Securities Act.

                  Upon satisfaction of the conditions of any of the
         subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
         Definitive Notes and increase or cause to be increased the aggregate
         principal amount of the Unrestricted Global Note.

                  (iii) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Notes to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time. Upon receipt of a request for
         such an exchange or transfer, the Trustee shall cancel the applicable

                                       27
<PAGE>   34
         Unrestricted Definitive Note and increase or cause to be increased the
         aggregate principal amount of one of the Unrestricted Global Notes.

                  If any such exchange or transfer from a Definitive Note to a
         beneficial interest is effected pursuant to subparagraphs (ii)(B),
         (ii)(D) or (iii) above at a time when an Unrestricted Global Note has
         not yet been issued, the Company shall issue and, upon receipt of an
         Authentication Order in accordance with Section 2.02 hereof, the
         Trustee shall authenticate one or more Unrestricted Global Notes in an
         aggregate principal amount equal to the principal amount of Definitive
         Notes so transferred.

         (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

             (i) Restricted Definitive Notes to Restricted Definitive Notes. Any
         Restricted Definitive Note may be transferred to and registered in the
         name of Persons who take delivery thereof in the form of a Restricted
         Definitive Note if the Registrar receives the following:

                  (A) if the transfer will be made pursuant to Rule 144A under
             the Securities Act, then the transferor must deliver a certificate
             in the form of Exhibit B hereto, including the certifications in
             item (1) thereof;

                  (B) if the transfer will be made pursuant to Rule 903 or Rule
             904, then the transferor must deliver a certificate in the form of
             Exhibit B hereto, including the certifications in item (2) thereof;
             and

                  (C) if the transfer will be made pursuant to any other
             exemption from the registration requirements of the Securities Act,
             then the transferor must deliver a certificate in the form of
             Exhibit B hereto, including the certifications, certificates and
             Opinion of Counsel required by item (3) thereof, if applicable.

             (ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
         Any Restricted Definitive Note may be exchanged by the Holder thereof
         for an Unrestricted Definitive Note or transferred to a Person or
         Persons who take delivery thereof in the form of an Unrestricted
         Definitive Note if:

                  (A) such exchange or transfer is effected pursuant to the
             Exchange Offer in accordance with the Registration Rights Agreement
             and the Holder, in the case of an exchange, or the transferee, in
             the case of a transfer, certifies in the applicable Letter of
             Transmittal that it is not (1) a broker-dealer, (2) a Person
             participating in the distribution of the Exchange Notes or (3) a
             Person who is an affiliate (as defined in Rule 144) of the Company;

                  (B) any such transfer is effected pursuant to the Shelf
             Registration Statement in accordance with the Registration Rights
             Agreement;

                                       28
<PAGE>   35

                  (C) any such transfer is effected by a Broker-Dealer pursuant
             to the Exchange Offer Registration Statement in accordance with the
             Registration Rights Agreement; or

                  (D) the Registrar receives the following:

                      (1) if the Holder of such Restricted Definitive Notes
                  proposes to exchange such Notes for an Unrestricted Definitive
                  Note, a certificate from such Holder in the form of Exhibit C
                  hereto, including the certifications in item (1)(d) thereof;
                  or

                      (2) if the Holder of such Restricted Definitive Notes
                  proposes to transfer such Notes to a Person who shall take
                  delivery thereof in the form of an Unrestricted Definitive
                  Note, a certificate from such Holder in the form of Exhibit B
                  hereto, including the certifications in item (4) thereof;

             and, in each such case set forth in this subparagraph (D), if the
             Registrar so requests, an Opinion of Counsel in form reasonably
             acceptable to the Company to the effect that such exchange or
             transfer is in compliance with the Securities Act and that the
             restrictions on transfer contained herein and in the Private
             Placement Legend are no longer required in order to maintain
             compliance with the Securities Act.

             (iii) Unrestricted Definitive Notes to Unrestricted Definitive
         Notes. A Holder of Unrestricted Definitive Notes may transfer such
         Notes to a Person who takes delivery thereof in the form of an
         Unrestricted Definitive Note. Upon receipt of a request to register
         such a transfer, the Registrar shall register the Unrestricted
         Definitive Notes pursuant to the instructions from the Holder thereof.

         (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.

         (g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

             (i)  Private Placement Legend.

                  (A) Except as permitted by subparagraph (B) below, each Global
             Note and each Definitive Note (and all Notes issued in exchange
             therefor or substitution thereof) shall bear the legend in
             substantially the following form:

                                       29
<PAGE>   36

"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER:

         (a) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI"),

         (b) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
REGULATION S OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN
$250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND

         (c) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.

AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS."

                  (B) Notwithstanding the foregoing, any Global Note or
             Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
             (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
             Section 2.06 (and all Notes issued in exchange therefor or
             substitution thereof) shall not bear the Private Placement Legend.

             (ii) Global Note Legend. Each Global Note shall bear a legend in
         substantially the following form:

                                       30

<PAGE>   37

"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF HERCULES INCORPORATED."

         (h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

         (i) General Provisions Relating to Transfers and Exchanges.

             (i) To permit registrations of transfers and exchanges, the Company
         shall execute and the Trustee shall authenticate Global Notes and
         Definitive Notes upon the Company's order or at the Registrar's
         request.

             (ii) No service charge shall be made to a holder of a beneficial
         interest in a Global Note or to a Holder of a Definitive Note for any
         registration of transfer or exchange, but the Company may require
         payment of a sum sufficient to cover any transfer tax or similar
         governmental charge payable in connection therewith (other than any
         such transfer taxes or similar governmental charge payable upon
         exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15
         and 9.05 hereof).

             (iii) The Registrar shall not be required to register the transfer
         of or exchange any Note selected for redemption in whole or in part,
         except the unredeemed portion of any Note being redeemed in part.

             (iv) All Global Notes and Definitive Notes issued upon any
         registration of transfer or exchange of Global Notes or Definitive
         Notes shall be the valid obligations of the Company, evidencing the
         same debt, and entitled to the same benefits under this Indenture, as
         the Global Notes or Definitive Notes surrendered upon such registration
         of transfer or exchange.

             (v) The Company shall not be required (A) to issue, to register the
         transfer of or to exchange any Notes during a period beginning at the
         opening of business 15 days before the day of any selection of Notes
         for redemption under Section 3.02 hereof and ending at the close of
         business on the day of selection, (B) to register the transfer of or to
         exchange any Note so selected for redemption in whole or in part,
         except the unredeemed portion of any Note being

                                       31
<PAGE>   38
         redeemed in part or (C) to register the transfer of or to exchange
         a Note between a record date and the next succeeding Interest Payment
         Date.

             (vi) Prior to due presentment for the registration of a transfer of
         any Note, the Trustee, any Agent and the Company may deem and treat the
         Person in whose name any Note is registered as the absolute owner of
         such Note for the purpose of receiving payment of principal of and
         interest on such Notes and for all other purposes, and none of the
         Trustee, any Agent or the Company shall be affected by notice to the
         contrary.

             (vii) The Trustee shall authenticate Global Notes and Definitive
         Notes in accordance with the provisions of Section 2.02 hereof.

             (viii) All certifications, certificates and Opinions of Counsel
         required to be submitted to the Registrar pursuant to this Section 2.06
         to effect a registration of transfer or exchange may be submitted by
         facsimile.

Section 2.07. Replacement Notes.

         If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.

         Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

Section 2.08. Outstanding Notes.

         The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.

         If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

         If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

         If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.

                                       32
<PAGE>   39

Section 2.09. Treasury Notes.

         In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.

Section 2.10. Temporary Notes.

         Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.

         Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

Section 2.11. Cancellation.

         The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.

Section 2.12. Defaulted Interest.

         If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

Section 3.01. Notices to Trustee.

         If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption

                                       33
<PAGE>   40
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.

Section 3.02. Selection of Notes to Be Redeemed.

         If less than all of the Notes are to be redeemed at any time, the
Trustee will select Notes for redemption as follows:

         (a) if the Notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities exchange
on which the Notes are listed; or

         (b) if the Notes are not listed on any national securities exchange, on
a pro rata basis.

         No Notes of $1,000 or less can be redeemed in part.

Section 3.03. Notice of Redemption.

         Subject to the provisions of Section 3.09, notices of redemption will
be mailed by first class mail at least 30 but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its registered
address, except that redemption notices may be mailed more than 60 days prior to
a redemption date if the notice is issued in connection with a defeasance of the
Notes or a satisfaction and discharge of this Indenture.

         The notice shall identify the Notes to be redeemed and shall state:

         (a) the redemption date;

         (b) the redemption price;

         (c) if any Note is to be redeemed in part only, the notice of
redemption that relates to that Note will state the portion of the principal
amount of that Note that is to be redeemed. A new Note in principal amount equal
to the unredeemed portion of the original Note will be issued in the name of the
Holder of Notes upon cancellation of the original Note.

