Document:

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                                  $125,000,000

                                CREDIT AGREEMENT

                                      among

                              COLGATE MEDICAL LTD,
                                  as Borrower,

                                       and

           ORTHOFIX INTERNATIONAL N.V. AND CERTAIN SUBSIDIARIES OF THE
                                    BORROWER,
                                 as Guarantors,

                           THE LENDERS PARTIES HERETO,

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                            as Administrative Agent,

                                       and

                         WACHOVIA CAPITAL MARKETS, LLC,
                     as Sole Lead Arranger and Book Manager

                          Dated as of December 30, 2003

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                                TABLE OF CONTENTS
                                -----------------
                                                                            Page
                                                                            ----

ARTICLE I  DEFINITIONS.........................................................1
     Section 1.1    Defined Terms..............................................1
     Section 1.2    Other Definitional Provisions.............................32
     Section 1.3    Accounting Terms..........................................32

ARTICLE II  THE LOANS; AMOUNT AND TERMS.......................................33
     Section 2.1    Revolving Loans...........................................33
     Section 2.2    Term Loan Facility........................................35
     Section 2.3    Letter of Credit Subfacility..............................36
     Section 2.4    Swingline Loan Subfacility................................40
     Section 2.5    Fees......................................................41
     Section 2.6    Commitment Reductions.....................................42
     Section 2.7    Prepayments...............................................43
     Section 2.8    Minimum Principal Amount of Tranches; Lending Offices.....45
     Section 2.9    Default Rate and Payment Dates............................45
     Section 2.10   Conversion Options........................................45
     Section 2.11   Computation of Interest and Fees..........................46
     Section 2.12   Pro Rata Treatment and Payments...........................47
     Section 2.13   Non-Receipt of Funds by the Administrative Agent..........49
     Section 2.14   Inability to Determine Interest Rate......................50
     Section 2.15   Illegality................................................50
     Section 2.16   Requirements of Law.......................................51
     Section 2.17   Indemnity.................................................52
     Section 2.18   Taxes.....................................................53
     Section 2.19   Indemnification; Nature of Issuing Lender's Duties........56

ARTICLE III  REPRESENTATIONS AND WARRANTIES...................................57
     Section 3.1    Financial Condition.......................................57
     Section 3.2    No Change.................................................58
     Section 3.3    Corporate Existence; Compliance with Law..................58
     Section 3.4    Corporate Power; Authorization; Enforceable Obligations...59
     Section 3.5    Status Under Certain Statutes.............................59
     Section 3.6    Margin Regulations........................................60
     Section 3.7    No Legal Bar; No Default..................................60
     Section 3.8    No Material Litigation....................................60
     Section 3.9    ERISA.....................................................60
     Section 3.10   Environmental Matters.....................................61
     Section 3.11   Use of Proceeds...........................................62
     Section 3.12   Subsidiaries..............................................63
     Section 3.13   Ownership.................................................63
     Section 3.14   Indebtedness..............................................63
     Section 3.15   Taxes.....................................................63
     Section 3.16   Intellectual Property.....................................63
     Section 3.17   Solvency..................................................64
     Section 3.18   Investments...............................................64

                                       i

<PAGE>

     Section 3.19   Location of Collateral....................................64
     Section 3.20   No Burdensome Restrictions................................64
     Section 3.21   Labor Matters.............................................64
     Section 3.22   Security Documents........................................65
     Section 3.23   Accuracy and Completeness of Information..................65
     Section 3.24   Fraud and Abuse...........................................65
     Section 3.25   Licensing and Accreditation...............................66
     Section 3.26   Other Regulatory Protection...............................66
     Section 3.27   Reimbursement from Third Party Payors.....................66
     Section 3.28   Other Agreements..........................................67
     Section 3.29   Material Contracts........................................67
     Section 3.30   Insurance.................................................67
     Section 3.31   Classification as Senior Indebtedness.....................67
     Section 3.32   Tax Shelter Regulations...................................67

ARTICLE IV  CONDITIONS PRECEDENT..............................................68
     Section 4.1    Conditions to Closing Date and Initial Extensions of
                    Credit....................................................68
     Section 4.2    Conditions to All Extensions of Credit....................74

ARTICLE V  AFFIRMATIVE COVENANTS..............................................75
     Section 5.1    Financial Statements......................................75
     Section 5.2    Certificates; Other Information...........................76
     Section 5.3    Payment of Obligations....................................77
     Section 5.4    Conduct of Business and Maintenance of Existence..........78
     Section 5.5    Maintenance of Property; Insurance........................78
     Section 5.6    Inspection of Property; Books and Records; Discussions....79
     Section 5.7    Notices...................................................79
     Section 5.8    Environmental Laws........................................80
     Section 5.9    Financial Covenants.......................................81
     Section 5.10   Additional Subsidiary Guarantors..........................82
     Section 5.11   Compliance with Law.......................................82
     Section 5.12   Pledged Assets............................................83
     Section 5.13   Further Assurances........................................84

ARTICLE VI  NEGATIVE COVENANTS................................................85
     Section 6.1    Indebtedness..............................................85
     Section 6.2    Liens.....................................................86
     Section 6.3    Nature of Business........................................86
     Section 6.4    Consolidation, Merger, Sale or Purchase of Assets, etc....86
     Section 6.5    Advances, Investments and Loans...........................88
     Section 6.6    Transactions with Affiliates..............................88
     Section 6.7    Ownership of Subsidiaries; Restrictions...................88
     Section 6.8    Fiscal Year; Organizational Documents; Material Contracts;
                    Subordinated Indebtedness Documents.......................88
     Section 6.9    Limitation on Restricted Actions..........................89
     Section 6.10   Restricted Payments.......................................89
     Section 6.11   Sale Leasebacks...........................................90
     Section 6.12   No Further Negative Pledges...............................90

                                       ii
<PAGE>

     Section 6.13   Secured Indebtedness of Parent............................90
     Section 6.14   Orthofix II B.V...........................................90
     Section 6.15   Levtech Inc...............................................90

ARTICLE VII  EVENTS OF DEFAULT................................................91
     Section 7.1    Events of Default.........................................91
     Section 7.2    Acceleration; Remedies....................................94

ARTICLE VIII  THE AGENT.......................................................94
     Section 8.1    Appointment...............................................94
     Section 8.2    Delegation of Duties......................................95
     Section 8.3    Exculpatory Provisions....................................95
     Section 8.4    Reliance by Administrative Agent..........................95
     Section 8.5    Notice of Default.........................................96
     Section 8.6    Non-Reliance on Administrative Agent and Other Lenders....96
     Section 8.7    Indemnification...........................................97
     Section 8.8    Administrative Agent in Its Individual Capacity...........97
     Section 8.9    Successor Administrative Agent............................97
     Section 8.10   Other Agents..............................................98

ARTICLE IX  MISCELLANEOUS.....................................................98
     Section 9.1    Amendments, Waivers and Release of Collateral.............98
     Section 9.2    Notices..................................................100
     Section 9.3    No Waiver; Cumulative Remedies...........................101
     Section 9.4    Survival of Representations and Warranties...............101
     Section 9.5    Payment of Expenses and Taxes............................102
     Section 9.6    Successors and Assigns; Participations;
                    Purchasing Lenders.......................................102
     Section 9.7    Adjustments; Set-off.....................................106
     Section 9.8    Table of Contents and Section Headings...................107
     Section 9.9    Counterparts.............................................107
     Section 9.10   Effectiveness............................................107
     Section 9.11   Severability.............................................108
     Section 9.12   Integration..............................................108
     Section 9.13   Governing Law............................................108
     Section 9.14   Consent to Jurisdiction and Service of Process...........108
     Section 9.15   Confidentiality..........................................109
     Section 9.16   Acknowledgments..........................................109
     Section 9.17   Waivers of Jury Trial....................................110
     Section 9.18   Patriot Act Notice.......................................110

ARTICLE X  GUARANTY..........................................................110
     Section 10.1   The Guaranty.............................................110
     Section 10.2   Bankruptcy...............................................111
     Section 10.3   Nature of Liability......................................111
     Section 10.4   Independent Obligation...................................112
     Section 10.5   Authorization............................................112
     Section 10.6   Reliance.................................................112
     Section 10.7   Waiver...................................................112
     Section 10.8   Limitation on Enforcement................................114

                                      iii
<PAGE>

     Section 10.9   Confirmation of Payment..................................114

                                       iv
<PAGE>

Schedules

Schedule 1.1-1             Account Designation Letter
Schedule 1.1-2             EBITDA Adjustments
Schedule 1.1-3             Permitted Liens
Schedule 2.1(a)            Schedule of Lenders and Commitments
Schedule 2.1(b)(i)         Form of Notice of Borrowing
Schedule 2.1(e)            Form of Revolving Note
Schedule 2.2(d)            Form of Term Note
Schedule 2.4(d)            Form of Swingline Note
Schedule 2.10              Form of Notice of Conversion/Extension
Schedule 3.8               Litigation
Schedule 3.12              Subsidiaries
Schedule 3.16              Intellectual Property
Schedule 3.19(a)           Location of Real Property
Schedule 3.19(b)           Location of Collateral
Schedule 3.19(c)           Chief Executive Offices
Schedule 3.21              Labor Matters
Schedule 3.29              Material Contracts
Schedule 3.30              Insurance
Schedule 4.1-1             Form of Secretary's Certificate
Schedule 4.1-2             Form of Solvency Certificate
Schedule 5.10              Form of Joinder Agreement
Schedule 6.1(b)            Indebtedness
Schedule 9.2               Schedule of Lenders' Lending Offices
Schedule 9.6(c)            Form of Commitment Transfer Supplement

                                       v

<PAGE>

     CREDIT AGREEMENT, dated as of December 30, 2003, among COLGATE MEDICAL LTD,
a company formed under the laws of England and Wales and registered with number
01311455 (the "Borrower"), Orthofix International N.V., a Netherlands Antilles
corporation (the "Parent"), those Subsidiaries of the Borrower identified as a
"Guarantor" on the signature pages hereto and such other Subsidiaries of the
Borrower as may from time to time become a party hereto (each, a "Subsidiary
Guarantor" and, together with the Parent, the "Guarantors"), the several banks
and other financial institutions as may from time to time become parties to this
Agreement (collectively, the "Lenders"; and individually, a "Lender"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for the Lenders hereunder (in such capacity, the
"Administrative Agent").

                              W I T N E S S E T H:

     WHEREAS, the Borrower has requested that the Lenders make loans and other
financial accommodations to the Borrower in the amount of up to $125,000,000, as
more particularly described herein; and

     WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.1  Defined Terms.

     As used in this Agreement, terms defined in the first paragraph of this
Agreement have the meanings therein indicated, and the following terms have the
following meanings:

     "Account Designation Letter" shall mean the Account Designation Letter
dated the Closing Date from the Borrower to the Administrative Agent
substantially in the form attached hereto as Schedule 1.1-1.

     "Acquired Company" shall mean Breg, Inc., a California corporation.

     "Acquisition" shall mean the merger of Trevor Acquisition, Inc., a wholly
owned subsidiary of Orthofix Holdings organized under the laws of Delaware, with
and into the Acquired Company, with the Acquired Company being the surviving
company, pursuant to the Acquisition Documents.

     "Acquisition Documents" shall mean the Purchase Agreement, Voting
Agreement, Merger Documents and all other agreements and documents executed in
connection with the Acquisition.

<PAGE>

     "Additional Credit Party" shall mean each Person that becomes a Guarantor
by execution of a Joinder Agreement in accordance with Section 5.10.

     "Administrative Agent" shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.

     "Affiliate" shall mean as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, a Person shall be deemed to
be "controlled by" a Person if such Person possesses, directly or indirectly,
power either (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.

     "Agreement" or "Credit Agreement" shall mean this Credit Agreement, as
amended, restated, modified or supplemented from time to time in accordance with
its terms.

     "Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean, at any time, the rate of interest per annum publicly
announced from time to time by Wachovia at its principal office in Charlotte,
North Carolina as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by
Wachovia as its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the opening of business on the date of such
change.

     "Alternate Base Rate Loans" shall mean Loans that bear interest at an
interest rate based on the Alternate Base Rate.

                                       2
<PAGE>

     "Applicable Percentage" shall mean, for any day, the rate per annum set
forth below opposite the applicable level then in effect, it being understood
that the Applicable Percentage for (a) Revolving Loans that are Alternate Base
Rate Loans shall be the percentage set forth under the column "Alternate Base
Rate Margin for Revolving Loans", (b) Revolving Loans that are LIBOR Rate Loans
shall be the percentage set forth under the column "LIBOR Rate Margin for
Revolving Loans and Letter of Credit Fee", (c) the Letter of Credit Fee shall be
the percentage set forth under the column "LIBOR Rate Margin for Revolving Loans
and Letter of Credit Fee", (d) Term Loans that are Alternate Base Rate Loans
shall be the percentage set forth under the column "Alternate Base Rate Margin
for Term Loans", (e) Term Loans that are LIBOR Rate Loans shall be the
percentage set forth under the column "LIBOR Rate Margin for Term Loans", and
(f) the Commitment Fee shall be the percentage set forth under the column
"Commitment Fee":

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                   LIBOR Rate
                                   Alternate       Margin for      Alternate
                                   Base Rate        Revolving      Base Rate
                 Borrower          Margin for       Loans and      Margin for      LIBOR Rate
                 Leverage          Revolving        Letter of        Term          Margin for       Commitment
  Level            Ratio             Loans         Credit Fee        Loans         Term Loans           Fee
-------------------------------------------------------------------------------------------------------------------
<S>              <C>                 <C>              <C>             <C>              <C>              <C>
    I        > = 2.50 to 1.0         1.25%            2.25%           1.75%            2.75%            0.50%
-------------------------------------------------------------------------------------------------------------------
    II       > = 2.00 to 1.0 but     1.00%            2.00%           1.75%            2.75%            0.50%
               < 2.50 to 1.0
-------------------------------------------------------------------------------------------------------------------
   III       > = 1.50 to 1.0 but     0.75%            1.75%           1.50%            2.50%            0.50%
               < 2.00 to 1.0
-------------------------------------------------------------------------------------------------------------------
    IV         < 1.50 to 1.0         0.50%            1.50%           1.50%            2.50%           0.375%
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     The Applicable Percentage shall, in each case, be determined and adjusted
quarterly on the date five (5) Business Days after the date on which the
Administrative Agent has received from the Borrower the financial information
and certifications required to be delivered to the Administrative Agent and the
Lenders in accordance with the provisions of Sections 5.1(a) and (b) and Section
5.2(b) (each, an "Interest Determination Date"). Such Applicable Percentage
shall be effective from such Interest Determination Date until the next such
Interest Determination Date. The initial Applicable Percentages shall be based
on Level II until the first Interest Determination Date occurring after the
delivery of the officer's compliance certificate pursuant to Section 5.2(b) for
the quarter ended March 31, 2004. If the Borrower shall fail to provide the
annual and quarterly financial information and certifications in accordance with
the provisions of Sections 5.1(a) and (b) and Section 5.2(b), the Applicable
Percentage from such Interest Determination Date shall, on the date five (5)
Business Days after the date by which the Borrower was so required to provide
such financial information and certifications to the Administrative Agent and
the Lenders, be based on Level I until such time as such information and
certifications are provided, whereupon the level shall be determined by the then
current Leverage Ratio.

     "Arranger" shall mean Wachovia Capital Markets, LLC, as sole lead arranger
and book manager, together with its successors and/or assigns.

                                       3
<PAGE>

     "Asset Disposition" shall mean the disposition of any or all of the assets
(including, without limitation, the Capital Stock of a Subsidiary or any
ownership interest in a joint venture) of the Borrower or any Subsidiary whether
by sale, lease, transfer or otherwise. The term "Asset Disposition" shall not
include (i) the sale, lease, transfer or other disposition of assets permitted
by Section 6.4(a)(i), (ii), (iii), (iv) or (v) hereof or (ii) any Equity
Issuance, including any equity issued upon exercise of employee stock options.

     "Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.

     "Borrower" shall have the meaning set forth in the first paragraph of this
Agreement.

     "Borrower Leverage Ratio" shall mean, with respect to the Borrower and its
subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Borrower, the ratio of (a) Funded Debt of
the Borrower and its subsidiaries on a consolidated basis on the last day of
such period to (b) Consolidated Borrower EBITDA for such period.

     "Borrowing Date" shall mean, in respect of any Loan, the date such Loan is
made.

     "Business" shall have the meaning set forth in Section 3.10.

     "Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina or New York, New York are
authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term "Business Day" shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.

     "BV II" shall mean Orthofix II B.V., a company formed under the laws of the
Netherlands.

     "BV II Limited Guaranty and Pledge Agreement" shall mean the Limited
Guaranty and Pledge Agreement dated as of the Closing Date executed by BV II, in
favor of the Administrative Agent, as amended, modified, restated or
supplemented from time to time in accordance with its terms and the terms
hereof.

     "Capital Lease" shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.

     "Capital Lease Obligations" shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.

     "Capital Stock" shall mean (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership

                                       4
<PAGE>

interests (whether general or limited), (d) in the case of a limited liability
company, membership interests and (e) 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.

     "Cash Equivalents" shall mean (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition ("Government Obligations"), (b)
U.S. dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (i) any United States commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (ii) bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more than 364 days from
the date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition, (d)
repurchase agreements with a bank or trust company (including a Lender) or a
recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America, (e) obligations of any state of the United States or any
political subdivision thereof for the payment of the principal and redemption
price of and interest on which there shall have been irrevocably deposited
Government Obligations maturing as to principal and interest at times and in
amounts sufficient to provide such payment and (f) Investments, classified in
accordance with GAAP as current assets of the Borrower or its Subsidiaries, in
money market investment programs registered under the Investment Company Act of
1940, as amended, that are administered by financial institutions that have the
highest rating obtainable from either Moody's or S&P, and the portfolios of
which are limited solely to Investments (i) in corporate obligations having a
remaining maturity of less than two years, issued by corporations having
outstanding comparable obligations that are rated in the two highest categories
of Moody's and S&P or no lower than the two highest long term debt ratings
categories of either Moody's or S&P or (ii) of the character, quality and
maturity described in clauses (a)-(e) of this definition.

     "CHAMPUS" shall mean the United States Department of Defense Civilian
Health and Medical Program of the United States.

     "Change of Control" shall mean the occurrence of any of the following: (a)
any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined
in Rule l3d-3 under the Securities Exchange Act of 1934) of more than 30% of
then outstanding Voting Stock of the Parent, measured by voting power rather
than the number of shares; (b) Continuing Directors shall cease for any reason
to constitute a majority of the members of the board of directors of the Parent
then in office, (c) the Parent shall cease to own, directly or indirectly
through wholly-owned Subsidiaries, all of the outstanding Capital Stock of the
Borrower, or (d) the occurrence of a

                                       5
<PAGE>

"Change of Control" (or any comparable term) under, and as defined in, the
documents evidencing or governing any Subordinated Indebtedness.

     "Closing Date" shall mean the date of this Agreement.

     "CMS" shall mean the Centers for Medicare and Medicaid Services and any
successor thereto.

     "Code" shall mean the Internal Revenue Code of 1986, as amended, modified,
succeeded or replaced from time to time.

     "Collateral" shall mean a collective reference to the collateral that is
identified in, and at any time will be covered by, the Security Documents.

     "Commitment" shall mean the Revolving Commitment, the LOC Commitment, the
Swingline Commitment and the Term Loan Commitment, individually or collectively,
as appropriate.

     "Commitment Fee" shall have the meaning set forth in Section 2.5(a).

     "Commitment Percentage" shall mean the Revolving Commitment Percentage
and/or the Term Loan Commitment Percentage, as appropriate.

     "Commitment Period" shall mean the period from and including the Closing
Date to but not including the Maturity Date.

     "Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).

     "Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001(b)(1) of ERISA or is part of a group which includes the Borrower
and which is treated as a single employer under Section 414(b) or 414(c) of the
Code or, solely for purposes of Section 412 of the Code to the extent required
by such section, Section 414(m) or 414(o) of the Code.

     "Consolidated Borrower EBITDA" shall mean, for any applicable period of
computation, the sum of (a) Consolidated Borrower Net Income for such period,
but excluding therefrom all extraordinary items of income or loss, plus (b) to
the extent deducted in determining Consolidated Borrower Net Income for such
period, the sum of (i) the aggregate amount of depreciation and amortization
charges for such period, plus (ii) Consolidated Borrower Interest Expense for
such period, plus (iii) the aggregate amount of all income taxes reflected on
the consolidated statements of income of the Borrower and its Subsidiaries for
such period, plus (iv) adjustments set forth on Schedule 1.1-2 related to (A)
the fees and expenses associated with the Acquisition and the closing of this
Credit Agreement and (B) OIG Settlement Costs in an aggregate amount not to
exceed $1,700,000.

                                       6
<PAGE>

     "Consolidated Borrower Interest Expense" shall mean, for any applicable
period of computation, all interest expense of the Borrower and its Subsidiaries
on a consolidated basis for such period (including, without limitation, the
interest component under Capital Leases and any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product, but excluding interest income), as determined in accordance with GAAP.

     "Consolidated Borrower Net Income" shall mean, for any applicable period of
computation, net income after taxes for such period of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.

     "Consolidated Capital Expenditures" shall mean, for any applicable period
of computation, all capital expenditures of the Borrower and its Subsidiaries on
a consolidated basis for such period, as determined in accordance with GAAP.

     "Consolidated Parent EBITDA" shall mean, for any applicable period of
computation, the sum of (a) Consolidated Parent Net Income for such period, but
excluding therefrom all extraordinary items of income or loss, plus (b) to the
extent deducted in determining Consolidated Parent Net Income for such period,
the sum of (i) the aggregate amount of depreciation and amortization charges for
such period, plus (ii) Consolidated Parent Interest Expense for such period,
plus (iii) the aggregate amount of all income taxes reflected on the
consolidated statements of income of the Parent and its Subsidiaries for such
period plus (iv) adjustments set forth on Schedule 1.1-2 related to (A) the fees
and expenses associated with the Acquisition and the closing of this Credit
Agreement, (B) OIG Settlement Costs in an aggregate amount not to exceed
$1,700,000 and (C) KCI Litigation Expenses in an aggregate amount not to exceed
$3,900,000.

     "Consolidated Parent Interest Expense" shall mean, for any applicable
period of computation, all interest expense of the Parent and its Subsidiaries
on a consolidated basis for such period (including, without limitation, the
interest component under Capital Leases and any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet financing
product, but excluding interest income), as determined in accordance with GAAP.

     "Consolidated Parent Net Income" shall mean, for any applicable period of
computation, net income after taxes for such period of the Parent and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.

     "Consolidated Working Capital" shall mean, for any applicable period of
computation, (a) all current assets of the Borrower and its Subsidiaries on a
consolidated basis minus (b) all current liabilities of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.

     "Continuing Directors" shall mean, during any period of up to 24
consecutive months commencing after the Closing Date, individuals who at the
beginning of such 24 month period were directors of the Parent (together with
any new director whose election by the Parent's board of directors or whose
nomination for election by the Parent's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the

                                       7
<PAGE>

beginning of such period or whose election or nomination for election was
previously so approved).

     "Contractual Obligation" shall mean, as to any Person, any provision of any
security issued by such Person or of any contract, agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.

     "Copyright Licenses" shall mean any agreement, written or oral, naming the
Borrower or any of its Subsidiaries as licensor and granting any right under any
Copyright including, without limitation, any thereof referred to in Schedule
3.16.

     "Copyrights" shall mean (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith (including,
without limitation, registrations, recordings and applications in the United
States Copyright Office), including, without limitation, any thereof referred to
in Schedule 3.16, and (b) all renewals thereof including, without limitation,
any renewals referred to in Schedule 3.16.

     "Credit Documents" shall mean this Agreement, each of the Notes, any
Joinder Agreement, the LOC Documents, the Security Documents and all other
agreements, documents, certificates and instruments delivered to the
Administrative Agent or any Lender by any Credit Party in connection therewith
(excluding, however, any Hedging Agreement).

     "Credit Party" shall mean any of the Borrower or the Guarantors.

     "Credit Party Obligations" shall mean, without duplication, (a) all of the
obligations of the Credit Parties to the Lenders (including the Issuing Lender)
and the Administrative Agent, whenever arising, under this Agreement, the Notes
or any of the other Credit Documents (including, but not limited to, any
interest accruing after the occurrence of a filing of a petition of bankruptcy
under the Bankruptcy Code with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and (b) all
liabilities and obligations, whenever arising, owing from any Credit Party or
any of its Subsidiaries to any Hedging Agreement Provider arising under any
Secured Hedging Agreement permitted pursuant to Section 6.1(e).

     "Debentures" shall mean the Debentures, each dated as of the Closing Date,
executed by the Borrower and Orthofix UK Ltd in favor of the Administrative
Agent, in each case as amended, modified, restated or supplemented from time to
time in accordance with its terms and the terms hereof.

     "Debt Issuance" shall mean the issuance of any Indebtedness for borrowed
money by the Borrower or any of its Subsidiaries (excluding, for purposes
hereof, any Equity Issuance or any Indebtedness of the Borrower and its
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof).

                                       8
<PAGE>

     "Default" shall mean any event which would constitute an Event of Default,
whether or not any requirement for the giving of notice or the lapse of time, or
both, or any other condition with respect to such Event of Default, has been
satisfied.

     "Defaulting Lender" shall mean, at any time, any Lender that, at such time
(a) has failed to make a Loan required pursuant to the term of this Credit
Agreement, including the funding of a Participation Interest in accordance with
the terms hereof, (b) has failed to pay to the Administrative Agent or any
Lender an amount owed by such Lender pursuant to the terms of this Credit
Agreement, or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or similar
official.

     "Deferred Purchase Agreement" shall mean the deferred purchase agreement
between the Borrower and Orthofix UK Ltd., dated as of the Closing Date.

     "Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.

     "Domestic Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's Domestic Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which Alternate Base Rate Loans of such Lender are to be made.

     "Drop Down Date" shall mean the date upon which BV II shall have
transferred ownership of all of the Capital Stock of Orthofix Holdings owned by
BV II to the Borrower on terms reasonably satisfactory to the Administrative
Agent.

     "Eligible UK Lender" means a Lender that is (a) (i) a "bank" (as defined
for purposes of Section 349 of the UK Income and Corporation Taxes Act 1988)
making an advance under this Credit Agreement or (ii) a Lender in respect of an
advance made under this Credit Agreement by a Person that was a "bank" (as
defined for purposes of Section 349 of the UK Income and Corporation Taxes Act
1988) at the time that such advance was made, and (b) beneficially entitled to
interest payable to such Lender in respect of such advance and within the charge
to United Kingdom corporation tax as regards any payments of interest made in
respect of such advance.

     "Environmental Laws" shall mean any and all applicable foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health as such
relates to exposure to Materials of Environmental Concern or the environment, as
now or may at any time be in effect during the term of this Agreement.

     "Equity Issuance" shall mean any issuance by the Parent, the Borrower or
any of the Borrower's Subsidiaries to any Person that is not the Parent or one
of its Subsidiaries of (a) shares of its Capital Stock, (b) any shares of its
Capital Stock pursuant to the exercise of options or warrants (excluding
employee stock options), (c) any shares of its Capital Stock

                                       9
<PAGE>

pursuant to the conversion of any debt securities to equity or (d) warrants or
options which are exercisable for shares of its Capital Stock. The term "Equity
Issuance" shall not include any Asset Disposition or Debt Issuance.

     "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, modified, succeeded or replaced from time to time.

     "Eurodollar Reserve Percentage" shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) that is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.

     "Event of Default" shall mean any of the events specified in Section 7.1;
provided, however, with respect to any such event, that any requirement for the
giving of notice or the lapse of time, or both, or any other condition with
respect thereto, has been satisfied.

     "Excess Cash Flow" shall mean, with respect to any fiscal year of the
Borrower commencing with the Borrower's fiscal year ending December 31, 2004,
for the Borrower and its Subsidiaries on a consolidated basis, an amount equal
to (a) Consolidated Borrower EBITDA for such period minus (b) Consolidated
Capital Expenditures for such period minus (c) Scheduled Funded Debt Payments
made during such period minus (d) Consolidated Borrower Interest Expense
(excluding any Consolidated Borrower Interest Expense associated with
intercompany Indebtedness) for such period minus (e) amounts paid in respect of
federal, state, local and foreign income taxes of the Borrower and its
Subsidiaries with respect to such period minus (f) increases in Consolidated
Working Capital plus (g) decreases in Consolidated Working Capital minus (h)
optional prepayments of Revolving Loans (to the extent accompanied by a
corresponding reduction of the Revolving Committed Amount) and the Term Loan
made pursuant to Section 2.7(a).

     "Extension of Credit" shall mean, as to any Lender, the making of a Loan by
such Lender or the issuance of, or participation in, a Letter of Credit by such
Lender.

     "Federal Funds Effective Rate" shall have the meaning set forth in the
definition of "Alternate Base Rate".

     "Fee Letter" shall mean the letter agreement dated November 10, 2003
addressed to the Borrower from Wachovia and WCM, as amended, modified, restated
or supplemented from time to time in accordance with its terms.

     "Fixed Charge Coverage Ratio" shall mean, with respect to the Borrower and
its Subsidiaries on a consolidated basis for the twelve-month period ending on
the last day of any fiscal quarter of the Borrower, the ratio of (a)
Consolidated Borrower EBITDA for such period to (b) the sum of Consolidated
Borrower Interest Expense for such period plus Scheduled Funded

                                       10
<PAGE>

Debt Payments for such period plus cash taxes paid or payable during such period
plus Consolidated Capital Expenditures for such period plus Restricted Payments
made during such period. Notwithstanding the foregoing, for purposes of
calculating the Fixed Charge Coverage Ratio for the fiscal quarters ending March
31, 2004, June 30, 2004 and September 30, 2004, the Fixed Charge Coverage Ratio
shall be determined by annualizing the Consolidated Borrower Interest Expense
during such fiscal quarters such that (i) for the calculation of the Fixed
Charge Coverage Ratio as of March 31, 2004, the Consolidated Borrower Interest
Expense for the fiscal quarter ending March 31, 2004 would be multiplied by four
(4), (ii) for the calculation of the Fixed Charge Coverage Ratio as of June 30,
2004, the Consolidated Borrower Interest Expense for the two fiscal quarter
period then ending would be multiplied by two (2) and (iii) for the calculation
of the Fixed Charge Coverage Ratio as of September 30, 2004, the Consolidated
Borrower Interest Expense for the three fiscal quarter period then ending would
be multiplied by one and one-third (1 1/3).

     "Flood Hazard Property" shall have the meaning set forth in Section
4.1(f)(iv).

     "Funded Debt" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person incurred, issued or
assumed as the deferred purchase price of property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business and
due within six months of the incurrence thereof) that would appear as
liabilities on a balance sheet of such Person, (e) the principal portion of all
obligations of such Person under Capital Leases, (f) all obligations of such
Person under Hedging Agreements to the extent required to be accounted for as a
liability under GAAP, excluding any portion thereof which would be accounted for
as interest expense under GAAP, (g) the maximum amount of all letters of credit
issued or bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (h) all preferred Capital Stock or other equity interests issued
by such Person and which by the terms thereof could be (at the request of the
holders thereof or otherwise) subject to mandatory sinking fund payments,
redemption or other acceleration, (i) the principal balance outstanding under
any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product, (j) all Indebtedness of others of
the type described in clauses (a) through (i) hereof secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (k) all Guaranty Obligations of such Person
with respect to Indebtedness of another Person of the type described in clauses
(a) through (i) hereof, and (l) all Indebtedness of the type described in
clauses (a) through (i) hereof of any partnership or unincorporated joint
venture in which such Person is a general partner or a joint venturer; provided,
however, that (i) with respect to Funded Debt of the Parent and its
Subsidiaries, Funded Debt shall not include Subordinated Indebtedness
(including, without limitation, the Parent Intercompany Loan) among the Borrower
and the Guarantors to the extent such Indebtedness would be eliminated on a
consolidated basis and (ii) with respect to Funded Debt

                                       11
<PAGE>

of the Borrower and its Subsidiaries, Funded Debt shall not include Subordinated
Indebtedness (including, without limitation, the Parent Intercompany Loan or the
Deferred Purchase Agreement) among the Borrower and the Subsidiary Guarantors to
the extent such Indebtedness would be eliminated on a consolidated basis.

     "GAAP" shall mean generally accepted accounting principles in effect in the
United States of America applied on a consistent basis, subject, however, in the
case of determination of compliance with the financial covenants set out in
Section 5.9, to the provisions of Section 1.3.

     "Government Acts" shall have the meaning set forth in Section 2.19(a).

     "Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

     "Guaranty Obligations" shall mean, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (a) to purchase any such Indebtedness or
any property constituting security therefore, (b) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (c) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (d) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.

     "Guarantor" shall have the meaning set forth in the first paragraph of this
Agreement.

     "Guaranty" shall mean the guaranty of the Guarantors set forth in Article
X.

     "Hedging Agreement Provider" shall mean any Person that enters into a
Secured Hedging Agreement with a Credit Party or any of its Subsidiaries that is
permitted by Section 6.1(e) to the extent such Person is a Lender, an Affiliate
of a Lender or any other Person that was a Lender (or an Affiliate of a Lender)
at the time it entered into the Secured Hedging Agreement but has ceased to be a
Lender (or whose Affiliate has ceased to be a Lender) under the Credit
Agreement.

     "Hedging Agreements" shall mean, with respect to any Person, any agreements
entered into to protect such Person against fluctuations in interest rates, or
currency or raw materials values, including, without limitation, any interest
rate swap, cap or collar agreements or similar arrangements between such Person
and one or more counterparties, any foreign currency

                                       12
<PAGE>

exchange agreements, currency protection agreements, commodity purchase or
option agreements or other interest or exchange rate or commodity price hedging
agreements.

     "Indebtedness" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) that would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
Guaranty Obligations of such Person with respect to Indebtedness of another
Person, (h) the principal portion of all obligations of such Person under
Capital Leases plus any accrued interest thereon, (i) all obligations of such
Person under Hedging Agreements to the extent required to be accounted for as a
liability under GAAP, excluding any portion thereof which would be accounted for
as interest expense under GAAP, (j) the maximum amount of all letters of credit
issued or bankers' acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock or other equity interest issued
by such Person and which by the terms thereof could be (at the request of the
holders thereof or otherwise) subject to mandatory sinking fund payments,
redemption or other acceleration, (l) the principal balance outstanding under
any synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product plus any accrued interest thereon,
and (m) the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer.

     "Initial Lender" shall mean a Lender (a) that is a party to this Credit
Agreement on the Closing Date or (b) whose Commitment is held by Wachovia on the
Closing Date and assigned from Wachovia to such Lender thereafter; provided that
a Lender shall not be treated as an Initial Lender for the purposes of Section
9.6 immediately following an assignment or participation by such Lender of all
of its rights and obligations under this Credit Agreement.

     "Initial Mortgaged Properties" shall have the meaning set forth in Section
4.1(f)(i).

     "Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.

     "Insolvent" shall mean being in a condition of Insolvency.

     "Intellectual Property" shall mean, collectively, all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.

                                       13
<PAGE>

     "Interest Coverage Ratio" shall mean, with respect to the Borrower and its
subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Borrower, the ratio of (a) Consolidated
Borrower EBITDA for such period to (b) Consolidated Borrower Interest Expense
for such period. Notwithstanding the foregoing, for purposes of calculating the
Interest Coverage Ratio for the fiscal quarters ending March 31, 2004, June 30,
2004 and September 30, 2004, the Interest Coverage Ratio shall be determined by
annualizing the Consolidated Borrower Interest Expense during such fiscal
quarters such that (i) for the calculation of the Interest Coverage Ratio as of
March 31, 2004, the Consolidated Borrower Interest Expense for the fiscal
quarter ending March 31, 2004 would be multiplied by four (4), (ii) for the
calculation of the Interest Coverage Ratio as of June 30, 2004, the Consolidated
Borrower Interest Expense for the two fiscal quarter period then ending would be
multiplied by two (2) and (iii) for the calculation of the Interest Coverage
Ratio as of September 30, 2004, the Consolidated Borrower Interest Expense for
the three fiscal quarter period then ending would be multiplied by one and
one-third (1 1/3).

     "Interest Determination Date" shall have the meaning assigned thereto in
the definition of "Applicable Percentage".

     "Interest Payment Date" shall mean (a) as to any Alternate Base Rate Loan
or Swingline Loan, the last Business Day of each March, June, September and
December during the term of this Agreement and on the Maturity Date, (b) as to
any LIBOR Rate Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any LIBOR Rate Loan having an Interest
Period longer than three months, (i) each three month anniversary of the first
day of such Interest Period and (ii) the last day of such Interest Period, and
(d) as to any Loan which is the subject of a mandatory prepayment required
pursuant to Section 2.7(b) hereof, the date of such prepayment.

     "Interest Period" shall mean, with respect to any LIBOR Rate Loan,

          (a) initially, the period commencing on the Borrowing Date or
     conversion date, as the case may be, with respect to such LIBOR Rate Loan
     and ending one, two, three or six months thereafter, subject to
     availability, as selected by the Borrower in the Notice of Borrowing or
     Notice of Conversion/Extension given with respect thereto; and

          (b) thereafter, each period commencing on the last day of the
     immediately preceding Interest Period applicable to such LIBOR Rate Loan
     and ending one, two, three or six months thereafter, subject to
     availability, as selected by the Borrower by irrevocable notice to the
     Administrative Agent not less than three (3) Business Days prior to the
     last day of the then current Interest Period with respect thereto;

               provided that the foregoing provisions are subject to the
     following:

               (i) if any Interest Period pertaining to a LIBOR Rate Loan would
          otherwise end on a day that is not a Business Day, such Interest
          Period shall be extended to the next succeeding Business Day unless
          the result of such extension

                                       14
<PAGE>

          would be to carry such Interest Period into another calendar month in
          which event such Interest Period shall end on the immediately
          preceding Business Day;

               (ii) any Interest Period pertaining to a LIBOR Rate Loan that
          begins on the last Business Day of a calendar month (or on a day for
          which there is no numerically corresponding day in the calendar month
          at the end of such Interest Period) shall end on the last Business Day
          of the relevant calendar month for such Interest Period;

               (iii) if the Borrower shall fail to give notice as provided
          above, the Borrower shall be deemed to have selected an Alternate Base
          Rate Loan to replace the affected LIBOR Rate Loan;

               (iv) any Interest Period in respect of any Loan that would
          otherwise extend beyond the Maturity Date shall end on the Maturity
          Date;

               (v) with regard to the Term Loan, no Interest Period shall extend
          beyond any principal amortization payment date unless the portion of
          the Term Loan consisting of Alternate Base Rate Loans together with
          the portion of the Term Loan consisting of LIBOR Rate Loans with
          Interest Periods expiring prior to or concurrently with the date such
          principal amortization payment date is due, is at least equal to the
          amount of such principal amortization payment due on such date; and

               (vi) no more than six (6) LIBOR Rate Loans may be in effect at
          any time; provided that, for purposes hereof, LIBOR Rate Loans with
          different Interest Periods shall be considered as separate LIBOR Rate
          Loans, even if they shall begin on the same date and have the same
          duration, although borrowings, extensions and conversions may, in
          accordance with the provisions hereof, be combined at the end of
          existing Interest Periods to constitute a new LIBOR Rate Loan with a
          single Interest Period.

     "Investment" shall mean all investments made directly or indirectly in, to
or from any Person, whether in cash or by acquisition of shares of Capital
Stock, property, assets, indebtedness or other obligations or securities or by
loan advance, capital contribution or otherwise.

     "IOL" shall mean Intavent Orthofix Limited, a company formed under the laws
of England and Wales and registered with number 02853159.

     "IOL Limited Guaranty and Pledge Agreement" shall mean the pledge agreement
dated as of the Closing Date executed by IOL, in favor of the Administrative
Agent, as amended, modified, restated or supplemented from time to time in
accordance with its terms and the terms hereof.