         (d) the name and address of the Paying Agent;

         (e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

         (f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;

         (g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and

         (h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.

         At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.

                                       34

<PAGE>   41

Section 3.04. Effect of Notice of Redemption.

         Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on Notes
or portions of them called for redemption. Notices of redemption may not be
conditional.

Section 3.05. Deposit of Redemption Price.

         One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.

         If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.

Section 3.06. Notes Redeemed in Part.

         If any Note is to be redeemed in part only, the notice of redemption
that relates to that Note will state the portion of the principal amount of that
Note that is to be redeemed. A new Note in principal amount equal to the
unredeemed portion of the original Note will be issued in the name of the Holder
of Notes upon cancellation of the original Note.

Section 3.07. Optional Redemption.

         At any time prior to November 15, 2003, the Company may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Notes
issued under this Indenture at a redemption price of 111.125% of the principal
amount, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings; provided that:

         (a) at least 65% of the aggregate principal amount of Notes issued
under this Indenture remains outstanding immediately after the occurrence of
such redemption (excluding Notes held by the Company and its Subsidiaries); and

         (b) the redemption occurs within 45 days of the date of the closing of
such Public Equity Offering.

         At any time prior to November 15, 2001, the Company may also redeem all
or a part of the Notes upon the occurrence of a Change of Control, upon not less
than 30 nor more than 60 days prior notice (but in no event may any such
redemption occur more than 90 days after the occurrence of such Change of
Control) mailed by first-class mail to each Holder's registered address, at a
redemption price equal to

                                       35
<PAGE>   42
111.125% of the principal amount of Notes redeemed plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of redemption (the
"Redemption Date").

         Except pursuant to the preceding paragraphs, the Notes will not be
redeemable at the Company's option prior to maturity.

         Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.

Section 3.08. Mandatory Redemption.

         The Company is not required to make mandatory redemption or sinking
fund payments with respect to the Notes.

Section 3.09. Offer to Purchase by Application of Excess Proceeds.

         In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.

         The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.

         If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.

         Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:

         (a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;

         (b) the Offer Amount, the purchase price and the Purchase Date;

         (c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;

         (d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;

                                      36
<PAGE>   43

         (e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;

         (f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;

         (g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;

         (h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and

         (i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).

         On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.

         Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.

                                   ARTICLE 4.
                                   COVENANTS

Section 4.01. Payment of Notes.

         The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then

                                       37

<PAGE>   44
due. The Company shall pay all Liquidated Damages, if any, in the same manner on
the dates and in the amounts set forth in the Registration Rights Agreement.

         The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.

Section 4.02. Maintenance of Office or Agency.

         The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of 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.

         The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.

         The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.

Section 4.03. Reports.

         Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes, within the time periods specified in the SEC's rules and regulations:

         (a) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K
(including all exhibits) if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report on the annual financial statements by the Company's certified independent
accountants; and

         (b) all current reports that would be required to be filed with the SEC
on Form 8-K if the Company were required to file such reports.

         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 thereto, and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.

                                       38
<PAGE>   45

         In addition, following the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, whether or not required by
the rules and regulations of the SEC, the Company shall file a copy of all of
the information and reports referred to in clauses (a) and (b) above with the
SEC for public availability within the time periods specified in the SEC's rules
and regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company and the Note Guarantors have agreed that, for
so long as any Notes remain outstanding, they shall furnish to the Holders and
to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. The Company shall at all times comply with TIA ss. 314(a).

         So long as any Notes are outstanding, the Company shall:

         (a) file with the Trustee, within 15 days after the Company, as the
case may be, is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company is required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Company, as the case may be, is not required to file information, documents
or reports pursuant to either of said Sections, then it shall (i) deliver to the
Trustee annual audited financial statements of the Company and its Subsidiaries,
prepared on a consolidated basis in conformity with GAAP, within 120 days after
the end of each fiscal year of the Company, and (ii) file with the Trustee and
the Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;

         (b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company, as the case may be, with the conditions and covenants of this Indenture
as is required from time to time by such rules and regulations (including such
rules and regulations, if any, referred to in Trust Indenture Act Section
314(a)); and

         (c) transmit by mail to all Holders or any other persons entitled to
receive a report pursuant to Trust Indenture Act Section 313(c), within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Trust Indenture Act Section 313 (c), such summaries of any
information, documents and reports required to by filed by the Company, as the
case may be, pursuant to Section 12.02 hereunder and Subsections (a) and (b) of
this Section as is required by rules and regulations prescribed from time to
time by the Commission.

Section 4.04. Compliance Certificate.

         (a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or

                                       39
<PAGE>   46
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.

         (b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.

Section 4.05. Taxes.

         The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.

Section 4.06. Stay, Extension and Usury Laws.

         The Company and each of the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.

Section 4.07. Restricted Payments.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:

         (a) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary
of the Company);

         (b) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company;

         (c) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes or the Note Guarantees, except a payment of interest
or principal at the Stated Maturity thereof; or

                                       40

<PAGE>   47

         (d) make any Restricted Investment (all such payments and other actions
set forth in these clauses (a) through (d) above being collectively referred to
as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:

             (i) no Default or Event of Default has occurred and is continuing
         or would occur as a consequence of such Restricted Payment; and

             (ii) the Company would, at the time of such Restricted Payment and
         after giving pro forma effect thereto as if such Restricted Payment had
         been made at the beginning of the applicable four-quarter period, have
         been permitted to incur at least $1.00 of additional Indebtedness
         pursuant to the Fixed Charge Coverage Ratio test set forth in the first
         paragraph of Section 4.09, and

             (iii) such Restricted Payment, together with the aggregate amount
         of all other Restricted Payments made by the Company and its Restricted
         Subsidiaries after the date of this Indenture (excluding Restricted
         Payments permitted by clauses (b), (c) and (d) of the next succeeding
         paragraph), is less than the sum, without duplication, of:

                  (A) 50% of the Consolidated Net Income of the Company for the
             period (taken as one accounting period) from the beginning of the
             first fiscal quarter commencing after the date of this Indenture to
             the end of the Company's most recently ended fiscal quarter for
             which internal financial statements are available at the time of
             such Restricted Payment (or, if such Consolidated Net Income for
             such period is a deficit, less 100% of such deficit), plus

                  (B) 100% of the aggregate Qualified Proceeds received by the
             Company since the date of this Indenture as a contribution to its
             common equity capital or from the issue or sale of Equity Interests
             of the Company (other than Disqualified Stock) or from the issue or
             sale of convertible or exchangeable Disqualified Stock or
             convertible or exchangeable debt securities of the Company that
             have been converted into or exchanged for such Equity Interests
             (other than Equity Interests (or Disqualified Stock or debt
             securities) sold to a Subsidiary of the Company), plus

                  (C) to the extent that any Restricted Investment that was made
             after the date of this Indenture is sold for cash or otherwise
             liquidated or repaid for cash, the lesser of (i) the cash return of
             capital with respect to such Restricted Investment (less the cost
             of disposition, if any) and (ii) the initial amount of such
             Restricted Investment.

         So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions shall not prohibit:

         (a) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the dividend payment
would have complied with the provisions of this Indenture;

         (b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any Guarantor or
of any Equity Interests of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (3)(b) of the preceding
paragraph;

                                       41
<PAGE>   48

         (c) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;

         (d) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its Equity Interests on a pro rata basis;

         (e) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement, stock option agreement, employee benefit plan or similar agreement;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests may not exceed $10.0 million in any
twelve-month period; and

         (f) other Restricted Payments in an aggregate amount not to exceed
$100.0 million.

         The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be valued
by this covenant and have a fair market value that exceeds (i) $5.0 million
shall be evidenced by a certificate issued by the chief executive officer, chief
financial officer or general counsel and shall be delivered to the Trustee or
(ii) $20.0 million shall be approved by a majority of disinterested members of
the Board of Directors whose resolution with respect thereto shall be delivered
to the Trustee. The approval by a majority of disinterested members of the Board
of Directors' must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing. A copy of
any fairness opinion or appraisal required by this Indenture, together with the
resolution of the Board of Directors, must be delivered to the Trustee no later
than the date of making any Restricted Payment.

Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

         (a) pay dividends or make any other distributions on its Capital Stock
to the Company or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries;

         (b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or

         (c) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries.

         However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:

         (a) agreements governing Existing Indebtedness and Credit Facilities as
in effect on the date of this Indenture and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of those agreements, provided that the amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings

                                       42
<PAGE>   49

are no more restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in those agreements on the date
of this Indenture;

         (b) this Indenture, the Notes and the Note Guarantees;

         (c) applicable law;

         (d) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness or Capital
Stock was incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, so acquired, provided that, in the case of Indebtedness,
such Indebtedness was permitted by the terms of this Indenture to be incurred;

         (e) customary non-assignment provisions in leases entered into in the
ordinary course of business;

         (f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on that property of the nature
described in clause (3) of the preceding paragraph;

         (g) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary pending
its sale or other disposition;

         (h) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive, taken as a whole, than those contained in the
agreements governing the Indebtedness being refinanced;

         (i) Liens securing Indebtedness otherwise permitted to be incurred
under the provisions of Section 4.12 hereof that limit the right of the debtor
to dispose of the assets subject to such Liens;

         (j) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business; and

         (k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.

Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock, and the Guarantors may incur Indebtedness or issue preferred stock, if
the Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock or preferred stock is issued would have been at least
2.0 to 1 for any incurrence on or prior to November 15, 2002 and 2.5 to 1 any
time thereafter, in each case, determined on a pro forma basis (including a pro
forma application of the net

                                       43
<PAGE>   50
proceeds therefrom), as if the additional Indebtedness had been incurred or the
preferred stock or Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.

         The first paragraph of this covenant shall not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):

         (a) the incurrence by the Company and any of its Subsidiaries of
additional Indebtedness and letters of credit under Credit Facilities in an
aggregate principal amount at any one time outstanding under this clause
(a)(with letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company and its Subsidiaries thereunder) not
to exceed the greater of (1) $2.2 billion and (2) the Borrowing Base less the
aggregate amount of all repayments, optional or mandatory, of the principal of
any term Indebtedness under a Credit Facility that have been made by the Company
or any of its Subsidiaries since the date of this Indenture and less the
aggregate amount of all commitment reductions with respect to any revolving
credit borrowings under a Credit Facility that have been made by the Company or
any of its Subsidiaries since the date of this Indenture;

         (b) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness;

         (c) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes and the related Note Guarantees to be issued on the
date of this Indenture and the Exchange Notes and the related Note Guarantees to
be issued pursuant to the registration rights agreement;

         (d) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case, incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company or such
Subsidiary or in a Permitted Business, in an aggregate principal amount,
including all Permitted Refinancing Indebtedness incurred to refund, refinance
or replace any Indebtedness incurred pursuant to this clause (d), not to exceed
$25.0 million at any time outstanding;

         (e) the incurrence by the Company or any of its Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to refund, refinance or replace Indebtedness (other than intercompany
Indebtedness) that was permitted by this Indenture to be incurred under the
first paragraph of this covenant or clauses (b), (c), (d), (e), (j) or (l) of
this paragraph;

         (f) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its Restricted
Subsidiaries; provided, however, that:

             (i) if the Company or any Guarantor is the obligor on such
         Indebtedness, such Indebtedness must be expressly subordinated to the
         prior payment in full in cash of all Obligations with respect to the
         Notes, in the case of the Company, or the Note Guarantee, in the case
         of a Guarantor; and

             (ii) (1) any subsequent issuance or transfer of Equity Interests
         that results in any such Indebtedness being held by a Person other than
         the Company or a Subsidiary of the Company and (2) any sale or other
         transfer of any such Indebtedness to a Person that is not either the
         Company or a Restricted Subsidiary of the Company; shall be deemed, in
         each case, to constitute an incurrence of such Indebtedness by the
         Company or such Subsidiary, as the case may be, that was not permitted
         by this clause (f);

                                       44
<PAGE>   51

         (g) the incurrence by the Company or any of its Subsidiaries of Hedging
Obligations that are incurred for the purpose of fixing or hedging interest rate
risk with respect to any floating rate Indebtedness that is permitted by the
terms of this Indenture to be outstanding;

         (h) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Subsidiary of the Company that was permitted to
be incurred by another provision of this covenant;

         (i) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this covenant; provided, in each
such case, that the amount thereof is included in Fixed Charges of the Company
as accrued;

         (j) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (j);

         (k) Indebtedness in respect of performance and surety bonds, terminable
guarantees and completion guarantees or other similar forms of Indebtedness
provided by the Company or a Restricted Subsidiary in the ordinary course of
business; and

         (l) the incurrence by the Company or any of its Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (l), not to exceed $100.0 million.

         The Company shall not incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of the Company unless such Indebtedness is also contractually subordinated in
right of payment to the Notes on substantially identical terms; provided,
however, that no Indebtedness of the Company shall be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the Company solely
by virtue of being unsecured.

         For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (a) through (l) above,
or is entitled to be incurred pursuant to the first paragraph of this covenant,
the Company shall be permitted to classify such item of Indebtedness on the date
of its incurrence, or later reclassify all or a portion of such item of
Indebtedness, in any manner that complies with this covenant. Indebtedness under
Credit Facilities outstanding on the date on which Notes are first issued and
authenticated under this Indenture shall be deemed to have been incurred on such
date in reliance on the exception provided by clause (a) of the definition of
Permitted Debt.

                                       45
<PAGE>   52

Section 4.10. Asset Sales.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

         (a) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of the Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;

         (b) the fair market value is determined by (i) in the case of property
valued at less than $5.0 million, the Company's principal financial or
accounting officer and evidenced by an Officers' Certificate delivered to the
Trustee and (ii) in the case of property valued at $5.0 million or more, the
Company's Board of Directors and evidenced by a resolution of the Board of
Directors set forth in an officers' certificate delivered to the Trustee; and

         (c) at least 75% of the consideration received in the Asset Sale by the
Company or such Restricted Subsidiary is in the form of cash. For purposes of
this provision, each of the following shall be deemed to be cash:

             (i) any liabilities, as shown on the Company's or such Restricted
         Subsidiary's most recent balance sheet, of the Company or any
         Restricted Subsidiary (other than contingent liabilities and
         liabilities that are by their terms subordinated to the Notes or any
         Note Guarantee) that are assumed by the transferee of any such assets
         pursuant to a customary novation or an assignment agreement that
         releases the Company or such Restricted Subsidiary from further
         liability; and

             (ii) any securities, Notes or other obligations received by the
         Company or any such Restricted Subsidiary from such transferee that are
         contemporaneously, subject to ordinary settlement periods, converted by
         the Company or such Restricted Subsidiary into cash, to the extent of
         the cash received in that conversion.

         Notwithstanding the foregoing, we and our Restricted Subsidiaries may
engage in Asset Swaps; provided that, (1) immediately after giving effect to
such Asset Swap, we would be permitted to incur at least $1.00 of Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of Section 4.09 and (2) our or the Restricted Subsidiary's Board of
Directors, as the case may be, determines that such Asset Swap is fair to us or
such Restricted Subsidiary, as the case may be, from a financial point of view
and such determination is (A) in the case of Asset Swaps valued at less than
$5.0 million, the Company's principal financial or accounting officer and
evidenced by an Officers' Certificate delivered to the Trustee, (B) for Asset
Swaps valued at $5.0 million or more but less than $10.0 million, evidenced by a
resolution of such Board of Directors set forth in an Officer's Certificate
delivered to the Trustee and (C) for Asset Swaps valued at $10.0 million or
more, evidenced by an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing.

         Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply those Net Proceeds:

         (a) to repay Indebtedness and/or other Obligations under a Credit
Facility and, if the Indebtedness repaid is revolving credit Indebtedness, to
correspondingly reduce commitments with respect thereto;

                                       46
<PAGE>   53

         (b) to acquire all or substantially all of the assets of, or a majority
of the Voting Stock of, another Permitted Business; or

         (c) to acquire or obtain other long-term assets that are used or useful
in a Permitted Business.

         Pending the final application of any Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by this Indenture.

         Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph shall constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall
make an Asset Sale Offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100%
of principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase, and shall be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
those Excess Proceeds for any purpose not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes and other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.

         The Company shall comply with the requirements of Rule l4e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.

Section 4.11. Transactions with Affiliates.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each, an "Affiliate Transaction"), unless:

         (a) the Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and

         (b) The Company delivers to the Trustee:

             (i) with respect to any Affiliate Transaction or series of related
         Affiliate Transactions involving aggregate consideration in excess of
         $5.0 million, a certificate issued by the chief executive officer,
         chief financial officer or general counsel certifying that such
         Affiliate Transaction complies with this covenant; and

                                       47

<PAGE>   54

             (ii) with respect to any Affiliate Transaction or series of related
         Affiliate Transactions involving aggregate consideration in excess of
         $25.0 million, a resolution by the Board of Directors, that is approved
         by a majority of disinterested members, accompanied by an opinion
         issued by an accounting, appraisal or investment banking firm of
         national standing, as to the fairness to the Holders of such Affiliate
         Transaction from a financial point of view.

         The following items shall not be deemed to be Affiliate Transactions
and, therefore, shall not be subject to the provisions of the prior paragraph:

         (a) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;

         (b) transactions between or among the Company and/or its Restricted
Subsidiaries;

         (c) transactions with a Person that is an Affiliate of the Company
solely because the Company owns an Equity Interest in, or controls, such Person;

         (d) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company;

         (e) sales of Equity Interests (other than Disqualified Stock) to
Affiliates of the Company; and

         (f) Restricted Payments that are permitted by the provisions of this
Indenture described above in Section 4.07.