     "Issuing Lender" shall mean Wachovia.

                                       15
<PAGE>

     "Issuing Lender Fees" shall have the meaning set forth in Section 2.5(c).

     "Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.

     "KCI Litigation Expenses" shall mean those expenses incurred by the Parent
or its Subsidiaries in connection with the litigation between Novamedix, a
subsidiary of the Parent, and Kinetic Concepts Inc., regarding alleged
infringement of patents relating to Novamedix's A-V Impulse System product.

     "Kinesis Earnout" shall mean the earnout obligations of Orthofix Inc. upon
(i) the receipt of a unique healthcare reimbursement code and (ii) the
attainment of certain sales thresholds, in each case owed to Kinesis Medical
Inc. in connection with Orthofix Inc.'s acquisition of Kinesis Medical Inc.'s
pneumatic vest business on August 31, 2000.

     "Lender" shall have the meaning set forth in the first paragraph of this
Agreement and shall include the Issuing Lender and the Swingline Lender.

     "Letters of Credit" shall mean any letter of credit issued by the Issuing
Lender pursuant to the terms hereof, as such Letters of Credit may be amended,
modified, extended, renewed or replaced from time to time.

     "Letter of Credit Fee" shall have the meaning set forth in Section 2.5(b).

     "LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period
therefore, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR" shall mean, for any LIBOR Rate Loan for
any Interest Period therefore, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%). If, for any reason, neither of such rates is
available, then "LIBOR" shall mean the rate per annum at which, as determined by
the Administrative Agent, Dollars in an amount comparable to the Loans then
requested are being offered to leading banks at approximately 11:00 A.M. London
time, two (2) Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks in the
London interbank market for a period equal to the Interest Period selected.

                                       16
<PAGE>

     "LIBOR Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.

     "LIBOR Rate" shall mean a rate per annum (rounded upwards, if necessary, to
the next higher 1/100th of 1%) determined by the Administrative Agent pursuant
to the following formula:

           LIBOR Rate =                     LIBOR
                              ------------------------------------
                              1.00 - Eurodollar Reserve Percentage

     "LIBOR Rate Loan" shall mean Loans the rate of interest applicable to which
is based on the LIBOR Rate.

     "Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).

     "Limited Guarantors" shall mean IOL and BV II.

     "Loan" shall mean a Revolving Loan, a Swingline Loan and/or a Term Loan, as
appropriate.

     "LOC Commitment" shall mean the commitment of the Issuing Lender to issue
Letters of Credit and, with respect to each Revolving Lender, the commitment of
such Revolving Lender to purchase participation interests in the Letters of
Credit up to the amount identified as such Revolving Lender's "LOC Commitment"
on Schedule 2.1(a) or in the Register, as such amount may be modified in
connection with any assignment made in accordance with the provisions of Section
9.6(c) or reduced from time to time in accordance with the provisions hereof.

     "LOC Committed Amount" shall have the meaning set forth in Section 2.3(a).

     "LOC Documents" shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefore, and any agreements, instruments,
guarantees or other documents (whether general in application or applicable only
to such Letter of Credit) governing or providing for (a) the rights and
obligations of the parties concerned or (b) any collateral security for such
obligations.

     "LOC Obligations" shall mean, at any time, the sum of (a) the maximum
amount which is, or at any time thereafter may become, available to be drawn
under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters

                                       17
<PAGE>

of Credit plus (b) the aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed.

     "Mandatory Borrowing" shall have the meaning set forth in Section 2.3(e)
and Section 2.4(b)(ii), as the context may require.

     "Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of the Parent and its Subsidiaries taken as a whole or the Borrower and its
Subsidiaries taken as a whole, (b) the ability of the Parent, the Borrower or
the Borrower and the Subsidiary Guarantors taken as a whole to perform its or
their obligations, as applicable, when such obligations are required to be
performed, under this Agreement, any of the Notes or any other Credit Document
or (c) the validity or enforceability of this Agreement, any of the Notes or any
of the other Credit Documents or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder.

     "Material Contract" shall mean any contract or other arrangement, whether
written or oral, to which the Parent, the Borrower or any of the Borrower's
Subsidiaries is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.

     "Material Property" shall mean real and/or personal property of the
Borrower and the Subsidiary Guarantors with an aggregate fair market value
greater than or equal to $1,000,000.

     "Materials of Environmental Concern" shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

     "Maturity Date" shall mean December 30, 2008.

     "Medicaid" shall mean that entitlement program under Title XIX of the
Social Security Act that provides federal grants to states for medical
assistance based on specific eligibility criteria.

     "Medicaid Certification" shall mean recognition by a state agency or other
such entity administering a particular state's Medicaid program that a health
care provider or supplier is in compliance with all the conditions of
participation set forth in the appropriate state and federal Medicaid
Regulations.

     "Medicaid Provider Agreement" shall mean an agreement entered into between
a state agency or other such entity administering the Medicaid program and a
health care provider or supplier under which the health care provider or
supplier agrees to provide services for Medicaid patients in accordance with the
terms of the agreement and Medicaid Regulations.

     "Medicaid Regulations" shall mean, collectively, (a) all federal statutes
(whether set forth

                                       18
<PAGE>

in Title XIX of the Social Security Act or elsewhere) affecting the medical
assistance program established by Title XIX of the Social Security Act and any
statutes succeeding thereto; (b) all applicable provisions of all federal rules,
regulations, manuals and orders of all Governmental Authorities promulgated
pursuant to or in connection with the statutes described in clause (a) above and
all federal administrative, reimbursement and other guidelines of all
Governmental Authorities having the force of law promulgated pursuant to or in
connection with the statutes described in clause (a) above; (c) all state
statutes and plans for medical assistance enacted in connection with the
statutes and provisions described in clauses (a) and (b) above; and (d) all
applicable provisions of all rules, regulations, manuals and orders of all
Governmental Authorities promulgated pursuant to or in connection with the
statutes described in clause (c) above and all state administrative,
reimbursement and other guidelines of all Governmental Authorities having the
force of law promulgated pursuant to or in connection with the statutes
described in clause (b) above, in each case as may be amended, supplemented or
otherwise modified from time to time.

     "Medical Reimbursement Programs" shall mean Medicare, Medicaid and TRICARE
programs and any other healthcare program operated by or financed in whole or in
part by any foreign, federal, state or local government and any other
non-government funded third party payor programs.

     "Medicare Certification" shall mean recognition by CMS or an entity under
contract with CMS that the health care provider or supplier is in compliance
with all of the conditions of participation set forth in the Medicare
Regulations.

     "Medicare Provider Agreement" means an agreement entered into between CMS
or other such entity administering the Medicare program on behalf of CMS, and a
health care provider or supplier under which the health care provider or
supplier agrees to provide services for Medicare patients in accordance with the
terms of the agreement and Medicare Regulations.

     "Medicare" shall mean that government-sponsored entitlement program under
Title XVIII of the Social Security Act that provides for a health insurance
system for eligible elderly and disabled individuals.

     "Medicare Regulations" shall mean, collectively, all Federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled established by
Title XVIII of the Social Security Act and any statutes succeeding thereto;
together with all applicable provisions of all rules, regulations, manuals and
orders and administrative, reimbursement and other guidelines having the force
of law of all Governmental Authorities (including, without limitation, the
United States Department of Health and Human Services ("HHS"), CMS, the OIG, or
any person succeeding to the functions of any of the foregoing) promulgated
pursuant to or in connection with any of the foregoing having the force of law,
as each may be amended, supplemented or otherwise modified from time to time.

     "Merger Documents" shall mean the Certificate of Merger to be filed with
the Secretary of State of the State of Delaware and the Agreement of Merger to
be filed with the Secretary of State of the State of California, in each case in
connection with the Acquisition.

                                       19
<PAGE>

     "Mexican Security Documents" shall mean the Pledge Agreement executed by
the Mexican Subsidiary in favor of the Administrative Agent and any other
agreement or instrument executed by the Mexican Subsidiary in connection
therewith, in each case as amended, modified, restated or supplemented from time
to time in accordance with its terms and the terms hereof.

     "Mexican Subsidiary" shall mean Breg Mexico S. de R.L. de C.V., a company
organized under the laws of Mexico.

     "Moody's" shall mean Moody's Investors Service, Inc or any successor rating
agency.

     "Mortgage Instruments" shall mean any mortgage, deed of trust or deed to
secure debt executed by a Credit Party in favor of the Administrative Agent
pursuant to the terms of Section 4.1(f)(i), 5.10 or 5.12, as the same may be
amended, modified, restated or supplemented from time to time.

     "Mortgage Policy" shall mean an ALTA mortgagee title insurance policy
issued by the Title Insurance Company in an amount (limited to 125% of the
appraised value (if an appraisal is available) or, if no appraisal is available,
then 125% of the assessed value) satisfactory to the Administrative Agent, in
form and substance satisfactory to the Administrative Agent.

     "Mortgaged Property" shall mean any owned or leased real property of a
Credit Party with respect to which such Credit Party executes a Mortgage
Instrument in favor of the Administrative Agent.

     "Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

     "Net Cash Proceeds" shall mean the aggregate cash proceeds received by (a)
the Borrower or any of its Subsidiaries in respect of any Asset Disposition,
Debt Issuance or Recovery Event and (b) the Parent, the Borrower or any of the
Borrower's Subsidiaries in respect of any Equity Issuance, in each case net of
(i) direct costs paid or payable as a result thereof (including, without
limitation, reasonable legal, accounting and investment banking fees, and sales
commissions) and (ii) taxes paid or payable as a result thereof; it being
understood that "Net Cash Proceeds" shall include, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration
received by (y) the Borrower or any of its Subsidiaries in respect of such Asset
Disposition, Equity Issuance, Debt Issuance or Recovery Event and (z) the Parent
in respect of any Equity Issuance.

     "Non-U.S. Subsidiary" shall mean any Subsidiary that is not a U.S.
Subsidiary.

     "Note" or "Notes" shall mean the Revolving Notes, the Swingline Note and/or
the Term Notes, collectively, separately or individually, as appropriate.

     "Notice of Borrowing" shall have the meaning set forth in Section
2.1(b)(i).

                                       20
<PAGE>

     "Notice of Conversion/Extension" shall have the meaning set forth in
Section 2.10.

     "Obligations" shall mean, collectively, Loans and LOC Obligations.

     "OIG" shall mean the Office of the Inspector General for the United States
Department of Health and Human Services.

     "OIG Settlement Costs" shall mean those costs incurred by the Parent or its
Subsidiaries under the settlement agreement with CHAMPUS/Tricare in connection
with the OIG's investigation of the Parent's billings to federal and state
healthcare programs for the off-label use of the Parent's FDA approved pulsed
electronic magnetic field device.

     "Orthofix Holdings" shall mean Orthofix Holdings, Inc., a subsidiary of the
Borrower organized under the laws of Delaware.

     "Orthofix Holdings Contribution Agreement" shall mean the contribution
agreement between Orthofix Holdings and the Borrower, dated as of the Closing
Date.

     "Orthofix Holdings Pledge Agreement" shall mean the Pledge Agreement dated
as of the Closing Date executed by Orthofix Holdings in favor of the
Administrative Agent, as amended, modified, restated or supplemented from time
to time in accordance with its terms and the terms hereof.

     "Orthofix Inc." shall mean Orthofix Inc., a Minnesota corporation.

     "Parent" shall have the meaning set forth in the first paragraph of this
Agreement.

     "Parent Intercompany Loan" shall mean that certain unsecured, subordinated
intercompany loan from the Parent to Orthofix Holdings in connection with the
consummation of the Acquisition in an aggregate principal amount not to exceed
$35,561,835.

     "Parent Leverage Ratio" shall mean, with respect to the Parent and its
Subsidiaries on a consolidated basis for the twelve-month period ending on the
last day of any fiscal quarter of the Parent, the ratio of (a) Funded Debt of
the Parent and its Subsidiaries on a consolidated basis on the last day of such
period to (b) Consolidated Parent EBITDA for such period.

     "Participant" shall have the meaning set forth in Section 9.6(b).

     "Participation Interest" shall mean the purchase by a Revolving Lender of a
participation interest in Letters of Credit as provided in Section 2.3 and in
Swingline Loans as provided in Section 2.4.

     "Patent License" shall mean any agreement, whether written or oral,
providing for the grant by or to the Borrower or any of its Subsidiaries of any
right to manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 3.16.

                                       21
<PAGE>

     "Patents" shall mean (a) all patents of the United States or any other
country and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Schedule 3.16, and (b) all applications for patents
of the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any thereof
referred to in Schedule 3.16.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

     "Permitted Acquisition" shall mean any acquisition or any series of related
acquisitions by the Borrower or a Subsidiary Guarantor of the assets or a
majority of the Voting Stock or equity interests of a Person that is
incorporated, formed or organized in the United States, including any of its
territories or commonwealths, or any division, line of business or other
business unit of a Person that is incorporated, formed or organized in the
United States, including any of its territories or commonwealths (such Person or
such division, line of business or other business unit of such Person referred
to herein as the "Target"), in each case that is a type of business (or assets
used in a type of business) permitted to be engaged in by the Borrower and the
Subsidiary Guarantors pursuant to this Credit Agreement, so long as (a) no
Default or Event of Default shall then exist or would exist after giving effect
thereto, (b) the Administrative Agent, on behalf of the Lenders, shall have
received (or shall receive in connection with the closing of such acquisition),
a first priority perfected security interest in all property with such
exceptions as approved by the Administrative Agent (including, without
limitation, Capital Stock or equity interests) acquired with respect to the
Target and the Target, if a Person, shall have executed a Joinder Agreement, (c)
such acquisition is not a "hostile" acquisition and has been approved by the
board of directors and/or shareholders (or comparable persons or groups) of the
Borrower or the applicable Subsidiary Guarantor and the Target, (d) after giving
effect to such acquisition, there shall be at least $5,000,000 of borrowing
availability under the Revolving Committed Amount, (e) the Administrative Agent
shall have received a certificate from a Responsible Officer of the Borrower
certifying that, in the reasonable judgment of the Borrower, the Borrower and
the Subsidiary Guarantors have conducted such financial, legal, environmental
and consulting due diligence with respect to the Target as a substantially
similarly situated prudent purchaser acquiring substantially similar property
and/or assets would customarily conduct, (f) the total consideration (including,
without limitation, cash, Capital Stock, assumed Indebtedness, earnout payments
and any other deferred payment) paid for the Target acquired in such acquisition
or series of related acquisitions shall not exceed $15,000,000 for any
individual acquisition (or series of related acquisitions), $25,000,000 in the
aggregate for all acquisitions during any four fiscal quarter period, or
$50,000,000 in the aggregate during the Commitment Period and (g) to the extent
the total consideration of any Permitted Acquisition is in excess of $5,000,000
or the Borrower requests a Revolving Loan to fund such Permitted Acquisition,
the Borrower and the Subsidiary Guarantors shall provide not less than twenty
(20) Business Days prior to the consummation of such Permitted Acquisition (i) a
reasonably detailed description of the material terms of such Permitted
Acquisition (including, without limitation, the purchase price and method and
structure of payment) and of each Target, (ii) to the extent available,
financial statements of the Target for the previous two years and year-to-date
financial statements of the Target, and (iii) a certificate, in form and
substance reasonably satisfactory to

                                       22
<PAGE>

the Administrative Agent, executed by a Responsible Officer of the Borrower (A)
setting forth the best good faith estimate of the total consideration
(including, without limitation, cash, Capital Stock, assumed Indebtedness,
earnout payments and any other deferred payment) to be paid for each Target, and
(B) certifying that such Permitted Acquisition complies with the requirements of
this Credit Agreement and (z) certifying and demonstrating that after giving
effect to such Permitted Acquisition and any borrowings in connection therewith
on a Pro Forma Basis, the Borrower and its Subsidiaries will be in compliance
with the financial covenants set forth in Section 5.9.

     "Permitted Investments" shall mean:

          (a) cash and Cash Equivalents;

          (b) receivables owing to the Borrower or any of its Subsidiaries or
     any receivables and advances to suppliers, in each case if created,
     acquired or made in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms;

          (c) Investments (including, without limitation, the purchase or
     ownership of Capital Stock) by any Credit Party in any other Credit Party
     (other than the Parent) and Subordinated Indebtedness owing by any Credit
     Party to any other Credit Party (other than the Parent);

          (d) the Parent Intercompany Loan;

          (e) loans and advances to officers, directors, employees and
     Affiliates in the ordinary course of business in an aggregate amount not to
     exceed $500,000 at any time outstanding;

          (f) Investments (including debt obligations) received in connection
     with the bankruptcy or reorganization of suppliers and customers and in
     settlement of delinquent obligations of, and other disputes with, customers
     and suppliers arising in the ordinary course of business;

          (g) Investments, acquisitions or transactions permitted under Section
     6.4(b);

          (h) Permitted Acquisitions;

          (i) Hedging Agreements to the extent permitted pursuant to Section
     6.1(e); and

          (j) additional loan advances and/or Investments of a nature not
     contemplated by the foregoing clauses hereof; provided that such loans,
     advances and/or Investments made pursuant to this clause (j) shall not
     exceed an aggregate amount of $500,000.

                                       23
<PAGE>

          "Permitted Liens" shall mean:

          (a) Liens created by or otherwise existing, under or in connection
     with this Agreement or the other Credit Documents in favor of the
     Administrative Agent and each other Secured Party;

          (b) Liens securing purchase money Indebtedness and Capital Lease
     Obligations to the extent permitted under Section 6.1(c), including Liens
     existing on any asset at the time of acquisition pursuant to a Permitted
     Acquisition (other than any such Liens created in contemplation of such
     acquisition that do not secure the purchase price); provided that (i) any
     such Lien attaches to such property concurrently with or within thirty (30)
     days after the acquisition thereof and (ii) such Lien attaches solely to
     the property so acquired in such transaction;

          (c) Liens for taxes, assessments, charges or other governmental levies
     not yet due or as to which the period of grace (not to exceed 60 days), if
     any, related thereto has not expired or which are being contested in good
     faith by appropriate proceedings; provided that adequate reserves with
     respect thereto are maintained on the books of the Borrower or any of its
     Subsidiaries, as the case may be, in conformity with GAAP;

          (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
     or other like Liens arising in the ordinary course of business which are
     not overdue for a period of more than sixty (60) days or which are being
     contested in good faith by appropriate proceedings;

          (e) pledges or deposits in connection with workers' compensation,
     unemployment insurance and other social security legislation and deposits
     securing liability to insurance carriers under insurance or self-insurance
     arrangements incurred in the ordinary course of business;

          (f) deposits to secure the performance of bids, trade contracts (other
     than for borrowed money), leases, statutory obligations, surety and appeal
     bonds, performance bonds and other obligations of a like nature incurred in
     the ordinary course of business;

          (g) any extension, renewal or replacement (or successive extensions,
     renewals or replacements), in whole or in part, of any Lien referred to in
     the foregoing clauses; provided that such extension, renewal or replacement
     Lien shall be limited to all or a part of the property which secured the
     Lien so extended, renewed or replaced;

          (h) Liens in favor of a Hedging Agreement Provider in connection with
     any Secured Hedging Agreement, but only (i) to the extent such Liens are on
     the Collateral and are shared ratably with the Administrative Agent and
     (ii) if such Hedging Agreement Provider, the Administrative Agent and the
     Lenders shall share the proceeds of the Collateral subject to such Liens in
     accordance with the terms of Section 2.12(b);

                                       24
<PAGE>

          (i) Liens existing on the Closing Date and set forth on Schedule
     1.1-3; provided that (i) no such Lien shall at any time be extended to
     cover property or assets other than the property or assets subject thereto
     on the Closing Date and (ii) the principal amount of the Indebtedness
     secured by such Liens shall not be extended, renewed, refunded or
     refinanced;

          (j) easements, rights-of-way, restrictions (including zoning
     restrictions), minor defects or irregularities in title and other similar
     charges or encumbrances shown on any Mortgage Policy or not, in any
     material respect, impairing the use of the encumbered Property for its
     intended purposes; and

          (iii) Liens on equipment arising from precautionary UCC financing
     statements relating to the lease of such equipment to the extent permitted
     by this Agreement.

     "Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.

     "Plan" shall mean, at any particular time, any employee benefit plan which
is covered by Title IV of ERISA and in respect of which any Credit Party or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.

     "Pledge Agreement" shall mean the pledge agreement dated as of the Closing
Date executed by the Borrower and its Subsidiaries in favor of the
Administrative Agent, as amended, modified, restated or supplemented from time
to time in accordance with its terms and the terms hereof.

     "Prime Rate" shall have the meaning set forth in the definition of
"Alternate Base Rate".

     "Pro Forma Basis" shall mean, with respect to any transaction, that such
transaction shall be deemed to have occurred as of the first day of the
twelve-month period ending as of the most recent month end ending at least
twenty (20) days preceding the date of such transaction.

     "Properties" shall have the meaning set forth in Section 3.10(a).

     "Purchase Agreement" shall mean the Acquisition Agreement dated as of
November 20, 2003, among the Parent, Trevor Acquisition, Inc., a Delaware
company, the Acquired Company and Bradley R. Mason, as the representative
shareholders of the Acquired Company.

     "Purchasing Lenders" shall have the meaning set forth in Section 9.6(c).

     "Qualified Lender" shall mean a Treaty Lender or an Eligible UK Lender.

                                       25
<PAGE>

     "Recovery Event" shall mean the receipt by the Borrower or any Subsidiary
Guarantor of any cash insurance proceeds or condemnation award payable by reason
of theft, loss, physical destruction or damage, taking or similar event with
respect to any Material Property.

     "Register" shall have the meaning set forth in Section 9.6(d).

     "Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.

     "Related Fund" shall mean, with respect to any Lender, any fund or trust or
entity that invests in commercial bank loans in the ordinary course of business
and is advised or managed by (a) such Lender, (b) an Affiliate of such Lender,
(c) any other Lender or any Affiliate thereof or (d) the same investment advisor
as any Person described in clauses (a) - (c).

     "Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under PBGC Reg. ss.4043.

     "Required Lenders" shall mean, at any time, Lenders holding in the
aggregate a majority of (i) the Commitments (and Participation Interests
therein) or (ii) if the Commitments have been terminated, the outstanding Loans
and Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit and of the Swingline Lender in Swingline
Loans); provided, however, that if any Lender shall be a Defaulting Lender at
such time, then there shall be excluded from the determination of Required
Lenders, Obligations (including Participation Interests) owing to such
Defaulting Lender and such Defaulting Lender's Commitments, or after termination
of the Commitments, the principal balance of the Obligations owing to such
Defaulting Lender.

     "Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its Material Property or to which such
Person or any of its Material Property is subject.

     "Responsible Officer" shall mean, as to (a) the Borrower, any of the
President, the Chief Executive Officer or the Chief Financial Officer or the
Treasurer or (b) any other Credit Party, any duly authorized officer thereof.

     "Restricted Payments" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock of
the Borrower or any of its Subsidiaries, now or hereafter outstanding, (b) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding,
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or

                                       26
<PAGE>

hereafter outstanding, (d) any payment with respect to any earnout
obligation, (e) any payment or prepayment of principal of, premium, if any, or
interest on, redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to, any Subordinated Indebtedness or (f) the
payment by the Borrower or any of its Subsidiaries of any management or
consulting fee to any Person or of any salary, bonus or other form of
compensation to any Person who is directly or indirectly a significant partner,
shareholder, owner or executive officer of any such Person, to the extent such
salary, bonus or other form of compensation is either not included in the
corporate overhead of the Borrower or such Subsidiary or, to the extent such
salary, bonus or other form of compensation, is reimbursed by the Parent.

     "Revolving Committed Amount" shall have the meaning set forth in Section
2.1.

     "Revolving Commitment" shall mean, with respect to each Revolving Lender,
the commitment of such Revolving Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to the amount identified as such
Revolving Lender's "Revolving Commitment" on Schedule 2.1(a) or in the Register,
as such amount may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c) or reduced from time to time in
accordance with the provisions hereof.

     "Revolving Commitment Percentage" shall mean, for each Revolving Lender,
the percentage identified as its "Revolving Commitment Percentage" on Schedule
2.1(a) or in the Register, as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section 9.6(c).

     "Revolving Lender" shall mean, as of any date of determination, each Lender
with a Revolving Commitment greater than $0.

     "Revolving Loans" shall have the meaning set forth in Section 2.1.

     "Revolving Note" or "Revolving Notes" shall mean the promissory notes of
the Borrower in favor of each of the Revolving Lenders evidencing the Revolving
Loans provided pursuant to Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time.

     "S&P" shall mean Standard & Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc. or any successor or rating agency.

     "Scheduled Funded Debt Payments" shall mean, as of any date of
determination for the Borrower and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applicable period ending on the
date of determination (including the principal component of payments due on
Capital Leases during the applicable period ending on the date of
determination).

     "Secured Hedging Agreement" shall mean any Hedging Agreement between a
Credit Party and a Hedging Agreement Provider, as amended, modified, restated or
supplemented from time to time in accordance with its terms.

                                       27
<PAGE>

     "Secured Party" shall mean each of the Administrative Agent, the Lenders
and the Hedging Agreement Providers, together with their respective successors
and assigns.

     "Security Agreement" shall mean the security agreement dated as of the
Closing Date executed by the Borrower and the Subsidiary Guarantors in favor of
the Administrative Agent, as amended, modified, restated or supplemented from
time to time in accordance with its terms and the terms hereof.

     "Security Documents" shall mean the Security Agreement, the Pledge
Agreement, the BV II Limited Guaranty and Pledge Agreement, the Mortgage
Instruments, the Mexican Security Documents, the UK Collateral Documents and
such other documents executed and delivered in connection with the grant,
attachment and perfection of the Administrative Agent's security interests and
liens arising thereunder, including, without limitation, UCC financing
statements.

     "Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan.

     "Social Security Act" shall mean the Social Security Act as set forth in
Title 42 of the United States Code, as amended, and any successor statute
thereto, as interpreted by the rules and regulations issued thereunder, in each
case as in effect from time to time. References to sections of the Social
Security Act shall be construed also to refer to any successor sections.

     "Solvent" shall mean, with respect to any Person on any date (a) the fair
saleable value of such Person's assets, measured on a going concern basis,
exceeds all probable liabilities of such Person, including contingent
liabilities and those liabilities to be incurred pursuant to this Credit
Agreement, or (b) such Person (i) does not have unreasonably small capital in
relation to the business in which it is or proposes to be engaged, (ii) has not
incurred, or believes that it will incur after giving effect to the transactions
contemplated by this Credit Agreement, debts beyond its ability to pay such
debts as they become due, (iii) has not suspended making payments on any of its
debts unless subject to a good faith dispute or (iv) by reason of actual or
anticipated financial difficulties, has not commenced negotiations with one or
more of its creditors in order to reschedule the payment of such indebtedness.

     "Subordinated Indebtedness" shall mean any Indebtedness (including, without
limitation, the Parent Intercompany Loan and the Deferred Purchase Agreement)
incurred by any Credit Party that is (a) specifically subordinated in right of
payment to the prior payment of the Credit Party Obligations on terms acceptable
to the Administrative Agent and the Lenders and (b) evidenced by promissory
notes, to the extent such Indebtedness (other than Indebtedness owing in respect
of the Deferred Purchase Agreement) is owed to another Credit Party, which
promissory notes shall be pledged to the Administrative Agent as Collateral for
the Credit Party Obligations.

     "Subsidiary" shall mean (a) as to any Person other than the Borrower, a
corporation, partnership, limited liability company or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of

                                       28
<PAGE>

directors or other managers of such corporation, partnership, limited liability
company or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person, and (b) as to the Borrower, a corporation, partnership,
limited liability company or other entity of which shares or stock or other
ownership interest of at least a 49% interest are at the time owned directly or
indirectly through one or more intermediaries, or both, by the Borrower;
provided, however, Levtech Inc. shall not be considered a "Subsidiary"
hereunder. Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.

     "Subsidiary Guarantor" shall have the meaning set forth in the first
paragraph of this Agreement.

     "Survey" shall mean any maps or plats of an as-built survey of the site of
a Mortgaged Property, which maps or plats and the surveys on which they are
based shall be sufficient to delete any standard printed survey exception
contained in the applicable title policy and be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys the
following: (a) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines; (b) the lines of
streets abutting the sites and width thereof; (c) all access and other easements
appurtenant to the sites necessary to use the sites; (d) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (e) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (f) if the site is described as being on a filed
map, a legend relating the survey to said map.

     "Swingline Commitment" shall mean the commitment of the Swingline Lender to
make Swingline Loans in an aggregate principal amount at any time outstanding up
to the Swingline Committed Amount, and the commitment of the Revolving Lenders
to purchase participation interests in the Swingline Loans as provided in
Section 2.4(b)(ii), as such amounts may be reduced from time to time in
accordance with the provisions hereof.

     "Swingline Committed Amount" shall have the meaning set forth in Section
2.4(a).

     "Swingline Lender" shall mean Wachovia.

     "Swingline Loan" or "Swingline Loans" shall have the meaning set forth in
Section 2.4(a).

     "Swingline Note" shall mean the promissory note of the Borrower in favor of
the Swingline Lender evidencing the Swingline Loans provided pursuant to Section
2.4(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.

                                       29
<PAGE>

     "Syndication Agent" shall have the meaning set forth in the first paragraph
of this Agreement and any successors in such capacity.

     "Target" shall have the meaning set forth in the definition of "Permitted
Acquisition".

     "Taxes" shall have the meaning set forth in Section 2.18.

     "Term Loan" shall have the meaning set forth in Section 2.2(a).

     "Term Loan Commitment" shall mean, with respect to each Term Loan Lender,
the commitment of such Term Loan Lender to make its portion of the Term Loan in
a principal amount equal to such Term Loan Lender's Term Loan Commitment
Percentage of the Term Loan Committed Amount (and for purposes of making
determinations of Required Lenders hereunder after the Closing Date, the
principal amount outstanding on the Term Loan).

     "Term Loan Commitment Percentage" shall mean, for any Term Loan Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule 2.1(a),
as such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c).

     "Term Loan Committed Amount" shall have the meaning set forth in Section
2.2(a).

     "Term Loan Lender" shall mean, as of any date of determination, each Lender
that holds a portion of the outstanding Term Loan.

     "Term Note" or "Term Notes" shall mean the promissory notes of the Borrower
in favor of each of the Term Loan Lenders evidencing the portion of the Term
Loan provided pursuant to Section 2.2(d), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.

     "Title Insurance Company" shall mean Chicago Title Insurance Company or any
other title insurance company approved by the Administrative Agent.

     "Trademark License" shall means any agreement, written or oral, providing
for the grant by or to the Borrower or any of its Subsidiaries of any right to
use any Trademark, including, without limitation, any thereof referred to in
Schedule 3.16.

     "Trademarks" shall mean (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress and
service marks, logos and other source or business identifiers, and the goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 3.16, and (b) all renewals
thereof, including, without limitation, any thereof referred to in Schedule
3.16.

                                       30
<PAGE>

     "Tranche" shall mean the collective reference to LIBOR Rate Loans whose
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a "LIBOR Tranche".

     "Transfer Effective Date" shall have the meaning set forth in each
Commitment Transfer Supplement.

     "Treaty Lender" means a Lender that is treated as a resident (as such term
is defined in the appropriate double taxation agreement) in a country with which
the United Kingdom has an appropriate double taxation agreement for purposes of
such agreement, which agreement gives residents of that country full exemption
from United Kingdom taxation on interest and such Lender is (subject to
completion of any necessary formalities) entitled to such exemption.

     "TRICARE" means the United States Department of Defense healthcare program
for service families (including TRICARE Prime, TRICARE Extra and TRICARE
Standard), and any successor or predecessor thereof, including without
limitation, CHAMPUS.

     "Type" shall mean, as to any Loan, its nature as an Alternate Base Rate
Loan or LIBOR Rate Loan, as the case may be.

     "UK Collateral Documents" shall mean the IOL Limited Guaranty and Pledge
Agreement, the Orthofix Holdings Pledge Agreement and the Debentures.

     "U.S." or "United States" shall mean the United States of America.

     "U.S. Subsidiary" shall mean any Subsidiary that is organized and existing
under the laws of the United States or any state or commonwealth thereof or
under the laws of the District of Columbia.

     "Voting Agreement" shall mean the Voting and Subscription Agreement dated
as of November 20, 2003 among the Parent and the "Significant Shareholders" of
the Acquired Company as identified on the signature pages thereto.

     "Voting Stock" shall mean, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
may be or have been suspended by the happening of such a contingency.

     "Wachovia" shall mean Wachovia Bank, National Association, a national
banking association, together with its successors and/or assigns.

     "WCM" shall mean Wachovia Capital Markets, LLC.

     "Works" shall mean all works which are subject to copyright protection
pursuant to Title 17 of the United States Code.

                                       31
<PAGE>

     Section 1.2  Other Definitional Provisions.

          (a) Unless otherwise specified therein, all terms defined in this
     Agreement shall have such defined meanings when used in the Notes or other
     Credit Documents or any certificate or other document made or delivered
     pursuant hereto.

          (b) The words "hereof", "herein" and "hereunder" and words of similar
     import when used in this Agreement shall refer to this Agreement as a whole
     and not to any particular provision of this Agreement, and Section,
     subsection, Schedule and Exhibit references are to this Agreement unless
     otherwise specified.

          (c) The meanings given to terms defined herein shall be equally
     applicable to both the singular and plural forms of such terms.

     Section 1.3  Accounting Terms.

     Unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Parent delivered to the Lenders;
provided that, if the Borrower notifies the Administrative Agent that it wishes
to amend any covenant in Section 5.9 to eliminate the effect of any change in
GAAP on the operation of such covenant (or if the Administrative Agent notifies
the Borrower that the Required Lenders wish to amend Section 5.9 for such
purpose), then the Borrower's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Lenders.

     The Borrower shall deliver to the Administrative Agent and each Lender at
the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (a) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (b) a reasonable estimate of the effect on the financial statements on
account of such changes in application.

     Notwithstanding the above, the parties hereto acknowledge and agree that,
for purposes of all calculations made in determining compliance for any
applicable period with the financial covenants set forth in Section 5.9
(including without limitation for purposes of the definition of "Pro Forma
Basis" set forth in Section 1.1), after consummation of any Permitted
Acquisition, (i) income statement items and other balance sheet items (whether
positive or negative) attributable to the Target acquired in such transaction
shall be included in such calculations to the extent relating to such applicable
period, and (ii) Indebtedness of a Target that is retired in connection with a
Permitted Acquisition shall be excluded from such calculations and deemed to
have been retired as of the first day of such applicable period, in each case in
accordance with

                                       32
<PAGE>

Regulation S-X under the Securities Act of 1933, as amended, applicable to a
Registration Statement under such Act on Form S-1.

                                   ARTICLE II

                           THE LOANS; AMOUNT AND TERMS

     Section 2.1  Revolving Loans.

          (a) Revolving Commitment. During the Commitment Period, subject to the
     terms and conditions hereof, each Revolving Lender severally, but not
     jointly, agrees to make revolving credit loans ("Revolving Loans") to the
     Borrower from time to time in an aggregate principal amount of up to
     FIFTEEN Million DOLLARS ($15,000,000) (as such aggregate maximum amount may
     be reduced from time to time as provided in Section 2.6, the "Revolving
     Committed Amount") for the purposes hereinafter set forth; provided,
     however, that (i) with regard to each Revolving Lender individually, the
     sum of such Revolving Lender's Revolving Commitment Percentage of
     outstanding Revolving Loans plus such Revolving Lender's Revolving
     Commitment Percentage of outstanding Swingline Loans plus such Revolving
     Lender's Revolving Commitment Percentage of LOC Obligations shall not
     exceed such Revolving Lender's Revolving Commitment and (ii) with regard to
     the Revolving Lenders collectively, the sum of the outstanding Revolving
     Loans plus outstanding Swingline Loans plus LOC Obligations shall not
     exceed the Revolving Committed Amount. Revolving Loans may consist of
     Alternate Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as
     the Borrower may request, and may be repaid and reborrowed in accordance
     with the provisions hereof; provided, however, Revolving Loans made on the
     Closing Date or on any of the three (3) Business Days following the Closing
     Date may only consist of Alternate Base Rate Loans. LIBOR Rate Loans shall
     be made by each Revolving Lender at its LIBOR Lending Office and Alternate
     Base Rate Loans at its Domestic Lending Office.

          (b) Revolving Loan Borrowings.

               (i) Notice of Borrowing. The Borrower shall request a Revolving
          Loan borrowing by written notice (a "Notice of Borrowing")
          substantially in the form of the notice attached as Schedule 2.1(b)(i)
          (or telephone notice promptly confirmed by delivery to the
          Administrative Agent of a Notice of Borrowing by fax or other
          electronic notice with confirmed receipt from the recipient) to the
          Administrative Agent not later than 12:00 Noon. (Charlotte, North
          Carolina time) on the Business Day of the requested borrowing in the
          case of Alternate Base Rate Loans, and on the third Business Day prior
          to the date of the requested borrowing in the case of LIBOR Rate
          Loans. Each such request for borrowing shall be irrevocable and shall
          specify (A) that a Revolving Loan is requested, (B) the date of the
          requested borrowing (which shall be a Business Day), (C) the aggregate
          principal amount to be borrowed, (D) whether the borrowing shall be
          comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a
          combination

                                       33
<PAGE>

          thereof, and if LIBOR Rate Loans are requested, the Interest Period(s)
          therefore. If the Borrower shall fail to specify in any such Notice of
          Borrowing (I) an applicable Interest Period in the case of a LIBOR
          Rate Loan, then such notice shall be deemed to be a request for an
          Interest Period of one month, or (II) the type of Revolving Loan
          requested, then such notice shall be deemed to be a request for an
          Alternate Base Rate Loan hereunder. The Administrative Agent shall
          give notice to each Revolving Lender promptly upon receipt of each
          Notice of Borrowing, of the contents thereof and each such Revolving
          Lender's share thereof.

               (ii) Minimum Amounts. Each Revolving Loan shall be in a minimum
          aggregate amount of $1,000,000 and in integral multiples of $500,000
          in excess thereof (or the remaining amount of the Revolving Committed
          Amount, if less).

               (iii) Advances. Each Revolving Lender will make its Revolving
          Commitment Percentage of each Revolving Loan borrowing available to
          the Administrative Agent for the account of the Borrower at the office
          of the Administrative Agent specified in Section 9.2, or at such other
          office as the Administrative Agent may designate in writing, by 2:00
          P.M. (Charlotte, North Carolina time) on the date specified in the
          applicable Notice of Borrowing in Dollars and in funds immediately
          available to the Administrative Agent. Such borrowing will then be
          made available to the Borrower by the Administrative Agent by
          crediting the account of the Borrower designated in the Account
          Designation Letter (or as otherwise agreed by the Borrower and the
          Administrative Agent) with the aggregate of the amounts made available
          to the Administrative Agent by the Revolving Lenders and in like funds
          as received by the Administrative Agent.

          (c) Repayment. The principal amount of all Revolving Loans shall be
     due and payable in full on the Maturity Date, unless accelerated sooner
     pursuant to Section 7.2.

          (d) Interest. Subject to the provisions of Section 2.9, Revolving
     Loans shall bear interest as follows:

               (i) Alternate Base Rate Loans. During such periods as Revolving
          Loans shall be comprised of Alternate Base Rate Loans, each such
          Alternate Base Rate Loan shall bear interest at a per annum rate equal
          to the sum of the Alternate Base Rate plus the Applicable Percentage;
          and

               (ii) LIBOR Rate Loans. During such periods as Revolving Loans
          shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan
          shall bear interest at a per annum rate equal to the sum of the LIBOR
          Rate plus the Applicable Percentage.

     Interest on Revolving Loans shall be payable in arrears on each Interest
     Payment Date.

                                       34
<PAGE>

          (e) Revolving Notes. Each Revolving Lender's Revolving Commitment
     shall be evidenced by a duly executed promissory note of the Borrower to
     such Revolving Lender in substantially the form of Schedule 2.1(e).

     Section 2.2  Term Loan Facility.

          (a) Term Loan. Subject to the terms and conditions hereof and in
     reliance upon the representations and warranties set forth herein, each
     Term Loan Lender severally agrees to make available to the Borrower on the
     Closing Date, by transfer of funds as directed by the Administrative Agent
     to the Borrower's account set forth in the Account Designation Letter, such
     Term Loan Lender's Term Loan Commitment Percentage of a term loan in
     Dollars (the "Term Loan") in the aggregate principal amount of ONE HUNDRED
     TEN MILLION DOLLARS ($110,000,000) (the "Term Loan Committed Amount") for
     the purposes hereinafter set forth. The Term Loan may consist of Alternate
     Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as the
     Borrower may request; provided that on the Closing Date the Term Loan shall
     only consist of Alternate Base Rate Loans. Amounts repaid or prepaid on the
     Term Loan may not be reborrowed.

          (b) Repayment of Term Loan. The principal amount of the Term Loan
     shall be repaid in twenty (20) consecutive quarterly installments as
     follows, unless accelerated sooner pursuant to Section 7.2:

===============================================================================
      Principal Amortization                         Term Loan
           Payment Date                     Principal Amortization Payment
-------------------------------------------------------------------------------
          March 31, 2004                             $2,750,000
-------------------------------------------------------------------------------
           June 30, 2004                             $2,750,000
-------------------------------------------------------------------------------
        September 30, 2004                           $2,750,000
-------------------------------------------------------------------------------
         December 31, 2004                           $2,750,000
-------------------------------------------------------------------------------
          March 31, 2005                             $2,750,000
-------------------------------------------------------------------------------
           June 30, 2005                             $2,750,000
-------------------------------------------------------------------------------
        September 30, 2005                           $2,750,000
-------------------------------------------------------------------------------
         December 31, 2005                           $2,750,000
-------------------------------------------------------------------------------
          March 31, 2006                             $2,750,000
-------------------------------------------------------------------------------
           June 30, 2006                             $2,750,000
-------------------------------------------------------------------------------
        September 30, 2006                           $2,750,000
-------------------------------------------------------------------------------
         December 31, 2006                           $2,750,000
-------------------------------------------------------------------------------
          March 31, 2007                             $2,750,000
-------------------------------------------------------------------------------

                                       35
<PAGE>

===============================================================================
      Principal Amortization                         Term Loan
           Payment Date                     Principal Amortization Payment
-------------------------------------------------------------------------------
           June 30, 2007                             $2,750,000
-------------------------------------------------------------------------------
        September 30, 2007                           $2,750,000
-------------------------------------------------------------------------------
         December 31, 2007                           $2,750,000
-------------------------------------------------------------------------------
          March 31, 2008                            $16,500,000
-------------------------------------------------------------------------------
           June 30, 2008                            $16,500,000
-------------------------------------------------------------------------------
        September 30, 2008                          $16,500,000
-------------------------------------------------------------------------------
           Maturity Date                            $16,500,000
----------------------------------- -------------------------------------------

          (c) Interest on the Term Loan. Subject to the provisions of Section
     2.9, the Term Loan shall bear interest as follows:

               (i) Alternate Base Rate Loans. During such periods as the Term
          Loan shall be comprised of Alternate Base Rate Loans, each such
          Alternate Base Rate Loan shall bear interest at a per annum rate equal
          to the sum of the Alternate Base Rate plus the Applicable Percentage;
          and

               (ii) LIBOR Rate Loans. During such periods as the Term Loan shall
          be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear
          interest at a per annum rate equal to the sum of the LIBOR Rate plus
          the Applicable Percentage.

          Interest on the Term Loan shall be payable in arrears on each Interest
          Payment Date.

          (d) Term Notes. Each Term Loan Lender's Term Loan Commitment
     Percentage of the Term Loan Committed Amount shall be evidenced by a duly
     executed promissory note of the Borrower to such Term Loan Lender in
     substantially the form of Schedule 2.2(d).

     Section 2.3  Letter of Credit Subfacility.

          (a) Issuance. Subject to the terms and conditions hereof and of the
     LOC Documents, if any, and any other terms and conditions which the Issuing
     Lender may reasonably require, during the Commitment Period the Issuing
     Lender shall issue, and the Revolving Lenders shall participate in, Letters
     of Credit for the account of the Borrower from time to time upon request in
     a form acceptable to the Issuing Lender; provided, however, that (i) the
     aggregate amount of LOC Obligations shall not at any time exceed FIVE
     MILLION DOLLARS ($5,000,000) (the "LOC Committed Amount"), (ii) the sum of
     outstanding Revolving Loans plus outstanding Swingline Loans plus LOC
     Obligations shall not at any time exceed the Revolving Committed Amount,
     (iii) all

                                       36
<PAGE>

     Letters of Credit shall be denominated in U.S. Dollars and (iv) Letters of
     Credit shall be issued for lawful corporate purposes and may be issued as
     standby letters of credit, including in connection with workers'
     compensation and other insurance programs. Except as otherwise expressly
     agreed upon by all the Revolving Lenders, no Letter of Credit shall have an
     original expiry date more than twelve (12) months from the date of
     issuance; provided, however, so long as no Default or Event of Default has
     occurred and is continuing and subject to the other terms and conditions to
     the issuance of Letters of Credit hereunder, the expiry dates of Letters of
     Credit may be extended annually or periodically from time to time at the
     request of the Borrower or by operation of the terms of the applicable
     Letter of Credit to a date not more than twelve (12) months from the date
     of extension; provided, further, that no Letter of Credit, as originally
     issued or as extended, shall have an expiry date extending beyond the
     Maturity Date. Each Letter of Credit shall comply with the related LOC
     Documents. The issuance and expiry date of each Letter of Credit shall be a
     Business Day. Any Letters of Credit issued hereunder shall be in a minimum
     original face amount of $100,000. Wachovia shall be the Issuing Lender on
     all Letters of Credit issued on or after the Closing Date. In the event and
     to the extent that the provisions of any LOC Document shall conflict with
     this Agreement, the provisions of this Agreement shall govern. The Issuing
     Lender shall make any Letter of Credit issued hereunder available to the
     Borrower at its office referred to in Section 9.2 or as otherwise agreed
     with the Borrower in connection with such issuance.

          (b) Notice and Reports. The request for the issuance of a Letter of
     Credit shall be submitted to the Issuing Lender at least five (5) Business
     Days prior to the requested date of issuance. The Issuing Lender will
     promptly upon request provide to the Administrative Agent for dissemination
     to the Revolving Lenders a detailed report specifying the Letters of Credit
     which are then issued and outstanding and any activity with respect thereto
     which may have occurred since the date of any prior report, and including
     therein, among other things, the account party, the beneficiary, the face
     amount, expiry date as well as any payments or expirations which may have
     occurred.

          (c) Participations. Each Revolving Lender upon issuance of a Letter of
     Credit shall be deemed to have purchased without recourse a risk
     participation from the Issuing Lender in such Letter of Credit and the
     obligations arising thereunder and any collateral relating thereto, in each
     case in an amount equal to its Revolving Commitment Percentage of the
     obligations under such Letter of Credit and shall absolutely,
     unconditionally and irrevocably assume, as primary obligor and not as
     surety, and be obligated to pay to the Issuing Lender therefore and
     discharge when due, its Revolving Commitment Percentage of the obligations
     arising under such Letter of Credit. Without limiting the scope and nature
     of each Revolving Lender's participation in any Letter of Credit, to the
     extent that the Issuing Lender has not been reimbursed as required
     hereunder or under any LOC Document, each such Revolving Lender shall pay
     to the Issuing Lender its Revolving Commitment Percentage of such
     unreimbursed drawing in same day funds on the day of notification by the
     Issuing Lender of an unreimbursed drawing pursuant to the provisions of
     subsection (d) hereof. The obligation of each Revolving Lender to so
     reimburse the Issuing Lender shall be absolute and unconditional and shall
     not be affected by the occurrence of a Default, an Event of Default or any
     other

                                       37
<PAGE>

     occurrence or event. Any such reimbursement shall not relieve or otherwise
     impair the obligation of the Borrower to reimburse the Issuing Lender under
     any Letter of Credit, together with interest as hereinafter provided.

          (d) Reimbursement. In the event of any drawing under any Letter of
     Credit, the Issuing Lender will promptly notify the Borrower and the
     Administrative Agent. The Borrower shall reimburse the Issuing Lender on
     the day of drawing under any Letter of Credit (with the proceeds of a
     Revolving Loan obtained hereunder or otherwise) in same day funds as
     provided herein or in the LOC Documents. If the Borrower shall fail to
     reimburse the Issuing Lender as provided herein, the unreimbursed amount of
     such drawing shall bear interest at a per annum rate equal to the Alternate
     Base Rate plus the Applicable Percentage for Revolving Loans that are
     Alternate Base Rate Loans plus two percent (2%). Unless the Borrower shall
     promptly notify the Issuing Lender and the Administrative Agent of its
     intent to otherwise reimburse the Issuing Lender, the Borrower shall be
     deemed to have requested a Revolving Loan in the amount of the drawing as
     provided in subsection (e) hereof, the proceeds of which will be used to
     satisfy the reimbursement obligations. The Borrower's reimbursement
     obligations hereunder shall be absolute and unconditional under all
     circumstances irrespective of any rights of set-off, counterclaim or
     defense to payment the Borrower may claim or have against the Issuing
     Lender, the Administrative Agent, the Lenders, the beneficiary of the
     Letter of Credit drawn upon or any other Person, including without
     limitation any defense based on any failure of the Borrower to receive
     consideration or the legality, validity, regularity or unenforceability of
     the Letter of Credit. The Issuing Lender will promptly notify the other
     Revolving Lenders of the amount of any unreimbursed drawing and each
     Revolving Lender shall promptly pay to the Administrative Agent for the
     account of the Issuing Lender in Dollars and in immediately available
     funds, the amount of such Revolving Lender's Revolving Commitment
     Percentage of such unreimbursed drawing. Such payment shall be made on the
     day such notice is received by such Revolving Lender from the Issuing
     Lender if such notice is received at or before 2:00 P.M. (Charlotte, North
     Carolina time), otherwise such payment shall be made at or before 12:00
     Noon (Charlotte, North Carolina time) on the next succeeding Business Day.
     If such Revolving Lender does not pay such amount to the Issuing Lender in
     full upon such request, such Revolving Lender shall, on demand, pay to the
     Administrative Agent for the account of the Issuing Lender interest on the
     unpaid amount during the period from the date of such drawing until such
     Revolving Lender pays such amount to the Issuing Lender in full at a rate
     per annum equal to, if paid within two (2) Business Days of the date of
     drawing, the Federal Funds Effective Rate and thereafter at a rate equal to
     the Alternate Base Rate. Each Revolving Lender's obligation to make such
     payment to the Issuing Lender, and the right of the Issuing Lender to
     receive the same, shall be absolute and unconditional, shall not be
     affected by any circumstance whatsoever and without regard to the
     termination of this Agreement or the Commitments hereunder, the existence
     of a Default or Event of Default or the acceleration of the Credit Party
     Obligations hereunder and shall be made without any offset, abatement,
     withholding or reduction whatsoever.

                                       38
<PAGE>

          (e) Repayment with Revolving Loans. On any day on which the Borrower
     shall have requested, or been deemed to have requested, a Revolving Loan to
     reimburse a drawing under a Letter of Credit, the Administrative Agent
     shall give notice to the Revolving Lenders that a Revolving Loan has been
     requested or deemed requested in connection with a drawing under a Letter
     of Credit, in which case a Revolving Loan borrowing comprised entirely of
     Alternate Base Rate Loans (each such borrowing, a "Mandatory Borrowing")
     shall be immediately made (without giving effect to any termination of the
     Commitments pursuant to Section 7.2) pro rata based on each Revolving
     Lender's respective Revolving Commitment Percentage (determined before
     giving effect to any termination of the Commitments pursuant to Section
     7.2) and the proceeds thereof shall be paid directly to the Issuing Lender
     for application to the respective LOC Obligations. Each Revolving Lender
     hereby irrevocably agrees to make such Revolving Loans immediately upon any
     such request or deemed request on account of each Mandatory Borrowing in
     the amount and in the manner specified in the preceding sentence and on the
     same such date notwithstanding (i) the amount of Mandatory Borrowing may
     not comply with the minimum amount for borrowings of Revolving Loans
     otherwise required hereunder, (ii) whether any conditions specified in
     Section 4.2 are then satisfied, (iii) whether a Default or an Event of
     Default then exists, (iv) failure for any such request or deemed request
     for Revolving Loan to be made by the time otherwise required in Section
     2.1(b), (v) the date of such Mandatory Borrowing, or (vi) any reduction in
     the Revolving Committed Amount after any such Letter of Credit may have
     been drawn upon; provided, however, that in the event any such Mandatory
     Borrowing should be less than the minimum amount for borrowings of
     Revolving Loans otherwise provided in Section 2.1(b)(ii), the Borrower
     shall pay to the Administrative Agent for its own account an administrative
     fee of $500. In the event that any Mandatory Borrowing cannot for any
     reason be made on the date otherwise required above (including, without
     limitation, as a result of the commencement of a proceeding under the
     Bankruptcy Code), then each such Revolving Lender hereby agrees that it
     shall forthwith fund (as of the date the Mandatory Borrowing would
     otherwise have occurred, but adjusted for any payments received from the
     Borrower on or after such date and prior to such purchase) its
     Participation Interests in the LOC Obligations; provided, further, that in
     the event any Revolving Lender shall fail to fund its Participation
     Interest on the day the Mandatory Borrowing would otherwise have occurred,
     then the amount of such Revolving Lender's unfunded Participation Interest
     therein shall bear interest payable by such Revolving Lender to the Issuing
     Lender upon demand, at the rate equal to, if paid within two (2) Business
     Days of such date, the Federal Funds Effective Rate, and thereafter at a
     rate equal to the Alternate Base Rate.

          (f) Modification, Extension. The issuance of any supplement,
     modification, amendment, renewal, or extension to any Letter of Credit
     shall, for purposes hereof, be treated in all respects the same as the
     issuance of a new Letter of Credit hereunder.

          (g) Uniform Customs and Practices. The Issuing Lender shall have the
     Letters of Credit be subject to The Uniform Customs and Practice for
     Documentary Credits, as published by the International Chamber of Commerce
     (the "UCP") as of the

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<PAGE>

     date of issue, in which case the UCP may be incorporated therein and deemed
     in all respects to be a part thereof.

     Section 2.4  Swingline Loan Subfacility.

          (a) Swingline Commitment. During the Commitment Period, subject to the
     terms and conditions hereof, the Swingline Lender, in its individual
     capacity, agrees to make certain revolving credit loans to the Borrower
     (each a "Swingline Loan" and, collectively, the "Swingline Loans") for the
     purposes hereinafter set forth; provided, however, (i) the aggregate amount
     of Swingline Loans outstanding at any time shall not exceed FIVE MILLION
     DOLLARS ($5,000,000) (the "Swingline Committed Amount"), and (ii) the sum
     of the outstanding Revolving Loans plus outstanding Swingline Loans plus
     LOC Obligations shall not exceed the Revolving Committed Amount. Swingline
     Loans hereunder may be repaid and reborrowed in accordance with the
     provisions hereof.

          (b) Swingline Loan Borrowings.

               (i) Notice of Borrowing and Disbursement. The Swingline Lender
          will make Swingline Loans available to the Borrower by crediting the
          account of the Borrower designated in the Account Designation Letter
          (or as otherwise agreed between the Borrower and the Administrative
          Agent) on any Business Day upon request made by the Borrower through
          the delivery of a Notice of Borrowing (with appropriate modifications)
          to the Administrative Agent and the Swingline Lender not later than
          2:00 P.M. (Charlotte, North Carolina time) on such Business Day.
          Swingline Loan borrowings hereunder shall be made in minimum amounts
          of $100,000 and in integral amounts of $100,000 in excess thereof.

               (ii) Repayment of Swingline Loans. Each Swingline Loan borrowing
          shall be due and payable on the Maturity Date. The Swingline Lender
          may, at any time, in its sole discretion, by written notice to the
          Borrower and the Administrative Agent, demand repayment of its
          Swingline Loans by way of a Revolving Loan borrowing, in which case
          the Borrower shall be deemed to have requested a Revolving Loan
          borrowing comprised entirely of Alternate Base Rate Loans in the
          amount of such Swingline Loans; provided, however, that, in the
          following circumstances, any such demand shall also be deemed to have
          been given one Business Day prior to each of (A) the Maturity Date,
          (B) the occurrence of any Event of Default described in Section
          7.1(e), (C) upon acceleration of the Credit Party Obligations
          hereunder, whether on account of an Event of Default described in
          Section 7.1(e) or any other Event of Default, and (D) the exercise of
          remedies in accordance with the provisions of Section 7.2 hereof (each
          such Revolving Loan borrowing made on account of any such deemed
          request therefore as provided herein being hereinafter referred to as
          "Mandatory Borrowing"). Each Revolving Lender hereby irrevocably
          agrees to make such Revolving Loans promptly upon any such request or
          deemed request on account

                                       40
<PAGE>

          of each Mandatory Borrowing in the amount and in the manner specified
          in the preceding sentence and on the same such date notwithstanding
          (I) the amount of Mandatory Borrowing may not comply with the minimum
          amount for borrowings of Revolving Loans otherwise required hereunder,
          (II) whether any conditions specified in Section 4.2 are then
          satisfied, (III) whether a Default or an Event of Default then exists,
          (IV) failure of any such request or deemed request for Revolving Loans
          to be made by the time otherwise required in Section 2.1(b)(i), (V)
          the date of such Mandatory Borrowing, or (VI) any reduction in the
          Revolving Committed Amount or termination of the Revolving Commitments
          immediately prior to such Mandatory Borrowing or contemporaneously
          therewith. In the event that any Mandatory Borrowing cannot for any
          reason be made on the date otherwise required above (including,
          without limitation, as a result of the commencement of a proceeding
          under the Bankruptcy Code), then each Revolving Lender hereby agrees
          that it shall forthwith purchase (as of the date the Mandatory
          Borrowing would otherwise have occurred, but adjusted for any payments
          received from the Borrower on or after such date and prior to such
          purchase) from the Swingline Lender such participations in the
          outstanding Swingline Loans as shall be necessary to cause each such
          Revolving Lender to share in such Swingline Loans ratably based upon
          its respective Revolving Commitment Percentage (determined before
          giving effect to any termination of the Commitments pursuant to
          Section 7.2); provided that (x) all interest payable on the Swingline
          Loans shall be for the account of the Swingline Lender until the date
          as of which the respective participation is purchased, and (y) at the
          time any purchase of participations pursuant to this sentence is
          actually made, the purchasing Revolving Lender shall be required to
          pay to the Swingline Lender interest on the principal amount of such
          participation purchased for each day from and including the day upon
          which the Mandatory Borrowing would otherwise have occurred to but
          excluding the date of payment for such participation, at the rate
          equal to, if paid within two (2) Business Days of the date of the
          Mandatory Borrowing, the Federal Funds Effective Rate, and thereafter
          at a rate equal to the Alternate Base Rate.

          (c) Interest on Swingline Loans. Subject to the provisions of Section
     2.9, Swingline Loans shall bear interest at a per annum rate equal to the
     Alternate Base Rate plus the Applicable Percentage for Revolving Loans that
     are Alternate Base Rate Loans. Interest on Swingline Loans shall be payable
     in arrears on each Interest Payment Date.

          (d) Swingline Note. The Swingline Loans shall be evidenced by a duly
     executed promissory note of the Borrower to the Swingline Lender in the
     original amount of the Swingline Committed Amount and substantially in the
     form of Schedule 2.4(d).

     Section 2.5  Fees.

          (a) Commitment Fee. In consideration of the Revolving Commitments, the
     Borrower agrees to pay to the Administrative Agent for the ratable benefit
     of the Revolving Lenders a commitment fee (the "Commitment Fee") in an
     amount equal to the

                                       41
<PAGE>

     Applicable Percentage per annum on the average daily unused amount of the
     Revolving Committed Amount. For purposes of computation of the Commitment
     Fee, LOC Obligations shall be considered usage of the Revolving Committed
     Amount but Swingline Loans shall not be considered usage of the Revolving
     Committed Amount. The Commitment Fee shall be payable quarterly in arrears
     on the last Business Day of each calendar quarter for the prior calendar
     quarter then ending.

          (b) Letter of Credit Fees. In consideration of the LOC Commitments,
     the Borrower agrees to pay to the Issuing Lender a fee (the "Letter of
     Credit Fee") equal to the Applicable Percentage per annum on the average
     daily maximum amount available to be drawn under each Letter of Credit from
     the date of issuance to the date of expiration. In addition to such Letter
     of Credit Fee, the Issuing Lender may charge, and retain for its own
     account without sharing by the other Lenders, an additional facing fee of
     one-eighth of one percent (0.125%) per annum on the average daily maximum
     amount available to be drawn under each such Letter of Credit issued by it.
     The Issuing Lender shall promptly pay over to the Administrative Agent for
     the ratable benefit of the Revolving Lenders (including the Issuing Lender)
     the Letter of Credit Fee. The Letter of Credit Fee shall be payable
     quarterly in arrears on the last Business Day of each calendar quarter for
     the prior calendar quarter then ending.

          (c) Issuing Lender Fees. In addition to the Letter of Credit Fees
     payable pursuant to subsection (b) hereof, the Borrower shall pay to the
     Issuing Lender for its own account without sharing by the other Lenders the
     reasonable and customary charges from time to time of the Issuing Lender
     with respect to the amendment, transfer, administration, cancellation and
     conversion of, and drawings under, such Letters of Credit (collectively,
     the "Issuing Lender Fees"); provided such fees shall not be duplicative of
     any fees charged under any LOC Document.

          (d) Administrative Fee. The Borrower agrees to pay to the
     Administrative Agent the annual administrative fee as described in the Fee
     Letter.

     Section 2.6  Commitment Reductions.

          (a) Voluntary Reductions. The Borrower shall have the right to
     terminate or permanently reduce the unused portion of the Revolving
     Committed Amount at any time or from time to time upon not less than five
     (5) Business Days' prior notice to the Administrative Agent (which shall
     notify the Revolving Lenders thereof as soon as practicable) of each such
     termination or reduction, which notice shall specify the effective date
     thereof and the amount of any such reduction which shall be in a minimum
     amount of $1,000,000 or a whole multiple of $500,000 in excess thereof and
     shall be irrevocable and effective upon receipt by the Administrative
     Agent; provided that no such reduction or termination shall be permitted if
     after giving effect thereto, and to any prepayments of the Loans made on
     the effective date thereof, the sum of the outstanding Revolving Loans plus
     outstanding Swingline Loans plus LOC Obligations would exceed the Revolving
     Committed Amount.

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<PAGE>

          (b) Mandatory Reductions. On any date that the Revolving Loans are
     required to be prepaid pursuant to the terms of Section 2.7(b) (ii), (iii)
     and (iv), the Revolving Committed Amount shall be automatically permanently
     reduced by the amount of such required prepayment and/or reduction.

          (c) Maturity Date. The Revolving Commitment, the Swingline Commitment
     and the LOC Commitment shall automatically terminate on the Maturity Date.

     Section 2.7  Prepayments.

          (a) Optional Prepayments. The Borrower shall have the right to prepay
     Loans in whole or in part from time to time; provided, however, that each
     partial prepayment of a Revolving Loan and the Term Loan shall be in a
     minimum principal amount of $1,000,000 and integral multiples of $500,000
     in excess thereof, and each partial prepayment of a Swingline Loan shall be
     in a minimum principal amount of $100,000 and integral multiples of
     $100,000 in excess thereof. The Borrower shall give three (3) Business
     Days' irrevocable notice in the case of LIBOR Rate Loans and one Business
     Day's irrevocable notice in the case of Alternate Base Rate Loans, to the
     Administrative Agent (which shall notify the Lenders thereof as soon as
     practicable). Amounts prepaid under this Section 2.7(a) shall be applied to
     the outstanding Loans as the Borrower may elect; provided that each Lender
     shall receive its pro rata share (except with respect to prepayments of
     Swingline Loans) of any such prepayment based on its Revolving Commitment
     Percentage or Term Loan Commitment Percentage, as applicable. All
     prepayments under this Section 2.7(a) shall be subject to Section 2.17, but
     otherwise without premium or penalty. Interest on the principal amount
     prepaid shall be payable on the next occurring Interest Payment Date that
     would have occurred had such Loans not been prepaid or, at the request of
     the Administrative Agent, interest on the principal amount prepaid shall be
     payable on any date that a prepayment is made hereunder through the date of
     prepayment. Amounts prepaid on the Revolving Loans and the Swingline Loans
     may be reborrowed in accordance with the terms hereof. Amounts prepaid on
     the Term Loan may not be reborrowed.

          (b) Mandatory Prepayments.

               (i) Revolving Committed Amount. If at any time after the Closing
          Date, the sum of the outstanding Revolving Loans plus outstanding
          Swingline Loans plus LOC Obligations shall exceed the Revolving
          Committed Amount, the Borrower immediately shall prepay the Loans and
          cash collateralize the LOC Obligations in an amount sufficient to
          eliminate such excess (such prepayment to be applied as set forth in
          clause (vi) below).

               (ii) Asset Dispositions. Promptly following any Asset Disposition
          in excess of $100,000 in the aggregate for all such Asset Dispositions
          during any fiscal year, the Borrower shall prepay the Loans and cash
          collateralize the LOC Obligations in an aggregate amount equal to 100%
          of the Net Cash Proceeds derived from such Asset Disposition (such
          prepayment to be applied as set forth

                                       43
<PAGE>

          in clause (vi) below); provided, however, that such Net Cash Proceeds
          shall not be required to be so applied to the extent the Borrower
          delivers to the Administrative Agent promptly following such Asset
          Disposition a certificate stating that it intends to use such Net Cash
          Proceeds to acquire like assets used in the business of the Borrower
          and its Subsidiaries within 180 days of the receipt of such Net Cash
          Proceeds, it being expressly agreed that any Net Cash Proceeds not so
          reinvested shall be applied to prepay the Loans and cash collateralize
          the LOC Obligations immediately thereafter (such prepayment to be
          applied as set forth in clause (vi) below).

               (iii) Issuances. Immediately upon receipt by any Credit Party of
          proceeds from (A) any Debt Issuance, the Borrower shall prepay the
          Loans and cash collateralize the LOC Obligations in an aggregate
          amount equal to 100% of the Net Cash Proceeds of such Debt Issuance to
          the Lenders (such prepayment to be applied as set forth in clause (vi)
          below) or (B) any Equity Issuance, the Borrower shall prepay the Loans
          and cash collateralize the LOC Obligations in an aggregate amount
          equal to 100% of the Net Cash Proceeds of such Equity Issuance (such
          prepayment to be applied as set forth in clause (vi) below).

               (iv) Recovery Event. To the extent of Net Cash Proceeds received
          in connection with a Recovery Event that are not applied in accordance
          with Section 6.4(a)(iii), immediately following the expiration of the
          period allowed for reinvesting of such Net Cash Proceeds pursuant to
          Section 6.4(a)(iii), the Borrower shall prepay the Loans and cash
          collateralize the LOC Obligations in an aggregate amount equal to 100%
          of such Net Cash Proceeds (such prepayment to be applied as set forth
          in clause (vi) below).

               (v) Excess Cash Flow. Within ninety (90) days after the end of
          each fiscal year (commencing with the fiscal year ending December 31,
          2004), the Borrower shall prepay the Loans and cash collateralize the
          LOC Obligations in an amount equal to 75% of the Excess Cash Flow
          earned during such prior fiscal year (such prepayments to be applied
          as set forth in clause (vi) below); provided, however, if the Borrower
          Leverage Ratio is less than or equal to 1.50 to 1.00 as of the end of
          the preceding fiscal year of the Borrower, then the Borrower shall
          prepay the Loans and cash collateralize the LOC Obligations in an
          amount equal to 50% of the Excess Cash Flow earned during such prior
          fiscal period.

               (vi) Application of Mandatory Prepayments. All amounts required
          to be paid pursuant to this Section 2.7(b) shall be applied as
          follows: (A) with respect to all amounts prepaid pursuant to Section
          2.7(b)(i), (1) first, to the Swingline Loans, (2) second, to the
          Revolving Loans and (3) third (after all Revolving Loans have been
          repaid), to a cash collateral account in respect of LOC Obligations,
          and (B) with respect to all amounts prepaid pursuant to Sections
          2.7(b)(ii) through (v), (1) first, to the remaining Term Loan
          amortization payments set forth in Section 2.2(b) on a pro rata basis,
          (2) second to the Swingline Loans (with a corresponding reduction in
          the Revolving Committed

                                       44
<PAGE>

          Amount), (3) third, to the Revolving Loans (with a corresponding
          reduction in the Revolving Committed Amount) and (4) fourth (after all
          Revolving Loans have been repaid), to a cash collateral account in
          respect of LOC Obligations. Within the parameters of the applications
          set forth above, prepayments shall be applied first to Alternate Base
          Rate Loans and then to LIBOR Rate Loans in direct order of Interest
          Period maturities. Each Lender shall receive its pro rata share
          (except with respect to prepayments of Swingline Loans) of any such
          prepayment based on its Revolving Commitment Percentage or Term Loan
          Commitment Percentage, as applicable. All prepayments under this
          Section 2.7(b) shall be subject to Section 2.17 and include interest
          on the principal amount prepaid through the date of prepayment.

          (c) Hedging Obligations Unaffected. Any repayment or prepayment made
     pursuant to this Section 2.7 shall not affect the Borrower's obligation to
     continue to make payments under any Secured Hedging Agreement, which shall
     remain in full force and effect notwithstanding such repayment or
     prepayment, subject to the terms of such Secured Hedging Agreement.

     Section 2.8  Minimum Principal Amount of Tranches; Lending Offices.

          (a) All borrowings, payments and prepayments in respect of Revolving
     Loans and the Term Loan shall be in such amounts and be made pursuant to
     such elections so that after giving effect thereto the aggregate principal
     amount of the Revolving Loans and the Term Loan comprising any Tranche
     shall be (i) with respect to LIBOR Rate Loans, $1,000,000 or a whole
     multiple of $500,000 in excess thereof and (ii) with respect to Alternate
     Base Rate Loans, $500,000 or a whole multiple of $100,000 in excess
     thereof.

          (b) LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending
     Office and Alternate Base Rate Loans at its Domestic Lending Office.

     Section 2.9  Default Rate and Payment Dates.

     Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall, at
the discretion of the Required Lenders, bear interest, payable on demand, at a
per annum rate 2% greater than the rate which would otherwise be applicable (or
if no rate is applicable, whether in respect of interest, fees or other amounts,
then the Alternate Base Rate plus the Applicable Percentage with respect to
Alternate Base Rate Loans plus 2%).

     Section 2.10  Conversion Options.

          (a) The Borrower may, in the case of Revolving Loans and Term Loan,
     elect from time to time to convert Alternate Base Rate Loans to LIBOR Rate
     Loans, by giving the Administrative Agent at least three (3) Business Days'
     prior irrevocable written notice of such election substantially in the form
     of the notice attached as Schedule 2.10

                                       45
<PAGE>

     (the "Notice of Conversion/Extension"). If the date upon which an Alternate
     Base Rate Loan is to be converted to a LIBOR Rate Loan is not a Business
     Day, then such conversion shall be made on the next succeeding Business Day
     and during the period from such last day of an Interest Period to such
     succeeding Business Day such Loan shall bear interest as if it were an
     Alternate Base Rate Loan. All or any part of outstanding Alternate Base
     Rate Loans may be converted as provided herein; provided that (i) no Loan
     may be converted into a LIBOR Rate Loan when any Default or Event of
     Default has occurred and is continuing and (ii) partial conversions shall
     be in an aggregate principal amount of (A) in the case of Revolving Loans,
     $1,000,000 or a whole multiple of $500,000 in excess thereof and (B) in the
     case of the Term Loan, $2,000,000 or a whole multiple of $1,000,000 in
     excess thereof.

          (b) Any LIBOR Rate Loans may be continued as such upon the expiration
     of an Interest Period with respect thereto by compliance by the Borrower
     with the notice provisions contained in Section 2.10(a); provided, that no
     LIBOR Rate Loan may be continued as such when any Default or Event of
     Default has occurred and is continuing, in which case such Loan shall be
     automatically converted to an Alternate Base Rate Loan at the end of the
     applicable Interest Period with respect thereto. If the Borrower shall fail
     to give timely notice of an election to continue a LIBOR Rate Loan, or the
     continuation of LIBOR Rate Loans is not permitted hereunder, such LIBOR
     Rate Loans shall be automatically converted to Alternate Base Rate Loans at
     the end of the applicable Interest Period with respect thereto.

     Section 2.11  Computation of Interest and Fees.

          (a) Interest payable hereunder with respect to Alternate Base Rate
     Loans based on the Prime Rate shall be calculated on the basis of a year of
     365 days (or 366 days, as applicable) for the actual days elapsed. All
     other fees, interest and all other amounts payable hereunder shall be
     calculated on the basis of a 360-day year for the actual days elapsed. The
     Administrative Agent shall as soon as practicable notify the Borrower and
     the Lenders of each determination of a LIBOR Rate on the Business Day of
     the determination thereof. Any change in the interest rate on a Loan
     resulting from a change in the Alternate Base Rate shall become effective
     as of the opening of business on the day on which such change in the
     Alternate Base Rate shall become effective. The Administrative Agent shall
     as soon as practicable notify the Borrower and the Lenders of the effective
     date and the amount of each such change.

          (b) Each determination of an interest rate by the Administrative Agent
     pursuant to any provision of this Agreement shall be conclusive and binding
     on the Borrower and the Lenders in the absence of manifest error. The
     Administrative Agent shall, at the request of the Borrower, deliver to the
     Borrower a statement showing the computations used by the Administrative
     Agent in determining any interest rate.

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<PAGE>

     Section 2.12  Pro Rata Treatment and Payments.

          (a) Each borrowing of Revolving Loans and any reduction of the
     Revolving Commitments shall be made pro rata according to the respective
     Revolving Commitment Percentages of the Revolving Lenders. Each payment
     under this Agreement or any Note shall be applied, first, to any fees then
     due and owing by the Borrower pursuant to Section 2.5, second, to interest
     then due and owing in respect of the Notes of the Borrower and, third, to
     principal then due and owing hereunder and under the Notes of the Borrower.
     Each payment on account of any fees pursuant to Section 2.5 shall be made
     pro rata in accordance with the respective amounts due and owing (except as
     to the portion of the Letter of Credit retained by the Issuing Lender and
     the Issuing Lender Fees). Each payment (other than prepayments) by the
     Borrower on account of principal of and interest on the Revolving Loans and
     the Term Loan shall be made pro rata according to the respective amounts
     due and owing in accordance with Section 2.7 hereof. Prepayments made
     pursuant to Section 2.15 shall be applied in accordance with such section.
     Each optional prepayment on account of principal of the Loans shall be
     applied in accordance with Section 2.7(a) and each mandatory prepayment on
     account of principal of the Loans shall be applied in accordance with
     Section 2.7(b). All payments (including prepayments) to be made by the
     Borrower on account of principal, interest and fees shall be made without
     defense, set-off or counterclaim (except as provided in Section 2.18(b))
     and shall be made to the Administrative Agent for the account of the
     Lenders at the Administrative Agent's office specified on Schedule 9.2 in
     Dollars and in immediately available funds not later than 1:00 P.M.
     (Charlotte, North Carolina time) on the date when due. The Administrative
     Agent shall distribute such payments to the Lenders entitled thereto
     promptly upon receipt in like funds as received. If any payment hereunder
     (other than payments on the LIBOR Rate Loans) becomes due and payable on a
     day other than a Business Day, such payment shall be extended to the next
     succeeding Business Day, and, with respect to payments of principal,
     interest thereon shall be payable at the then applicable rate during such
     extension. If any payment on a LIBOR Rate Loan becomes due and payable on a
     day other than a Business Day, the maturity thereof shall be extended to
     the next succeeding Business Day unless the result of such extension would
     be to extend such payment into another calendar month, in which event such
     payment shall be made on the immediately preceding Business Day.

          (b) Allocation of Payments After Exercise of Remedies. Notwithstanding
     any other provision of this Credit Agreement to the contrary, upon the
     exercise of remedies by the Administrative Agent or the Lenders pursuant to
     Section 7.2 (or after the Commitments shall automatically terminate and the
     Loans and all other amounts under the Credit Documents shall automatically
     become due and payable in accordance with the terms of such Section), all
     amounts collected or received by the Administrative Agent or any Lender on
     account of the Credit Party Obligations or any other amounts outstanding
     under any of the Credit Documents or in respect of the Collateral shall be
     paid over or delivered as follows:

               FIRST, to the payment of all reasonable out-of-pocket costs and
          expenses (including without limitation reasonable attorneys' fees) of
          the Administrative

                                       47
<PAGE>

          Agent in connection with enforcing the rights of the Lenders under the
          Credit Documents and any protective advances made by the
          Administrative Agent with respect to the Collateral under or pursuant
          to the terms of the Collateral Documents;

               SECOND, to payment of any fees owed to the Administrative Agent;

               THIRD, to the payment of all reasonable out-of-pocket costs and
          expenses (including without limitation, reasonable attorneys' fees) of
          each of the Lenders in connection with enforcing its rights under the
          Credit Documents or otherwise with respect to the Credit Party
          Obligations owing to such Lender;

               FOURTH, to the payment of all of the Credit Party Obligations
          consisting of accrued fees and interest, including with respect to any
          Secured Hedging Agreement, any fees, premiums and scheduled periodic
          payments due under such Secured Hedging Agreement and any interest
          accrued thereon;

               FIFTH, to the payment of the outstanding principal amount of the
          Credit Party Obligations and the payment or cash collateralization of
          the outstanding LOC Obligations, and including with respect to any
          Secured Hedging Agreement, any breakage, termination or other payments
          due under such Secured Hedging Agreement and any interest accrued
          thereon;

               SIXTH, to all other Credit Party Obligations and other
          obligations which shall have become due and payable under the Credit
          Documents or otherwise and not repaid pursuant to clauses "FIRST"
          through "FIFTH" above; and

               SEVENTH, to the payment of the surplus, if any, to whoever may be
          lawfully entitled to receive such surplus.

          In carrying out the foregoing, (i) amounts received shall be applied
          in the numerical order provided until exhausted prior to application
          to the next succeeding category; (ii) each of the Lenders and Hedging
          Agreement Providers shall receive an amount equal to its pro rata
          share (based on the proportion that the then outstanding Loans and LOC
          Obligations held by such Lender or the outstanding obligations payable
          to such Hedging Agreement Provider bears to the aggregate then
          outstanding Loans, LOC Obligations and obligations payable under all
          Secured Hedging Agreements) of amounts available to be applied
          pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and
          (iii) to the extent that any amounts available for distribution
          pursuant to clause "FIFTH" above are attributable to the issued but
          undrawn amount of outstanding Letters of Credit, such amounts shall be
          held by the Administrative Agent in a cash collateral account and
          applied (A) first, to reimburse the Issuing Lender from time to time
          for any drawings under such Letters of Credit and (B) then, following
          the expiration of all Letters of Credit, to all other obligations of
          the types described in clauses "FIFTH" and "SIXTH" above in the manner
          provided in this

                                       48
<PAGE>

          Section 2.12(b). Notwithstanding the foregoing terms of this Section
          2.12(b), only Collateral proceeds and payments under the Guaranty with
          respect to Secured Hedging Agreements shall be applied to obligations
          under any Secured Hedging Agreement.

     Section 2.13  Non-Receipt of Funds by the Administrative Agent.