Section 4.12. Liens.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness, Attributable Debt or trade payables on any asset now
owned or hereafter acquired, except Permitted Liens.

Section 4.13. Business Activities.

         The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any business other than Permitted Businesses, except to such
extent as would not be material to the Company and its Restricted Subsidiaries
taken as a whole.

Section 4.14. Corporate Existence.

         Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.

                                       48
<PAGE>   55

Section 4.15. Change of Control.

         If a Change of Control occurs, each Holder of Notes shall have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple of $1,000) of that Holder's Notes pursuant to a Change of
Control Offer on the terms set forth in this Indenture. In the Change of Control
Offer, the Company shall offer a Change of Control Payment in cash equal to (i)
if such Change of Control is prior to November 15, 2001, 111.125% of the
aggregate principal amount of Notes repurchased and (ii) if such Change of
Control is on or after November 15, 2001, 101% of the aggregate principal amount
of Notes repurchased plus, in each case, accrued and unpaid interest and
Liquidated Damages, if any, on the Notes repurchased, to the date of purchase.
Within ten days following any Change of Control, the Company shall mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the Change of Control
Payment Date specified in the notice, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed, pursuant to
the procedures required by this Indenture and described in such notice. the
Company shall comply with the requirements of Rule l4e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control. To the extent that the provisions of
any securities laws or regulations conflict with the Change of Control
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Change of Control provisions of this Indenture by virtue
of such conflict.

         On the Change of Control Payment Date, the Company shall, to the extent
lawful:

         (a) accept for payment all Notes or portions of Notes properly tendered
pursuant to the Change of Control Offer;

         (b) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered;
and

         (c) deliver or cause to be delivered to the Trustee the Notes properly
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions of Notes being purchased by the Company.

         The Paying Agent shall promptly mail to each Holder of Notes properly
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each new Note shall be in a
principal amount of $1,000 or an integral multiple of $1,000.

         The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.

         The provisions described above that require the Company to make a
Change of Control Offer following a Change of Control shall be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.

         The Company shall 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

                                       49
<PAGE>   56
compliance with the requirements set forth in this Indenture applicable to a
Change of Control Offer made by the Company and purchases all Notes properly
tendered and not withdrawn under the Change of Control Offer.

         The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of the Company and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of Notes to require the Company to repurchase its Notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of the Company and its Subsidiaries taken as a whole to another Person or
group may be uncertain.

Section 4.16. No Senior Subordinated Debt.

         Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
Notes, and (ii) no Guarantor shall incur any Indebtedness that is subordinated
or junior in right of payment to any Guarantees of Senior Debt and senior in any
respect in right of payment to the Note Guarantees.

Section 4.17. Sale and Leaseback Transactions.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Guarantor may enter into a sale and leaseback transaction if:

         (a) The Company or that Guarantor, as applicable, could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction under the Fixed Charge Coverage Ratio test
in the first paragraph of Section 4.09 and (b) incurred a Lien to secure such
Indebtedness pursuant to Section 4.12.

         (b) the gross cash proceeds of that sale and leaseback transaction are
at least equal to the fair market value, as determined in good faith by (i) in
the case of property valued at less than $5.0 million, the Company's principal
financial or accounting officer and evidenced by an Officers' Certificate
delivered to the Trustee and (ii) in the case of property valued at $5.0 million
or more, the Board of Directors and set forth in an officers' certificate
delivered to the Trustee, of the property that is the subject of that sale and
leaseback transaction; and

         (c) the transfer of assets in that sale and leaseback transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with, Section 4.10.

Section 4.18. Note Guarantees.

         The Notes shall be guaranteed by each of the Company's current
wholly-owned Domestic Restricted Subsidiaries no later than February 15, 2001
and each of the Company's future wholly-owned Domestic Restricted Subsidiaries.
These Note Guarantees shall be joint and several obligations of the Guarantors.
The obligations of each Guarantor under its Note Guarantee shall be limited as
necessary to prevent that Note Guarantee from constituting a fraudulent
conveyance under applicable law.

                                       50
<PAGE>   57

         A Guarantor shall not sell or otherwise dispose of all or substantially
all of its assets to, or consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another Person, other than the Company
or another Guarantor, unless:

         (a) immediately after giving effect to that transaction, no Default or
Event of Default exists; and

         (b) either:

             (i) the Person acquiring the property in any such sale or
         disposition or the Person formed by or surviving any such consolidation
         or merger assumes all the obligations of that Guarantor under this
         Indenture, its Note Guarantee and the registration rights agreement
         pursuant to a supplemental indenture satisfactory to the Trustee; or

             (ii) the Net Proceeds of such sale or other disposition are applied
         in accordance with the applicable provisions of this Indenture.

         The Note Guarantee of a Guarantor shall be released:

         (a) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of merger or
consolidation) to a Person that is not (either before or after giving effect to
such transaction) a Subsidiary of the Company, if the sale or other disposition
complies with Section 4.10 hereof;

         (b) in connection with any sale of all of the Capital Stock of a
Guarantor to a Person that is not (either before or after giving effect to such
transaction) a Subsidiary of the Company, if the sale complies with Section 4.10
hereof; or

         (c) if the Company designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with the applicable
provisions of this Indenture.

Section 4.19. Payments for Consent.

         The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.

Section 4.20. Additional Note Guarantees.

         If the Company or any of its Subsidiaries acquires or creates another
wholly-owned Restricted Domestic Subsidiary after the date of this Indenture,
then that newly acquired or created Domestic Subsidiary shall become a Guarantor
and execute a supplemental indenture and deliver an opinion of counsel
satisfactory to the Trustee within 15 Business Days of the date on which it was
acquired or created; provided, however, that this covenant shall not apply to
any Subsidiary that has properly been designated as an Unrestricted Subsidiary
in accordance with this Indenture for so long as it continues to constitute an
Unrestricted Subsidiary.

                                       51
<PAGE>   58

Section 4.21. Designation of Restricted and Unrestricted Subsidiaries.

         The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Subsidiary properly designated shall be deemed to
be an Investment made as of the time of the designation and will reduce the
amount available for Restricted Payments under the first paragraph of Section
4.07 hereof or Permitted Investments, as determined by the Company. That
designation will only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default.

                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01. Merger, Consolidation, or Sale of Assets.

         The Company shall not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:

         (a) either: (i) the Company is the surviving corporation; or (ii) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, conveyance or other
disposition has been made is a corporation organized or existing under the laws
of the United States, any state of the United States or the District of
Columbia;

         (b) the Person formed by or surviving any such consolidation or merger
(if other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition has been made assumes all the
obligations of the Company under the Notes, this Indenture and the Registration
Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

         (c) immediately after such transaction no Default or Event of Default
exists; and

         (d) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition has been made:

             (i) shall have Consolidated Net Worth immediately after the
         transaction equal to or greater than the Consolidated Net Worth of the
         Company immediately preceding the transaction; and

             (ii) shall, on the date of such transaction after giving pro forma
         effect thereto and any related financing transactions as if the same
         had occurred at the beginning of the applicable four-quarter period, be
         permitted to incur at least $1.00 of additional Indebtedness pursuant
         to the Fixed Charge Coverage Ratio test set forth in the first
         paragraph of Section 4.09.

         In addition, the Company shall not, directly or indirectly, lease all
or substantially all of its properties or assets, in one or more related
transactions, to any other Person. This Section 5.01 shall not

                                       52
<PAGE>   59
apply to a sale, assignment, transfer, conveyance or other disposition of assets
between or among the Company and any of its Wholly Owned Restricted Subsidiaries
which are Guarantors.

Section 5.02. Successor Corporation Substituted.

         Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" or "Hercules" shall
refer instead to the successor corporation and not to the Company or to
Hercules), and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay the principal of and interest on the Notes
except in the case of a sale, assignment, transfer, conveyance or other
disposition of all of the Company's assets that meets the requirements of
Section 5.01 hereof.

                                   ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01. Events of Default.

         Each of the following is an Event of Default:

         (a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes;

         (b) default in payment when due of the principal of, or premium, if
any, on the Notes;

         (c) failure by (i) the Company or any of its Subsidiaries to comply
with the provisions described under Sections 4.07, 4.09, 4.10, 4.15 and 5.01 of
this Indenture, or (ii) any of the Company's wholly owned Domestic Restricted
Subsidiaries to provide a Note Guarantee of the Notes by February 15, 2001.