          (a) Unless the Administrative Agent shall have been notified in
     writing by a Lender prior to the date a Loan is to be made by such Lender
     (which notice shall be effective upon receipt) that such Lender does not
     intend to make the proceeds of such Loan available to the Administrative
     Agent, the Administrative Agent may assume that such Lender has made such
     proceeds available to the Administrative Agent on such date, and the
     Administrative Agent may in reliance upon such assumption (but shall not be
     required to) make available to the Borrower a corresponding amount. If such
     corresponding amount is not in fact made available to the Administrative
     Agent, the Administrative Agent shall be able to recover such corresponding
     amount from such Lender. If such Lender does not pay such corresponding
     amount forthwith upon the Administrative Agent's demand therefore, the
     Administrative Agent will promptly notify the Borrower, and the Borrower
     shall immediately pay such corresponding amount to the Administrative
     Agent. The Administrative Agent shall also be entitled to recover from the
     Lender or the Borrower, as the case may be, interest on such corresponding
     amount in respect of each day from the date such corresponding amount was
     made available by the Administrative Agent to the Borrower to the date such
     corresponding amount is recovered by the Administrative Agent at a per
     annum rate equal to (i) from the Borrower at the applicable rate for the
     applicable borrowing pursuant to the Notice of Borrowing and (ii) from a
     Lender at the Federal Funds Effective Rate.

          (b) Unless the Administrative Agent shall have been notified in
     writing by the Borrower, prior to the date on which any payment is due from
     it hereunder (which notice shall be effective upon receipt) that the
     Borrower does not intend to make such payment, the Administrative Agent may
     assume that such Borrower has made such payment when due, and the
     Administrative Agent may in reliance upon such assumption (but shall not be
     required to) make available to each Lender on such payment date an amount
     equal to the portion of such assumed payment to which such Lender is
     entitled hereunder, and if the Borrower has not in fact made such payment
     to the Administrative Agent, such Lender shall, on demand, repay to the
     Administrative Agent the amount made available to such Lender. If such
     amount is repaid to the Administrative Agent on a date after the date such
     amount was made available to such Lender, such Lender shall pay to the
     Administrative Agent on demand interest on such amount in respect of each
     day from the date such amount was made available by the Administrative
     Agent to such Lender to the date such amount is recovered by the
     Administrative Agent at a per annum rate equal to the Federal Funds
     Effective Rate.

          (c) A certificate of the Administrative Agent submitted to the
     Borrower or any Lender with respect to any amount owing under this Section
     2.13 shall be conclusive in the absence of manifest error.

                                       49
<PAGE>

     Section 2.14  Inability to Determine Interest Rate.

     Notwithstanding any other provision of this Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR Rate for any Interest Period, or (ii) the Administrative
Agent or the Required Lenders shall reasonably determine (which determination
shall be conclusive and binding absent manifest error) that LIBOR Rate does not
adequately and fairly reflect the cost to such Lenders of funding LIBOR Rate
Loans that the Borrower has requested be outstanding as a LIBOR Tranche during
such Interest Period, the Administrative Agent shall forthwith give telephone
notice of such determination, confirmed in writing, to the Borrower, and the
Lenders at least two (2) Business Days prior to the first day of such Interest
Period. Unless the Borrower shall have notified the Administrative Agent upon
receipt of such telephone notice that it wishes to rescind or modify its request
regarding such LIBOR Rate Loans, any Loans that were requested to be made as
LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any Loans that
were requested to be converted into or continued as LIBOR Rate Loans shall
remain as or be converted into Alternate Base Rate Loans. Until any such notice
has been withdrawn by the Administrative Agent, no further Loans shall be made
as, continued as, or converted into, LIBOR Rate Loans for the Interest Periods
so affected.

     Section 2.15  Illegality.

     Notwithstanding any other provision of this Agreement, if the adoption of
or any change in any Requirement of Law or in the interpretation, administration
or application thereof by the relevant Governmental Authority to any Lender
shall make it unlawful for such Lender or its LIBOR Lending Office to make or
maintain LIBOR Rate Loans as contemplated by this Agreement or to obtain in the
interbank eurodollar market through its LIBOR Lending Office the funds with
which to make such Loans, (a) such Lender shall promptly notify the
Administrative Agent and the Borrower thereof, (b) the commitment of such Lender
hereunder to make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall
forthwith be suspended until the Administrative Agent shall give notice that the
condition or situation which gave rise to the suspension shall no longer exist,
and (c) such Lender's Loans then outstanding as LIBOR Rate Loans, if any, shall
be converted on the last day of the Interest Period for such Loans or within
such earlier period as required by law to Alternate Base Rate Loans. The
Borrower hereby agrees promptly to pay any Lender, upon its demand, any
additional amounts necessary to compensate such Lender for actual and direct
costs (but not including anticipated profits) reasonably incurred by such Lender
including, but not limited to, any interest or fees payable by such Lender to
lenders of funds obtained by it in order to make or maintain its LIBOR Rate
Loans hereunder. A certificate as to any additional amounts payable pursuant to
this Section submitted by such Lender, through the Administrative Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its reasonable discretion to be
material.

                                       50
<PAGE>

     Section 2.16  Requirements of Law.

          (a) If the adoption of or any change in any Requirement of Law (other
     than any change by way of imposition or increase of reserve requirements
     included in the Eurodollar Reserve Percentage) or in the interpretation,
     administration or application thereof or compliance by any Lender with any
     request or directive (whether or not having the force of law) from any
     central bank or other Governmental Authority made subsequent to the date
     hereof:

               (i) shall subject such Lender to any tax of any kind whatsoever
          with respect to any Letter of Credit or any application relating
          thereto, any LIBOR Rate Loan made by it, or change the basis of
          taxation of payments to such Lender in respect thereof (except for
          changes in the rate of tax on the overall net income of such Lender);

               (ii) shall impose, modify or hold applicable any reserve, special
          deposit, compulsory loan or similar requirement against assets held
          by, deposits or other liabilities in or for the account of, advances,
          loans or other extensions of credit by, or any other acquisition of
          funds by, any office of such Lender which is not otherwise included in
          the determination of the LIBOR Rate hereunder; or

               (iii) shall impose on such Lender any other condition;

          and the result of any of the foregoing is to increase the cost to such
     Lender of making or maintaining LIBOR Rate Loans or the Letters of Credit
     or to reduce any amount receivable hereunder or under any Note, then, in
     any such case, the Borrower shall promptly pay such Lender, upon its
     demand, any additional amounts necessary to compensate such Lender for such
     additional cost or reduced amount receivable which such Lender reasonably
     deems to be material as determined by such Lender with respect to its LIBOR
     Rate Loans or Letters of Credit. A certificate as to any additional amounts
     payable pursuant to this Section submitted by such Lender, through the
     Administrative Agent, to the Borrower shall be conclusive in the absence of
     manifest error. Each Lender agrees to use reasonable efforts (including
     reasonable efforts to change its Domestic Lending Office or LIBOR Lending
     Office, as the case may be) to avoid or to minimize any amounts that might
     otherwise be payable pursuant to this paragraph of this Section; provided,
     however, that such efforts shall not cause the imposition on such Lender of
     any additional costs or legal or regulatory burdens deemed by such Lender
     in its reasonable discretion to be material.

          (b) If any Lender shall have reasonably determined that the adoption
     of or any change in any Requirement of Law regarding capital adequacy or in
     the interpretation or application thereof or compliance by such Lender or
     any corporation controlling such Lender with any request or directive
     regarding capital adequacy (whether or not having the force of law) from
     any central bank or Governmental Authority made subsequent to the date
     hereof does or shall have the effect of reducing the rate of return on such

                                       51
<PAGE>

     Lender's or such corporation's capital as a consequence of its obligations
     hereunder to a level below that which such Lender or such corporation could
     have achieved but for such adoption, change or compliance (taking into
     consideration such Lender's or such corporation's policies with respect to
     capital adequacy) by an amount reasonably deemed by such Lender in its
     reasonable discretion to be material, then from time to time, within
     fifteen (15) days after demand by such Lender, the Borrower shall pay to
     such Lender such additional amount as shall be certified by such Lender as
     being required to compensate it for such reduction. Such a certificate as
     to any additional amounts payable under this Section submitted by a Lender
     (which certificate shall include a description of the basis for the
     computation), through the Administrative Agent, to the Borrower shall be
     conclusive absent manifest error.

          (c) In the event that any Lender demands payment of costs or
     additional amounts pursuant to Section 2.16 or Section 2.18 or asserts,
     pursuant to Section 2.15, that it is unlawful for such Lender to make LIBOR
     Rate Loans, then (subject to such lender's right to rescind such demand or
     assertion within 10 days after the notice from the Borrower referred to
     below) the Borrower may, upon 20 days' prior written notice to such Lender
     and the Administrative Agent, elect to cause such Lender to assign at par
     its Loans and Commitments in full to one or more Persons selected by the
     Borrower so long as (i) each such Person is either another Lender or any
     Affiliate or Related Fund thereof or is otherwise satisfactory to the
     Administrative Agent, (ii) such Lender receives payment in full in cash of
     the outstanding principal amount of all Loans made by it and all accrued
     and unpaid interest thereon and all other amounts due and payable to such
     Lender as of the date of such assignment (including, without limitation,
     amounts owing pursuant to Sections 2.16, 2.17 and 2.18) and (iii) each such
     Lender assignee agrees to accept such assignment and to assume all
     obligations of such assigning party hereunder in accordance with Section
     9.6.

          (d) The agreements in this Section 2.16 shall survive the termination
     of this Agreement and payment of the Notes and all other amounts payable
     hereunder.

     Section 2.17  Indemnity.

     The Borrower hereby agrees to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which such Lender may sustain or incur
as a consequence of (a) default by the Borrower in payment of the principal
amount of or interest on any Loan by such Lender in accordance with the terms
hereof, (b) default by the Borrower in accepting a borrowing after the Borrower
has given a notice in accordance with the terms hereof, (c) default by the
Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Administrative Agent, to the
Borrower (which certificate must be delivered to the Administrative Agent within
thirty (30) days following such default, prepayment

                                       52
<PAGE>

or conversion) shall be conclusive in the absence of manifest error. The
agreements in this Section shall survive termination of this Agreement and
payment of the Notes and all other amounts payable hereunder.

     Section 2.18  Taxes.

          (a) All payments made by the Borrower hereunder or under any Note will
     be, except to the extent required by law, made free and clear of, and
     without deduction or withholding for, any present or future taxes, levies,
     imposts, duties, fees, assessments or other charges of whatever nature now
     or hereafter imposed by any Governmental Authority or by any political
     subdivision or taxing authority thereof or therein with respect to such
     payments (but excluding any tax imposed on or measured by the net income or
     profits of a Lender or the Administrative Agent pursuant to the laws of the
     jurisdiction in which it is organized or resident for tax purposes or the
     jurisdiction in which the principal office or applicable lending office of
     such Lender or the Administrative Agent is located or any subdivision
     thereof or therein) and all interest, penalties or similar liabilities with
     respect thereto (all such non-excluded taxes, levies, imposts, duties,
     fees, assessments or other charges being referred to collectively as
     "Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay
     the full amount of such Taxes, and such additional amounts as may be
     necessary so that every payment of all amounts due under this Agreement or
     under any Note, after withholding or deduction for or on account of any
     Taxes, will not be less than the amount provided for herein or in such
     Note. The Borrower will furnish to the Administrative Agent, as soon as
     practicable after the date the payment of any Taxes is due pursuant to
     applicable law, certified copies (to the extent reasonably available and
     required by law) of tax receipts evidencing such payment by the Borrower.
     The Borrower agrees to indemnify and hold harmless each Lender, and
     reimburse such Lender upon its written request, for the amount of any Taxes
     so levied or imposed and paid by such Lender.

          (b) Each Lender that is created or organized under the laws of the
     United States or any state thereof or the District of Columbia agrees to
     deliver to the Borrower and the Administrative Agent on or prior to the
     Closing Date, or in the case of a Lender that is an assignee or transferee
     of an interest under this Agreement pursuant to Section 9.6(c) (unless the
     respective Lender was already a Lender hereunder immediately prior to such
     assignment or transfer), on the date of such assignment or transfer to such
     Lender, two accurate and complete original signed copies of Internal
     Revenue Service Form W-9 (or any subsequent versions thereof or successors
     thereto). Each Lender that is not a United States person (as such term is
     defined in Section 7701(a)(30) of the Code) agrees to deliver to the
     Borrower and the Administrative Agent on or prior to the Closing Date, or
     in the case of a Lender that is an assignee or transferee of an interest
     under this Agreement pursuant to Section 9.6(c) (unless the respective
     Lender was already a Lender hereunder immediately prior to such assignment
     or transfer), on the date of such assignment or transfer to such Lender,
     two accurate and complete original signed copies of Internal Revenue
     Service Form W-8BEN or W-8ECI (or successor forms) or such other evidence
     satisfactory to the Borrower and the Administrative Agent that such Lender
     is entitled to a complete exemption from United States withholding tax with

                                       53
<PAGE>

     respect to payments to be made under this Agreement and under any Note. In
     addition, each Lender agrees that it will deliver upon the Borrower's
     request updated versions of the foregoing, as applicable, whenever the
     previous certification has become obsolete or inaccurate in any material
     respect, together with such other forms as may be required in order to
     confirm or establish the entitlement of such Lender to a continued
     exemption from or reduction in United States withholding tax with respect
     to payments under this Agreement and any Note. To the extent necessary, the
     Administrative Agent shall provide to the Borrower two accurate and
     complete original, signed copies of Form W-8IMY (or any subsequent version
     thereof or successor thereto), together with all documentation required to
     be supplied therewith. Notwithstanding anything to the contrary contained
     in Section 2.18(a), but subject to the immediately succeeding sentence, (x)
     the Borrower shall be entitled, to the extent it is required to do so by
     law, to deduct or withhold Taxes imposed by the United States (or any
     political subdivision or taxing authority thereof or therein) from
     interest, fees or other amounts payable hereunder for the account of any
     Lender for U.S. Federal income tax purposes to the extent that such Lender
     has not provided to the Borrower U.S. Internal Revenue Service Forms or
     other evidence satisfactory to the Borrower and the Administrative Agent
     that establish a complete exemption from such deduction or withholding and
     (y) the Borrower shall not be obligated pursuant to Section 2.18(a) hereof
     to gross-up payments to be made to a Lender in respect of Taxes imposed by
     the United States if such Lender has not provided to the Borrower the
     Internal Revenue Service Forms required to be provided to the Borrower
     pursuant to this Section 2.18(b). Notwithstanding anything to the contrary
     contained in the preceding sentence or elsewhere in this Section 2.18, the
     Borrower agrees to pay additional amounts and to indemnify each Lender in
     the manner set forth in Section 2.18(a) (without regard to the identity of
     the jurisdiction requiring the deduction or withholding) in respect of any
     amounts deducted or withheld by it as described in the immediately
     preceding sentence as a result of any changes after the Closing Date in any
     applicable law, treaty, governmental rule, regulation, guideline or order,
     or in the interpretation thereof, relating to the deducting or withholding
     of Taxes.

          (c) Each Initial Lender (other than an Eligible UK Lender) shall, as
     soon as is reasonably practicable after the Closing Date, or in the case of
     a Lender that is an assignee or transferee of an interest under this
     Agreement pursuant to Section 9.6(c) (other than an Eligible UK Lender or
     an Initial Lender that is assigned its initial Commitment in connection
     with the closing of this Agreement), on or before the date of such
     assignment or transfer to such Lender, complete the appropriate application
     forms and lodge them with the relevant tax authority in the relevant
     jurisdiction in relation to payments made or to be made by the Borrower
     under this Agreement. If the relevant tax authority determines that such
     form filed by such Initial Lender does not establish that the Initial
     Lender is entitled to receive payments made by the Borrower under this
     Agreement as at the date of delivery thereof without deduction or
     withholding of United Kingdom withholding taxes or, if the relevant tax
     authority requires proof of such entitlement, such Initial Lender shall
     offer such reasonable assistance as the Borrower may reasonably request in
     order to establish such Initial Lender's entitlement (if any) to receive
     payments made by the Borrower under this Agreement without deduction or
     withholding of United Kingdom withholding taxes. The Borrower shall not be
     required

                                       54
<PAGE>

     to pay any amounts to a Lender (other than an Eligible UK Lender) in
     respect of any deduction or withholding of United Kingdom withholding taxes
     imposed on a payment of interest which would otherwise be payable under
     this Section 2.18 (and the Borrower, if required by law to do so, shall be
     entitled to withhold such amounts and pay such amounts to the government of
     the United Kingdom) if (i) the obligation to pay such additional amounts
     would not have arisen but for a failure by such Lender to complete and
     lodge the requisite forms with the relevant tax authority in a timely
     manner or provide the Borrower with such other reasonable assistance in
     accordance with this Section 2.18(c), or (ii) such Lender is neither (A) an
     Initial Lender nor (B) a Qualified Lender on the date on which the payment
     falls due; provided that if such Lender would have been (if it had been a
     Lender at such time) a Qualified Lender on the Closing Date, or if such
     Lender was a Qualified Lender on the effective date of the Commitment
     Transfer Supplement pursuant to which it became a Lender hereunder, but
     such Lender has ceased to be a Qualified Lender as a result of the
     introduction of, change in, or any change in the interpretation,
     administration or application of, any law or regulation, any double
     taxation treaty or any practice or concession of the United Kingdom Inland
     Revenue occurring after the Closing Date or after the effective date of
     such Commitment Transfer Supplement, as applicable, the Borrower shall be
     required to pay any amounts to such Lender in respect of any deduction or
     withholding of United Kingdom withholding taxes imposed on a payment of
     interest in accordance with the terms of this Section 2.18.

          (d) Within thirty (30) days after the date of any payment of Taxes,
     the applicable Credit Party shall furnish to the Administrative Agent the
     original or a certified copy of a receipt evidencing such payment.

          (e) Each Lender agrees to use reasonable efforts (including reasonable
     efforts to change its Domestic Lending Office or LIBOR Lending Office, as
     the case may be) to avoid or to minimize any amounts which might otherwise
     be payable pursuant to this Section; provided, however, that such efforts
     shall not cause the imposition on such Lender of any additional costs or
     legal or regulatory burdens deemed by such Lender in its reasonable
     discretion to be material.

          (f) If the Borrower pays any additional amount pursuant to this
     Section 2.18 with respect to a Lender, such Lender or such Lender's owners
     or members shall use reasonable efforts to obtain a refund of tax or credit
     against its tax liabilities on account of such payment; provided that such
     Lender or such Lender's owners or members shall have no obligation to use
     such reasonable efforts if such Lender or such Lender's owners or members
     reasonably believes in good faith that it is not able to obtain the benefit
     of any such refund or credit. In the event that such Lender or such
     Lender's owners or members receives such a refund or credit, such Lender or
     such Lender's owners or members shall pay to the Borrower an amount that
     such Lender or such Lender's owners or members reasonably determines is
     equal to the net tax benefit obtained by such Lender or such Lender's
     owners or members as a result of such payment by the Borrower. In the event
     that no refund or credit is obtained with respect to the Borrower's
     payments to such Lender pursuant to this Section 2.18, then such Lender or
     such Lender's owners or members shall upon request provide a certification
     that such Lender or such Lender's

                                       55
<PAGE>

     owners or members has not received a refund or credit for such payments.
     Nothing contained in this Section 2.18 shall require such Lender or such
     Lender's owners or members to disclose or detail the basis of its
     calculation of the amount of any tax benefit or any other amount or the
     basis of its determination referred to in the proviso to the first sentence
     of this Section 2.18 to the Borrower or any other party.

          (g) If a Lender is not entitled to receive payments from the Borrower
     in respect of any deduction or withholding of withholding taxes imposed on
     a payment of interest in accordance with the terms of this Section 2.18,
     the Borrower shall offer such reasonable assistance as such Lender may
     reasonably request in order to reduce the amount or the rate of such
     withholding taxes.

          (h) The agreements in this Section 2.18 shall survive the termination
     of this Agreement and the payment of the Notes and all other amounts
     payable hereunder.

     Section 2.19  Indemnification; Nature of Issuing Lender's Duties.

          (a) In addition to its other obligations under Section 2.3, the
     Borrower hereby agrees to protect, indemnify, pay and save each Issuing
     Lender harmless from and against any and all claims, demands, liabilities,
     damages, losses, costs, charges and expenses (including reasonable
     attorneys' fees) that the Issuing Lender may incur or be subject to as a
     consequence, direct or indirect, of (i) the issuance of any Letter of
     Credit or (ii) the failure of the Issuing Lender to honor a drawing under a
     Letter of Credit as a result of any act or omission, whether rightful or
     wrongful, of any present or future de jure or de facto government or
     governmental authority (all such acts or omissions, herein called
     "Government Acts").

          (b) As between the Borrower and the Issuing Lender, the Borrower shall
     assume all risks of the acts, omissions or misuse of any Letter of Credit
     by the beneficiary thereof. The Issuing Lender shall not be responsible
     for: (i) the form, validity, sufficiency, accuracy, genuineness or legal
     effect of any document submitted by any party in connection with the
     application for and issuance of any Letter of Credit, even if it should in
     fact prove to be in any or all respects invalid, insufficient, inaccurate,
     fraudulent or forged; (ii) the validity or sufficiency of any instrument
     transferring or assigning or purporting to transfer or assign any Letter of
     Credit or the rights or benefits thereunder or proceeds thereof, in whole
     or in part, that may prove to be invalid or ineffective for any reason;
     (iii) failure of the beneficiary of a Letter of Credit to comply fully with
     conditions required in order to draw upon a Letter of Credit; (iv) errors,
     omissions, interruptions or delays in transmission or delivery of any
     messages, by mail, cable, telegraph, telex or otherwise, whether or not
     they be in cipher; (v) errors in interpretation of technical terms; (vi)
     any loss or delay in the transmission or otherwise of any document required
     in order to make a drawing under a Letter of Credit or of the proceeds
     thereof; and (vii) any consequences arising from causes beyond the control
     of the Issuing Lender, including, without limitation, any Government Acts.
     None of the above shall affect, impair, or prevent the vesting of the
     Issuing Lender's rights or powers hereunder.

                                       56
<PAGE>

          (c) In furtherance and extension and not in limitation of the specific
     provisions hereinabove set forth, any action taken or omitted by the
     Issuing Lender, under or in connection with any Letter of Credit or the
     related certificates, if taken or omitted in good faith, shall not put such
     Issuing Lender under any resulting liability to the Borrower. It is the
     intention of the parties that this Agreement shall be construed and applied
     to protect and indemnify the Issuing Lender against any and all risks
     involved in the issuance of the Letters of Credit, all of which risks are
     hereby assumed by the Borrower, including, without limitation, any and all
     risks of the acts or omissions, whether rightful or wrongful, of any
     Government Authority. The Issuing Lender shall not, in any way, be liable
     for any failure by the Issuing Lender or anyone else to pay any drawing
     under any Letter of Credit as a result of any Government Acts or any other
     cause beyond the control of the Issuing Lender.

          (d) Nothing in this Section 2.19 is intended to limit the
     reimbursement obligation of the Borrower contained in Section 2.3(d)
     hereof. The obligations of the Borrower under this Section 2.19 shall
     survive the termination of this Agreement. No act or omissions of any
     current or prior beneficiary of a Letter of Credit shall in any way affect
     or impair the rights of the Issuing Lender to enforce any right, power or
     benefit under this Agreement.

          (e) Notwithstanding anything to the contrary contained in this Section
     2.19, the Borrower shall have no obligation to indemnify any Issuing Lender
     in respect of any liability incurred by such Issuing Lender arising out of
     the gross negligence or willful misconduct of the Issuing Lender (including
     action not taken by an Issuing Lender), as determined by a court of
     competent jurisdiction.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, the Borrower and its Subsidiaries
hereby represent and warrant to the Administrative Agent and each Lender and,
with respect to Sections 3.1 through 3.9 and Sections 3.17, 3.23, 3.28 and 3.29,
the Parent hereby represents and warrants to the Administrative Agent and to
each Lender that:

     Section 3.1  Financial Condition.

     The Borrower has delivered to the Administrative Agent and the Lenders (a)
balance sheets and the related statements of income and of cash flows of (i) the
Parent and its Subsidiaries for the fiscal years ended December 31, 2000 and
2001 audited by Price WaterhouseCoopers, and for the fiscal year ended December
31, 2002 audited by Ernst & Young and (ii) the Acquired Company and its
Subsidiaries for the fiscal years ended December 31, 2000, December 31, 2001 and
December 31, 2002 audited by Deloitte & Touche, (b) a company-

                                       57
<PAGE>

prepared unaudited balance sheet and the related statement of income and of cash
flow of Orthofix, Inc. for fiscal years ended December 31, 2000, December 31,
2001 and December 31, 2002, (c) company-prepared unaudited balance sheets and
related statements of income and cash flows for the Parent and its Subsidiaries,
the Borrower and its Subsidiaries and the Acquired Company and its Subsidiaries
as of November 30, 2003 and for the eleven-month period then ending, (d) pro
forma balance sheets of the Parent and its Subsidiaries, the Borrower and its
Subsidiaries and the Acquired Company and its Subsidiaries as of November 30,
2003, in each case prepared giving effect to the Acquisition and the initial
Extensions of Credit made hereunder on a Pro Forma Basis and in form and
substance satisfactory to the Administrative Agent and the Lenders and (e) the
five-year projections of the Parent and the Borrower, in form and substance
reasonably satisfactory to the Administrative Agent. The financial statements
referred to in subsections (a)-(d) above are complete and correct and present
fairly the financial condition of the Parent, the Borrower, the Acquired Company
and their respective Subsidiaries as of such dates, subject in the case of
unaudited financials to the absence of footnotes and immaterial year end
adjustments. All such financial statements and projections, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as disclosed
therein).

     Section 3.2  No Change.

     Since December 31, 2002 there has been no development or event which has
had or could reasonably be expected to have a Material Adverse Effect.

     Section 3.3  Corporate Existence; Compliance with Law.

     Each of Credit Parties (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (b) has the requisite power and authority and the legal right to
own and operate all its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is duly
qualified to conduct business and is in good standing under the laws of (i) the
state of its organization and (ii) each other jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification except to the extent that the failure to so qualify or be in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, each of the Credit Parties represents
that:

          (i) (A) There is no Credit Party or, to the knowledge of the Credit
     Parties, individual employed by any Credit Party who may reasonably be
     expected to have criminal culpability or to be excluded or suspended from
     participation in any Medical Reimbursement Program for their corporate or
     individual actions or failures to act where such culpability, exclusion
     and/or suspension has or could be reasonably expected to result in a
     Material Adverse Effect; and (B) there is no member of management
     continuing to be employed by any Credit Party who may reasonably be
     expected to have individual culpability for matters under investigation by
     any Governmental Authority

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     unless such member of management has been, within a reasonable period of
     time after discovery of such actual or potential culpability, either
     suspended or removed from positions of responsibility related to those
     activities under challenge by the Governmental Authority;

          (ii) Current billing policies, arrangements, protocols and
     instructions comply with expressly stated requirements of Medical
     Reimbursement Programs and are administered by properly trained personnel
     except where any such failure to comply could not reasonably be expected to
     result in a Material Adverse Effect; and

          (iii) Current medical director compensation arrangements and other
     arrangements with referring physicians comply with state and federal
     self-referral and anti-kickback laws, including without limitation 42
     U.S.C. Section 1320a-7b(b)(1) - (b)(2) and 42 U.S.C. Section 1395nn, except
     where any such failure to comply could not reasonably be expected to result
     in a Material Adverse Effect.

     Section 3.4  Corporate Power; Authorization; Enforceable Obligations.

     Each of the Credit Parties has full power and authority and the legal right
to make, deliver and perform the Credit Documents to which it is party and has
taken all necessary limited liability company or corporate or other action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Document by the Credit Parties (other than
those which have been obtained) or with the validity or enforceability of any
Credit Document against the Credit Parties (except such filings as are necessary
in connection with the perfection of the Liens created by such Credit
Documents). This Credit Agreement has been, and each other Credit Document when
delivered hereunder will have been, duly executed and delivered on behalf of
each of the Credit Parties party thereto. Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of each of the Credit
Parties, enforceable against such Credit Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

     Section 3.5  Status Under Certain Statutes.

     No Credit Party is (i) required to be registered as an "investment
company", or "controlled" by a Person that is required to be registered as an
"investment company", under the Investment Company Act of 1940, as amended, or
(ii) subject to regulation under any federal or state statute or regulation
limiting its ability to incur the Credit Party Obligations.

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     Section 3.6  Margin Regulations.

     No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Parent and
the Borrower and its Subsidiaries taken as a group do not own "margin stock"
except as identified in the financial statements referred to in Section 3.1 and
the aggregate value of all "margin stock" owned by the Parent and the Borrower
and its Subsidiaries taken as a group does not exceed 25% of the value of their
assets.

     Section 3.7  No Legal Bar; No Default.

     The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law or any Contractual Obligation of the Parent, the Borrower
or any of the Borrower's Subsidiaries (except those as to which waivers or
consents have been obtained), and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any Requirement of Law or Contractual Obligation other than
the Liens arising under or contemplated in connection with the Credit Documents.
Neither the Parent, nor the Borrower, nor any of the Borrower's Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
material respect. No Default or Event of Default has occurred and is continuing.

     Section 3.8  No Material Litigation.

     As of the Closing Date, set forth on Schedule 3.8 is a description of any
material litigation, investigation, claim, criminal prosecution, civil
investigative demand, criminal or civil fine and penalty, or other proceeding of
or before any arbitrator or Governmental Authority (including but not limited to
those regulatory agencies responsible for licensing, accrediting or issuing
Medicare or Medicaid certifications) that is pending or, to the best knowledge
of the Parent, the Borrower and the Borrower's Subsidiaries, threatened by or
against the Parent, the Borrower or any of the Borrower's Subsidiaries or
against any of its or their respective properties or revenues. No litigation,
investigation, claim, criminal prosecution, civil investigative demand,
imposition of criminal or civil fines and penalties, or any other proceeding of
or before any arbitrator or Governmental Authority (including but not limited to
those regulatory agencies responsible for licensing, accrediting or issuing
Medicare or Medicaid certifications) is pending or, to the best knowledge of the
Borrower and its Subsidiaries, threatened by or against the Borrower or any of
its Subsidiaries or against any of its or their respective properties or
revenues (a) with respect to the Credit Documents or any Loan or any of the
transactions contemplated hereby, or (b) which, if adversely determined could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

     Section 3.9  ERISA.

     No Reportable Event that could reasonably be expected to result in a
Material Adverse Effect, and no "accumulated funding deficiency" (within the
meaning of Section 412 of the Code

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<PAGE>

or Section 302 of ERISA), has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Single Employer Plan. Each Single Employer Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred resulting in any liability that has remained
underfunded. No Lien in favor of a Single Employer Plan or in favor of the PBGC
with respect to a Single Employer Plan has arisen, during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Single Employer Plan (other than a Lien with respect to a
liability which has been satisfied in full). The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits, except to the extent
that such underfunding could not reasonably be expected to result in a Material
Adverse Effect. Neither any Credit Party nor any Commonly Controlled Entity has
any outstanding liability for a complete or partial withdrawal from a
Multiemployer Plan, except to the extent such liability could not reasonably be
expected to result in a Material Adverse Effect.

     Section 3.10  Environmental Matters.

     Except as would not reasonably be expected to have a Material Adverse
Effect:

          (a) The facilities and properties owned, leased or operated by the
     Borrower or any of its Subsidiaries (the "Properties") do not contain any
     Materials of Environmental Concern in amounts or concentrations that
     constitute a violation of or a liability under, any Environmental Law.

          (b) The Properties, all operations of the Borrower and/or its
     Subsidiaries at the Properties, and the business operated by the Borrower
     or any of its Subsidiaries (the "Business") are in compliance, and have in
     the last two years been in compliance, with all applicable Environmental
     Laws.

          (c) Neither the Borrower nor any of its Subsidiaries has received any
     written notice of violation, alleged violation, non-compliance, liability
     or potential liability regarding environmental matters or compliance with
     Environmental Laws with regard to any of the Properties or the Business,
     nor does the Borrower or any of its Subsidiaries have knowledge that any
     such notice will be received or is being threatened.

          (d) Materials of Environmental Concern have not been transported or
     disposed of from the Properties by the Borrower or any of its Subsidiaries
     in violation of any Environmental Law, and neither the Borrower nor any of
     its Subsidiaries has received any written notice of any liability or
     potential liability for any Materials of Environmental Concern transported
     or disposed of from the Properties by the Borrower or any of its
     Subsidiaries. Materials of Environmental Concern have not been generated,
     treated, stored or disposed of by the Borrower or any of its Subsidiaries
     at, on or under any of the Properties in violation of any applicable
     Environmental Law, and neither the Borrower nor any of its Subsidiaries is
     liable for any Materials of Environmental Concern

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<PAGE>

     that have been generated, treated, stored or disposed of at, on or under
     any of the Properties.

          (e) No judicial proceeding or governmental or administrative action is
     pending or, to the knowledge of the Borrower and its Subsidiaries,
     threatened, under any Environmental Law to which the Borrower or any
     Subsidiary is or, with respect to any threatened proceeding or action, is
     reasonably expected to become a party with respect to the Properties or the
     Business, nor are there any governmental consent decrees, consent orders or
     administrative orders with respect to which the Borrower or any of its
     Subsidiaries is a party, or other administrative or judicial requirements
     applicable to the Borrower or any of its Subsidiaries outstanding under any
     Environmental Law with respect to the Properties or the Business.

          (f) There has been no release of Materials of Environmental Concern by
     the Borrower or any of its Subsidiaries or for which the Borrower or any of
     its Subsidiaries is liable at or from the Properties, or arising from or
     related to the operations of the Borrower or any of its Subsidiaries in
     connection with the Properties or otherwise in connection with the
     Business, in violation of, or in amounts or in a manner that give rise to
     liability, under Environmental Laws, except for any such release that has
     been remediated in accordance with applicable Environmental Laws.

     Section 3.11  Use of Proceeds.

     The proceeds of the Extensions of Credit shall be used solely by the
Borrower to (i) finance a portion of the Acquisition, (ii) pay any fees and
expenses in connection with the Acquisition, (iii) pay any fees and expenses
owing to the Lenders and the Administrative Agent in connection with this
Agreement and the other Credit Documents (including those under the Fee Letter)
and (iv) provide for working capital and other general corporate purposes,
including, without limitation, Permitted Acquisitions.

     Section 3.12  Subsidiaries.

     Set forth on Schedule 3.12 is a complete and accurate list of all direct
and indirect Subsidiaries of the Borrower as of the Closing Date. Information on
the attached Schedule includes jurisdiction of incorporation or organization;
the number of shares of each class of Capital Stock or other equity interests
outstanding; the number and percentage of outstanding shares of each class of
Capital Stock held by each shareholder; and the number and effect, if exercised,
of all outstanding options, warrants, rights of conversion or purchase and
similar rights. The outstanding Capital Stock and other equity interests of all
such Subsidiaries is validly issued, fully paid and non-assessable and is owned,
free and clear of all Liens (other than those arising under or contemplated in
connection with the Credit Documents).

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<PAGE>

     Section 3.13  Ownership.

     Each of the Borrower and its Subsidiaries is the owner of, and has good and
insurable title to or an indefeasible leasehold interest in, all of its
respective assets and none of such assets is subject to any Lien on such party's
interest other than Permitted Liens.

     Section 3.14  Indebtedness.

     Except as otherwise permitted under Section 6.1, the Borrower and its
Subsidiaries have no Indebtedness.

     Section 3.15  Taxes.

     Each of the Borrower and its Subsidiaries has filed, or caused to be filed,
all tax returns required to be filed and paid (a) all amounts of taxes shown
thereon to be due (including interest and penalties) and (b) all other taxes,
fees, assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing by it, except for
such taxes (i) that are not yet delinquent or (ii) that are being contested in
good faith and by proper proceedings, and against which adequate reserves are
being maintained in accordance with GAAP. Neither the Borrower nor any of its
Subsidiaries are aware as of the Closing Date of any proposed tax assessments
against it or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

     Section 3.16  Intellectual Property.

     Each of the Borrower and its Subsidiaries owns, or has the legal right to
use, all Intellectual Property necessary for each of them to conduct its
business as currently conducted. Set forth on Schedule 3.16 is a list of all
material Intellectual Property (excluding unregistered trademarks to the extent
not used or not reasonably identifiable by the Borrower or any of its
Subsidiaries) owned by the Borrower and its Subsidiaries or that the Borrower or
any of its Subsidiaries has the right to use (excluding standard "off the shelf"
licensed software used in the ordinary course of business). Except pursuant to a
license agreement disclosed in Schedule 3.16 hereto, or as otherwise disclosed
in Schedule 3.16 hereto, (a) the Borrower and its Subsidiaries has the right to
use the Intellectual Property disclosed in Schedule 3.16 hereto in perpetuity
and without payment of royalties, (b) all registrations with and applications to
Governmental Authorities in respect of such Intellectual Property are valid or
subsisting and in full force and effect and are not subject to the payment of
any taxes or maintenance fees or the taking of any interest therein, held by the
Borrower or any of its Subsidiaries to maintain their validity or effectiveness
in any material respects, and (c) there are no restrictions on the direct or
indirect transfer of any Contractual Obligation, or any interest therein, held
by the Borrower or any of its Subsidiaries in respect of such Intellectual
Property. Neither the Borrower nor any of its Subsidiaries is in default (or
with the giving of notice or lapse of time or both, would be in default) under
any license to use any material Intellectual Property; no claim has been
asserted in writing and is pending by any Person, in any material respects,
seeking to restrict or deny the use of any material Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower or any of their Subsidiaries know of any such claim; and, to the

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<PAGE>

knowledge of the Borrower and its Subsidiaries, the use of any material
Intellectual Property by the Borrower or any of its Subsidiaries does not
infringe on the rights of any Person. Schedule 3.16 may be updated from time to
time by the Borrower to include new Intellectual Property by giving written
notice thereof to the Administrative Agent.

     Section 3.17  Solvency.

     Each of the Parent, the Borrower and the Subsidiary Guarantors is Solvent.

     Section 3.18  Investments.

     All Investments of each of the Borrower and its Subsidiaries are Permitted
Investments.

     Section 3.19  Location of Collateral.

     Set forth on Schedule 3.19(a) is a list of the real Properties (whether
owned or leased) of the Borrower and its Subsidiaries as of the Closing Date
with street address, county and state where located. Set forth on Schedule
3.19(b) is a list of all locations where any tangible personal property of the
Borrower and its Subsidiaries is located as of the Closing Date (other than
tangible personal property in transit, held by sales representatives or on
consignment with third parties), including county and state where located. Set
forth on Schedule 3.19(c) is the chief executive office and principal place of
business of each of the Borrower and its Subsidiaries as of the Closing Date and
the jurisdiction of incorporation or organization of each such Person as of the
Closing Date.

     Section 3.20  No Burdensome Restrictions.

     Neither the Borrower nor any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     Section 3.21  Labor Matters.

     Except as otherwise set forth in Schedule 3.21 hereto, as of the Closing
Date, (a) there are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any of its Subsidiaries, (b) neither
the Borrower nor any of its Subsidiaries has suffered any strikes, walkouts,
work stoppages or other material labor difficulty within the last five years,
(c) neither the Borrower nor any of its Subsidiaries has knowledge of any
material potential or pending strike, walkout or work stoppage and (d) no
material unfair labor practice compliant is pending or, to the best knowledge of
the Borrower and its Subsidiaries, threatened against the Borrower or any of its
Subsidiaries before any Governmental Authority.

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<PAGE>

     Section 3.22  Security Documents.

     The Security Documents create (or will create upon the execution and
delivery thereof) valid security interests in, and Liens on, the Collateral
purported to be covered thereby, which security interests and Liens are
currently (or will be upon the execution and delivery of the Security Documents
and upon the filing of appropriate financing statements, the recordation of the
applicable Mortgage Instruments, the filing of appropriate notices with the
United States Patent and Trademark Office and the United States Copyright
Office, the filing of the relevant UK Collateral Documents at Companies House in
the United Kingdom and the filing of the relevant Mexican Collateral Documents
in the applicable filing or recording offices in Mexico, in each case in favor
of the Administrative Agent, on behalf of the Lenders) perfected security
interests and Liens, prior to all other Liens other than Permitted Liens that
would be prior to the Liens in favor of the Administrative Agent as a matter of
law.

     Section 3.23  Accuracy and Completeness of Information.

     All factual written information (other than written financial projections)
heretofore, contemporaneously or hereafter furnished by or on behalf of any
Credit Party or any of its Subsidiaries to the Administrative Agent or any
Lender for purposes of or in connection with this Agreement or any other Credit
Document, or any transaction contemplated hereby or thereby, is or will be true
and accurate in all material respects and not incomplete by omitting to state
any material fact necessary to make such information not misleading. The written
financial projections concerning the Borrower and its Subsidiaries heretofore,
contemporaneously or hereafter furnished by or on behalf of any Credit Party or
any of its Subsidiaries to the Administrative Agent or any Lender for purposes
of or in connection with this Agreement or any other Credit Document, or any
transaction contemplated hereby or thereby, have been and will be prepared in
good faith based upon assumptions that the Borrower believes to be reasonable at
the time of such preparation. There is no fact now known to the Borrower, any
other Credit Party or any of their Subsidiaries which has, or could reasonably
be expected to have, a Material Adverse Effect, which fact has not been set
forth herein, in the financial statements of the Borrower and its Subsidiaries
furnished to the Administrative Agent and/or the Lenders, or in any opinion or
other written statement made or furnished by any Credit Party to the
Administrative Agent and/or the Lenders.

     Section 3.24  Fraud and Abuse.

     Neither the Borrower and its Subsidiaries nor, to the knowledge of the
Borrower and its Subsidiaries, any of their stockholders, officers or directors,
have engaged in any activities which are prohibited under federal Medicare and
Medicaid statutes, 42 U.S.C. ss.1320a-7b, or 42 U.S.C. ss.1395nn or the
regulations promulgated pursuant to such statutes or related state or local
statutes or regulations, or which are prohibited by binding rules of
professional conduct, including but not limited to the following: (a) knowingly
and willfully making or causing to be made a false statement or representation
of a material fact in any applications for any benefit or payment; (b) knowingly
and willfully making or causing to be made any false statement or representation
of a material fact for use in determining rights to any benefit or payment; (c)
failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to

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<PAGE>

any benefit or payment on its own behalf or on behalf of another with the intent
to secure such benefit or payment fraudulently; (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind or
offering to pay such remuneration (i) in return for referring an individual to a
Person for the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part by Medicare, Medicaid or other
applicable third party payors, or (ii) in return for purchasing, leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in whole or
in part by Medicare, Medicaid or other applicable third party payors.

     Section 3.25  Licensing and Accreditation.

     Each of the Borrower and its Subsidiaries has, to the extent applicable:
(a) obtained and maintains in good standing all required licenses; (b) to the
extent prudent and customary in the industry in which it is engaged, obtained
and maintains accreditation from all generally recognized accrediting agencies;
(c) obtained and maintains Medicaid Certification and Medicare Certification;
and (d) entered into and maintains in good standing its Medicare Provider
Agreement and its Medicaid Provider Agreement. To the knowledge of the Borrower
and its Subsidiaries, all such required licenses are in full force and effect on
the date hereof and have not been revoked or suspended or otherwise limited.

     Section 3.26  Other Regulatory Protection.

     Each of the Borrower and its Subsidiaries represent that it does not
manufacture pharmaceutical products and is in compliance with all applicable
rules, regulations and other requirements of the Food and Drug Administration
("FDA"), the Federal Trade Commission ("FTC"), the Occupational Safety and
Health Administration ("OSHA"), the Consumer Product Safety Commission, the
United States Customs Service and the United States Postal Service and other
state or federal regulatory authorities or jurisdictions in which the Borrower
or any of its Subsidiaries do business or distribute and market products, except
to the extent that any such noncompliance, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. Except as so
disclosed, neither the FDA, the FTC, OSHA, the Consumer Product Safety
Commission, nor any other such regulatory authority has requested (or, to the
knowledge of the Borrower and its Subsidiaries, are considering requesting) any
product recalls or other enforcement actions that (a) if not complied with,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect and (b) with which the Borrower and its Subsidiaries
have not complied within the time period allowed.

     Section 3.27  Reimbursement from Third Party Payors.

     The accounts receivable of the Borrower and its Subsidiaries have been and
will continue to be adjusted to reflect the reimbursement policies (both those
most recently published in writing as well as those not in writing which have
been verbally communicated) of third party payors such as Medicare, Medicaid,
Blue Cross/Blue Shield, private insurance companies, health maintenance
organizations, preferred provider organizations, alternative delivery systems,
managed care systems, government contacting agencies and other third party
payors. In

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particular, accounts receivable relating to third party payors do not and shall
not exceed amounts any obligee is entered to receive under any capitation
arrangement, fee schedule, discount formula, cost-based reimbursement or other
adjustment or limitation to its usual charges.

     Section 3.28  Other Agreements.

     No Credit Party is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in (a) any Medicaid
Provider Agreement, Medicare Provider Agreement or other agreement or instrument
to which such Person is a party, which default has resulted in, or if not
remedied within any applicable grace period could result in, the revocation,
termination, cancellation or material suspension of Medicaid Certification or
Medicare Certification of any such Person or (b) any other agreement or
instrument to which any such Person is a party, which default, individually or
in the aggregate, has, or if not remedied within any applicable grace period
could reasonably be expected to have, a Material Adverse Effect.

     Section 3.29  Material Contracts.

     Schedule 3.29 sets forth a true and correct and complete list of all
Material Contracts currently in effect. All of the Material Contracts are in
full force and effect and no material defaults exist thereunder.

     Section 3.30  Insurance.

     The insurance coverage of the Borrower and its Subsidiaries is outlined as
to carrier, policy number, expiration date, type and amount on Schedule 3.30 and
such insurance coverage complies the requirements set forth in Section 5.5(b).

     Section 3.31  Classification as Senior Indebtedness.

     The Credit Party Obligations constitute "Senior Indebtedness" under and as
may be defined in any agreement governing any outstanding Subordinated
Indebtedness and the subordination provisions set forth in each such agreement
are legally valid and enforceable against the parties thereto.

     Section 3.32  Tax Shelter Regulations.

     The Borrower does not intend to treat the Loans or Letters of Credit and
related transactions as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4). In the event the Borrower determines to
take any action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof. If the Borrower so notifies the Administrative
Agent, the Borrower acknowledges that one or more of the Lenders may treat its
Loans and/or Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such treasury
regulation.

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                                   ARTICLE IV

                              CONDITIONS PRECEDENT

     Section 4.1  Conditions to Closing Date and Initial Extensions of Credit.

     This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Revolving Loans and the Term Loans on the Closing
Date is subject to, the satisfaction of the following conditions precedent:

          (a) Execution of Agreements. The Administrative Agent shall have
     received (i) counterparts of this Agreement, (ii) for the account of each
     applicable Lender, a Revolving Note and a Term Note, (iii) for the account
     of each Swingline Lender, the Swingline Note, and (iv) counterparts of the
     Security Agreement, the Pledge Agreement, the UK Collateral Documents, the
     BV II Limited Guaranty and Pledge Agreement, and each Mortgage Instrument,
     in each case conforming to the requirements of this Agreement and executed
     by a duly authorized officer of each party thereto, and in each case in
     form and substance reasonably satisfactory to the Lenders.

          (b) Authority Documents. The Administrative Agent shall have received
     the following:

               (i) Articles of Incorporation/Organizational Documents. Copies of
          the articles of incorporation, certificate of incorporation or other
          organizational documents, as applicable, of each Credit Party
          certified to be true and complete as of a recent date by the
          appropriate Governmental Authority of the jurisdiction of its
          incorporation or organization, as the case may be.

               (ii) Resolutions. Copies of resolutions of the board of directors
          (or comparable group and, where applicable, the shareholders or
          members) of each Credit Party approving and adopting the Credit
          Documents, the transactions contemplated therein and authorizing
          execution and delivery thereof, certified by a secretary or assistant
          secretary of such Credit Party (pursuant to a secretary's certificate
          in substantially the form of Schedule 4.1-1 attached hereto) as of the
          Closing Date to be true and correct and in force and effect as of such
          date.

               (iii) Bylaws/Operating Agreement. A copy of the bylaws,
          memorandum and articles of association, limited liability company
          agreement or comparable operating agreement of each Credit Party
          certified by a secretary or assistant secretary of such Credit Party
          (pursuant to a secretary's certificate in substantially the form of
          Schedule 4.1-1 attached hereto) as of the Closing Date to be true and
          correct and in force and effect as of such date.

               (iv) Good Standing. Copies of certificates of good standing,
          existence or its equivalent (to the extent applicable) with respect to
          the each Credit Party

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<PAGE>

          certified as of a recent date by the appropriate Governmental
          Authorities of the jurisdiction of incorporation or organization and
          each other jurisdiction in which the failure to so qualify and be in
          good standing could reasonably be expected to have a Material Adverse
          Effect on the business or operations of the Borrower and its
          Subsidiaries in such state.

               (v) Incumbency. An incumbency certificate of each Credit Party
          certified by a secretary or assistant secretary (pursuant to a
          secretary's certificate in substantially the form of Schedule 4.1-1
          attached hereto) to be true and correct as of the Closing Date.

          (c) Legal Opinions of Counsel. The Administrative Agent shall have
     received (i) opinions of legal counsel (including local counsel to the
     extent required by the Administrative Agent) for the Credit Parties, dated
     the Closing Date and addressed to the Administrative Agent and the Lenders,
     which opinions shall include, without limitation, a "no conflicts" opinion
     with respect to corporate instruments and Material Contracts of the Credit
     Parties on the Closing Date after giving effect to the transactions
     contemplated herein, and (ii) an opinion from Berwin Leighton Paisner as
     to, inter alia, the enforceability of the UK Collateral Documents, each
     such opinion to be in form and substance reasonably satisfactory to the
     Administrative Agent.

          (d) Reliance. The Administrative Agent shall have received a copy of
     each opinion, report, agreement, and other document required to be
     delivered pursuant to the Acquisition Documents and the transactions
     contemplated in connection therewith, together with evidence that the
     Administrative Agent and the Lenders have been authorized to rely on each
     such opinion, all in form and substance reasonably satisfactory to the
     Administrative Agent, it being agreed that no affirmative requirement for
     the delivery of opinions exists in the Acquisition Documents.

          (e) Personal Property Collateral. The Administrative Agent shall have
     received, in form and substance reasonably satisfactory to the
     Administrative Agent:

               (i) searches of Uniform Commercial Code filings in the
          jurisdiction of the chief executive office of the Borrower and its
          Subsidiaries (other than the Mexican Subsidiary), the state or
          jurisdiction of incorporation or organization of each of the Borrower
          and its U.S. Subsidiaries and each jurisdiction where any Collateral
          is located or where a filing would need to be made in order to perfect
          the Administrative Agent's security interest in the Collateral (unless
          otherwise agreed by the Administrative Agent), copies of the financing
          statements on file in such jurisdictions and evidence that no Liens
          exist other than Permitted Liens;

               (ii) duly executed UCC financing statements for each appropriate
          jurisdiction as is necessary, in the Administrative Agent's sole
          discretion, to perfect the Administrative Agent's security interest in
          the Collateral; and

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               (iii) duly executed consents as are necessary, in the
          Administrative Agent's sole discretion, to perfect the Lenders'
          security interest in the Collateral.

          (f) Real Property Collateral. The Administrative Agent shall have
     received, in form and substance reasonably satisfactory to the
     Administrative Agent:

               (i) subject to the receipt of the applicable landlord consents
          pursuant to the terms of clause (vii) of this subsection (f) (to the
          extent the applicable leases require such landlord consents), fully
          executed and notarized Mortgage Instruments encumbering the leasehold
          interest in the Mortgaged Properties leased by the Borrower, the
          Acquired Company or any of their respective Subsidiaries in McKinney,
          Texas and Vista, California (collectively, the "Initial Mortgaged
          Properties");

               (ii) a title report in respect of each of the Initial Mortgaged
          Properties;

               (iii) with respect to each Initial Mortgaged Property, Mortgage
          Policies assuring the Administrative Agent that each of the Mortgage
          Instruments creates a valid and enforceable first priority mortgage
          lien on the applicable Initial Mortgaged Property, free and clear of
          all defects and encumbrances except Permitted Liens, which Mortgage
          Policies shall provide for affirmative insurance and such reinsurance
          as the Administrative Agent may reasonably request, all of the
          foregoing in form and substance reasonably satisfactory to the
          Administrative Agent;

               (iv) evidence as to (A) whether any Initial Mortgaged Property is
          in an area designated by the Federal Emergency Management Agency as
          having special flood or mud slide hazards (a "Flood Hazard Property")
          and (B) if any Initial Mortgaged Property is a Flood Hazard Property,
          (1) whether the community in which such Initial Mortgaged Property is
          located is participating in the National Flood Insurance Program, (2)
          the Borrower's or the applicable Subsidiary Guarantor's written
          acknowledgment of receipt of written notification from the
          Administrative Agent (y) as to the fact that such Initial Mortgaged
          Property is a Flood Hazard Property and (z) as to whether the
          community in which each such Flood Hazard Property is located is
          participating in the National Flood Insurance Program and (3) copies
          of insurance policies or certificates of insurance of the Borrower and
          its Subsidiaries evidencing flood insurance reasonably satisfactory to
          the Administrative Agent and naming the Administrative Agent as loss
          payee on behalf of the Lenders;

               (v) to the extent available, surveys of the sites of the Initial
          Mortgaged Properties;

               (vi) reasonably satisfactory Phase I environmental site
          assessment reports with respect to each of the Initial Mortgaged
          Properties, together with reliance letters with respect to such
          reports in favor of the Lenders;

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               (vii) opinions of counsel to the Borrower or the applicable
          Subsidiary Guarantors for each jurisdiction in which the Initial
          Mortgaged Properties are located; and

               (viii) in the case of the Properties located in Mexicali, Baja
          California and McKinney, Texas and Vista, California, such estoppel
          letters, consents and waivers from the landlords on such Properties as
          the Administrative Agent may reasonably require; provided, that the
          Credit Parties shall not be required (A) to obtain any such consent to
          the extent the applicable landlord refuses to execute such consent
          after the Credit Parties have used their best efforts to obtain such
          consent or (B) to expend any significant amount of money to obtain
          such consents.

          (g) Liability, Casualty and Business Interruption Insurance. The
     Administrative Agent shall have received copies of insurance policies or
     certificates of insurance evidencing liability and casualty insurance
     meeting the requirements set forth herein or in the Security Documents and
     business interruption insurance satisfactory to the Administrative Agent.
     The Administrative Agent shall be named as loss payee or mortgagee, as its
     interest may appear, and/or additional insured with respect to any such
     insurance providing coverage in respect of any Collateral, and each
     provider of any such insurance shall agree, by endorsement upon the policy
     or policies issued by it or by independent instruments furnished to the
     Administrative Agent, that it will give the Administrative Agent thirty
     (30) days prior written notice before any such policy or policies shall be
     altered or canceled.

          (h) Fees. The Administrative Agent and the Lenders shall have received
     (i) all fees, if any, owing pursuant to the Fee Letter and Section 2.5 and
     (ii) evidence that the aggregate amount of fees and expenses payable in
     connection with the consummation of the Acquisition by the Parent and its
     Subsidiaries (excluding those fees identified in the foregoing subsection
     (i)) did not exceed $6,000,000.

          (i) Litigation. Except as set forth on Schedule 3.8, there shall not
     exist any material litigation, investigation, claim, criminal prosecution,
     civil investigative demand, imposition of criminal or civil fines and
     penalties, or any other proceeding of or before any arbitrator or
     Governmental Authority (including but not limited to those regulatory
     agencies responsible for licensing, accrediting or issuing Medicare or
     Medicaid certifications) affecting or relating to any of the Parent, the
     Borrower or the Borrower's Subsidiaries, this Agreement and the other
     Credit Documents, that has not been settled, dismissed, vacated, discharged
     or terminated prior to the Closing Date.

          (j) Solvency Certificate. The Administrative Agent shall have received
     an officer's certificate prepared by the chief financial officer of the
     Parent as to the financial condition, solvency and related matters of each
     Credit Party, in each case after giving effect to the Acquisition and the
     initial borrowings under the Credit Documents, in substantially the form of
     Schedule 4.1-2 hereto.

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          (k) Account Designation Letter. The Administrative Agent shall have
     received the executed Account Designation Letter in the form of Schedule
     1.1-1 hereto.

          (l) Corporate Structure. The corporate, capital and ownership
     structure of the Borrower and its Subsidiaries after giving effect to the
     Acquisition shall be as described in Schedule 3.12, and shall otherwise be
     reasonably satisfactory to the Administrative Agent and the Lenders. The
     Administrative Agent and the Lenders shall be satisfied with the management
     of the Borrower and its Subsidiaries after giving effect to the
     Acquisition.

          (m) Acquisition Documents. The Administrative Agent shall have
     reviewed and approved in its sole discretion all of the Acquisition
     Documents and there shall not have been any material modification,
     amendment, supplement or waiver to the Acquisition Documents without the
     prior written consent of the Administrative Agent, and the Acquisition
     shall have been consummated in accordance with the terms of the Acquisition
     Documents (without waiver of any conditions precedent to the obligations of
     any party thereto). The Administrative Agent shall have received a copy,
     certified by an officer of the Borrower as true and complete, of each
     Acquisition Document as originally executed and delivered, together with
     all exhibits and schedules thereto.

          (n) Consents. The Administrative Agent shall have received evidence
     that all governmental, shareholder, board of director and material third
     party consents and approvals necessary in connection with the financings,
     the Acquisition and other transactions contemplated hereby have been
     obtained and all applicable waiting periods have expired without any action
     being taken by any authority that could restrain, prevent or impose any
     material adverse conditions on such transactions or that could seek or
     threaten any of such transactions.

          (o) Compliance with Laws. The financings and other transactions
     contemplated hereby shall be in compliance with all applicable Requirements
     of Law (including all applicable securities and banking laws, rules and
     regulations).

          (p) Bankruptcy. There shall be no bankruptcy or insolvency proceedings
     with respect to any Credit Party or any of its Subsidiaries.

          (q) Material Adverse Effect. No material adverse change shall have
     occurred since December 31, 2002 in the business, properties, operations or
     condition (financial or otherwise) of the Parent, the Borrower, the
     Acquired Company or any of their respective Subsidiaries.

          (r) Minimum Consolidated Parent EBITDA. The Administrative Agent shall
     have received evidence satisfactory thereto provided by the Parent that the
     Consolidated Parent EBITDA as of the Closing Date calculated on a Pro Forma
     Basis, is no less than $65,000,000.

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<PAGE>

          (s) Maximum Parent Leverage. The Administrative Agent shall have
     received evidence satisfactory thereto provided by the Parent that the
     Parent Leverage Ratio as of the Closing Date calculated on a Pro Forma
     Basis, is no greater than 1.85 to 1.0.

          (t) Minimum Consolidated Borrower EBITDA. The Administrative Agent
     shall have received evidence satisfactory thereto provided by the Borrower
     that the Consolidated Borrower EBITDA as of the Closing Date calculated on
     a Pro Forma Basis, is no less than $43,500,000.

          (u) Maximum Indebtedness. The Administrative Agent shall have received
     evidence satisfactory thereto provided by the Borrower that the
     Indebtedness of the Borrower and its Subsidiaries as of the Closing Date
     (excluding intercompany Subordinated Indebtedness of the Borrower and the
     Subsidiary Guarantors to the extent such Indebtedness would be eliminated
     on a consolidated basis, but including, without limitation, the Parent
     Intercompany Loan) calculated on a Pro Forma Basis, is no greater than
     $149,000,000.

          (v) Financial Statements. The Administrative Agent shall have received
     copies of the financial statements and projections referred to in Section
     3.1 hereof, each in form and substance satisfactory to it.

          (w) Termination of Existing Indebtedness; Approval of Intercompany
     Indebtedness. All existing Indebtedness for borrowed money of the Borrower,
     the Parent, the Acquired Company and their respective Subsidiaries in
     excess of $8,000,000 in the aggregate, shall have been repaid in full and
     terminated and all Liens relating thereto shall have been terminated. The
     Administrative Agent shall have reviewed and approved in its sole
     discretion all loan documentation with respect to any intercompany
     Indebtedness of the Credit Parties and the Administrative Agent shall have
     received a copy, certified by an officer of the Borrower as true and
     complete, of each such document, as originally executed and delivered,
     together with all exhibits, schedules, amendments and modifications
     thereto.

          (x) Officer's Certificates. The Administrative Agent shall have
     received a certificate executed by a Responsible Officer of the Borrower as
     of the Closing Date stating that (i) immediately after giving effect to
     this Credit Agreement (including the initial Extensions of Credit
     hereunder), the other Credit Documents and the Acquisition Documents and
     all the transactions contemplated therein to occur on such date, (A) no
     Default or Event of Default exists, (B) all representations and warranties
     contained herein and in the other Credit Documents are true and correct in
     all material respects, and (C) the Credit Parties are in compliance with
     each of the financial covenants set forth in Section 5.9 in each case after
     giving effect to the Acquisition and the initial borrowings under the
     Credit Documents on a Pro Forma Basis, and demonstrating compliance with
     such financial covenants.

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<PAGE>

          (y) Credit Rating. The Borrower shall have obtained a senior secured
     credit rating from Moody's and from S&P.

          (z) Patriot Act Certificate. The Administrative Agent shall have
     received a certificate satisfactory thereto, for benefit of itself and the
     Lenders, provided by the Borrower that sets forth information required by
     the Patriot Act (as defined in Section 9.18) including, without limitation,
     the identity of the Borrower, the name and address of the Borrower and
     other information that will allow the Administrative Agent or any Lender,
     as applicable, to identify the Borrower in accordance with the Patriot Act.

          (aa) Additional Matters. All other documents and legal matters in
     connection with the transactions contemplated by this Agreement shall be
     reasonably satisfactory in form and substance to the Administrative Agent
     and its counsel.

     Section 4.2  Conditions to All Extensions of Credit.

     The obligation of each Lender to make any Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent on the date of
making such Extension of Credit:

          (a) Representations and Warranties. The representations and warranties
     made by the Credit Parties herein, in the Security Documents or which are
     contained in any certificate furnished at any time under or in connection
     herewith shall be true and correct on and as of the date of such Extension
     of Credit as if made on and as of such date (other than any such
     representations or warranties that, by their terms, refer to a specific
     date other than the date of such Extension of Credit, in which case, as of
     such specific date).

          (b) No Default or Event of Default. No Default or Event of Default
     shall have occurred and be continuing on such date or after giving effect
     to the Extension of Credit to be made on such date unless such Default or
     Event of Default shall have been waived in accordance with this Agreement.

          (c) Compliance with Commitments. Immediately after giving effect to
     the making of any such Extension of Credit (and the application of the
     proceeds thereof), (i) the sum of outstanding Revolving Loans plus
     outstanding Swingline Loans plus LOC Obligations shall not exceed the
     Revolving Committed Amount, (ii) the LOC Obligations shall not exceed the
     LOC Committed Amount and (iii) the Swingline Loans shall not exceed the
     Swingline Committed Amount.

          (d) Additional Conditions to Extensions of Credit. If such Extension
     of Credit is made pursuant to Sections 2.1, 2.2, 2.3 or 2.4 all conditions
     set forth in such Section shall have been satisfied.

     Each request for an Extension of Credit and each acceptance by the Borrower
of any such Extension of Credit shall be deemed to constitute a representation
and warranty by the Borrower

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as of the date of such Extension of Credit that the applicable conditions in
paragraphs (a) through (d) of this Section have been satisfied.

                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

     The Borrower and the Subsidiary Guarantors hereby covenant and agree that
on the Closing Date, and thereafter for so long as this Agreement is in effect
and until the Commitments have terminated, no Note shall remain outstanding and
unpaid and the Credit Party Obligations, together with interest, Commitment Fees
and all other amounts owing to the Administrative Agent or any Lender hereunder,
shall have been paid in full, the Borrower and the Subsidiary Guarantors shall:

     Section 5.1  Financial Statements.

     Furnish to the Administrative Agent and each of the Lenders:

          (a) Annual Financial Statements. As soon as available, but in any
     event within ninety (90) days after the end of each fiscal year of the
     Borrower commencing with the fiscal year ended December 31, 2003 (or, with
     respect to the comparative information required below, commencing with the
     fiscal year ended December 31, 2005), a copy of the consolidated and
     consolidating balance sheet of the Parent and its consolidated Subsidiaries
     (which consolidating balance sheet shall include the consolidated balance
     sheet of the Borrower and its Subsidiaries) as at the end of such fiscal
     year and the related consolidated and consolidating statements of income
     and retained earnings and of cash flows of the Parent and its consolidated
     Subsidiaries (which consolidating statements shall include the consolidated
     statements of income and retained earnings and cash flow of the Borrower
     and its Subsidiaries) for such year, together with an "other financial
     information" opinion with respect to the Borrower and its Subsidiaries,
     audited (with respect to the consolidated statements only) by a firm of
     independent certified public accountants of, as appropriate, nationally or
     internationally recognized standing reasonably acceptable to the
     Administrative Agent, setting forth in comparative form consolidated and
     consolidating figures for the preceding fiscal year, reported on without a
     "going concern" or like qualification or exception, or qualification
     indicating that the scope of the audit was inadequate to permit such
     independent certified public accountants to certify such financial
     statements without such qualification;

          (b) Quarterly Financial Statements. (i) As soon as available and in
     any event within (i) forty-five (45) days after the end of each of the
     first three fiscal quarters of the Borrower and (ii) ninety (90) days after
     the end of the fourth fiscal quarter of the Borrower, a company-prepared
     consolidated and consolidating balance sheet of the Borrower and its
     consolidated Subsidiaries as at the end of such period and related
     company-prepared consolidated and consolidating statements of income and
     retained earnings and of cash flows for the Borrower and its consolidated
     Subsidiaries for such

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     quarterly period and for the portion of the fiscal year ending with such
     period, in each case setting forth in comparative form consolidated and
     consolidating figures for the corresponding period or periods of the
     preceding fiscal year (subject to normal recurring year-end audit
     adjustments) and including a summary of accounts receivable and accounts
     payable aging reports in form satisfactory to the Lenders and (ii) as soon
     as available and in any event within (i) forty-five (45) days after the end
     of each of the first three fiscal quarters of the Parent and (ii) ninety
     (90) days after the end of the fourth fiscal quarter of the Parent, a
     company-prepared consolidated and consolidating balance sheet of the Parent
     and its consolidated Subsidiaries as at the end of such period and related
     company-prepared consolidating and consolidating statements of income and
     retained earnings and of cash flows for the Parent and its consolidated
     Subsidiaries for such quarterly period and for the portion of the fiscal
     year ending with such period, in each case setting forth in comparative
     form consolidated and consolidating figures for the corresponding period or
     periods of the preceding fiscal year (subject to normal recurring year-end
     audit adjustments) and including management discussion and analysis of
     operating results inclusive of operating metrics in comparative form and a
     summary of accounts receivable and accounts payable aging reports in form
     satisfactory to the Lenders; and

          (c) Annual Budget Plan. As soon as available, but in any event within
     thirty (30) days after the end of each fiscal year, a copy of the detailed
     annual budget or plan of the Borrower for the next fiscal year on a
     quarterly basis, in form and detail reasonably acceptable to the
     Administrative Agent and the Required Lenders, together with a summary of
     the material assumptions made in the preparation of such annual budget or
     plan;

all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of a change, if any, in the application of accounting principles as
provided in Section 1.3.

     Section 5.2  Certificates; Other Information.

     Furnish to the Administrative Agent and each of the Lenders:

          (a) concurrently with the delivery of the financial statements
     referred to in Section 5.1(a) above, certificates of the independent
     certified public accountants with respect to the Borrower and the Parent
     reporting on such financial statements stating that in making the
     examination necessary therefore no knowledge was obtained of any Default or
     Event of Default under Section 5.9, except as specified in such
     certificate;

          (b) concurrently with the delivery of the financial statements
     referred to in Sections 5.1(a) and 5.1(b) above, a certificate of a
     Responsible Officer of the Borrower

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<PAGE>

     stating that, to the best of such Responsible Officer's knowledge, during
     such period each of the Credit Parties observed or performed all of its
     covenants and other agreements, and satisfied every condition, contained in
     this Agreement to be observed, performed or satisfied by it, and that such
     Responsible Officer has obtained no knowledge of any Default or Event of
     Default except as specified in such certificate and such certificate shall
     include the calculations in reasonable detail required to indicate
     compliance with Section 5.9 as of the last day of such period;

          (c) within ten (10) days after the same are sent, copies of all
     reports (other than those otherwise provided pursuant to Section 5.1 and
     those which are of a promotional nature) and other financial information
     which the Parent sends to its members and equity holders, and within ten
     (10) days after the same are filed, copies of all financial statements and
     non-confidential reports which the Parent may make to or file with the
     Securities and Exchange Commission or any successor or analogous
     Governmental Authority;

          (d) within ninety (90) days after the end of each fiscal year of the
     Borrower, a certificate containing information regarding the amount of all
     Asset Dispositions, Debt Issuances, and Equity Issuances that were made
     during the prior fiscal year and amounts received in connection with any
     Recovery Event during the prior fiscal year;

          (e) promptly upon receipt thereof, a copy of any other report or
     "management letter" submitted or presented by independent accountants to
     any Credit Party or any of the Borrower's Subsidiaries in connection with
     any annual, interim or special audit of the books of such Person;

          (f) promptly, copies of all notices from or material requests to the
     FDA, FTC, and OSHA (each, as defined in Section 3.26); and

          (g) promptly, such additional financial and other information as the
     Administrative Agent, on behalf of any Lender, may from time to time
     reasonably request.

     Section 5.3  Payment of Obligations.

     Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its taxes (Federal, state, local and
any other taxes) and all its other obligations and liabilities of whatever
nature and any additional costs that are imposed as a result of any failure to
so pay, discharge or otherwise satisfy such obligations and liabilities, except
(a) when the amount or validity of such obligations, liabilities and costs is
currently being contested in good faith by appropriate proceedings and reserves,
if applicable, in conformity with GAAP with respect thereto have been provided
on the books of the Borrower or a Subsidiary Guarantor, as the case may be or
(b) where any such failure to pay, discharge or satisfy could not reasonably be
expected to have a Material Adverse Effect.

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     Section 5.4  Conduct of Business and Maintenance of Existence.

     Continue to (a) engage in business of the same general type as now
conducted by it on the Closing Date and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business; provided that, if in the discretion of the Borrower it
is commercially feasible to do so and if in the discretion of the Administrative
Agent no materially adverse consequences to the Lenders would result therefrom,
(i) the Borrower may change its jurisdiction of organization from the United
Kingdom to any state of the United States so long as the Administrative Agent
has received such corporate documentation, collateral documentation and opinions
of counsel as the Administrative Agent may reasonably request in connection
therewith, and (ii) Orthofix Holdings may change its jurisdiction of
incorporation from the State of Minnesota to the State of Delaware so long as
the Borrower confirms that the Administrative Agent has filed all necessary UCC
financing statement in connection therewith; and provided, further, that the
Borrower may consummate the Acquisition and any other merger or consolidation
permitted under Section 6.4 or liquidate or dissolve any Subsidiary that has no
assets or that has sold, disposed of or otherwise transferred all of its assets
to the Borrower or another of the Subsidiaries and (b) comply with all
Contractual Obligations and Requirements of Law applicable to it except to the
extent that failure to comply therewith, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

     Section 5.5 Maintenance of Property; Insurance.

          (a) Keep all material property useful and necessary in its business in
     good working order and condition (ordinary wear and tear, damage by
     casualty and obsolescence excepted);

          (b) Maintain with financially sound and reputable insurance companies
     insurance on all its Material Property (including without limitation its
     material tangible Collateral) in at least such amounts and against at least
     such risks as are usually insured against in the same general area by
     companies engaged in the same or a similar business; and furnish to the
     Administrative Agent, upon written request, full information as to the
     insurance carried. The Administrative Agent shall be named as loss payee or
     mortgagee, as its interest may appear, (or additional insured in the case
     of liability coverage) with respect to any such insurance providing
     coverage in respect of any Collateral, and each provider of any such
     insurance shall agree, by endorsement upon the policy or policies issued by
     it or by independent instruments furnished to the Administrative Agent,
     that it will give the Administrative Agent thirty (30) days prior written
     notice before any such policy or policies shall be altered or canceled, and
     that no act or default of any Credit Party or any Subsidiary of the
     Borrower or any other Person shall affect the rights of the Administrative
     Agent or the Lenders under such policy or policies; and

          (c) In case of any material loss, damage to or destruction of the
     Collateral of any Credit Party or any part thereof, such Credit Party shall
     promptly give written notice thereof to the Administrative Agent generally
     describing the nature and extent of such damage or destruction. In case of
     any loss, damage to or destruction of the Collateral of any Credit

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<PAGE>

     Party or any part thereof, such Credit Party, whether or not the insurance
     proceeds, if any, received on account of such damage or destruction shall
     be sufficient for that purpose, at such Credit Party's cost and expense,
     will promptly repair or replace the Collateral of such Credit Party so
     lost, damaged or destroyed.

     Section 5.6  Inspection of Property; Books and Records; Discussions.

     Keep proper books and records of account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the
Administrative Agent or any Lender, the Administrative Agent or any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records (other than materials protected by the attorney-client
privilege and materials which the Borrower may not disclose without violation of
a confidentiality obligation binding upon it) once a fiscal quarter or upon the
occurrence and during the continuance of a Default or an Event of Default, and
to discuss the business, operations, properties and financial and other
condition of the Credit Parties and their Subsidiaries with officers and
employees of the Credit Parties and their Subsidiaries and with its independent
certified public accountants. The forgoing, with respect to the Lenders, shall
be at such Lender's expense and, with respect to the Administrative Agent, shall
be at the Borrower's expense.

     Section 5.7  Notices.

     Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:

          (a) promptly, but in any event within two (2) Business Days after any
     Credit Party knows thereof, the occurrence of any Default or Event of
     Default;

          (b) promptly, any default or event of default under any Contractual
     Obligation of any Credit Party or any of its Subsidiaries which,
     individually or in the aggregate, could reasonably be expected to have a
     Material Adverse Effect or involve a monetary claim in excess of
     $1,000,000;

          (c) promptly, any litigation, or any investigation or proceeding known
     to any Credit Party (i) affecting any Credit Party or any of its
     Subsidiaries which, if adversely determined, individually or in the
     aggregate, could reasonably be expected to have a Material Adverse Effect
     or involve a monetary claim in excess of $1,000,000 or (ii) affecting or
     with respect to this Agreement or any other Credit Document;

          (d) as soon as possible and in any event within thirty (30) days after
     any Credit Party knows or has reason to know thereof: (i) the occurrence of
     any material Reportable Event with respect to any Single Employer Plan, a
     failure to make any required contribution to a Single Employer Plan, the
     creation of any Lien in favor of a Single Employer Plan or in favor of the
     PBGC with respect to a Single Employer Plan (other than a Permitted Lien)
     or any withdrawal from, or the termination, Reorganization

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     or Insolvency of, any Multiemployer Plan, which could reasonably be
     expected to result in any material liability for any Credit Party, or (ii)
     the institution of proceedings or the taking of any other action by the
     PBGC or any Credit Party or any Commonly Controlled Entity or any
     Multiemployer Plan with respect to the withdrawal from, or the terminating,
     Reorganization or Insolvency of, any Plan, which could reasonably be
     expected to result in any material liability for any Credit Party;

          (e) promptly, of the institution of any investigation or proceeding
     against any Credit Party to suspend, revoke or terminate or which may
     result in the termination of any Medicaid Provider Agreement, Medicaid
     Certification, Medicare Provider Agreement, Medicare Certification or
     exclusion from any Medical Reimbursement Program;

          (f) promptly, after any Credit Party becomes involved in a pending
     civil or criminal investigation, criminal action or civil proposed
     debarment, exclusion or other sanctioning action related to any Federal or
     state healthcare program;

          (g) promptly, any other development or event which, individually or in
     the aggregate, could reasonably be expected to have a Material Adverse
     Effect;

          (h) promptly, any intention by the Borrower to treat the Loans and/or
     Letters of Credit and related transactions as being a "reportable
     transaction" (within the meaning of Treasury Regulation Section 1.6011-4),
     a duly completed copy of IRS Form 8886 or any successor form; and

          (i) promptly, the Borrower or any of its Subsidiaries (i) entering
     into a collective bargaining agreement or Multiemployer Plan covering the
     employees of the Borrower or any of its Subsidiaries, (ii) suffering any
     strike, walkout, work stoppage or other material labor difficulty or (iii)
     becoming aware of any material unfair labor practice compliant against the
     Borrower or any of its Subsidiaries before any Governmental Authority.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take with
respect thereto. In the case of any notice of a Default or Event of Default, the
Borrower shall specify that such notice is a Default or Event of Default notice
on the face thereof.

     Section 5.8  Environmental Laws.

          (a) Comply in all material respects with, and ensure compliance in all
     material respects by all tenants and subtenants, if any, with, all
     applicable Environmental Laws and obtain and comply in all material
     respects with and maintain, and ensure that all tenants and subtenants
     obtain and comply in all material respects with and maintain, any and all
     licenses, approvals, notifications, registrations or permits required by
     applicable

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     Environmental Laws except to the extent that failure to do so, individually
     or in the aggregate, could not reasonably be expected to have a Material
     Adverse Effect;

          (b) Conduct and complete all investigations, studies, sampling and
     testing, and all remedial, removal and other actions required under
     Environmental Laws and promptly comply in all material respects with all
     lawful orders and directives of all Governmental Authorities regarding
     Environmental Laws except to the extent that the same are being contested
     in good faith by appropriate proceedings and the pendency of such
     proceedings could not reasonably be expected to have a Material Adverse
     Effect; and

          (c) Defend, indemnify and hold harmless the Administrative Agent and
     the Lenders, and their respective employees, agents, officers and directors
     and affiliates, from and against any and all claims, demands, penalties,
     fines, liabilities, settlements, damages, costs and expenses of whatever
     kind or nature known or unknown, contingent or otherwise, arising out of,
     or in any way relating to the violation of, noncompliance with or liability
     under, any Environmental Law applicable to the operations of any Credit
     Party or any of the Borrower's Subsidiaries or the Properties, or any
     orders, requirements or demands of Governmental Authorities related
     thereto, including, without limitation, reasonable attorney's and
     consultant's fees, investigation and laboratory fees, response costs, court
     costs and litigation expenses, except to the extent that any of the
     foregoing arise out of the gross negligence or willful misconduct of the
     Person seeking indemnification or any of its employees, agents, officers
     and directors and affiliates. The agreements in this paragraph shall
     survive repayment of the Notes and all other amounts payable hereunder.

     Section 5.9  Financial Covenants.

     Commencing on the day immediately following the Closing Date and for so
long as this Agreement shall remain in effect, each of the Credit Parties shall,
and shall cause each of its Subsidiaries to, comply with the following financial
covenants:

          (a) Parent Leverage Ratio. The Parent Leverage Ratio, as of the last
     day of each fiscal quarter of the Parent and its Subsidiaries, shall be
     less than or equal to 2.25 to 1.0.