         (d) failure by the Company or any of its Subsidiaries for 60 days after
notice to comply with any of the other agreements in this Indenture;

         (e) 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 Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, if that default:

             (i) is caused by a failure to pay when due (including any grace
         period set forth in writing in the instruments governing such
         Indebtedness) principal of, or interest or premium, if any, on such
         Indebtedness (a "Payment Default"); or

             (ii) results in the acceleration of such Indebtedness prior to its
         express maturity,

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<PAGE>   60
         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 $50.0 million or more;

         (f) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $50.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days;

         (g) except as permitted by this Indenture, any Note Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations under
its Note Guarantee;

         (h) The Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:

             (i) commences a voluntary case,

             (ii) consents to the entry of an order for relief against it in an
         involuntary case,

             (iii) consents to the appointment of a custodian of it or for all
         or substantially all of its property,

             (iv) makes a general assignment for the benefit of its creditors,
         or

             (v) generally is not paying its debts as they become due;

         (i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

             (i) is for relief against the Company or any of its Significant
         Subsidiaries or any group of Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary in an involuntary case;

             (ii) appoints a custodian of the Company or any of its Significant
         Subsidiaries or any group of Subsidiaries that, taken as a whole, would
         constitute a Significant Subsidiary or for all or substantially all of
         the property of the Company or any of its Significant Subsidiaries or
         any group of Subsidiaries that, taken as a whole, would constitute a
         Significant Subsidiary; or

             (iii) orders the liquidation of the Company or any of its
         Significant Subsidiaries or any group of Subsidiaries that, taken as a
         whole, would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days;
and

         (j) except as permitted by this Indenture, any Note Guarantee is held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under such
Guarantor's Note Guarantee.

         Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then

                                       54
<PAGE>   61
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default if it determines that withholding notice is in their
interest, except a Default or Event of Default relating to the payment of
principal or interest or Liquidated Damages.

         The Company is required to deliver to the Trustee annually a statement
regarding compliance with this Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.

Section 6.02. Acceleration.

         In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, (clauses (h) or (i) of Section 6.01 above) with
respect to the Company, any Subsidiary that is a Significant Subsidiary or any
group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately.

Section 6.03. Other Remedies.

         If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

         The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note 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. All remedies are
cumulative to the extent permitted by law.

Section 6.04. Waiver of Past Defaults.

         The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages on, or the principal of, the Notes.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.

Section 6.05. Control by Majority.

         Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.

Section 6.06. Limitation on Suits.

         A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:

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<PAGE>   62

         (a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;

         (b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;

         (c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;

         (d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and

         (e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.

         A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

Section 6.07. Rights of Holders of Notes to Receive Payment.

         Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note including in connection with an offer to purchase, 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 6.08. Collection Suit by Trustee.

         If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as Trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

Section 6.09. Trustee May File Proofs of Claim.

         The Trustee is authorized to 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
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such 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 to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or

                                       56
<PAGE>   63
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained 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 Notes or the rights of any Holder, 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 pursuant to this Article, it shall
pay out the money in the following order:

             First: to the Trustee, its agents and attorneys for amounts due
         under Section 7.07 hereof, including payment of all compensation,
         expense and liabilities incurred, and all advances made, by the Trustee
         and the costs and expenses of collection;

             Second: to Holders of Notes for amounts due and unpaid on the Notes
         for principal, premium and Liquidated Damages, if any, and interest,
         ratably, without preference or priority of any kind, according to the
         amounts due and payable on the Notes for principal, premium and
         Liquidated Damages, if any and interest, respectively; and

             Third: to the Company or to such party as a court of competent
         jurisdiction shall direct.

         The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

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 a 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 a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.

                                   ARTICLE 7.
                                    TRUSTEE

Section 7.01. Duties of Trustee.

         (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

         (b) Except during the continuance of an Event of Default:

             (i) the duties of the Trustee shall be determined solely by the
         express provisions of this Indenture and the Trustee need perform only
         those duties that are specifically set forth in this

                                       57
<PAGE>   64
Indenture and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and

             (ii) 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 or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, the Trustee shall examine the certificates and
         opinions to determine whether or not they conform to the requirements
         of this Indenture.

         (c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

             (i) this paragraph does not limit the effect of paragraph (b) of
         this Section;

             (ii) the Trustee shall not be liable for any error of judgment made
         in good faith by a Responsible Officer, unless it is proved that the
         Trustee was negligent in ascertaining the pertinent facts; and

             (iii) 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 6.05 hereof.

         (d) Whether or not therein expressly so provided, 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) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.

         (f) 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. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

Section 7.02. Rights of Trustee.

         (a) The Trustee may conclusively rely upon any document 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.

         (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.

         (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 that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

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<PAGE>   65

         (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

         (f) This Indenture provides that in case of an Event of Default occurs
and is continuing, the Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders of Notes unless such Holders shall have offered
to the Trustee reasonable security or indemnity satisfactory to it against any
loss, liability or expense.

Section 7.03. Individual Rights of Trustee.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as Trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04. Trustee's Disclaimer.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.

Section 7.05. Notice of Defaults.

         If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.

Section 7.06. Reports by Trustee to Holders of the Notes.

         Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a)(but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).

         A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.

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<PAGE>   66

Section 7.07. Compensation and Indemnity.

         The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. 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 promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

         The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. 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 cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.

         The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.

         To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

         The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.

Section 7.08. Replacement of Trustee.

         A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.

         The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:

         (a) the Trustee fails to comply with Section 7.10 hereof;

         (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

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<PAGE>   67

         (c) a custodian or public officer takes charge of the Trustee or its
property; or

         (d) the Trustee becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.

         If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of 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 Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.

Section 7.09. Successor Trustee by Merger, etc.

         If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.

Section 7.10. Eligibility; Disqualification.

         There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
Trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).

Section 7.11. Preferential Collection of Claims Against Company.

         The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.

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                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.

         The Company may at any time, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Notes upon compliance with the conditions
set forth below in this Article Eight.

Section 8.02. Legal Defeasance and Discharge.

         The Company may, at its option and at any time, elect to have all of
its obligations discharged with respect to the outstanding Notes and all
obligations of the Guarantors discharged with respect to their Note Guarantees
("Legal Defeasance") except for:

         (a) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, or interest or premium and Liquidated Damages, if
any, on such Notes when such payments are due from the trust referred to below;

         (b) The Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust;

         (c) the rights, powers, trusts, duties and immunities of the Trustee,
and the Company's and the Guarantor's obligations in connection therewith; and

         (d) the Legal Defeasance provisions of this Indenture.

         For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) above, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the above provisions.

Section 8.03. Covenant Defeasance.

         Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16,
4.17, 4.18, 4.19, 4.20, 4.21 hereof and clause (iv) of Section 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, 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 shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall

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be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(c) through 6.01(f) hereof shall not constitute Events of Default.

Section 8.04. Conditions to Legal or Covenant Defeasance.

         The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:

         In order to exercise either Legal Defeasance or Covenant Defeasance:

         (a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of Notes, cash in United States dollars,
non-callable Government Securities, or a combination of cash in United States
dollars and non-callable Government Securities, in amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, or interest and premium and Liquidated
Damages, if any, on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;

         (b) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of this
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel will
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;

         (c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee confirming that the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;

         (d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit);

         (e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;

         (f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and

         (g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.

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Section 8.05. Deposited Money and Government Securities to be Held in Trust;
              Other Miscellaneous Provisions.

         Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying Trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.

         The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

         Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

Section 8.06. Repayment to Company.

         Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as Trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.

Section 8.07. Reinstatement.

         If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the

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Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders of Notes.

         Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Note
Guarantees or the Notes without the consent of any Holder of a Note:

         (a) to cure any ambiguity, defect or inconsistency;

         (b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;

         (c) to provide for the assumption of the Company's or Guarantors'
obligations to Holders of Notes in the case of a merger or consolidation or sale
of all or substantially all of the Company's assets;

         (d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights hereunder of any such Holder; or

         (e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;

         (f) to provide for the issuance of Additional Notes in accordance with
the limitations set forth in this Indenture as of the date hereof; or

         (g) to allow any Guarantor to execute a supplemental indenture and/or a
Note Guarantee with respect to the Notes.

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

Section 9.02. With Consent of Holders of Notes.

         Except as provided below in this Section 9.02, this Indenture or the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), and any existing default or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes).

         Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the

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<PAGE>   72

Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture directly affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may in its discretion,
but shall not be obligated to, enter into such amended or supplemental
Indenture.

         It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.

         After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Notes. However, without the consent of each Holder affected, an amendment or
waiver under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

         (a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;

         (b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
(other than provisions relating to Sections 4.10 and 4.15 hereof);

         (c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;

         (d) waive a Default or Event of Default in the payment of principal of,
or interest or premium, or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the outstanding Notes (including Additional Notes,
if any) and a waiver of the payment default that resulted from such
acceleration);

         (e) make any Note payable in money other than that stated in the Notes;

         (f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or interest or premium or Liquidated Damages, if any, on the
Notes;

         (g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 4.10 and 4.15 hereof);

         (h) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture; or

         (i) make any change in the preceding amendment and waiver provisions.

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<PAGE>   73

Section 9.03. Compliance with Trust Indenture Act.

         Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.

Section 9.04. Revocation and Effect of Consents.

         Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

Section 9.05. Notation on or Exchange of Notes.

         The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.

         Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06. Trustee to Sign Amendments, etc.

         The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.

                                   ARTICLE 10.
                                 NOTE GUARANTEES

Section 10.01. Guarantee.

         Subject to this Article 10, each of the Guarantors hereby agrees,
jointly and severally, to unconditionally guarantee no later than February 15,
2001 to each Holder of a Note authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that: (a) the principal of and interest on the Notes
will be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, that same will be promptly paid in full when due or performed in
accordance with

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<PAGE>   74

the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed
or any performance so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.

         The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.

         If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

         Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.

Section 10.02. Limitation on Guarantor Liability.

         Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 10, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.

Section 10.03. Execution and Delivery of Note Guarantee.

         To evidence its Note Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit E shall be endorsed by an

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<PAGE>   75
Officer of such Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor by
its President or one of its Vice Presidents.

         Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.

         If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.

         The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.

         In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.24 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Note Guarantees in accordance with Section 4.24 hereof and
this Article 10, to the extent applicable.

Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.

         Except as otherwise provided in Section 10.05, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:

         (a) subject to Section 10.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note Guarantee on the terms set
forth herein or therein; and

         (b) immediately after giving effect to such transaction, no Default or
Event of Default exists.

         In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.

         Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.

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Section 10.05. Releases Following Sale of Assets or Designation as an
               Unrestricted Guarantor.

         In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.10 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.

         In the event of any designation of a Guarantor as an Unrestricted
Subsidiary in accordance with Section 4.07 hereof, such Guarantor will
automatically and unconditionally be released from all obligations under its
Note Guarantee.

         Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 10.

                                   ARTICLE 11.
                           satisfaction and discharge

Section 11.01. Satisfaction and Discharge.

         This Indenture will be discharged and will cease to be of further
effect as to all Notes issued hereunder, when:

(1)      either:

         (a)      all Notes that have been authenticated (except lost, stolen or
                  destroyed Notes that have been replaced or paid and Notes for
                  whose payment money has been deposited in trust and thereafter
                  repaid to the Company) have been delivered to the Trustee for
                  cancellation; or

         (b)      all Notes that have not been delivered to the Trustee for
                  cancellation have become due and payable by reason of the
                  mailing of a notice of redemption or otherwise or will become
                  due and payable within one year and the Company or any
                  Guarantor has irrevocably deposited or caused to be deposited
                  with the Trustee as trust funds in trust solely for the
                  benefit of the Holders, cash in U.S. dollars, non-callable
                  Government Securities, or a combination of cash in U.S.
                  dollars and non-callable Government Securities, in amounts as
                  will be sufficient without consideration of any reinvestment
                  of interest, to pay and discharge the entire indebtedness on
                  the Notes not delivered to the Trustee for cancellation for
                  principal, premium and Liquidated Damages, if any, and accrued
                  interest to the date of maturity or redemption;

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(2)      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
         Guarantor is a party or by which the Company or any Guarantor is bound;

(3)      the Company or any Guarantor has paid or caused to be paid all sums
         payable by it under this Indenture; and

(4)      the Company has delivered irrevocable instructions to the Trustee under
         this Indenture to apply the deposited money toward the payment of the
         Notes at maturity or the redemption date, as the case may be.

In addition, the Company must deliver an Officers' Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

         Notwithstanding the satisfaction and discharge of this Indenture, if
money shall have been deposited with the Trustee pursuant to subclause (b) of
clause (1) of this Section, the provisions of Section 12.02 and Section 8.06
shall survive.

Section 11.02. Application of Trust Money.

         Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.

         If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 11.01 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
Company's and any Guarantor's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 11.01; provided that if the Company has made any payment of principal
of, premium, if any, or interest on any Notes because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.

                                   ARTICLE 12.
                                  MISCELLANEOUS

Section 12.01. Trust Indenture Act Controls.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.

Section 12.02. Notices.

         Any notice or communication by the Company , any Guarantor or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:

                                       71
<PAGE>   78

         If to the Company and/or any Guarantor:

         Hercules Incorporated
         Hercules Plaza
         1313 North Market Street
         Wilmington, DE  19894-0001
         Attention:  General Counsel

         With a copy to:
         Ballard Spahr Anrews & Ingersoll, LLP
         1735 Market Street, 51st Floor
         Philadelphia, PA 19103
         Telecopier No.:  (215) 864-8999
         Attention:  Justin Klein, Esq.

         If to the Trustee:
         Wells Fargo Bank Minnesota, N.A.
         MAC N9303-120
         Sixth and Marquette
         Minneapolis, MN  55479
         Telecopier No.:  (612) 667-9825
         Attention:  Corporate Trust Services

         The Company , any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

         All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

         Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.

         If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

         If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

Section 12.03. Communication by Holders of Notes with Other Holders of Notes.

         Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).

                                       72
<PAGE>   79

Section 12.04. Certificate and Opinion as to Conditions Precedent.

         Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

         (a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and

         (b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

Section 12.05. Statements Required in Certificate or Opinion.

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:

         (a) a statement that the Person making such certificate or opinion has
read such covenant or condition;

         (b) 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;

         (c) a statement that, in the opinion of such Person, he or she 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
satisfied; and

         (d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.

Section 12.06. Rules by Trustee and Agents.

         The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 12.07. No Personal Liability of Directors, Officers, Employees and
               Stockholders.

         No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or the Guarantors under the Notes, this
Indenture, the Note Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by accepting
a Note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Notes. The waiver may not be effective
to waive liabilities under the federal securities laws.

Section 12.08. Governing Law.

         THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT

                                       73
<PAGE>   80

GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 12.09. No Adverse Interpretation of Other Agreements.

         This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.

Section 12.10. Successors.

         All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Guarantor in this Indenture shall bind
its successors, except as otherwise provided in Section 10.05.

Section 12.11. Severability.

         In case any provision in this Indenture or in the Notes 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.

Section 12.12. Counterpart 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.

Section 12.13. Table of Contents, Headings, etc.

         The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.

                         [Signatures on following page]

                                       74
<PAGE>   81

                                   SIGNATURES

Dated as of November 14, 2000
                                     HERCULES INCORPORATED

                                     By: /s/ Thomas Gossage
                                         ----------------------------------
                                         Name:
                                         Title:
Attest:

/s/ Israel J. Floyd
----------------------------------
Name:
Title:

                                     THE GUARANTORS LISTED ON SCHEDULE I

                                     By: /s/ George MacKenzie
                                        -----------------------------------
                                        Name:
                                        Title:

Attest:

/s/ Stuart Shears
----------------------------------
Name:
Title:

                                     WELLS FARGO BANK MINNESOTA, N.A.

                                     By: /s/ Timothy P. Mowdy
                                         ----------------------------------
                                         Name: Timothy P. Mowdy
                                         Title: Corporate Trust Officer

Attest:

/s/ Illegible
-----------------------------------
Authorized Signatory

                                       75
<PAGE>   82

                                                                       EXHIBIT A

                                 [Face of Note]
--------------------------------------------------------------------------

                                                   CUSIP/CINS ____________

                          11 1/8% Senior Notes due 2007

No. ___                                                      $____________

                              HERCULES INCORPORATED

promises to pay to _______________________________________________________

or registered assigns,

the principal sum of _________________________________________

Dollars on November 15, 2007.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated:  November 14, 2000

                                       HERCULES INCORPORATED

                                       By: ______________________________
                                           Name:
                                           Title:

                                       By: ______________________________
                                           Name:
                                           Title:

                                                        (SEAL)

This is one of the Notes referred to
in the within-mentioned Indenture:

WELLS FARGO BANK MINNESOTA, N.A.,
  as Trustee

By: _______________________________________
             Authorized Signatory

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

                                      A-1

<PAGE>   83

                                 [Back of Note]
                          11 1/8% Senior Notes due 2007

[Insert the Global Note Legend, if applicable pursuant to the provisions of
the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the
provisions of the Indenture]

         Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

     1. INTEREST. Hercules Incorporated, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 11 1/8% per
annum from November 14, 2000 until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages semi-annually in
arrears on May 15th and November 15th of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be May 15, 2001. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate 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. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the May 1 or November 1 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages on,
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.

     3. PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank Minnesota, N.A.,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holders
of the Notes. The Company or any of its Subsidiaries may act in any such
capacity.

     4. INDENTURE. The Company issued the Notes under an Indenture dated as of
November 14, 2000 ("Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as

                                      A-2

<PAGE>   84

amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are unsecured obligations of the Company limited to
$400,000,000 in aggregate principal amount, plus amounts, if any, issued to pay
Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof.