          (b) Borrower Leverage Ratio. The Borrower Leverage Ratio, as of the
     last day of each fiscal quarter of the Borrower and its Subsidiaries during
     the periods indicated below, shall be less than or equal to the following:

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         -----------------------------------------------------------------------
                                   Period                         Ratio
                                   ------                         -----
         -----------------------------------------------------------------------
         Closing Date through June 30, 2004                   2.875 to 1.00
         -----------------------------------------------------------------------
         July 1, 2004 through December 30, 2004                2.75 to 1.00
         -----------------------------------------------------------------------
         December 31, 2004 through March 30, 2005              2.50 to 1.00
         -----------------------------------------------------------------------
         March 31, 2005 through September 29, 2005            2.375 to 1.00
         -----------------------------------------------------------------------
         September 30, 2005 through March 30, 2006             2.25 to 1.00
         -----------------------------------------------------------------------
         March 31, 2006 through March 30, 2007                 2.00 to 1.00
         -----------------------------------------------------------------------
         March 31, 2007 through December 30, 2007              1.75 to 1.00
         -----------------------------------------------------------------------
         December 31, 2007 and thereafter                      1.50 to 1.00
         -----------------------------------------------------------------------

          (c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as
     of the last day of each fiscal quarter of the Borrower occurring during the
     periods indicated below, shall be greater than or equal to the following:

                     Period                                        Ratio
                     ------                                        -----

     Closing Date through March 30, 2006                        1.10 to 1.0
     March 31, 2006 through March 30, 2007                      1.20 to 1.0
     March 31, 2007 and thereafter                              1.25 to 1.0

          (d) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
     last day of each fiscal quarter of the Borrower occurring during the
     periods indicated below, shall be greater than or equal to the following:

                     Period                                        Ratio
                     ------                                        -----

     Closing Date through September 29, 2005                    4.00 to 1.0
     September 30, 2005 and thereafter                          5.00 to 1.0

     Section 5.10  Additional Subsidiary Guarantors.

     The Borrower and its Subsidiary Guarantors will cause each of their U.S.
Subsidiaries, whether newly formed, after acquired or otherwise existing, to
promptly become a Guarantor hereunder by way of execution of a Joinder
Agreement. The guaranty obligations of any such Additional Credit Party shall be
secured by, among other things, the property and assets of the Additional Credit
Party and such U.S. Subsidiary shall execute and deliver to the Administrative
Agent such Security Documents, legal opinions and related documents as the
Administrative Agent may reasonably request with respect to such property and
assets.

     Section 5.11  Compliance with Law.

     The Borrower, the Parent and the Subsidiary Guarantors will, and will cause
each of its Subsidiaries to, (a) comply with all expressly stated laws, rules,
regulations, orders, restrictions and valid requirements imposed by all
Governmental Authorities and regulatory authorities applicable to it, its
property and assets and the conduct of its business if noncompliance with any
such law, rule, regulation, order, restriction or requirement, including without
limitation Titles XVIII and XIX of the Social Security Act, Medicare Regulations
and Medicaid Regulations,

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individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and (b) obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and herein
contemplated, including without limitation professional licenses, appropriate
Medicaid Certifications and Medicare Certifications, if failure to do so could
have, individually or in the aggregate, a Material Adverse Effect. Specifically,
but without limiting the foregoing, and except where any such failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect: (x) billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare,
Medicaid and other Medical Reimbursement Programs and will be administered by
properly trained personnel; and (y) medical director compensation arrangements
and other arrangements with referring physicians will comply with applicable
state and federal self-referral and anti-kickback laws, including without
limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) and 42 U.S.C. Section
1395nn.

     Section 5.12  Pledged Assets.

          (a) The Borrower will, and will cause each of its Subsidiaries to,
     cause 100% of the outstanding Capital Stock of each of its direct or
     indirect Subsidiaries to be subject at all times to a first priority,
     perfected Lien in favor of the Administrative Agent pursuant to the terms
     and conditions of the Security Documents or such other security documents
     as the Administrative Agent shall reasonably request.

          (b) If, subsequent to the Closing Date, the Borrower or any Subsidiary
     Guarantor shall acquire any securities, instruments (except checks),
     chattel paper or other personal property required for perfection to be
     delivered to the Administrative Agent as Collateral hereunder or under any
     of the Security Documents, the Borrower or such Subsidiary Guarantor shall
     promptly (and in any event within three (3) Business Days) after such
     acquisition notify the Administrative Agent of same; provided that property
     the value of which, individually, is less than $50,000 and, in the
     aggregate, is less than $250,000 in any twelve-month period, shall not be
     required to be delivered until such time that all such property shall
     exceed $100,000 in the aggregate. Each of the Borrower and the Subsidiary
     Guarantors shall take such action at its own expense as may be necessary or
     otherwise requested by the Administrative Agent (including, without
     limitation, any of the actions described in Sections 4.1(e) and (f) hereof)
     to ensure that the Administrative Agent has a first priority perfected Lien
     to secure the Credit Party Obligations in (i) all personal property
     Collateral of the Borrower and the Subsidiary Guarantors and (ii) to the
     extent required by the Administrative Agent or the Required Lenders in its
     or their sole reasonable discretion, all real property owned by the
     Borrower and the Subsidiary Guarantors, subject in each case only to
     Permitted Liens.

          (c) If, subsequent to the Closing Date, the Borrower or any Subsidiary
     Guarantor leases a warehouse, plant or other real property material to the
     such Person's business, the Borrower or such Subsidiary Guarantor shall (i)
     promptly notify the Administrative Agent of such lease, (ii) to the extent
     required by the Administrative Agent and to the extent consented to by the
     relevant landlord or not prohibited under the

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<PAGE>

     lease, promptly deliver to the Administrative Agent such Mortgage
     Instruments, title reports, Mortgage Policies, Surveys, environmental site
     assessment reports, legal opinions and other documentation as the
     Administrative Agent may require and (iii) use its reasonable best efforts
     to deliver to the Administrative Agent such estoppel letters, consents and
     waivers from the landlord on such real property as may be required by the
     Administrative Agent; provided, that the Borrower and the Subsidiary
     Guarantors shall not be required to expend any significant amount of money
     to obtain such consents.

     Section 5.13  Further Assurances.

          (a) Drop Down Date. If the Drop Down Date shall not have occurred on
     or prior to January 29, 2004, the Parent promptly will cause BV II and IOL
     to execute a full guaranty of the Credit Party Obligations and cause each
     of BV II and IOL to provide first-priority security interests in all of
     such Person's property and assets in favor of the Administrative Agent on
     behalf of the Lenders. If the Drop Down Date occurs on or prior to January
     29, 2004, the BV II Limited Guaranty and Pledge Agreement shall be
     automatically terminated and no consent of the Administrative Agent or any
     Lender or action by BV II, the Administrative Agent or any Lender shall be
     required in connection therewith.

          (b) Mexican Security Documents. Within 30 days after the Closing Date
     (or such extended period of time as agreed to by the Administrative Agent),
     the Administrative Agent shall have received (i) a Joinder Agreement and
     the Mexican Security Documents, in each case executed by the Mexican
     Subsidiary, and (ii) such corporate documents and certificates, opinion of
     counsel and other documents (including, without limitation, one or more
     certificates evidencing the outstanding Capital Stock of the Mexican
     Subsidiary to the extent available and obtainable) as the Administrative
     Agent may reasonably request in connection with the foregoing.

          (c) New Jersey Opinion. If at any time (i) the Consolidated Borrower
     EBITDA attributable to Neomedics, Inc. shall exceed 5% of the total
     Consolidated Borrower EBITDA at such time or (ii) the fair market value of
     the assets of Neomedics, Inc. shall exceed 5% of the fair market value of
     the total assets of the Borrower and its Subsidiaries, then, within 30 days
     thereafter (or such extended period of time as agreed to by the
     Administrative Agent), the Administrative Agent shall have received such
     opinion of counsel with respect to Neomedics, Inc. as the Administrative
     Agent may reasonably request.

          (d) IP Matters. Within sixty (60) days after the Closing Date (or such
     extended period of time as agreed to by the Administrative Agent), the
     Borrower and the Subsidiary Guarantors shall have used commercially
     reasonable efforts to correct with the United States Patent and Trademark
     Office any chain of title issues with respect to its Intellectual Property
     and to file with the United States Patent and Trademark Offices any
     security interest terminations, in each case as may be reasonably requested
     by the Administrative Agent.

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<PAGE>

          (e) Landlord Waiver. Within thirty (30) days after the Closing Date
     (or such extended period of time as agreed to by the Administrative Agent),
     the Borrower and the Subsidiary Guarantors shall have used commercially
     reasonable efforts to obtain a landlord waiver with respect to that certain
     leased property located in Vista, California on terms and conditions
     reasonably satisfactory to the Administrative Agent; provided that if the
     Administrative Agent determines that the cost of obtaining such waiver
     exceeds the value thereof, then such waiver shall no longer be required
     pursuant to this Section 5.13(e).

                                   ARTICLE VI

                               NEGATIVE COVENANTS

     The Borrower and the Subsidiary Guarantors hereby covenant and agree and,
with respect to Section 6.13, the Parent hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Agreement is in effect and
until the Commitments have terminated, no Note remains outstanding and unpaid
and the Credit Party Obligations, together with interest, Commitment Fee and all
other amounts owing to the Administrative Agent or any Lender hereunder, are
paid in full that:

     Section 6.1  Indebtedness.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, contract, create, incur, assume or permit to exist any
Indebtedness, except without duplication:

          (a) Indebtedness arising or existing under this Agreement and the
     other Credit Documents;

          (b) Indebtedness of the Borrower and its Subsidiaries existing as of
     the Closing Date as referenced in the financial statements referenced in
     Section 3.1 (and set out more specifically in Schedule 6.1(b)) hereto and
     renewals, refinancings or extensions thereof in a principal amount not in
     excess of that outstanding as of the date of such renewal, refinancing or
     extension; provided that the Borrower and the Subsidiary Guarantors party
     to the intercompany notes set forth on Schedule 6.1(b) hereby agree that
     the intercompany Indebtedness evidenced by such intercompany notes shall be
     subordinated to the Credit Party Obligations and that the Credit Party
     Obligations shall be paid in full prior to any payments being made on such
     intercompany notes, except as permitted by Section 6.10;

          (c) Indebtedness of the Borrower and its Subsidiaries incurred after
     the Closing Date consisting of Capital Leases or Indebtedness incurred to
     provide all or a portion of the purchase price or cost of construction of
     an asset; provided that (i) such Indebtedness when incurred shall not
     exceed the purchase price or cost of construction of such asset; (ii) no
     such Indebtedness shall be refinanced for a principal amount in excess

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<PAGE>

     of the principal balance outstanding thereon at the time of such
     refinancing; and (iii) the total amount of all such Indebtedness shall not
     exceed $2,500,000 at any time outstanding;

          (d) Unsecured intercompany Subordinated Indebtedness among the
     Borrower and the Subsidiary Guarantors;

          (e) Indebtedness and obligations owing under Secured Hedging
     Agreements and other Hedging Agreements entered into in order to manage
     existing or anticipated interest rate or exchange rate risks and not for
     speculative purposes;

          (f) Indebtedness and obligations of the Borrower and its Subsidiaries
     owing under documentary letters of credit for the purchase of goods or
     other merchandise (but not under standby, direct pay or other letters of
     credit except for the Letters of Credit hereunder) generally;

          (g) The Parent Intercompany Loan, the Deferred Purchase Agreement and
     other unsecured Subordinated Indebtedness of the Borrower and its
     Subsidiaries, which other Subordinated Indebtedness does not exceed
     $10,000,000 in the aggregate at any time outstanding;

          (h) Guaranty Obligations in respect of Indebtedness of the Borrower
     and its Subsidiaries to the extent such Indebtedness is permitted to exist
     or be incurred pursuant to this Section 6.1; and

          (i) other Indebtedness of the Borrower and its Subsidiaries which does
     not exceed $1,000,000 in the aggregate at any time outstanding.

     Section 6.2  Liens.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any of its Subsidiaries to, contract, create, incur, assume or permit to exist
any Lien with respect to any of its property or assets of any kind (whether real
or personal, tangible or intangible), whether now owned or hereafter acquired,
except for Permitted Liens.

     Section 6.3  Nature of Business.

     Each of the Credit Parties will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to, alter the character of its
business or any business activities reasonably related thereto in any material
respect from that conducted as of the Closing Date.

     Section 6.4  Consolidation, Merger, Sale or Purchase of Assets, etc.

     Each of the Credit Parties (other than the Parent with respect to
subclauses (a) and (b)(i) below) will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to,

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<PAGE>

          (a) dissolve, liquidate or wind up its affairs, sell, transfer, lease
     or otherwise dispose of its property or assets or agree to do so at a
     future time except the following, without duplication, shall be expressly
     permitted:

               (i) the sale, transfer, lease or other disposition of inventory
          and materials in the ordinary course of business;

               (ii) the sale, transfer or other disposition of cash and Cash
          Equivalents;

               (iii) (A) the disposition of property or assets as a direct
          result of a Recovery Event or (B) the sale, lease, transfer or other
          disposition of machinery, parts and equipment no longer used or useful
          in the conduct of the business of the Borrower or any of its
          Subsidiaries, so long as the net proceeds therefrom are used to
          replace such machinery, parts and equipment or to purchase or
          otherwise acquire new assets or property within 180 days of receipt of
          the net proceeds;

               (iv) the sale, lease or transfer of property or assets between or
          among the Borrower and the Subsidiary Guarantors;

               (v) the termination of any Hedging Agreement permitted pursuant
          to Section 6.1(e);

               (vi) the sale, lease or transfer of property or assets not to
          exceed $1,000,000 in the aggregate in any fiscal year; and

               (vii) liquidate or dissolve any Subsidiary that has no assets or
          that has sold, disposed of or otherwise transferred all of its assets
          to the Borrower or a Subsidiary Guarantor;

     provided, that, in the case of clauses (i), (ii), (iii) and (vi) above, at
     least 75% of the consideration received therefore by the Borrower or any
     other Credit Party is in the form of cash or Cash Equivalents; provided,
     further, that with respect to sales of assets permitted hereunder only, the
     Administrative Agent shall without the consent of the Required Lenders,
     release its Liens relating to the particular assets sold; or

          (b) (i) purchase, lease or otherwise acquire (in a single transaction
     or a series of related transactions) the property or assets of any Person
     (other than purchases or other acquisitions of inventory, leases,
     materials, property and equipment in the ordinary course of business,
     except as otherwise limited or prohibited herein) or (ii) enter into any
     transaction of merger or consolidation, except for (A) consummation of the
     Acquisition, (B) investments or acquisitions permitted pursuant to Section
     6.5, and (C) the merger or consolidation of a Credit Party (other than the
     Parent) with and into another Credit Party (other than the Parent);
     provided that (1) if the Borrower is a party thereto, the Borrower will be
     the surviving corporation and (2) the Administrative Agent's Liens with
     respect to

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<PAGE>

     the Collateral of each Credit Party involved in such merger or
     consolidation shall remain continuously perfected.

     Section 6.5  Advances, Investments and Loans.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, make any Investment except for Permitted Investments.

     Section 6.6  Transactions with Affiliates.

     Except as permitted in subsection (e) of the definition of Permitted
Investments, neither the Borrower nor any Subsidiary Guarantor will, nor will it
permit any Subsidiary to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer, director,
shareholder or Affiliate other than on terms and conditions substantially as
favorable as would be obtainable in a comparable arm's-length transaction with a
Person other than an officer, director, shareholder or Affiliate.

     Section 6.7  Ownership of Subsidiaries; Restrictions.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, create, form or acquire any Subsidiaries, except for U.S.
Subsidiaries which are Credit Parties or which are joined as Additional Credit
Parties in accordance with the terms hereof. Neither the Borrower nor any
Subsidiary Guarantor will sell, transfer, pledge or otherwise dispose of any
Capital Stock or other equity interests in any of its Subsidiaries, nor will it
permit any of its Subsidiaries to issue, sell, transfer, pledge or otherwise
dispose of any of their Capital Stock or other equity interests, except in a
transaction permitted by Section 6.4.

     Section 6.8  Fiscal Year; Organizational Documents; Material Contracts;
Subordinated Indebtedness Documents.

     Each of the Credit Parties will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to, change its fiscal year or its
accounting policies except as required by GAAP. Except as permitted pursuant to
Section 5.4, each of the Credit Parties will not, nor will the Borrower or any
Subsidiary Guarantor permit any Subsidiary to, amend, modify or change its
articles of incorporation (or corporate charter or other similar organizational
document) or bylaws (or other similar document) without the prior written
consent of the Required Lenders. Each of the Credit Parties will not, nor will
the Borrower or any Subsidiary Guarantor permit any Subsidiary to, without the
prior written consent of the Administrative Agent, amend, modify, cancel or
terminate or fail to renew or extend or permit the amendment, modification,
cancellation or termination of any of the Material Contracts to the extent any
amendment, modification, cancellation, termination or failure to renew or extend
could reasonably be expected to have a Material Adverse Effect. Each of the
Borrower and its Subsidiaries will not, without the prior written consent of the
Required Lenders, amend, modify, waive or extend or permit the amendment,
modification, waiver or extension of any Subordinated Indebtedness or of any
documentation governing or evidencing such Subordinated Indebtedness in a manner
that is adverse to the interests of the Lenders or the issuer of such
Subordinated Indebtedness.

                                       88
<PAGE>

     Section 6.9  Limitation on Restricted Actions.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any such Person to (a) pay dividends or make any other distributions to any
Credit Party on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Credit Party, (c) make loans or advances to any Credit
Party, (d) sell, lease or transfer any of its properties or assets to any Credit
Party, or (e) act as a guarantor and pledge its assets pursuant to the Credit
Documents or any renewals, refinancings, exchanges, refundings or extension
thereof, except (in respect of any of the matters referred to in clauses (a)-(d)
above) for such encumbrances or restrictions existing under or by reason of (i)
this Agreement and the other Credit Documents, (ii) applicable law, (iii) any
document or instrument governing Indebtedness incurred pursuant to Section
6.1(c); provided that any such restriction contained therein relates only to the
asset or assets constructed or acquired in connection therewith, or (iv) any
Permitted Lien or any document or instrument governing any Permitted Lien;
provided that any such restriction contained therein relates only to the asset
or assets subject to such Permitted Lien.

     Section 6.10  Restricted Payments.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment except (a) to make dividends payable
solely in the same class of Capital Stock of such Person, (b) to make dividends
or other distributions (directly or indirectly through Subsidiaries) payable to
any Credit Party other than the Parent, (c) to make payments in respect of the
Kinesis Earnout in an aggregate amount not to exceed $1,200,000 so long as such
payment is not to an Affiliate of the Credit Parties, (d) if the Borrower
achieves a Borrower Leverage Ratio of 1.50 to 1.0 as of the end of any fiscal
year, so long as (i) no Default or Event of Default has occurred and is
continuing at the time of any such payment or would result therefrom and (ii)
the Parent, the Borrower and the Borrower's Subsidiaries are in compliance with
the financial covenants set forth in Section 5.9 after giving effect to any such
payment on a Pro Forma Basis, the Borrower may make distributions to the Parent
for purposes of repaying the principal amount of the Parent Intercompany Loan in
an aggregate amount not to exceed (x) 25% of the Excess Cash Flow from the
fiscal year then ending and (y) $35,561,835 over the term of this Credit
Agreement; provided further that to the extent any such portion of Excess Cash
Flow is distributed in the form of a dividend, there shall be no bankruptcy or
insolvency of Orthofix International B.V. or either of the Limited Guarantors at
the time of such dividend or reasonable expectation of bankruptcy or insolvency
of Orthofix International B.V. or the Limited Guarantors at the time of such
dividend, (e) so long as no Event of Default has occurred and is continuing or
would result therefrom, to make payments on intercompany Subordinated
Indebtedness permitted under Sections 6.1(b) and (d), (f) so long as no Event of
Default has occurred and is continuing or would result therefrom, to make
interest payments on intercompany Subordinated Indebtedness permitted under
Section 6.1(g), (g) so long as (i) no Default or Event of Default has occurred
and is continuing at the time of any such payment or would result therefrom and
(ii) the Parent, the Borrower and the Borrower's Subsidiaries are in compliance
with the financial covenants set forth in Section 5.9

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<PAGE>

after giving effect to any such payment on a Pro Forma Basis, to make interest
payments on the Parent Intercompany Loan in an aggregate amount not to exceed 5%
per annum, and (h) payments by Orthofix UK Ltd to the Borrower pursuant to the
terms of the Deferred Purchase Agreement.

     Section 6.11  Sale Leasebacks.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, directly or indirectly become or remain liable as lessee or
as guarantor or other surety with respect to any lease, whether an operating
lease or a Capital Lease, of any property (whether real, personal or mixed),
whether now owned or hereafter acquired, which the Borrower, or any Subsidiary
Guarantor or any Subsidiary has sold or transferred or is to sell or transfer to
a Person which is not another Credit Party or Subsidiary thereof.

     Section 6.12  No Further Negative Pledges.

     Neither the Borrower nor any Subsidiary Guarantor will, nor will it permit
any Subsidiary to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or requiring
the grant of any security for such obligation if security is given for some
other obligation, except (a) pursuant to this Agreement and the other Credit
Documents, (b) pursuant to any document or instrument governing Indebtedness
incurred pursuant to Section 6.1(c), provided that any such restriction
contained therein relates only to the asset or assets constructed or acquired in
connection therewith and (c) in connection with any Permitted Lien or any
document or instrument governing any Permitted Lien; provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien.

     Section 6.13  Secured Indebtedness of Parent.

     The Parent will not, nor will it permit any of its Subsidiaries (other than
the Borrower and its Subsidiaries) to contract, create, incur, assume or permit
to exist any secured Indebtedness in excess of $10,000,000 in the aggregate at
any one time outstanding.

     Section 6.14  Orthofix II B.V.

     Prior to the Drop Down Date, BV II shall not incur any Indebtedness nor
grant any Liens upon any of its properties or assets nor engage in any
commercial operations other than owning 100% of the Capital Stock of IOL and a
majority of the Capital Stock of Orthofix Holdings, pledging its interests
therein to the Administrative Agent on behalf of the Lenders and providing the
limited guaranty provided for in the BV Limited Guaranty and Pledge Agreement.

     Section 6.15  Levtech Inc.

     The Borrower will not undertake any measures to reinstate Levtech Inc., a
subsidiary of the Borrower organized under the laws of Florida that has been
administratively dissolved by the Department of State of the State of Florida,
nor will the Borrower or its Subsidiaries use Levtech

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Inc. or its name to conduct any business operations, including, without
limitation, owning, leasing, holding or maintaining any assets, entering into
any agreements or incurring any Indebtedness or other liabilities, other than in
connection with its corporate dissolution and as permitted under Section
6.4(a)(vii).

                                   ARTICLE VII

                                EVENTS OF DEFAULT

     Section 7.1  Events of Default.

     An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):

          (a) The Borrower shall fail to pay any principal on any Loan when due
     in accordance with the terms thereof or hereof; or the Borrower shall fail
     to reimburse the Issuing Lender for any LOC Obligations when due in
     accordance with the terms hereof; or the Borrower shall fail to pay any
     interest on any Loan or any fee or other amount payable hereunder when due
     in accordance with the terms thereof or hereof and such failure shall
     continue unremedied for three (3) Business Days (or any Guarantor shall
     fail to pay on the Guaranty in respect of any of the foregoing or in
     respect of any other Guaranty Obligations thereunder within the aforesaid
     period of time); or

          (b) Any representation or warranty made or deemed made herein or in
     any of the other Credit Documents or which is contained in any certificate,
     document or financial or other written statement furnished at any time
     under or in connection with this Agreement shall prove to have been
     incorrect, false or misleading in any material respect on or as of the date
     made or deemed made; or

          (c) (i) Any of the Parent, the Borrower or the Borrower's Subsidiaries
     shall fail to perform, comply with or observe any term, covenant or
     agreement applicable to it contained in Section 5.1(a) and (b), Section
     5.2, Section 5.4, Section 5.7(a), Section 5.9 or Article VI hereof; or (ii)
     any Credit Party shall fail to comply with any other covenant, contained in
     this Credit Agreement or the other Credit Documents or any other agreement,
     document or instrument among any Credit Party, the Administrative Agent and
     the Lenders or executed by any Credit Party in favor of the Administrative
     Agent or the Lenders (other than as described in Sections 7.1(a), 7.1(b) or
     7.1(c)(i) above), and in the event such breach or failure to comply is
     capable of cure, is not cured within thirty (30) days of its occurrence; or

          (d) Any of the Parent, the Borrower or the Borrower's Subsidiaries
     shall (i) default in any payment of principal of or interest on any
     Indebtedness (other than the Notes) in a principal amount outstanding of at
     least $1,000,000 in the aggregate for the Credit Parties and their
     Subsidiaries beyond the period of grace (not to exceed 30 days), if any,
     provided in the instrument or agreement under which such Indebtedness was

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     created; (ii) default in the observance or performance of any other
     agreement or condition relating to any Indebtedness in a principal amount
     outstanding of at least $1,000,000 in the aggregate for the Parent, the
     Borrower and the Borrower's Subsidiaries or contained in any instrument or
     agreement evidencing, securing or relating thereto, or any other event
     shall occur or condition exist, the effect of which default or other event
     or condition is to cause, or to permit the holder or holders of such
     Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
     trustee or agent on behalf of such holder or holders or beneficiary or
     beneficiaries) to cause, with the giving of notice if required, such
     Indebtedness to become due prior to its stated maturity; or (iii) breach or
     default any Secured Hedging Agreement; or

          (e) (i) The Parent, Borrower, or any of the Borrower's Subsidiaries
     shall commence any case, proceeding or other action (A) under any existing
     or future law of any jurisdiction, domestic or foreign, relating to
     bankruptcy, insolvency, reorganization or relief of debtors, seeking to
     have an order for relief entered with respect to it, or seeking to
     adjudicate it a bankrupt or insolvent, or seeking reorganization,
     arrangement, adjustment, suspension of payment, winding-up, liquidation,
     dissolution, composition or other relief with respect to it or its debts,
     or (B) seeking appointment of a receiver, trustee, custodian, conservator,
     administrator, administrative receiver, compulsory manager or other similar
     official for it or for all or any substantial part of its assets, or the
     Parent, the Borrower or any Subsidiary of the Borrower shall make a general
     assignment or arrangement for the benefit of any of its creditors; or (ii)
     there shall be commenced against any of the Parent, the Borrower or any of
     the Borrower's Subsidiaries any case, proceeding or other action of a
     nature referred to in clause (i) above which (A) results in the entry of an
     order for relief or any such adjudication or appointment or (B) remains
     undismissed, undischarged or unbonded for, with respect to such proceeding
     or other action in a jurisdiction outside the United States, a period of
     fifteen (15) days and, with respect to such proceeding or other action in a
     United States jurisdiction, a period of forty-five (45) days; or (iii)
     there shall be commenced against any of the Parent, the Borrower or the
     Borrower's Subsidiaries any case, proceeding or other action seeking
     issuance of a warrant of attachment, execution, distraint or similar
     process against all or any substantial part of its assets which results in
     the entry of an order for any such relief which shall not have been
     vacated, discharged, or stayed or bonded pending appeal within, with
     respect to such case, proceeding or other action in a jurisdiction outside
     the United States, fifteen (15) days from the entry thereof and, with
     respect such case, proceeding or other action in a United States
     jurisdiction, thirty (30) days from the entry thereof; or (iv) any of the
     Parent, the Borrower or the Borrower's Subsidiaries shall take any action
     in furtherance of, or indicating its consent to, approval of, or
     acquiescence in, any of the acts set forth in clauses (i), (ii), or (iii)
     above; or (v) any of the Parent, the Borrower or the Borrower and its
     Subsidiaries taken as a whole shall fail to be Solvent; or

          (f) One or more judgments or decrees shall be entered against any of
     the Parent, the Borrower or the Subsidiary Guarantors involving in the
     aggregate a liability (to the extent not paid when due or covered by
     insurance) of $3,000,000 or more and all such judgments or decrees shall
     not have been paid and satisfied, vacated, discharged, stayed or bonded
     pending appeal within ten (10) days from the entry thereof; or

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          (g) (i) Any Person shall engage in any "prohibited transaction" (as
     defined in Section 406 of ERISA or Section 4975 of the Code) involving any
     Single Employer Plan, (ii) any "accumulated funding deficiency" (as defined
     in Section 302 of ERISA), whether or not waived, shall exist with respect
     to any Single Employer Plan or any Lien in favor of a Single Employer Plan
     or in favor of the PBGC with respect to a Single Employer Plan (other than
     a Permitted Lien) shall arise on the assets of any Credit Party or any
     Commonly Controlled Entity, (iii) a Reportable Event shall occur with
     respect to, or proceedings shall commence to have a trustee appointed, or a
     trustee shall be appointed, to administer or to terminate, any Single
     Employer Plan, which Reportable Event or commencement of proceedings or
     appointment of a Trustee is, in the reasonable opinion of the Required
     Lenders, likely to result in the termination of such Plan for purposes of
     Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
     purposes of Title IV of ERISA, or (v) any Credit Party or any Commonly
     Controlled Entity shall incur any liability in connection with a withdrawal
     from, or the Insolvency or Reorganization of, any Multiemployer Plan; and
     in each case in clauses (i) through (v) above, such event or condition,
     together with all other such events or conditions, if any, could reasonably
     be expected to have a Material Adverse Effect; or

          (h) There shall occur a Change of Control; or

          (i) The Guaranty or any provision thereof shall cease to be in full
     force and effect or any Guarantor or any Person acting by or on behalf of
     any Guarantor shall deny or disaffirm any Guarantor's obligations under the
     Guaranty; or

          (j) (i) The IOL Limited Guaranty and Pledge Agreement or any provision
     thereof shall cease to be in full force and effect or IOL or any Person
     acting by or on behalf of IOL shall deny or disaffirm IOL's obligations
     under the IOL Limited Guaranty and Pledge Agreement, or (ii) the BV II
     Limited Guaranty and Pledge Agreement or any provision thereof shall cease
     to be in full force and effect or BV II or any Person acting by or on
     behalf of BV II shall deny or disaffirm BV II's obligations under the BV II
     Limited Guaranty and Pledge Agreement; or

          (k) Any other Credit Document shall fail to be in full force and
     effect or to give the Administrative Agent and/or the Lenders the security
     interests, liens, rights, powers and privileges purported to be created
     thereby (except as such documents may be terminated or no longer in force
     and effect in accordance with the terms thereof, other than those
     indemnities and provisions which by their terms shall survive); or

          (l) Any default (which is not waived or cured within the applicable
     period of grace) or event of default shall occur under any of document
     governing or evidencing any Subordinated Indebtedness or the subordination
     provisions contained therein shall cease to be in full force and effect or
     to give the Administrative Agent and the Lenders the rights, powers and
     privileges purported to be created thereby; or

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          (m) any Credit Party shall be temporarily or permanently excluded
     from, or have payments suspended under, (i) any Medicaid Provider
     Agreement, Medicaid Certification, Medicare Provider Agreement or Medicare
     Certification or (ii) any Medical Reimbursement Program, where such
     exclusion or suspension arises from fraud or other claims or allegations
     which, individually or in the aggregate, could reasonably be expected to
     have a Material Adverse Effect.

     Section 7.2  Acceleration; Remedies.

     Upon the occurrence of an Event of Default, then, and in any such event,
(a) if such event is an Event of Default specified in Section 7.1(e) above with
respect to the Parent, the Borrower or any material Subsidiary of the Borrower,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon), and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall immediately become due and payable, and (b) if
such event is any other Event of Default, any or all of the following actions
may be taken: (i) with the written consent of the Required Lenders, the
Administrative Agent may, or upon the written request of the Required Lenders,
the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; (ii) the Administrative Agent may, or upon the written
request of the Required Lenders, the Administrative Agent shall, by notice of
default to the Borrower, declare the Loans (with accrued interest thereon) and
all other amounts owing under this Agreement and the Notes to be due and payable
forthwith and direct the Borrower to pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under
then outstanding Letters of Credit in an amount equal to the maximum amount of
which may be drawn under Letters of Credit then outstanding, whereupon the same
shall immediately become due and payable; (iii) exercise any rights or remedies
of the Administrative Agent or the Lenders under this Agreement or any other
Credit Document, including, without limitation, any rights or remedies with
respect to the Collateral; and (iv) exercise any rights or remedies available to
the Administrative Agent or Lenders under applicable law.

                                  ARTICLE VIII

                                    THE AGENT

     Section 8.1  Appointment.

     Each Lender hereby irrevocably designates and appoints Wachovia Bank,
National Association as the Administrative Agent of such Lender under this
Agreement, and each such Lender irrevocably authorizes Wachovia Bank, National
Association, as the Administrative Agent for such Lender, to take such action on
its behalf under the provisions of this Agreement and to exercise such powers
and perform such duties as are expressly delegated to the Administrative Agent
by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agent shall not have any duties
or responsibilities, except those

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expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Administrative Agent.

     Section 8.2  Delegation of Duties.

     The Administrative Agent may execute any of its duties under this Agreement
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care. Without limiting the
foregoing, but subject to the provisions of Section 8.3, the Administrative
Agent may appoint one of its affiliates as its agent to perform the functions of
the Administrative Agent hereunder relating to the advancing of funds to the
Borrower and distribution of funds to the Lenders and to perform such other
related functions of the Administrative Agent hereunder as are reasonably
incidental to such functions.

     Section 8.3  Exculpatory Provisions.

     Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Borrower
to perform its obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Borrower of any of the agreements contained
in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrower and its Subsidiaries.

     Section 8.4  Reliance by Administrative Agent.

     The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Credit Party), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless (a) a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent and (b)
the Administrative Agent shall have received the written agreement of such
assignee to be bound hereby as fully and to the same extent as if such assignee
were an original Lender party hereto, in each case in form satisfactory to the
Administrative Agent. The Administrative Agent shall be fully justified in

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failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any of the Credit Documents in accordance with a request of the Required Lenders
or all of the Lenders, as may be required under this Agreement, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.

     Section 8.5  Notice of Default.

     The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, however, that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders except to the extent that
this Credit Agreement expressly requires that such action be taken, or not
taken, only with the consent or upon the authorization of the Required Lenders,
or all of the Lenders, as the case may be.

     Section 8.6  Non-Reliance on Administrative Agent and Other Lenders.

     Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness

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of the Borrower which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

     Section 8.7  Indemnification.

     The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought
under this Section, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of any Credit Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Agent's gross negligence or willful misconduct,
as determined by a court of competent jurisdiction. The agreements in this
Section 8.7 shall survive the termination of this Agreement and payment of the
Notes and all other amounts payable hereunder.

     Section 8.8  Administrative Agent in Its Individual Capacity.

     The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though the Administrative Agent were not the Administrative Agent hereunder.
With respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.

     Section 8.9  Successor Administrative Agent.

     The Administrative Agent may resign as Administrative Agent upon thirty
(30) days' prior notice to the Borrower and the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the Notes,
then the Required Lenders shall appoint from among the Lenders a successor agent
for the Lenders, which successor agent shall be approved by the Borrower,
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Agent's resignation as Administrative Agent, the
provisions of this Section 8.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.

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     Section 8.10  Other Agents.

     None of the Lenders or other Persons identified on the facing page or
signature pages of this Agreement as a "syndication agent," "documentation
agent," "co-agent," "book manager," "book runner," "lead manager," "arranger,"
"lead arranger" or "co-arranger" shall have any right (except as expressly set
forth herein), power, obligation, liability, responsibility or duty under this
Agreement other than, in the case of such Lenders, those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary relationship
with any Lender. Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders or other Persons so identified in deciding to enter
into this Credit Agreement or in taking or not taking action hereunder.

                                   ARTICLE IX

                                  MISCELLANEOUS

     Section 9.1  Amendments, Waivers and Release of Collateral.

     Neither this Agreement, nor any of the other Credit Documents, nor any
terms hereof or thereof may be amended, supplemented, waived or modified except
in accordance with the provisions of this Section. The Required Lenders may, or,
with the written consent of the Required Lenders, the Administrative Agent may,
from time to time, (a) enter into with the Credit Parties written amendments,
supplements or modifications hereto and to the other Credit Documents for the
purpose of adding any provisions to this Agreement or the other Credit Documents
or changing in any manner the rights of the Lenders or of the Credit Parties
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders may specify in such instrument, any of the requirements of this
Agreement or the other Credit Documents or any Default or Event of Default and
its consequences; provided, however, that no such waiver and no such amendment,
waiver, supplement, modification or release shall:

               (i) (A) reduce the amount or extend the scheduled date of
          maturity of any Loan or Note or any installment thereon; (B) reduce
          the stated rate of any interest or fee payable hereunder (except in
          connection with a waiver of interest at the increased post-default
          rate set forth in Section 2.9 which shall be determined by a vote of
          the Required Lenders) or extend the scheduled date of any payment
          thereof; (C) modify the definition of Interest Period so as to permit
          Interest Periods greater than 6 months without regard to the
          availability of such longer Interest Periods to each Lender; or (D)
          increase the amount or extend the expiration date of any Lender's
          Commitment, in each case without the written consent of each Lender
          directly affected thereby; provided that, it is understood and agreed
          that no waiver, reduction or deferral of a mandatory prepayment
          required pursuant to Section 2.7(b), nor any amendment of Section
          2.7(b) or the definitions of Asset Disposition, Debt Issuance, Equity
          Issuance, Excess Cash Flow, or Recovery

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          Event, shall constitute a reduction of the amount of, or an extension
          of the scheduled date of, any principal installment of any Loan or
          Note; or

               (ii) amend, modify or waive any provision of this Section 9.1 or
          reduce the percentage specified in the definition of Required Lenders,
          without the written consent of all the Lenders; or

               (iii) amend, modify or waive any provision of Article VIII
          without the written consent of the then Administrative Agent; or

               (iv) release the Borrower or all or substantially all of the
          Guarantors from its or their obligations hereunder or under the
          Guaranty, without the written consent of all of the Lenders and each
          Hedging Agreement Provider; or

               (v) release all or substantially all of the Collateral without
          the written consent of all of the Lenders and each Hedging Agreement
          Provider; or

               (vi) permit the Borrower to assign or transfer any of its rights
          or obligations under this Credit Agreement or other Credit Documents;
          or

               (vii) amend, modify or waive any provision of the Credit
          Documents requiring consent, approval or request of the Required
          Lenders or all Lenders without the written consent of the Required
          Lenders or of all Lenders as appropriate; or

               (viii) amend or modify the definition of Credit Party Obligations
          to delete or exclude any obligation or liability described therein
          without the written consent of each Lender and each Hedging Agreement
          Provider directly affected thereby; or

               (ix) amend, modify or waive the order in which Credit Party
          Obligations are paid in Section 2.12(b) without the written consent of
          each Lender and each Hedging Agreement Provider directly affected
          thereby; or

               (x) without the consent of Revolving Lenders holding in the
          aggregate more than 50% of the outstanding Revolving Commitments (or
          if the Revolving Commitments have been terminated, the outstanding
          Revolving Loans), amend, modify or waive Section 4.2 or waive any
          Default or Event of Default (or amend any Credit Document to
          effectively waive any Default or Event of Default) if the effect of
          such waiver is that the Revolving Lenders shall be required to
          continue to make Revolving Loans;

provided, further, that no amendment, waiver or consent affecting the rights or
duties of the Administrative Agent, the Issuing Lender or the Swingline Lender
under any Credit Document shall in any event be effective, unless in writing and
signed by the Administrative Agent, the

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Issuing Lender and/or the Swingline Lender, as applicable, in addition to the
Lenders required hereinabove to take such action.

     Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Credit Parties, the Lenders, the Administrative
Agent and all future holders of the Notes. In the case of any waiver, the
Borrower, the other Credit Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
outstanding Loans and Notes and other Credit Documents, and any Default or Event
of Default permanently waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.

     Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.9); provided,
however, that the Administrative Agent will provide written notice to the
Borrower of any such amendment, modification or waiver. In addition, the
Borrower and the Lenders hereby authorize the Administrative Agent to modify
this Credit Agreement by unilaterally amending or supplementing Schedule 2.1(a)
from time to time in the manner requested by the Borrower, the Administrative
Agent or any Lender in order to reflect any assignments or transfers of the
Loans as provided for hereunder; provided further, however, that the
Administrative Agent shall promptly deliver a copy of any such modification to
the Borrower and each Lender.

     Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.

     Section 9.2  Notices.

     Except as otherwise provided in Article II, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy or other electronic communication with confirmed
receipt from the recipient), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made (a) when delivered by hand, (b)
when transmitted via telecopy (or other electronic communication device with
confirmed receipt from the recipient) to the number set out herein, (c) the day
following the day on which the same has been delivered prepaid (or pursuant to
an invoice arrangement) to a reputable national overnight air courier service,
or (d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case addressed as follows
in the case of the Borrower, the other Credit Parties and the Administrative
Agent, and as set forth on Schedule 9.2 in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:

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 The Borrower       Colgate Medical Ltd
 and the other      The Storrs Building, Suite 250
 Credit Parties:    10115 Kincey Avenue
                    Huntersville Business Park
                    Huntersville, NC  28078
                    Attention:  Thomas Hein
                    Telecopier:  704 948 2691
                    Telephone:  704 948 2635

 The Administrative Wachovia Bank, National Association, as Administrative Agent
 Agent:             Charlotte Plaza
                    201 South College Street
                    NC0680/CP8
                    Charlotte, North Carolina  28288-0680
                    Attention:  Syndication Agency Services
                    Telecopier:  (704) 383-0288
                    Telephone:  (704) 715-1093

                    with a copy to:

                    Wachovia Bank, National Association
                    One Wachovia Center
                    301 South College Street
                    NC0760/DC5
                    Charlotte, North Carolina  28288-0737
                    Attention:  Scott Santa Cruz
                    Telecopier:  (704) 383-7611
                    Telephone:  (704) 383-1988

     Section 9.3  No Waiver; Cumulative Remedies.

     No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

     Section 9.4  Survival of Representations and Warranties.

     All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans; provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated, no Credit
Document remains in effect and all Credit Party Obligations have been paid in
full.

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     Section 9.5 Payment of Expenses and Taxes.

     The Borrower agrees (a) to pay or reimburse the Administrative Agent and
the Arranger for all their reasonable out-of-pocket costs and expenses incurred
in connection with the development, preparation, negotiation, printing and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Credit Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, together with the reasonable fees
and disbursements of counsel to the Administrative Agent and the Arranger, (b)
to pay or reimburse the Administrative Agent and, if an Event of Default shall
have occurred and is continuing, each Lender for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement and the other Credit Documents, including, without limitation,
the reasonable fees and disbursements of counsel to the Administrative Agent and
to the Lenders (including reasonable allocated costs of in-house legal counsel),
and (c) on demand, to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, the Credit Documents and any such other documents, except for
such recording and filing fees and any and all stamp, excise and other similar
taxes payable in connection with any transfer under Section 9.6 of this
Agreement, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their Affiliates harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all of the foregoing, collectively, the
"indemnified liabilities"); provided, however, that the Borrower shall not have
any obligation hereunder to the Administrative Agent or any Lender with respect
to indemnified liabilities arising from the gross negligence or willful
misconduct of the Administrative Agent or any such Lender, as determined by a
court of competent jurisdiction pursuant to a final non-appealable judgment. The
agreements in this Section 9.5 shall survive repayment of the Loans, Notes and
all other Credit Party Obligations.

     Section 9.6  Successors and Assigns; Participations; Purchasing Lenders.

          (a) This Agreement shall be binding upon and inure to the benefit of
     the Credit Parties, the Lenders, the Administrative Agent, all future
     holders of the Notes and their respective successors and assigns, except
     that the Borrower may not assign or transfer any of its rights or
     obligations under this Agreement or the other Credit Documents without the
     prior written consent of each Lender.

          (b) Any Lender may, in the ordinary course of its business and in
     accordance with applicable law, at any time sell to one or more banks or
     other entities

                                      102
<PAGE>

     ("Participants") participating interests in any Loan owing to such Lender,
     any Note held by such Lender, any Commitment of such Lender, or any other
     interest of such Lender hereunder. In the event of any such sale by a
     Lender of participating interests to a Participant, such Lender's
     obligations under this Agreement to the other parties to this Agreement
     shall remain unchanged, such Lender shall remain solely responsible for the
     performance thereof, such Lender shall remain the holder of any such Note
     for all purposes under this Agreement, and the Borrower and the
     Administrative Agent shall continue to deal solely and directly with such
     Lender in connection with such Lender's rights and obligations under this
     Agreement. No Lender shall transfer or grant any participation under which
     the Participant shall have rights to approve any amendment to or waiver of
     this Agreement or any other Credit Document except to the extent such
     amendment or waiver would (i) extend the scheduled maturity of any Loan or
     Note or any installment thereon in which such Participant is participating,
     or reduce the stated rate or extend the time of payment of interest or fees
     thereon (except in connection with a waiver of interest at the increased
     post-default rate) or reduce the principal amount thereof, or increase the
     amount of the Participant's participation over the amount thereof then in
     effect (it being understood that a waiver of any Default or Event of
     Default shall not constitute a change in the terms of such participation,
     and that an increase in any Commitment or Loan shall be permitted without
     consent of any participant if the Participant's participation is not
     increased as a result thereof), (ii) release all or substantially all of
     the Guarantors from their obligations under the Guaranty, (iii) release all
     or substantially all of the Collateral, or (iv) consent to the assignment
     or transfer by the Borrower of any of its rights and obligations under this
     Agreement. In the case of any such participation, the Participant shall not
     have any rights under this Agreement or any of the other Credit Documents
     (the Participant's rights against such Lender in respect of such
     participation to be those set forth in the agreement executed by such
     Lender in favor of the Participant relating thereto) and all amounts
     payable by the Borrower hereunder shall be determined as if such Lender had
     not sold such participation; provided that each Participant shall be
     entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.5 with respect
     to its participation in the Commitments and the Loans outstanding from time
     to time; provided further, that no Participant shall be entitled to receive
     any greater amount pursuant to such Sections than the transferor Lender
     would have been entitled to receive in respect of the amount of the
     participation transferred by such transferor Lender to such Participant had
     no such transfer occurred. If an Initial Lender that receives gross-up
     withholding tax payments from the Borrower pursuant to Section 2.18(c)
     sells participating interests to a Participant that is not a Qualified
     Lender in accordance with the terms of this Section, such Initial Lender
     shall promptly notify the Administrative Agent and the Borrower of such
     participation amount and such gross-up withholding tax payments shall
     thereafter be reduced an amount corresponding to the percentage of such
     Initial Lender's total outstanding Loans that are subject to such
     participation.

          (c) Any Lender may, in the ordinary course of its business and in
     accordance with applicable law, at any time, with the consent of the
     Administrative Agent and, so long as (i) no Default then exists that has
     not been cured within fifteen (15) days after the occurrence thereof and
     (ii) no Event of Default has occurred and is continuing, the Borrower (in
     each case, which consent shall not be unreasonably withheld or delayed),

                                      103
<PAGE>

     sell or assign to one or more additional banks or financial institutions or
     entities (each, a "Purchasing Lender"), all or any part of its rights and
     obligations under this Agreement and the Notes in minimum amounts of (A)
     $2,000,000 with respect to its Revolving Commitment or its Revolving Loans
     and (B) $1,000,000 with respect to its Term Loan (or, if less, the entire
     amount of such Lender's obligations), pursuant to a Commitment Transfer
     Supplement, executed by such Purchasing Lender and such transferor Lender
     (and, to the extent required above, the Administrative Agent and the
     Borrower), and delivered to the Administrative Agent for its acceptance and
     recording in the Register; provided, however, that (1) any sale or
     assignment to an Initial Lender of its initial Commitment in connection
     with the closing of this Agreement shall not require the consent of the
     Administrative Agent or the Borrower, (2) any sale or assignment to an
     existing Lender or any Affiliate or Related Fund thereof shall not require
     the consent of the Administrative Agent or the Borrower to the extent such
     Person is a Qualified Lender, (3) any sale or assignment to an existing
     Lender or any Affiliate or Related Fund thereof that is not a Qualified
     Lender shall not require the consent of the Administrative Agent or the
     Borrower to the extent the assigning Lender is not a Qualified Lender and
     (4) any sale or assignment to an existing Lender or any Affiliate or
     Related Fund thereof shall not be subject to the minimum assignment amounts
     specified herein. Upon such execution, delivery, acceptance and recording,
     from and after the Transfer Effective Date specified in such Commitment
     Transfer Supplement, (x) the Purchasing Lender thereunder shall be a party
     hereto and, to the extent provided in such Commitment Transfer Supplement,
     have the rights and obligations of a Lender hereunder with a Commitment as
     set forth therein, and (y) the transferor Lender thereunder shall, to the
     extent provided in such Commitment Transfer Supplement, be released from
     its obligations under this Agreement (and, in the case of a Commitment
     Transfer Supplement covering all or the remaining portion of a transferor
     Lender's rights and obligations under this Agreement, such transferor
     Lender shall cease to be a party hereto; provided, however, that such
     Lender shall still be entitled to any indemnification rights that expressly
     survive hereunder). Such Commitment Transfer Supplement shall be deemed to
     amend this Agreement to the extent, and only to the extent, necessary to
     reflect the addition of such Purchasing Lender and the resulting adjustment
     of Commitment Percentages arising from the purchase by such Purchasing
     Lender of all or a portion of the rights and obligations of such transferor
     Lender under this Agreement and the Notes. On or prior to the Transfer
     Effective Date specified in such Commitment Transfer Supplement, the
     Borrower, at its own expense, shall execute and deliver to the
     Administrative Agent in exchange for the Notes delivered to the
     Administrative Agent pursuant to such Commitment Transfer Supplement new
     Notes to the order of such Purchasing Lender in an amount equal to the
     Commitment assumed by it pursuant to such Commitment Transfer Supplement
     and, unless the transferor Lender has not retained a Commitment hereunder,
     new Notes to the order of the transferor Lender in an amount equal to the
     Commitment retained by it hereunder. Such new Notes shall be dated the
     Closing Date and shall otherwise be in the form of the Notes replaced
     thereby. The Notes surrendered by the transferor Lender shall be returned
     by the Administrative Agent to the Borrower marked "canceled".

                                      104
<PAGE>

          (d) The Administrative Agent shall maintain at its address referred to
     in Section 9.2 a copy of each Commitment Transfer Supplement delivered to
     it and a register (the "Register") for the recordation of the names and
     addresses of the Lenders and the Commitment of, and principal amount of the
     Loans owing to, each Lender from time to time. The entries in the Register
     shall be conclusive, in the absence of manifest error, and the Borrower,
     the Administrative Agent and the Lenders may treat each Person whose name
     is recorded in the Register as the owner of the Loan recorded therein for
     all purposes of this Agreement. The Register shall be available for
     inspection by the Borrower or any Lender at any reasonable time and from
     time to time upon reasonable prior notice.

          (e) Upon its receipt of a duly executed Commitment Transfer
     Supplement, together with payment to the Administrative Agent by the
     transferor Lender or the Purchasing Lender, as agreed between them, of a
     registration and processing fee of $3,500.00 for each Purchasing Lender
     listed in such Commitment Transfer Supplement (provided that in the case of
     simultaneous assignments on the same day by or to more than one fund or
     trust or entity that invests in commercial bank loans in the ordinary
     course of business that is managed or advised by the same investment
     adviser, only a single $3,500 registration and processing fee shall be
     payable for all such assignments) and the Notes subject to such Commitment
     Transfer Supplement, the Administrative Agent shall (i) accept such
     Commitment Transfer Supplement, (ii) record the information contained
     therein in the Register and (iii) give prompt notice of such acceptance and
     recordation to the Lenders and the Borrower.

          (f) The Borrower authorizes each Lender to disclose to any pledgee
     pursuant to subsection (i) below, any Participant or any Purchasing Lender
     (each, a "Transferee") and any prospective Transferee any and all financial
     information in such Lender's possession concerning the Borrower and its
     Affiliates which has been delivered to such Lender by or on behalf of the
     Borrower pursuant to this Agreement or which has been delivered to such
     Lender by or on behalf of the Borrower in connection with such Lender's
     credit evaluation of the Borrower and its Subsidiaries prior to becoming a
     party to this Agreement, in each case subject to Section 9.16.

          (g) At the time of each assignment pursuant to this Section 9.6 to a
     Person which is not already a Lender hereunder and which is not a United
     States person (as such term is defined in Section 7701(a)(30) of the Code)
     for Federal income tax purposes, the respective assignee Lender shall
     provide to the Borrower and the Administrative Agent the appropriate
     Internal Revenue Service Forms described in Section 2.18.

          (h) At the time of each assignment pursuant to this Section 9.6 (other
     than assignments to Eligible UK Lenders), the respective assignee Lender
     shall (i) comply with the terms of Section 2.18(c), including the
     completion of appropriate forms and lodging them with the relevant tax
     authority and providing such assistance as the Borrower may reasonably
     request in order to establish an entitlement to treaty relief and (ii)
     unless such assignee Lender is an initial Lender and such assignment is the
     assignment to such Initial Lender of its initial Commitment in connection
     with the

                                      105
<PAGE>

     closing of this Agreement, confirm in the Commitment Transfer Supplement
     whether, to the best of its knowledge, it is or is not a Qualified Lender.

          (i) Nothing herein shall prohibit any Lender from pledging or
     assigning any of its rights under this Credit Agreement (including, without
     limitation, any right to payment of principal and interest under any Note)
     to secure obligations of such Lender, including without limitation, (i) any
     pledge or assignment to secure obligations to a Federal Reserve Bank and
     (ii) in the case of any Lender that is a fund or trust or entity that
     invests in commercial bank loans in the ordinary course of business, any
     pledge or assignment to any holders of obligations owed, or securities
     issued, by such Lender including to any trustee for, or any other
     representative of, such holders; it being understood that the requirements
     for assignments set forth in this Section 9.6 shall not apply to any such
     pledge or assignment of a security interest, except with respect to any
     foreclosure or similar action taken by such pledgee or assignee with
     respect to such pledge or assignment; provided that no such pledge or
     assignment of a security interest shall release a Lender from any of its
     obligations hereunder or substitute any such pledgee or assignee for such
     Lender as a party hereto and no such pledgee or assignee shall have any
     voting rights under this Credit Agreement unless and until the requirements
     for assignments set forth in this Section 9.6 are complied with in
     connection with any foreclosure or similar action taken by such pledgee or
     assignee.

     Section 9.7  Adjustments; Set-off.

          (a) Each Lender agrees that if any Lender (a "benefited Lender") shall
     at any time receive any payment of all or part of its Loans, or interest
     thereon, or receive any collateral in respect thereof (whether voluntarily
     or involuntarily, by set-off, pursuant to events or proceedings of the
     nature referred to in Section 7.1(e), or otherwise) in a greater proportion
     than any such payment to or collateral received by any other Lender, if
     any, in respect of such other Lender's Loans, or interest thereon, such
     benefited Lender shall purchase for cash from the other Lenders a
     participating interest in such portion of each such other Lender's Loan, or
     shall provide such other Lenders with the benefits of any such collateral,
     or the proceeds thereof, as shall be necessary to cause such benefited
     Lender to share the excess payment or benefits of such collateral or
     proceeds ratably with each of the Lenders; provided, however, that if all
     or any portion of such excess payment or benefits is thereafter recovered
     from such benefited Lender, such purchase shall be rescinded, and the
     purchase price and benefits returned, to the extent of such recovery, but
     without interest. The Borrower agrees that each Lender so purchasing a
     portion of another Lender's Loans may exercise all rights of payment
     (including, without limitation, rights of set-off) with respect to such
     portion as fully as if such Lender were the direct holder of such portion.

          (b) In addition to any rights and remedies of the Lenders provided by
     law (including, without limitation, other rights of set-off), each Lender
     shall have the right, without prior notice to the Borrower, any such notice
     being expressly waived by the Borrower to the extent permitted by
     applicable law, in the event that all amount's under the Credit Agreement
     shall have become immediately due and payable pursuant to

                                      106
<PAGE>

     Section 7.2, to setoff and appropriate and apply any and all deposits
     (general or special, time or demand, provisional or final), in any
     currency, and any other credits, indebtedness or claims, in any currency,
     in each case whether direct or indirect, absolute or contingent, matured or
     unmatured, at any time held by or owing to such Lender or any branch or
     agency thereof to or for the credit or the account of the Borrower or any
     other Credit Party, or any part thereof in such amounts as such Lender may
     elect, against and on account of the Loans and other Credit Party
     Obligations of the Borrower and the other Credit Parties to such Lender
     hereunder and claims of every nature and description of such Lender against
     the Borrower and the other Credit Parties, in any currency, whether arising
     hereunder, under any other Credit Document or any Secured Hedging Agreement
     provided by such Lender pursuant to the terms of this Agreement, as such
     Lender may elect, whether or not such Lender has made any demand for
     payment and although such obligations, liabilities and claims may be
     contingent or unmatured. The aforesaid right of set-off may be exercised by
     such Lender against the Borrower, any other Credit Party or against any
     trustee in bankruptcy, debtor in possession, assignee for the benefit of
     creditors, receiver or execution, judgment or attachment creditor of the
     Borrower or any other Credit Party, or against anyone else claiming through
     or against the Borrower, any other Credit Party or any such trustee in
     bankruptcy, debtor in possession, assignee for the benefit of creditors,
     receiver, or execution, judgment or attachment creditor, notwithstanding
     the fact that such right of set-off shall not have been exercised by such
     Lender prior to the occurrence of any Event of Default. Each Lender agrees
     promptly to notify the Borrower and the Administrative Agent after any such
     set-off and application made by such Lender; provided, however, that the
     failure to give such notice shall not affect the validity of such set-off
     and application.

     Section 9.8  Table of Contents and Section Headings.

     The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Agreement.

     Section 9.9  Counterparts.

     This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same agreement.

     Section 9.10  Effectiveness.

     This Credit Agreement shall become effective on the date on which all of
the parties have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent pursuant to Section
9.2 or, in the case of the Lenders, shall have given to the Administrative Agent
written, telecopied or other electronic notice with confirmed receipt from the
recipient at such office that the same has been signed and mailed to it.

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<PAGE>

     Section 9.11  Severability.

     Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     Section 9.12  Integration.

     This Agreement and the other Credit Documents represent the agreement of
the Borrower, the Administrative Agent and the Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Administrative Agent, the Borrower or any Lender relative
to the subject matter hereof not expressly set forth or referred to herein or in
the other Credit Documents.

     Section 9.13  Governing Law.

     This Agreement and the other Credit Documents (other than the UK Collateral
Documents) and the rights and obligations of the parties under this Agreement
and the other Credit Documents (other than the UK Collateral Documents) shall be
governed by, and construed and interpreted in accordance with, the law of the
State of New York.

     Section 9.14  Consent to Jurisdiction and Service of Process.

     All judicial proceedings brought against any party hereto with respect to
this Agreement, any Note or any of the other Credit Documents may be brought in
any state or federal court of competent jurisdiction in the State of New York,
and, by execution and delivery of this Agreement, each of such parties accepts,
for itself and in connection with its properties, generally and unconditionally,
the non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with this
Agreement, any Note or any other Credit Document from which no appeal has been
taken or is available. The parties hereto irrevocably agree that all service of
process in any such proceedings in any such court may be effected by mailing a
copy thereof by registered or certified mail (or any substantially similar form
of mail), postage prepaid, to it at its address set forth in Section 9.2 or at
such other address of which the Administrative Agent or the Borrower shall have
been notified pursuant thereto, such service being hereby acknowledged by the
parties hereto to be effective and binding service in every respect. Each of the
parties hereto irrevocably waives any objection, including, without limitation,
any objection to the laying of venue based on the grounds of forum non
conveniens which it may now or hereafter have to the bringing of any such action
or proceeding in any such jurisdiction. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
any party to bring proceedings against any other party in the court of any other
jurisdiction.

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<PAGE>

     Section 9.15  Confidentiality.

     The Administrative Agent and each of the Lenders agrees that it will use
its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, affiliates, auditors or counsel or to another
Lender) any information with respect to the Credit Parties and their
Subsidiaries which is furnished pursuant to this Agreement, any other Credit
Document or any documents contemplated by or referred to herein or therein and
which is designated by the Borrower to the Lenders in writing as confidential or
as to which it is otherwise reasonably clear such information is not public,
except that any Lender may disclose any such information (a) as has become
generally available to the public other than by a breach of this Section 9.16,
(b) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or federal regulatory body having or claiming
to have jurisdiction over such Lender or to the Federal Reserve Board or the
Federal Deposit Insurance Corporation or the OCC or the NAIC or similar
organizations (whether in the United States or elsewhere) or their successors,
(c) as may be required or appropriate in response to any summons or subpoena or
any law, order, regulation or ruling applicable to such Lender, (d) to any
prospective Participant or assignee in connection with any contemplated transfer
pursuant to Section 9.6; provided that such prospective transferee shall have
agreed to be bound by the confidentiality provisions set forth in this Section,
(e) to any actual or prospective counterparty (or its advisors) to any Hedging
Agreement relating to a Credit Party and its obligations; provided that such
prospective transferee shall have agreed to be bound by the confidentiality
provisions set forth in this Section, (f) to Gold Sheets and other similar bank
trade publications, such information to consist of deal terms and other
information regarding the credit facilities evidenced by this Credit Agreement
customarily found in such publications or (g) in connection with any suit,
action or proceeding for the purpose of defending itself, reducing its
liability, or protecting or exercising any of its claims, rights, remedies or
interests under or in connection with the Credit Documents or any Secured
Hedging Agreement. Notwithstanding anything herein to the contrary, the
Administrative Agent and each Lender may disclose to any and all Persons,
without limitation of any kind, any information with respect to the "tax
treatment" and "tax structure" (in each case, within the meaning of Treasury
Regulation Section 1.6011-4) of the transactions contemplated hereby and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Administrative Agent or such Lender relating to such tax
treatment and tax structure; provided that with respect to any document or
similar item that in either case contains information concerning the tax
treatment or tax structure of the transaction as well as other information, this
sentence shall only apply to such portions of the document or similar item that
relate to the tax treatment or tax structure of the Loans, Letters of Credit and
transactions contemplated hereby.

     Section 9.16  Acknowledgments.

     The Borrower and the other Credit Parties each hereby acknowledges that:

          (a) it has been advised by counsel in the negotiation, execution and
     delivery of each Credit Document;

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<PAGE>

          (b) neither the Administrative Agent nor any Lender has any fiduciary
     relationship with or duty to the Borrower or any other Credit Party arising
     out of or in connection with this Agreement and the relationship between
     Administrative Agent and Lenders, on one hand, and the Borrower and the
     other Credit Parties, on the other hand, in connection herewith is solely
     that of debtor and creditor; and

          (c) no joint venture exists among the Lenders or among the Borrower or
     the other Credit Parties and the Lenders.

     Section 9.17  Waivers of Jury Trial.

     THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

     Section 9.18  Patriot Act Notice.

     Each Lender and the Administrative Agent (for itself and not on behalf of
any other party) hereby notifies the Borrower that, pursuant to the requirements
of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
2001 (the "Patriot Act"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Patriot Act.

                                    ARTICLE X

                                    GUARANTY

     Section 10.1  The Guaranty.

     In order to induce the Lenders to enter into this Credit Agreement and any
Hedging Agreement Provider to enter into any Secured Hedging Agreement and to
extend credit hereunder and thereunder and in recognition of the direct benefits
to be received by the Guarantors from the Extensions of Credit hereunder and any
Secured Hedging Agreement, each of the Guarantors hereby agrees with the
Administrative Agent and the Lenders as follows: the Guarantor hereby
unconditionally and irrevocably jointly and severally guarantees as primary
obligor and not merely as surety the full and prompt payment when due, whether
upon maturity, by acceleration or otherwise, of any and all indebtedness of the
Borrower owed to the Administrative Agent, the Lenders and the Hedging Agreement
Providers. If any or all of the indebtedness becomes due and payable hereunder
or under any Secured Hedging Agreement, each Guarantor unconditionally promises
to pay such indebtedness to the Administrative Agent, the Lenders, the Hedging
Agreement Providers, or their respective order, or demand, together with any and
all reasonable expenses which may be incurred by the Administrative Agent, the

                                      110
<PAGE>

Lenders or the Hedging Agreement Providers in collecting any of the Credit Party
Obligations. The word "indebtedness" is used in this Article X in its most
comprehensive sense and includes any and all advances, debts, obligations and
liabilities of the Borrower and the Guarantors, including specifically all
Credit Party Obligations, arising in connection with this Credit Agreement, the
other Credit Documents or any Secured Hedging Agreement, in each case,
heretofore, now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower and the
Guarantors may be liable individually or jointly with others, whether or not
recovery upon such indebtedness may be or hereafter become barred by any statute
of limitations, and whether or not such indebtedness may be or hereafter become
otherwise unenforceable.

     Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable law relating to fraudulent
conveyances or transfers) then the obligations of each such Guarantor hereunder
shall be limited to the maximum amount that is permissible under applicable law
(including, without limitation, the Bankruptcy Code or its non-U.S. equivalent).

     Section 10.2  Bankruptcy.

     Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all Credit Party
Obligations of the Borrower to the Lenders and any Hedging Agreement Provider
whether or not due or payable by the Borrower upon the occurrence of any of the
events specified in Section 7.1(e) as applicable to the Parent, the Borrower or
any material Subsidiaries of the Borrower, and unconditionally promises to pay
such Credit Party Obligations to the Administrative Agent for the account of the
Lenders and to any such Hedging Agreement Provider, or order, on demand, in
lawful money of the United States. Each of the Guarantors further agrees that to
the extent that the Borrower or a Guarantor shall make a payment or a transfer
of an interest in any property to the Administrative Agent, any Lender or any
Hedging Agreement Provider, which payment or transfer or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, or
otherwise is avoided, and/or required to be repaid to the Borrower or a
Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or any
other party under any bankruptcy law, state or federal law, common law or other
applicable law or equitable cause, then to the extent of such avoidance or
repayment, the obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made.

     Section 10.3  Nature of Liability.

     The liability of each Guarantor hereunder is exclusive and independent of
any security for or other guaranty of the Credit Party Obligations of the
Borrower whether executed by any such Guarantor, any other guarantor or by any
other party, and no Guarantor's liability hereunder shall be affected or
impaired by (a) any direction as to application of payment by the Borrower or by
any other party, or (b) any other continuing or other guaranty, undertaking or
maximum

                                      111
<PAGE>

liability of a guarantor or of any other party as to the Credit Party
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Administrative Agent, the Lenders or any Hedging Agreement Provider on the
Credit Party Obligations that the Administrative Agent, such Lenders or such
Hedging Agreement Provider repay the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and each of the Guarantors waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding.

     Section 10.4  Independent Obligation.

     The obligations of each Guarantor hereunder are independent of the
obligations of any other guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.

     Section 10.5  Authorization.

     Each of the Guarantors authorizes the Administrative Agent, each Lender and
each Hedging Agreement Provider without notice or demand (except as shall be
required by applicable law and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to (a) renew, compromise,
extend, increase, accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Credit Party Obligations or any part thereof
in accordance with this Agreement and any Secured Hedging Agreement, as
applicable, including any increase or decrease of the rate of interest thereon,
(b) take and hold security from any Guarantor or any other party for the payment
of this Guaranty or the Credit Party Obligations and exchange, enforce waive and
release any such security, (c) apply such security and direct the order or
manner of sale thereof as the Administrative Agent and the Lenders in their
discretion may determine and (d) release or substitute any one or more
endorsers, Guarantors, the Borrower or other obligors.

     Section 10.6  Reliance.

     It is not necessary for the Administrative Agent, the Lenders or any
Hedging Agreement Providers to inquire into the capacity or powers of the
Borrower or the officers, directors, members, partners or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

     Section 10.7  Waiver.

          (a) Each of the Guarantors waives any right (except as shall be
     required by applicable law and cannot be waived) to require the
     Administrative Agent, any Lender or any Hedging Agreement Provider to (i)
     proceed against the Borrower, any other guarantor or any other party, (ii)
     proceed against or exhaust any security held from the

                                      112
<PAGE>

     Borrower, any other guarantor or any other party, or (iii) pursue any other
     remedy in the Administrative Agent's, any Lender's or any Hedging Agreement
     Provider's power whatsoever. Each of the Guarantors waives any defense
     based on or arising out of any defense of the Borrower, any other guarantor
     or any other party other than payment in full of the Credit Party
     Obligations, including without limitation any defense based on or arising
     out of the disability of the Borrower, any other guarantor or any other
     party, or the unenforceability of the Credit Party Obligations or any part
     thereof from any cause, or the cessation from any cause of the liability of
     the Borrower other than payment in full of the Credit Party Obligations.
     The Administrative Agent or any of the Lenders may, at their election,
     foreclose on any security held by the Administrative Agent or a Lender by
     one or more judicial or nonjudicial sales, whether or not every aspect of
     any such sale is commercially reasonable (to the extent such sale is
     permitted by applicable law), or exercise any other right or remedy the
     Administrative Agent and any Lender may have against the Borrower or any
     other party, or any security, without affecting or impairing in any way the
     liability of any Guarantor hereunder except to the extent the Credit Party
     Obligations have been paid in full. Each of the Guarantors, to the extent
     permitted by law, waives any defense arising out of any such election by
     the Administrative Agent and each of the Lenders, even though such election
     operates to impair or extinguish any right of reimbursement or subrogation
     or other right or remedy of the Guarantors against the Borrower or any
     other party or any security.

          (b) Each of the Guarantors waives all presentments, demands for
     performance, protests and notices, including without limitation notices of
     nonperformance, notice of protest, notices of dishonor, notices of
     acceptance of this Guaranty, and notices of the existence, creation or
     incurring of new or additional Credit Party Obligations. Each Guarantor
     assumes all responsibility for being and keeping itself informed of the
     Borrower's financial condition and assets, and of all other circumstances
     bearing upon the risk of nonpayment of the Credit Party Obligations and the
     nature, scope and extent of the risks which such Guarantor assumes and
     incurs hereunder, and agrees that neither the Administrative Agent nor any
     Lender shall have any duty to advise such Guarantor of information known to
     it regarding such circumstances or risks.

          (c) Each of the Guarantors hereby agrees it will not exercise any
     rights of subrogation which it may at any time otherwise have as a result
     of this Guaranty (whether contractual, under Section 509 of the U.S.
     Bankruptcy Code, or otherwise) to the claims of the Lenders or the Hedging
     Agreement Provider against the Borrower or any other guarantor of the
     Credit Party Obligations of the Borrower owing to the Lenders or such
     Hedging Agreement Provider (collectively, the "Other Parties") and all
     contractual, statutory or common law rights of reimbursement, contribution
     or indemnity from any Other Party which it may at any time otherwise have
     as a result of this Guaranty until such time as the Credit Party
     Obligations shall have been paid in full, no Credit Document or Secured
     Hedging Agreement remains in effect and the Commitments have been
     terminated. Each of the Guarantors hereby further agrees not to exercise
     any right to enforce any other remedy which the Administrative Agent, the
     Lenders or any Hedging Agreement Provider now have or may hereafter have
     against any Other Party, any endorser or any other guarantor of all or any
     part of the Credit Party Obligations of

                                      113
<PAGE>

     the Borrower and any benefit of, and any right to participate in, any
     security or collateral given to or for the benefit of the Lenders and/or
     the Hedging Agreement Providers to secure payment of the Credit Party
     Obligations of the Borrower until such time as the Credit Party Obligations
     shall have been paid in full, no Credit Document or Secured Hedging
     Agreement remains in effect and the Commitments have been terminated.

     Section 10.8  Limitation on Enforcement.

     The Lenders and the Hedging Agreement Providers agree that this Guaranty
may be enforced only by the action of the Administrative Agent acting upon the
instructions of the Required Lenders or any such Hedging Agreement Provider
(only with respect to obligations under the applicable Secured Hedging
Agreement) and that no Lender or Hedging Agreement Provider shall have any right
individually to seek to enforce or to enforce this Guaranty, it being understood
and agreed that such rights and remedies may be exercised by the Administrative
Agent for the benefit of the Lenders under the terms of this Credit Agreement
and for the benefit of any Hedging Agreement Provider under any Secured Hedging
Agreement. The Lenders and the Hedging Agreement Providers further agree that
this Guaranty may not be enforced against any director, officer, employee or
stockholder of the Guarantors.

     Section 10.9  Confirmation of Payment.

     The Administrative Agent and the Lenders will, upon request after payment
of the Credit Party Obligations under the Credit Documents which are the subject
of this Guaranty and termination of the Commitments relating thereto, confirm to
the Borrower, the Guarantors or any other Person that the Credit Party
Obligations under the Credit Documents have been paid in full and the
Commitments relating thereto terminated, subject to the provisions of Section
10.2.

                                      114
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.

BORROWER:                   COLGATE MEDICAL LTD,
                            a company formed under the laws of England and Wales

                            By: /s/ G.H. MOULD
                               ---------------------------------------------
                            Name:  G.H. Mould
                            Title: Director

                            [Signature Pages Continue]

<PAGE>

GUARANTORS:                 ORTHOFIX INTERNATIONAL N.V.,
                            a Netherlands Antilles corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Chief Financial Officer

                            [Signature Pages Continue]

<PAGE>

                            ORTHOFIX HOLDINGS, INC.,
                            a Delaware Corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Secretary

                            [Signature Pages Continue]

<PAGE>

                            ORTHOFIX INC.,
                            a Minnesota corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Chief Financial Officer

                            [Signature Pages Continue]

<PAGE>

                            BREG, INC.,
                            a California corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Asst. Secretary

                            [Signature Pages Continue]

<PAGE>

                            ORTHOFIX UK LTD,
                            a company formed under the laws of England and Wales

                            By: /s/ G.H. MOULD
                               ---------------------------------------------
                            Name:  G.H. Mould
                            Title: Director

                            [Signature Pages Continue]

<PAGE>

                            ORTHOFIX US LLC,
                            a Delaware limited liability company

                            By:  ORTHOFIX UK LTD,
                                 Sole Member

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Secretary

                            [Signature Pages Continue]

<PAGE>

                            AMEI TECHNOLOGIES INC.,
                            a Delaware corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Assistant Secretary

                            [Signature Pages Continue]

<PAGE>

                            NEOMEDICS, INC., a New Jersey corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Assistant Secretary

                            [Signature Pages Continue]

<PAGE>

                            OSTEOGENICS INC., a Delaware corporation

                            By: /s/ THOMAS HEIN
                               ---------------------------------------------
                            Name:  Thomas Hein
                            Title: Assistant Secretary

                            [Signature Pages Continue]

<PAGE>

ADMINISTRATIVE AGENT
AND LENDERS:                WACHOVIA BANK, NATIONAL ASSOCIATION,
                            as Administrative Agent and as a Lender

                            By: /s/ SCOTT SANTA CRUZ
                               ---------------------------------------------
                            Name:  Scott Santa Cruz
                            Title: Director

                            [Signature Pages Continue]

<PAGE>

                            BANK OF AMERICA, N.A., as a Lender

                            By: /s/ JOHN L. MERCURI
                               ---------------------------------------------
                            Name:  John L. Mercuri
                            Title: Senior Vice President

                            [Signature Pages Continue]

<PAGE>

                            ALLIED IRISH BANKS, P.L.C., as a Lender

                            By: /s/ RIMA TERRADISTA
                               ---------------------------------------------
                            Name:  Rima Terradista
                            Title: Senior Vice President

                            By: /s/ JOSEPH S. AUGUSTINI
                               ---------------------------------------------
                            Name:  Joseph S. Augustini
                            Title: Vice President

                            [Signature Pages Continue]

<PAGE>

                            GENERAL ELECTRIC CAPITAL CORPORATION,
                            as a Lender

                            By: /s/ EARL F. SMITH III
                               ---------------------------------------------
                            Name:  Earl F. Smith III
                            Title: Duly Authorized Signatory

                            [Signature Pages End]Exhibit 4.1

                                                                  EXECUTION COPY

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

                                TEKNI-PLEX, INC.

                     and each of the Guarantors PARTY HERETO

                      8 3/4% SENIOR SECURED NOTES DUE 2013

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

                                    INDENTURE

                          Dated as of November 21, 2003

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

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

                                  HSBC Bank USA

                                     Trustee

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

<PAGE>

                             CROSS-REFERENCE TABLE*

Trust Indenture
Act Section                                                   Indenture Section
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)..............................................          10.04
     (b)(2)..............................................        7.06; 7.07
     (c).................................................    7.06; 10.04;14.02
     (d).................................................           7.06
314(a)...................................................    4.03;14.02; 14.05
     (b).................................................          10.05
     (c)(1)..............................................          14.04
     (c)(2)..............................................          14.04
     (c)(3)..............................................           N.A.
     (d).................................................   10.04, 10.06, 10.07
     (e).................................................          14.05
     (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)...................................................          14.01
     (b).................................................           N.A.
     (c).................................................          14.01

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

<PAGE>

<TABLE>
<S>            <C>                                                                                         <C>
                                TABLE OF CONTENTS

                                                                                                        Page

                               ARTICLE 1.
                      DEFINITIONS AND INCORPORATION
                              BY REFERENCE

Section 1.01   Definitions.................................................................................1
Section 1.02   Other Definitions..........................................................................23
Section 1.03   Incorporation by Reference of Trust Indenture Act..........................................23
Section 1.04   Rules of Construction......................................................................24

                            ARTICLE 2.
                             THE NOTES

Section 2.01   Form and Dating............................................................................24
Section 2.02   Execution and Authentication...............................................................25
Section 2.03   Registrar and Paying Agent.................................................................26
Section 2.04   Paying Agent to Hold Money in Trust........................................................26
Section 2.05   Holder Lists...............................................................................26
Section 2.06   Transfer and Exchange......................................................................26
Section 2.07   Replacement Notes..........................................................................38
Section 2.08   Outstanding Notes..........................................................................38
Section 2.09   Treasury Notes.............................................................................39
Section 2.10   Temporary Notes............................................................................39
Section 2.11   Cancellation...............................................................................39
Section 2.12   Defaulted Interest.........................................................................39

                            ARTICLE 3.
                     REDEMPTION AND PREPAYMENT

Section 3.01   Notices to Trustee.........................................................................40
Section 3.02   Selection of Notes to Be Redeemed or Purchased.............................................40
Section 3.03   Notice of Redemption.......................................................................40
Section 3.04   Effect of Notice of Redemption.............................................................41
Section 3.05   Deposit of Redemption or Purchase Price....................................................41
Section 3.06   Notes Redeemed or Purchased in Part........................................................42
Section 3.07   Optional Redemption........................................................................42
Section 3.08   Mandatory Redemption.......................................................................43
Section 3.09   Offer to Purchase by Application of Excess Proceeds........................................43

                            ARTICLE 4.
                             COVENANTS

Section 4.01   Payment of Notes...........................................................................44
Section 4.02   Maintenance of Office or Agency............................................................45
Section 4.03   Reports....................................................................................45
Section 4.04   Compliance Certificate.....................................................................46
Section 4.05   Taxes......................................................................................46
Section 4.06   Stay, Extension and Usury Laws.............................................................46
Section 4.07   Restricted Payments........................................................................47
Section 4.08   Dividend and Other Payment Restrictions Affecting Subsidiaries.............................49
Section 4.09   Incurrence of Indebtedness and Issuance of Preferred Stock.................................51
Section 4.10   Asset Sales................................................................................54

                                       i

<PAGE>

Section 4.11   Transactions with Affiliates...............................................................56
Section 4.12   Liens......................................................................................57
Section 4.13   Business Activities........................................................................57
Section 4.14   Corporate Existence........................................................................57
Section 4.15   Offer to Repurchase Upon Change of Control.................................................57
Section 4.16   No Amendment of Subordination Provisions in Existing Subordinated Notes....................59
Section 4.17   Limitation on Issuances and Sales of Equity Interest in Restricted Subsidiaries............59
Section 4.18   Payments for Consent.......................................................................59
Section 4.19   Additional Subsidiary Guarantees...........................................................60
Section 4.20   Designation of Restricted and Unrestricted Subsidiaries....................................60
Section 4.21   Collateral.................................................................................60