     5. OPTIONAL REDEMPTION. At any time prior to November 15, 2003, the Company
may on any one or more occasions redeem up to 35% of the aggregate principal
amount of Notes issued under the Indenture at a redemption price of 111.125% of
the principal amount, plus accrued and unpaid interest and Liquidated Damages,
if any, to the redemption date, with the net cash proceeds of one or more Public
Equity Offerings; provided that:

     (a) at least 65% of the aggregate principal amount of Notes issued under
the Indenture remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its Subsidiaries); and

     (b) the redemption occurs within 45 days of the date of the closing of such
Public Equity Offering.

     At any time prior to November 15, 2001, the Company may also redeem all or
a part of the Notes upon the occurrence of a Change of Control, upon not less
than 30 nor more than 60 days prior notice (but in no event may any such
redemption occur more than 90 days after the occurrence of such Change of
Control) mailed by first-class mail to each Holder's registered address, at a
redemption price equal to 111.125% of the principal amount of Notes redeemed
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
redemption (the "Redemption Date").

     Except pursuant to the preceding paragraphs, the Notes will not be
redeemable at the Company's option prior to maturity.

     6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below, the
Company shall not be required to make mandatory redemption payments or sinking
fund payments with respect to the Notes.

     7. REPURCHASE AT OPTION OF HOLDER.

     (a) If a Change of Control occurs, each Holder of Notes shall have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple of $1,000) of that Holder's Notes pursuant to a Change of
Control Offer on the terms set forth in the Indenture. In the Change of Control
Offer, the Company shall offer a Change of Control Payment in cash equal to (i)
if such Change of Control is prior to November 15, 2001, 111.125% of the
aggregate principal amount of Notes repurchased and (ii) if such Change of
Control is on or after November 15, 2001, 101% of the aggregate principal amount
of Notes repurchased plus, in each case, accrued and unpaid interest and
Liquidated Damages, if any, on the Notes repurchased, to the date of purchase.
Within ten days following any Change of Control, the Company shall mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes on the Change of Control
Payment Date specified in the notice, which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed, pursuant to
the procedures required by the Indenture and described in such notice.

     (b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $10 million, the Company shall commence an offer to all Holders of Notes
(as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase

                                      A-3

<PAGE>   85

the maximum principal amount of Notes (including any Additional Notes) 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 thereof plus accrued and unpaid interest,
if any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes (including any Additional Notes) tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Restricted
Subsidiary) may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.

     8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

     9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

     10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.

     11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class,
and any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes and Additional Notes,
if any, voting as a single class. Without the consent of any Holder of a Note,
the Indenture, the Note Guarantees or the Notes may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or benefits
to the Holders of Notes or that does not adversely affect the legal rights
hereunder of any such Holder or to comply with requirements of the SEC in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act, to provide for the Issuance of Additional Notes in accordance
with the limitations set forth in the Indenture, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with
respect to the Notes.

     12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on, or Liquidated Damages with respect
to, the Notes; (ii) default in payment when due of the principal of, or premium,
if any, on the Notes; (iii) failure by (1) the Company or any of its

                                      A-4

<PAGE>   86

Subsidiaries to comply with the provisions described under Sections 4.07, 4.09,
4.10, 4.15 and 5.01 of the Indenture, or (2) any of the Company's wholly owned
Domestic Restricted Subsidiaries to provide a Subsidiary Guarantee of the Notes
by February 15, 2001; (iv) failure by the Company or any of its Subsidiaries for
60 days after notice to comply with any of the other agreements in the
Indenture; (v) 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 Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, if that default: (1) is caused by a failure to pay when due
(including any grace period set forth in writing in the instruments governing
such Indebtedness) principal of, or interest or premium, if any, on such
Indebtedness (a "Payment Default"); or (2) results in the acceleration of such
Indebtedness prior to its express maturity; 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 $50.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating in
excess of $50.0 million, which judgments are not paid, discharged or stayed for
a period of 60 days; (vii) except as permitted by the Indenture, any Note
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; (viii) the Company or
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law: (1) commences a voluntary case, (2) consents to the
entry of an order for relief against it in an involuntary case, (3) consents to
the appointment of a custodian of it or for all or substantially all of its
property, (4) makes a general assignment for the benefit of its creditors, or
(5) generally is not paying its debts as they become due; (ix) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(1) is for relief against the Company or any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary in an involuntary case; (2) appoints a custodian of the Company or
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary or for all or substantially
all of the property of the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or (3) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary; and the order or decree remains
unstayed and in effect for 60 consecutive days; and (x) except as permitted by
the Indenture, any Note Guarantee is held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.

                                      A-5

<PAGE>   87

     13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.

     14. NO RECOURSE AGAINST OTHERS. A director, officer, employee, incorporator
or stockholder, of the Company or Guarantor, as such, shall not have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Indenture or the Guarantees or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

     15. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.

     16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

     17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of November 14, 2000, between the Company and the parties named on the
signature pages thereof (the "Registration Rights Agreement").

     18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

     The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware  19894-0001
Attention:  General Counsel

                                      A-6

<PAGE>   88

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                (Insert assignee's legal name)

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

Date: _______________

                               Your Signature: _________________________________
                                                  (Sign exactly as your name
                                               appears on the face of this Note)

Signature Guarantee*:  _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-7

<PAGE>   89

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:

                _____ Section 4.10     _____ Section 4.15

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:

                                                           $_______________

Date:  _______________

                              Your Signature: __________________________________
                                                  (Sign exactly as your name
                                               appears on the face of this Note)

                               Tax Identification No.: ____________

Signature Guarantee*:  _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

                                      A-8

<PAGE>   90

              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:

<TABLE>
<CAPTION>
                                                                         Principal Amount
                                                                        of this Global Note       Signature of
                         Amount of decrease    Amount of increase in      following such       authorized officer
                         in Principal Amount      Principal Amount           decrease          of Trustee or Note
  Date of Exchange       of this Global Note    of this Global Note        (or increase)            Custodian
  ----------------       -------------------    -------------------     --------------------   ------------------
<S>                      <C>                    <C>                      <C>                   <C>
</TABLE>

                                      A-9

<PAGE>   91

                                                                       EXHIBIT B

                         FORM OF CERTIFICATE OF TRANSFER

Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware  19894-0001
Attention:  General Counsel

Wells Fargo Bank Minnesota, N.A.
MAC N9303-120
Sixth and Marquette
Minneapolis, MN  55479

     Re: 11 1/8 % Senior Notes due 2007

     Reference is hereby made to the Indenture, dated as of November 14, 2000
(the "Indenture"), by and among Hercules Incorporated, as issuer (the "Company")
the Guarantors listed on Schedule I thereto, and Wells Fargo Bank Minnesota,
N.A., as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     ___________________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

     1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.

     2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the

                                      B-1
<PAGE>   92

Securities Act and (iii) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act. Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture and
the Securities Act.

     3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):

          (a) [ ] such Transfer is being effected pursuant to and in accordance
     with Rule 144 under the Securities Act;

                                       or

          (b) [ ] such Transfer is being effected to the Company or a subsidiary
     thereof;

                                       or

          (c) [ ] such Transfer is being effected pursuant to an effective
     registration statement under the Securities Act and in compliance with the
     prospectus delivery requirements of the Securities Act;

                                       or

          (d) [ ] such Transfer is being effected to an Institutional Accredited
     Investor and pursuant to an exemption from the registration requirements of
     the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the
     Transferor hereby further certifies that it has not engaged in any general
     solicitation within the meaning of Regulation D under the Securities Act
     and the Transfer complies with the transfer restrictions applicable to
     beneficial interests in a Restricted Global Note or Restricted Definitive
     Notes and the requirements of the exemption claimed, which certification is
     supported by (1) a certificate executed by the Transferee in the form of
     Exhibit D to the Indenture and (2) if such Transfer is in respect of a
     principal amount of Notes at the time of transfer of less than $250,000, an
     Opinion of Counsel provided by the Transferor or the Transferee (a copy of
     which the Transferor has attached to this certification), to the effect
     that such Transfer is in compliance with the Securities Act. Upon
     consummation of the proposed transfer in accordance with the terms of the
     Indenture, the transferred beneficial interest or Definitive Note will be
     subject to the restrictions on transfer enumerated in the Private Placement
     Legend printed on the IAI Global Note and/or the Definitive Notes and in
     the Indenture and the Securities Act.

     4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

     (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement

                                      B-2

<PAGE>   93

Legend are not required in order to maintain compliance with the Securities
Act. Upon consummation of the proposed Transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

     (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

     (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                        ________________________________________
                                                 [Insert Name of Transferor]

                                        By: ____________________________________
                                            Name:
                                            Title:

Dated:  _______________________

                                      B-3

<PAGE>   94

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

         (a) [ ] a beneficial interest in the:

                (i)   [ ] 144A Global Note (CUSIP _________), or

                (ii)  [ ] Regulation S Global Note (CUSIP _________), or

                (iii) [ ] IAI Global Note (CUSIP _________); or

         (b) [ ] a Restricted Definitive Note.

2.       After the Transfer the Transferee will hold:

                                   [CHECK ONE]

         (a) [ ] a beneficial interest in the:

                (i)   [ ] 144A Global Note (CUSIP _________), or

                (ii)  [ ] Regulation S Global Note (CUSIP _________), or

                (iii) [ ] IAI Global Note (CUSIP _________); or

                (iv)  [ ] Unrestricted Global Note (CUSIP _________); or

         (b) [ ] a Restricted Definitive Note; or

         (c) [ ] an Unrestricted Definitive Note,

         in accordance with the terms of the Indenture.

                                      B-4

<PAGE>   95

                                                                 EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware  19894-0001
Attention:  General Counsel

Wells Fargo Bank Minnesota, N.A.
MAC N9303-120
Sixth and Marquette
Minneapolis, MN  55479

     Re: 11 1/8 % Senior Notes Due 2007

                              (CUSIP ____________)

     Reference is hereby made to the Indenture, dated as of November 14, 2000
(the "Indenture"), by and among Hercules Incorporated, as issuer (the "Company")
the Guarantors listed on Schedule I thereto, and Wells Fargo Bank Minnesota,
N.A., as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     __________________________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:

     1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE

     (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.

     (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

                                      C-1

<PAGE>   96

                                                                 EXHIBIT C

     (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

     (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

     2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

     (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.

     (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
144A Global Note, Regulation S Global Note, IAI Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                                ________________________________
                                                   [Insert Name of Transferor]

                                      C-2

<PAGE>   97

                                                                       EXHIBIT C

                                                By: ____________________________
                                                    Name:
                                                    Title:

Dated:  ______________________

                                      C-3

<PAGE>   98

                                                                       EXHIBIT D

                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, Delaware  19894-0001
Attention:  General Counsel

Wells Fargo Bank Minnesota, N.A.
MAC N9303-120
Sixth and Marquette
Minneapolis, MN  55479

     Re: 11 1/8 % Senior Notes Due 2007

     Reference is hereby made to the Indenture, dated as of November 14, 2000
(the "Indenture"), by and among Hercules Incorporated, as issuer (the "Company")
the Guarantors listed on Schedule I thereto, and Wells Fargo Bank Minnesota,
N.A., as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.

     In connection with our proposed purchase of $____________ aggregate
principal amount of:

     (a) [ ] a beneficial interest in a Global Note, or

     (b) [ ] a Definitive Note,

     we confirm that:

     1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "Securities Act").

     2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.

                                      D-1

<PAGE>   99

                                                                       EXHIBIT D

     3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.

     4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.

     5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.

     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.

                                      ____________________________________
                                      [Insert Name of Accredited Investor]

                                       By: _______________________________

                                                Name:
                                                Title:

Dated:  _______________________

                                      D-2

<PAGE>   100

                                                                       EXHIBIT E

                         [FORM OF NOTATION OF GUARANTEE]

         For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of November 14, 2000 (the "Indenture") by
and among Hercules Incorporated, the Guarantors listed on Schedule I thereto and
Wells Fargo Bank Minnesota, N.A., as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors to the
Holders of Notes and to the Trustee pursuant to the Note Guarantee and the
Indenture are expressly set forth in Article 10 of the Indenture and reference
is hereby made to the Indenture for the precise terms of the Note Guarantee.
Each Holder of a Note, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee, on behalf of such
Holder, to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.

                                    [NAME OF GUARANTOR(S)]

                                    By: ________________________________________
                                        Name:
                                        Title:

                                      E-1

<PAGE>   101

                                                                       EXHIBIT F

                         [FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

     SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Hercules Incorporated (or its permitted successor), a Delaware
corporation (the "Company"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and Wells Fargo Bank Minnesota, N.A., as
trustee under the indenture referred to below (the "Trustee").

                               W I T N E S S E T H

     WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of November 14, 2000 providing for the
issuance of an aggregate principal amount of up to $500,000,000 of 11 1/8%
Senior Notes due 2007 (the "Notes");

     WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.

     NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

     1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

     2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as
follows:

     (a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, the Notes or the
obligations of the Company hereunder or thereunder, that:

          (i) the principal of and interest on the Notes will be promptly paid
     in full when due, whether at maturity, by acceleration, redemption or
     otherwise, and interest on the overdue principal of and interest on the
     Notes, if any, if lawful, and all other obligations of the Company to the
     Holders or the Trustee hereunder or thereunder will be promptly paid in
     full or performed, all in accordance with the terms hereof and thereof; and

          (ii) in case of any extension of time of payment or renewal of any
     Notes or any of such other obligations, that same will be promptly paid in
     full when due or performed in accordance with the terms of the extension or
     renewal, whether at stated maturity, by acceleration or otherwise. Failing
     payment when due of any amount so guaranteed or any performance so

                                      F-1

<PAGE>   102

     guaranteed for whatever reason, the Guarantors shall be jointly and
     severally obligated to pay the same immediately.

     (b) The obligations hereunder shall be unconditional, subject to the
validity, regularity or enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor.

     (c) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever.

     (d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture, and the
Guaranteeing Subsidiary accepts all obligations of a Guarantor under the
Indenture.

     (e) If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.

     (f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby.

     (g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 of the Indenture for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.

     (h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.

     (i) Pursuant to Section 10.02 of the Indenture, after giving effect to any
maximum amount and any other contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under Article 10 of the Indenture, this new Note Guarantee
shall be limited to the maximum amount permissible such that the obligations of
such Guarantor under this Note Guarantee will not constitute a fraudulent
transfer or conveyance.

     3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.

                                      F-2

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          4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.

     (a) The Guaranteeing Subsidiary may not consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor
unless:

          (i) subject to Sections 10.04 and 10.05 of the Indenture, the Person
     formed by or surviving any such consolidation or merger (if other than a
     Guarantor or the Company) unconditionally assumes all the obligations of
     such Guarantor, pursuant to a supplemental indenture in form and substance
     reasonably satisfactory to the Trustee, under the Notes, the Indenture and
     the Note Guarantee on the terms set forth herein or therein; and

          (ii) immediately after giving effect to such transaction, no Default
     or Event of Default exists.

     (b) In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor corporation, by supplemental indenture, executed
and delivered to the Trustee and satisfactory in form to the Trustee, of the
Note Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of the Indenture to be performed by the
Guarantor, such successor corporation shall succeed to and be substituted for
the Guarantor with the same effect as if it had been named herein as a
Guarantor. Such successor corporation thereupon may cause to be signed any or
all of the Note Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of the
Indenture as though all of such Note Guarantees had been issued at the date of
the execution hereof.

     (c) Except as set forth in Articles 4 and 5 and Section 10.04 of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.

     5. RELEASES.

     (a) In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transaction) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of the Indenture, including without limitation Section 4.10 of the
Indenture. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of the
Indenture, including without limitation Section 4.10 of the Indenture, the
Trustee shall execute any documents reasonably

                                      F-3

<PAGE>   104

required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.

     (b) In the event of any designation of a Guarantor as an Unrestricted
Subsidiary in accordance with Section 4.07 hereof, such Guarantor will
automatically and unconditionally be released from all obligations under its
Note Guarantee.

     (c) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under the Indenture
as provided in Article 10 of the Indenture.

     6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the SEC that such a waiver is against public policy.

     7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

     8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

     9. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.

     10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.

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<PAGE>   105

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.

Dated:  _______________, ____

                                            [GUARANTEEING SUBSIDIARY]

                                            By:  _______________________________
                                                 Name:
                                                 Title:

                                                 Hercules Incorporated

                                            By:  _______________________________
                                                 Name:
                                                 Title:

                                                 [EXISTING GUARANTORS]

                                            By:  _______________________________
                                                 Name:
                                                 Title:

                                                 [TRUSTEE],
                                                 as Trustee

                                            By:  _______________________________
                                                 Authorized Signatory

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<PAGE>   106

                                   SCHEDULE I

                             SCHEDULE OF GUARANTORS

         The following schedule lists each Guarantor under the Indenture as of
the Issue Date:

Aqualon Company
Athens Holding Inc.
BetzDearborn China, Ltd.
BetzDearborn Europe, Inc.
BetzDearborn Inc.
BetzDearborn International Inc.
BL Chemicals, Inc.
BL Technologies, Inc.
BLI Holdings Corp.
Chemical Technologies India, Ltd.
Covington Holdings Inc.
DRC, Ltd.
East Bay Realty Services, Inc.
FiberVisions Incorporated
FiberVisions, L.L.C.
FiberVisions L.P.
FiberVisions Products, Inc.
Hercules Chemical Corporation
Hercules Country Club, Inc.
Hercules Credit, Inc.
Hercules Euro Holdings, L.L.C.
Hercules Finance Company
Hercules Flavor, Inc.
Hercules International Limited
Hercules International Limited, L.L.C.
Hercules Investments LLC
Hercules Shared Services Corporation
HISPAN Corporation
WSP, Inc.

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