                            ARTICLE 5.
                            SUCCESSORS

Section 5.01   Merger, Consolidation, or Sale of Assets...................................................61
Section 5.02   Successor Corporation Substituted..........................................................62

                            ARTICLE 6.
                       DEFAULTS AND REMEDIES

Section 6.01   Events of Default..........................................................................62
Section 6.02   Acceleration...............................................................................64
Section 6.03   Other Remedies.............................................................................65
Section 6.04   Waiver of Past Defaults....................................................................65
Section 6.05   Control by Majority........................................................................65
Section 6.06   Limitation on Suits........................................................................65
Section 6.07   Rights of Holders of Notes to Receive Payment..............................................66
Section 6.08   Collection Suit by Trustee.................................................................66
Section 6.09   Trustee May File Proofs of Claim...........................................................66
Section 6.10   Priorities.................................................................................67
Section 6.11   Undertaking for Costs......................................................................67

                            ARTICLE 7.
                              TRUSTEE

Section 7.01   Duties of Trustee..........................................................................67
Section 7.02   Rights of Trustee..........................................................................68
Section 7.03   Individual Rights of Trustee...............................................................69
Section 7.04   Trustee"s Disclaimer.......................................................................69
Section 7.05   Notice of Defaults.........................................................................69
Section 7.06   Reports by Trustee to Holders of the Notes.................................................69
Section 7.07   Compensation and Indemnity.................................................................70
Section 7.08   Replacement of Trustee.....................................................................70
Section 7.09   Successor Trustee by Merger, etc...........................................................71
Section 7.10   Eligibility; Disqualification..............................................................71
Section 7.11   Preferential Collection of Claims Against Company..........................................72

                            ARTICLE 8.
              EGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01   Option to Effect Legal Defeasance or Covenant Defeasance...................................72
Section 8.02   Legal Defeasance and Discharge.............................................................72
Section 8.03   Covenant Defeasance........................................................................73
Section 8.04   Conditions to Legal or Covenant Defeasance.................................................73

                                       ii

<PAGE>

Section 8.05   Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous
               Provisions.................................................................................74
Section 8.06   Repayment to Company.......................................................................75
Section 8.07   Reinstatement..............................................................................75

                            ARTICLE 9.
                 AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01   Without Consent of Holders of Notes........................................................75
Section 9.02   With Consent of Holders of Notes...........................................................76
Section 9.03   Compliance with Trust Indenture Act........................................................77
Section 9.04   Revocation and Effect of Consents..........................................................78
Section 9.05   Notation on or Exchange of Notes...........................................................78
Section 9.06   Trustee to Sign Amendments, etc............................................................78

                            ARTICLE 10.
                      COLLATERAL AND SECURITY

Section 10.01  Security Documents.........................................................................78
Section 10.02  Collateral Agent...........................................................................79
Section 10.03  Authorization of Actions to Be Taken.......................................................79
Section 10.04  Release of Note Liens......................................................................80
Section 10.05  Recording and Opinions.....................................................................81
Section 10.06  Certificates of the Company................................................................82
Section 10.07  Certificates of the Trustee................................................................82
Section 10.08  Termination of Security Interest...........................................................82

                            ARTICLE 11.
                       SUBSIDIARY GUARANTEES

Section 11.01  Guarantee..................................................................................82
Section 11.02  Limitation on Guarantor Liability..........................................................83
Section 11.03  Execution and Delivery of Subsidiary Guarantee.............................................84
Section 11.04  Guarantors May Consolidate, etc., on Certain Terms.........................................84
Section 11.05  Releases...................................................................................85

                            ARTICLE 12.
                    satisfaction and discharge

Section 12.01  Satisfaction and Discharge.................................................................85
Section 12.02  Application of Trust Money.................................................................86

                            ARTICLE 13.
                       RANKING OF NOTE LIENS

Section 13.01  Agreement for the Benefit of Holders of Priority Liens.....................................87
Section 13.02  Ranking....................................................................................87
Section 13.03  Collateral Sharing with Additional Notes...................................................87
Section 13.04  Restriction on Enforcement of Note Liens...................................................88
Section 13.05  Insolvency or Liquidation Proceedings......................................................89
Section 13.06  Relative Rights............................................................................91

                            ARTICLE 14.
                           MISCELLANEOUS

Section 14.01  Trust Indenture Act Controls...............................................................91
Section 14.02  Notices....................................................................................91

                                       iii

<PAGE>

Section 14.03  Communication by Holders of Notes with Other Holders of Notes..............................93
Section 14.04  Certificate and Opinion as to Conditions Precedent.........................................93
Section 14.05  Statements Required in Certificate or Opinion..............................................93
Section 14.06  Rules by Trustee and Agents................................................................93
Section 14.07  No Personal Liability of Directors, Officers, Employees and Stockholders...................93
Section 14.08  Governing Law..............................................................................94
Section 14.09  No Adverse Interpretation of Other Agreements..............................................94
Section 14.10  Successors.................................................................................94
Section 14.11  Severability...............................................................................94
Section 14.12  Counterpart Originals......................................................................94
Section 14.13  Table of Contents, Headings, etc...........................................................94
Section 14.14  Waivers under Existing Indenture...........................................................94
</TABLE>

                                EXHIBITS

Exhibit A1    FORM OF NOTE
Exhibit A2    FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B     FORM CERTIFICATE OF TRANSFER
Exhibit C     FORM OF CERTIFICATE OF EXCHANGE
Exhibit D     FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E     FORM OF SUBSIDIARY GUARANTEE

                                       iv

<PAGE>

         INDENTURE dated as of November 21, 2003 among Tekni-Plex, Inc., a
Delaware corporation (the "Company"), the Guarantors (as defined) and HSBC Bank
USA, 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 (as
defined) of the 8 3/4% Senior Secured Notes due 2013 (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 A1 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 Restricted 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 Restricted Subsidiary of, such specified
         Person; and

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

         "Additional Notes" means additional 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. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" have correlative
meanings.

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

         "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 Clearstream that apply to such transfer or
exchange.

         "Asset Sale" means:

                  (1) the sale, lease, conveyance or other disposition of any
         assets or rights of the Company or any Restricted Subsidiary; provided
         that the sale, conveyance or other disposition of all or substantially
         all of the assets of the Company and its Restricted Subsidiaries taken
         as a whole will be governed by the provisions of Section 4.15 and/or
         the provisions of Section 5.01 hereof; and

                                       1

<PAGE>

                  (2) the issuance of Equity Interests in any of the Company's
         Restricted Subsidiaries other than directors' qualifying shares or the
         sale of Equity Interests in any of its Subsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:

                (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
        Restricted Subsidiaries,

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

                (4) the sale or lease of products, services or accounts
        receivable in the ordinary course of business and any sale or other
        disposition of damaged, worn-out or obsolete assets in the ordinary
        course of business;

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

                (6) a Restricted Payment that does not violate Section 4.07
        hereof or a Permitted Investment;

                (7) the grant in the ordinary course of business of any
        non-exclusive license of patents, trademarks, registrations therefor
        and other similar intellectual property; and

                (8) any Lien (or foreclosure thereon) securing Indebtedness to
        the extent such Lien was granted in compliance with Section 4.12
        hereof.

        "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. 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 or any committee thereof duly authorized to act on
        behalf of such board;

                (2) with respect to a partnership, the Board of Directors of
        the general partner of the partnership;

                (3) with respect to a limited liability company, the managing
        member or members or any controlling committee of managing members
        thereof; and

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

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

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

                                       2

<PAGE>

        "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, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.

        "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) similar to corporate stock;

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

        "Cash Equivalents" means:

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

                (2) dollar denominated time deposits and certificates of
        deposit of any commercial bank having, or which is the principal
        banking subsidiary of a bank holding company having, a long-term
        unsecured debt rating of at least "A" or the equivalent thereof from
        S&P or "A2" or the equivalent thereof from Moody's with maturities of
        not more than one year from the date of acquisition;

                (3) repurchase obligations for underlying securities of the
        types described in clause (1) above entered into with any bank meeting
        the qualifications specified in clause (2) above;

                (4) commercial paper issued by any Person incorporated in the
        United States rated at least A-1 or the equivalent thereof by S&P or at
        least P-1 or the equivalent thereof by Moody's and in each case
        maturing not more than one year after the date of acquisition;

                (5) marketable direct obligations issued by the District of
        Columbia or any State of the United States or any political subdivision
        of any such State or any public instrumentality thereof maturing within
        one year from the date of acquisition and, at the time of acquisition,
        having one of the two highest ratings obtainable from either S&P or
        Moody's;

                (6) investments in money market funds substantially all of
        whose assets are comprised of Cash Equivalents of the types described
        in clauses (1) through (5) above; and

                (7) in the case of Investments by foreign Subsidiaries, other
        short-term investments in accordance with normal investment practices
        for cash management of a type analogous to the foregoing.

                                       3

<PAGE>

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

                (1) any person or persons acting together that would
        constitute a group (for purposes of Section 13(d) of the Exchange Act,
        or any successor provision thereto) (a "group"), together with any
        affiliates or related persons thereof, other than any such person,
        persons, affiliates or related person who are Permitted Holders, shall
        Beneficially Own, directly or indirectly, at least (a) 50% of the
        voting power of the Company's outstanding voting stock or (b) 40% of
        the voting power of the Company's outstanding voting stock and in the
        case of clause (b) the Permitted Holders own less than such person or
        group (in doing the "own less than" comparison in this clause (b), the
        holdings of the Permitted Holders who are members of the new group
        shall not be counted in the shares held in the aggregate by Permitted
        Holders); provided that in no event shall a "governance change," within
        the meaning of the amended and restated limited liability company
        agreement of Tekni-Plex Partners and the limited liability company
        agreement of MST/TP Partners, in each case as in effect on June 21,
        2000, be deemed to be a Change of Control hereunder;

                (2) any sale, lease or other transfer (in one transaction or a
        series of related transactions) is made by the Company or any
        Restricted Subsidiaries of all or substantially all of the consolidated
        assets of the Company and the Restricted Subsidiaries to any person;

                (3) the Company consolidates with or merges with or into
        another person or any person consolidates with, or mergers with or
        into, the Company, in any such event pursuant to a transaction in which
        immediately after the consummation thereof persons owning a majority of
        the Company's voting stock voting immediately prior to such
        consummation shall cease to own a majority of the Company's voting
        stock, or, if the Company is not the surviving entity, a majority of
        the voting stock of such surviving entity;

                (4) continuing directors cease to constitute at least a majority
        of the board of directors of the Company; or

                (5) the Company's stockholders approve any plan or proposal for
        the Company's liquidation or dissolution.

In no event would the sale of the Company's common stock to an underwriter or
group of underwriters in privity of contract with the Company (or anybody in
privity of contact with such underwriters) be deemed to be a Change of Control
or be deemed the acquisition of more than 40% of the voting power of the
Company's outstanding voting stock by a person or any group unless such common
stock is held in an investment account in which case the investment account
would be treated without giving effect to the foregoing part of this sentence.

        "Clearstream" means Clearstream Banking, S.A., a limited liability
company (la societe anonyme) organized under Luxemberg law.

        "Collateral" includes, but is not limited to, the following property of
the Company and the Guarantors (whether now owned or existing or acquired or
arising after the date of this Indenture):

                (1) all of the stock and equity interests of the Company's
        Domestic Subsidiaries and 65% of the Capital Stock and equity interests
        of certain of the Company's Foreign Subsidiaries;

                (2) all accounts, inventory, general intangibles, equipment and
        insurance policies;

                (3) all documents of title covering, evidencing or representing
        goods;

                                       4

<PAGE>

                (4) all instruments and chattel paper;

                (5) commercial tort claims;

                (6) certain real property;

                (7) rights under certain railcar leases;

                (8) patents, trademarks, copyrights and other intellectual
        property;

                (9) all letter of credit rights;

                (10) all supporting obligations;

                (11) certain deposit accounts; and

                (12) all proceeds of, and all other profits, products, rents
        or receipts, arising from the collection, sale, lease, exchange,
        assignment, licensing or other disposition or realization upon the
        Collateral described in (1) through (11) above.

        "Company" means the party named as such in the preamble to this
Indenture, 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,
without duplication:

                (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) the Fixed Charges of such Person and its Restricted
        Subsidiaries for such period, to the extent that such Fixed Charges
        were deducted in computing such Consolidated Net Income; plus

                (4) depreciation and amortization (including amortization of
        intangibles but excluding amortization of prepaid cash expenses that
        were paid in a prior period) of such Person and its Restricted
        Subsidiaries for such period to the extent that such depreciation and
        amortization expenses were deducted in computing such Consolidated Net
        Income; plus

                (5) non-cash items to the extent deducted from Consolidated
        Net Income for such period, other than any non-cash charges that
        represent accruals of, or reserves for, cash disbursements to be made
        in any future accounting period;

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

        "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:

                                       5

<PAGE>

                (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 similar distributions paid in cash to the specified Person
        or a 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,
        instrument, judgment, decree, order, statute, rule or governmental
        regulation applicable to that Restricted Subsidiary or its
        stockholders;

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

                (4) non cash gains and losses due solely to fluctuations in
        currency values will be excluded.

        "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.

        "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" will be at the address of the
Trustee specified in Section 14.02 hereof or such other address as to which the
Trustee may give notice to the Company.

        "Credit Agreement" means that certain Credit Agreement, dated as of
June 21, 2000, by and among the Company, the Guarantor parties thereto, the
Lender parties thereto, the LC Issuing Banks referred to therein (each as
therein defined), and JP Morgan Chase Bank, as agent, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, restated, modified,
increased, renewed, refunded, replaced (whether upon or after termination or
otherwise) or refinanced (including by means of sales of debt securities to
institutional investors) in whole or in part from time to time, including any
agreement increasing the amount of indebtedness incurred thereunder or available
to be borrowed thereunder, provided that on the date of that Indebtedness is
incurred it would not be prohibited by Section 4.09(b)(1) hereof.

                                       6

<PAGE>

        "Credit Agreement Agent" means, at any time, the Person serving at such
time as the "Agent" or "Administrative Agent" under the Credit Agreement or any
other representative of the Lenders then most recently designated by the
Majority Lenders, in a written notice delivered to the Trustee, as the Credit
Agreement Agent for the purposes of this Indenture.

        "Credit Bid Rights" means, in respect of any order relating to a sale
of assets in any solvency or liquidation proceeding, that:

                (1) such order grants the Holders of Notes (individually and
        in any combination) the right to bid at the sale of such assets and the
        right to offset such Holders' claims secured by Note Liens upon such
        assets against the purchase price of such assets if:

                        (a) the bid of such Holders is the highest bid or
                otherwise determined by a court to be the best offer at a
                sale; and

                        (b) the bid of such Holders includes a cash purchase
                price component payable at the closing of the sale in an
                amount that would be sufficient on the date of the closing of
                the sale, if such amount were applied to such payment on such
                date, to pay all unpaid Priority Lien Obligations (except
                Unasserted Contingent Obligations) and to satisfy all liens
                entitled to priority over the Priority Liens that attach to
                the proceeds of the sale, and such order requires such amount
                to be so applied; and

                (2) such order allows the claims of the Holders of Notes in
        such insolvency or liquidation proceeding to the extent required for
        the grant of such rights.

        "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 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, increased, renewed, refunded, replaced (whether
upon termination or otherwise) or refinanced (including by means of sales of
debt securities to institutional investors) 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 A1 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.

        "Discharge of Priority Lien Obligations" means termination of all
commitments to extend credit that would constitute Priority Lien Debt, payment
in full in cash of the principal of and interest and

                                       7

<PAGE>

premium (if any) on all Priority Lien Debt (except undrawn letters of credit),
discharge or cash collateralization (in compliance with the relevant Priority
Lien Documents) of all letters of credit outstanding under any Priority Lien
Debt or Hedging Obligations constituting Priority Lien Debt, and payment in full
in cash of all other Priority Lien Obligations (except Unasserted Contingent
Obligations) that are outstanding and unpaid at the time the Priority Lien Debt
is paid in full in cash.

        "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. Provided further, that if the
Capital Stock is issued to any plan for the benefit of employees of the Company
or its subsidiaries or by any such plan to those employees, that Capital Stock
shall not constitute Disqualified Stock solely because it may be required to be
repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations. The amount of Disqualified Stock deemed to be
outstanding at any time will be the maximum amount that the Company and its
Restricted Subsidiaries may become obligated to pay upon the maturity of, or
pursuant to any mandatory redemption provisions of, such Disqualified Stock,
exclusive of accrued dividends.

        "Domestic Subsidiary" means any Restricted 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).

        "Equity Offerings" means one or more public or private offerings of
Equity Interests (other than Disqualified Stock) of the Company or cash capital
contributions received by the Company in respect of such Equity Interests (other
than Disqualified Stock).

        "Euroclear" means Euroclear Bank, S.A./N.V., 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.

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

        "Existing Indebtedness" means up to $320.8 million in aggregate
principal amount of 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. The $320.8 million of Existing

                                       8

<PAGE>

Indebtedness includes $315.0 million in aggregate principal amount of the
Company's existing 12 3/4% Senior Subordinated Notes due 2010.

        "Fair Market Value" means the value that would be paid by a willing
buyer to an unaffiliated willing seller, determined in good faith by the Board
of Directors of the Company (unless otherwise provided hereunder).

        "Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the specified Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise
discharges 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, redemption, defeasance or other
discharge 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, or any Person or any of its Restricted Subsidiaries
        acquired by the specified Person or any of its Restricted Subsidiaries,
        and including any related financing transactions and including
        increases in ownership of Restricted Subsidiaries, during the
        four-quarter reference period or subsequent to such reference period
        and on or prior to the Calculation Date will be given pro forma effect
        (such calculations will be done in accordance with Regulation S-X under
        the Securities Act or any successor provision and may include
        reasonable ascertainable cost savings) as if they had occurred on the
        first day of the four-quarter reference period;

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

                (3) the Fixed Charges attributable to discontinued operations,
        as determined in accordance with GAAP, and operations or businesses
        (and ownership interests therein) 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;

                (4) any Person that is a Restricted Subsidiary on the
        Calculation Date will be deemed to have been a Restricted Subsidiary at
        all times during such four-quarter period;

                (5) any Person that is not a Restricted Subsidiary on the
        Calculation Date will be deemed not to have been a Restricted
        Subsidiary at any time during such four-quarter period; and

                (6) if any Indebtedness bears a floating rate of interest, the
        interest expense on such Indebtedness will be calculated as if the rate
        in effect on the Calculation Date had been the applicable rate for the
        entire period (taking into account any Hedging Obligation applicable to

                                       9

<PAGE>

        such Indebtedness if such Hedging Obligation has a remaining term until
        the earlier of the maturity of such Indebtedness or as at the
        Calculation Date in excess of 12 months).

        "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 in respect of interest
        rates; plus

                (2) the consolidated interest of such Person and its
        Restricted Subsidiaries that was capitalized during such period to the
        extent the net income of such Restricted Subsidiary is included in the
        calculation of Net Income; plus

                (3) any interest accruing 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,
        expressed as a decimal, in each case, on a consolidated basis and in
        accordance with GAAP.

        "Foreign Subsidiary" means any Restricted Subsidiary that is not a
Domestic Subsidiary.

        "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 Note Legend" means the legend set forth in Section 2.06(g)(2),
which is required to be placed on all Global Notes issued under this Indenture.

        "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes deposited with or on
behalf of and registered in the name of the Depository or its nominee,
substantially in the form of Exhibit A1 hereto and that bears the Global Note
Legend and that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, issued in accordance with Section 2.01, 2.06(b)(3),
2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof.

        "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.

                                       10

<PAGE>

        "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 (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).

        "Guarantors" means:

                (1) all of the Company's Domestic Subsidiaries with the
        exception of Coast Recycling North, Inc., and Pure Tech Recycling of
        California, Pure Tech APR, Inc. and Alumet Smelting Corporation; 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 (whether from fixed to
        floating or from floating to fixed), interest rate cap agreements and
        interest rate collar agreements;

                (2) other agreements or arrangements designed to manage
        interest rates or interest rate risk; and

                (3) other agreements or arrangements designed to protect such
        Person against fluctuations in currency exchange rates or commodity
        prices or the prices of other raw materials used in their business

        "Holder" means a Person in whose name a Note is registered.

        "IAI Global Note" means a Global Note substantially in the form of
Exhibit A1 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 (excluding accrued expenses and trade payables),
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 in respect of sale
        and leaseback transactions;

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<PAGE>

                (5) representing the balance deferred and unpaid of the
        purchase price of any property or services due more than six months
        after such property is acquired or such services are completed; or

                (6) representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit,
Attributable Debt 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.

        "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 $275,000,000 aggregate principal amount
of Notes issued under this Indenture on the date hereof.

        "Initial Purchasers" means Lehman Brothers Inc. and Citigroup Global
Markets Inc.

        "Insolvency or Liquidation Proceeding" means:

                (1) any case commenced by or against the Company or any other
        Obligor under any Bankruptcy Law, any other proceeding for the
        reorganization, recapitalization or adjustment or marshalling of the
        assets or liabilities of the Company or any other Obligor, any
        receivership or assignment for the benefit of creditors relating to the
        Company or any other Obligor or any similar case or proceeding relative
        to the Company or any other Obligor or its creditors, as such, in each
        case whether or not voluntary;

                (2) any liquidation, dissolution, marshalling of assets or
        liabilities or other winding up of or relating to the Company or any
        other Obligor, in each case whether or not voluntary and whether or not
        involving bankruptcy or insolvency; or

                (3) any other proceeding of any type or nature in which
        substantially all claims of creditors of the Company or any other
        Obligor are determined and any payment or distribution is or may be made
        on account of such claims.

        "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.

        "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

                                       12

<PAGE>

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 Company's Investments in such Subsidiary that were not sold or disposed of
in an amount determined as provided in Section 4.07(b) 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 Investments held by the acquired Person in such third Person in an
amount determined as provided in Section 4.07(b) hereof. Except as otherwise
provided in this Indenture, the amount of an Investment will be determined at
the time the Investment is made and without giving effect to subsequent changes
in value.

        "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.

        "Lenders" means, at any time, the parties to the Credit Agreement then
holding (or committed to provide) loans, letters of credit or other extensions
of credit that constitute (or when provided will constitute) Priority Lien Debt
outstanding under the Credit Agreement.

        "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 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 the Registration Rights Agreement.

        "Majority Lenders" means, at any time, Lenders then holding or
committed to provide at least a majority in principal amount of the aggregate
loans, letters of credit and other extensions of credit outstanding or committed
under the Credit Agreement.

        "Moody's" means Moody's Investors Service, Inc.

        "Mortgages" means any mortgages, deeds of trust, or deeds to secure
debt, as applicable, with respect to each parcel of owned real property of the
Company and the Guarantors.

        "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 (but not loss), together with any related
        provision for taxes on such gain (but not 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

                                       13

<PAGE>

                (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 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
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 Lien" means, to the extent securing Note Obligations, a Lien
granted pursuant to a Security Document as security for Note Obligations.

        "Note Obligations" means the Notes, the Subsidiary Guarantees and all
other Obligations of any Obligor under this Indenture, the Notes, the Subsidiary
Guarantees and the Security Documents.

        "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, and unless the context
otherwise requires, all references to the Notes shall include the Initial Notes
and any Additional Notes.

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

        "Obligor" means a Person obligated as an issuer or guarantor of the
Notes.

        "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.

                                       14

<PAGE>

        "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 14.05 hereof.

        "Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
14.05 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
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

        "Permitted Business" means (1) the manufacturing and distributing of
packaging products and materials, plastics products and materials, specialty
chemicals and other disposable products and tubing products and (2) any business
or activity reasonably related or ancillary thereto.

        "Permitted Holder" means (1) Dr. F. Patrick Smith, Kenneth W.R. Baker
and (a) entities controlled by such Persons, (b) trusts for the benefit of such
individual Persons or the spouses, issue, parents or other relatives of such
individual Persons and (c) in the event of the death of any such individual
Person, heirs or testamentary legatees of such Person; and (2) Tekni-Plex
Partners LLC and entities controlled by such Person. For purposes of this
definition, "control," as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.

        "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 Restricted Subsidiary
        of the Company in a Person, if as a result of such Investment:

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

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

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

                (6) any Investments received in compromise or resolution of
        (A) obligations of any person or customers that were incurred in the
        ordinary course of business of the Company or any of its Restricted
        Subsidiaries, including pursuant to any plan of reorganization or
        similar

                                       15

<PAGE>

        arrangement upon the bankruptcy or insolvency of such person; or (B)
        litigation, arbitration or other disputes with Persons who are not
        Affiliates;

                (7) Investments represented by Hedging Obligations;

                (8) loans or advances to employees made in the ordinary course
        of business of the Company or the Restricted Subsidiary of the Company;

                (9) repurchases of the Notes;

                (10) other Investments in any Person other than an Affiliate
        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 (10) that are at the time
        outstanding not to exceed $20.0 million;

                (11) endorsements for collection or deposit in the ordinary
        course of business by such Person of bank drafts and similar negotiable
        instruments of such other Person received as payment for ordinary
        course of business trade receivable; and

                (12) receivables and prepaid expenses, in each case arising in
        the ordinary course of business; provided, however that such
        receivables and prepaid expenses would be recorded as assets of such
        Person in accordance with GAAP.

        "Permitted Liens" means:

                (1) Note Liens;

                (2) Priority Liens;

                (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 (including Capital Stock) existing at
        the time of acquisition of the property, including by way of merger,
        consolidation or otherwise, by the Company or any Subsidiary of the
        Company; provided that such Liens were in existence prior to, such
        acquisition, and not incurred in contemplation of, such acquisition and
        do not extend to any assets other than those of the Person merged into
        or consolidated with the Company or the Subsidiary;

                (6) Liens to secure the performance of statutory obligations
        (including obligations under workers compensation, unemployment
        insurance or similar legislation), surety or appeal bonds, performance
        bonds or other obligations of a like nature incurred in the ordinary
        course of business;

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

                                       16

<PAGE>

                (8) 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;

                (9) Liens imposed by law, such as carriers', warehousemen's,
        landlord's and mechanics' Liens, in each case, incurred in the ordinary
        course of business;

                (10) survey exceptions, easements or reservations of, or
        rights of others for, licenses, rights-of-way, sewers, electric lines,
        telegraph and telephone lines and other similar purposes, or zoning or
        other restrictions as to the use of real property that were not
        incurred in connection with Indebtedness and that do not in the
        aggregate materially adversely affect the value of said properties or
        materially impair their use in the operation of the business of such
        Person;

                (11) Liens created for the benefit of (or to secure) the Notes
        (or the Subsidiary Guarantees);

                (12) Liens to secure any Permitted Refinancing Indebtedness
        permitted to be incurred under this Indenture; provided, however, that:

                        (A) the new Lien shall be limited to all or part of
                the same property and assets that secured or, under the
                written agreements pursuant to which the original Lien arose,
                could secure the original Lien (plus improvements and
                accessions to, such property or proceeds or distributions
                thereof); and

                        (B) the Indebtedness secured by the new Lien is not
                increased to any amount greater than the sum of (1) the
                outstanding principal amount or, if greater, committed amount,
                of the Permitted Referencing Indebtedness and (2) an amount
                necessary to pay any fees and expenses, including premiums,
                related to such refinancings, refunding, extension, renewal or
                replacement;

                (13) Liens in favor of the Trustee as provided for herein on
        money or property held or collected by the Trustee in its capacity as
        Trustee;

                (14) Liens arising pursuant to an order of attachment,
        distraint or similar legal process arising in connection with legal
        proceedings not giving rise to an Event of Default hereunder;

                (15) 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

                (16) Liens in favor of the Trustee as provided in the
        indenture governing the Subordinated Notes, as supplemented, on money
        or property held or collected by the Trustee in its capacity as
        Trustee.

        "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 refund, refinance, replace, defease or discharge
other Indebtedness of the Company or any of its Restricted Subsidiaries (other
than intercompany Indebtedness); provided that:

                                       17

<PAGE>

                (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;

                (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 or any
        other Restricted Subsidiary.

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

        "Priority Lien" means, to the extent securing Priority Lien
Obligations, a Lien granted to any holder, or representative of holders, of
Priority Lien Obligations as security for Priority Lien Obligations.

        "Priority Lien Agent" means the Credit Agreement Agent or, after the
Credit Agreement and all commitments to extend credit thereunder have been
terminated, all letters of credit (if any) issued under the Credit Agreement
have been discharged or cash collateralized in accordance with the terms
thereof, and all Priority Lien Obligations (except Unasserted Contingent
Obligations) outstanding under the Credit Agreement have been paid in full in
cash, a single representative of all holders of Priority Liens most recently
designated by the Company in an officer's certificate delivered to the Trustee
or the successor of such representative in its capacity as such.

        "Priority Lien Debt" means:

                (1) the principal of and interest (including interest accruing
        on or after the filing of any petition in bankruptcy or for
        reorganization, only to the extent a claim for post-petition interest
        is allowed in any case under the Bankruptcy Code) on Indebtedness under
        the Credit Agreement to the extent which, when advanced (or, in the
        case of any reimbursement obligation for a letter of credit issued
        under the Credit Agreement, when such letter of credit was issued),
        either (a) was permitted to be incurred by clause (1) or clause (14) of
        the definition of "Permitted Debt" or (b) was advanced (or, in the case
        of any such reimbursement obligation, relates to a letter of credit
        that was issued) upon delivery to the Trustee and the Credit Agreement
        Agent of an officer's certificate to the effect that such Indebtedness
        was permitted to be incurred by clause (1) or clause (14) of the
        definition of "Permitted Debt", including without limitation any such
        Indebtedness incurred in any insolvency or liquidation proceeding to
        the extent permitted by clause (1) or clause (14) of the definition of
        "Permitted Debt;"

                                       18

<PAGE>

                (2) Hedging Obligations permitted to be incurred by clause (8)
        of the definition of "Permitted Debt" that are equally and ratably
        secured by any and all Liens securing Indebtedness outstanding under
        the Credit Agreement; and

                (3) the principal of and interest (including interest accruing
        on or after the filing of any petition in bankruptcy or for
        reorganization, only to the extent a claim for post-petition interest
        is allowed in such any case under the Bankruptcy Code) on Indebtedness
        under any Credit Facility other than the Credit Agreement to the extent
        such Indebtedness was permitted to be incurred by clause (1) or clause
        (14) of the definition of "Permitted Debt" but only if on or before the
        day on which such Indebtedness was incurred by the Company or any of
        its Restricted Subsidiaries such Indebtedness is designated by the
        Company, in an officer's certificate delivered to the Trustee and the
        Credit Agreement Agent on or before such date, as Priority Lien Debt
        for the purposes of this Indenture.

        "Priority Lien Documents" means the documentation relating to any
Priority Lien Debt including, without limitation, the Credit Agreement, the
Priority Lien Security Documents and all other agreements governing, securing or
relating to any Priority Lien Obligations.

        "Priority Lien Obligations" means the Priority Lien Debt and all other
Obligations of the Company or any Guarantor under the Priority Lien Documents.

        "Priority Lien Security Documents" means one or more security
agreements, pledge agreements, collateral assignment, mortgages, deed of trust
or other grants or transfers for security executed and delivered by the Company
or any Guarantor creating a Lien upon property owned or to be acquired by the
Company or such Guarantor in favor of any holder or holders of Priority Lien
Debt, or any trustee, agent or representative acting for any such holders, as
security for any Priority Lien Obligations.

        "Private Placement Legend" means the legend set forth in Section
2.06(g)(1) 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.

        "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 21, 2003, among the Company, the Guarantors 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 among the Company,
the Guarantors 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 Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.

        "Regulation S Permanent Global Note" means a permanent Global Note in
the form of Exhibit A1 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, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.

                                       19

<PAGE>

        "Regulation S Temporary Global Note" means a temporary Global Note in
the form of Exhibit A2 hereto deposited with or on behalf of 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.

        "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 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 Period" means the 40-day distribution compliance period as
defined in Regulation S.

        "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 under the Securities Act.

        "S&P" means Standard & Poor's Ratings Group.

        "SEC" means the Securities and Exchange Commission.

        "Securities Act" means the Securities Act of 1933, as amended.

        "Security Documents" means one or more security agreements, pledge
agreements, collateral assignments, mortgages, deeds of trust or other grants or
transfers for security executed and delivered by the Company or any other
Obligor creating a Lien upon property owned or to be acquired by the Company or
such other Obligor in favor of the Collateral Agent for the benefit of all
present and future holders of Note Obligations, whenever incurred, and any
document perfecting such security interests.

        "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
November 12, 2003.

        "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 documentation governing
such Indebtedness as of the date of this Indenture, and will not include any

                                       20

<PAGE>

contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

        "Subordinated Note Indenture" means the indenture, dated as of June 21,
2000, by and among the Company, the Guarantors and HSBC Bank USA, as trustee,
under which the Company's 12 3/4% Senior Subordinated Notes due 2010 were
issued, as supplemented by a First Supplemental Indenture, dated as of May 6,
2002, by and among the Company, the Company Acquisition Subsidiary, Inc. and
HSBC Bank USA and as further supplemented by a Second Supplemental Indenture,
dated as of August 22, 2002, by and among, the Company, TP/Elm Acquisition
Subsidiary and HSBC Bank USA.

        "Subordinated Notes" means the Company's 12 3/4 % Senior Subordinated
Notes due 2010 issued pursuant to the Subordinated Note Indenture.

        "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 and
        after giving effect to any voting agreement or stockholders' agreement
        that effectively transfers voting power) 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).

        "Subsidiary Guarantee" means the Guarantee by each Guarantor of the
Company's obligations under this Indenture and on the Notes, executed pursuant
to Article 11 hereof.

        "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
thereunder.

        "Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

        "Unasserted Contingent Obligations" means, at any time, Obligations for
taxes, costs, indemnifications, reimbursements, damages and other liabilities
(except (i) the principal of and interest and premium (if any) on, and fees
relating to, any Indebtedness and (ii) contingent obligations to reimburse the
issuer of an outstanding letter of credit for amounts that may be drawn or paid
thereunder) in respect of which no claim or demand for payment has been made at
such time.

        "Unrestricted Global Note" means a Global Note that does not bear and
is not required to bear the Private Placement Legend.

        "Unrestricted Definitive Note" means a Definitive Note that does not
bear and is not required to bear the Private Placement Legend.

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<PAGE>

        "Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
resolution of the Board of Directors, but only to the extent that such
Subsidiary:

                (1) has no Indebtedness other than Non-Recourse Debt;

                (2) except as permitted by Section 4.11 hereof, 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; and

                (4) has not guaranteed or otherwise directly or indirectly
        provided credit support for any Indebtedness 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 the provisions of 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 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 pursuant to
Section 4.09 hereof, 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 hereof, 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(k) promulgated
under the Securities Act.

        "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

                                       22

<PAGE>

                (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.

                                                                  Defined in
        Term                                                         Section
        ----                                                         -------
        "Affiliate Transaction"...................................    4.11
        "Asset Sale Offer"........................................    4.10
        "Authentication Order"....................................    2.02
        "Change of Control Offer".................................    4.15
        "Change of Control Payment"...............................    4.15
        "Change of Control Payment Date"..........................    4.15
        "Collateral Agent"........................................    10.02
        "Covenant Defeasance".....................................    8.03
        "DTC".....................................................    2.03
        "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

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:

        "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 Subsidiary Guarantees means the Company
and the Guarantors, respectively, and any successor obligor upon the Notes and
the Subsidiary Guarantees, respectively.

                                       23

<PAGE>

        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:

                (1) a term has the meaning assigned to it;

                (2) an accounting term not otherwise defined has the meaning
        assigned to it in accordance with GAAP;

                (3) "or" is not exclusive;

                (4) words in the singular include the plural, and in the plural
        include the singular;

                (5) "will" shall be interpreted to express a command;

                (6) provisions apply to successive events and transactions; and

                (7) references to Sections of or rules under the Securities Act
        will 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
will 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 will be dated the date of its authentication. The Notes shall
be in denominations of $1,000 principal amount and integral multiples thereof.

        The terms and provisions contained in the Notes will 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 will be substantially in
the form of Exhibits A1 or A2 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 will be substantially in the form of
Exhibit A1 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 will represent such of the outstanding Notes as will
be specified therein and each shall provide that it represents 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 will 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.

                                       24

<PAGE>

        (c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S will be issued initially in the form of the Regulation S Temporary
Global Note, which will be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary, and registered in the name of the Depositary or the nominee of
the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Clearstream, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Restricted Period will be terminated upon
the receipt by the Trustee of:

                (1) a written certificate from the Depositary, together with
        copies of certificates from Euroclear and Clearstream certifying that
        they have received certification of non-United States beneficial
        ownership of 100% of the aggregate principal amount of the Regulation S
        Temporary Global Note (except to the extent of any beneficial owners
        thereof who acquired an interest therein during the Restricted Period
        pursuant to another exemption from registration under the Securities Act
        and who will take delivery of a beneficial ownership interest in a 144A
        Global Note or an IAI Global Note bearing a Private Placement Legend,
        all as contemplated by Section 2.06(b) hereof); and

                (2) an Officers' Certificate from the Company.

        Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Note will be exchanged for
beneficial interests in Regulation S Permanent Global Note pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Note, the Trustee will cancel the Regulation S Temporary Global
Note. The aggregate principal amount of the Regulation S Temporary Global Note
and the Regulation S Permanent Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.

                (3) Euroclear and Clearstream 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 Clearstream Banking" and "Customer Handbook" of
        Clearstream will be applicable to transfers of beneficial interests in
        the Regulation S Temporary Global Note and the Regulation S Permanent
        Global Note that are held by Participants through Euroclear or
        Clearstream.

Section 2.02      Execution and Authentication.

        One Officer shall sign the Notes for the Company by manual or facsimile
signature.

        If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note will nevertheless be valid.

        A Note will not be valid until authenticated by the manual signature of
the Trustee. The signature will be conclusive evidence that the Note has been
authenticated under this Indenture.

        The Trustee will, upon receipt of a written order of the Company signed
by one Officer (an "Authentication Order"), authenticate Notes for (i) original
issue up to the aggregate principal amount stated in paragraph 4 of the Notes
and (ii) Additional Notes in such amounts as may be specified from time to time
without limit, subject to Article 4 hereof. In addition, the Trustee shall
authenticate upon receipt of an Authentication Order other Notes issued in
exchange therefore from time to time.

                                       25

<PAGE>

        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 will 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 will 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 will 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.

        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 will 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) will have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it will 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 will serve as Paying Agent for the Notes.

Section 2.05      Holder Lists.

        The Trustee will 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 will 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

                                       26

<PAGE>

successor Depositary or a nominee of such successor Depositary. All Global Notes
will be exchanged by the Company for Definitive Notes if:

                (1) 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;

                (2) 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; provided that in no event shall the Regulation S Temporary
        Global Note be exchanged by the Company for Definitive Notes prior to
        (x) the expiration of the Restricted Period and (y) the receipt by the
        Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B)
        under the Securities Act; or

                (3) there shall have occurred and be continuing to occur an
        Event of Default with respect to the Notes;

                (4) Upon the occurrence of either of the preceding events in
        (1), (2) or (3) above, Definitive Notes shall be issued in such names as
        the Depositary shall instruct the Trustee. In addition, beneficial
        interests in a Global Note may be exchanged for certificated Notes upon
        request by or on behalf of DTC in accordance with customary procedures.
        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.

        (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes will be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes will 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 will require compliance with
either subparagraph (1) or (2) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

                (1) 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 Temporary 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)(1).

                (2) 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

                                       27

<PAGE>

        Section 2.06(b)(1) above, the transferor of such beneficial interest
        must deliver to the Registrar either:

                (A) both:

                        (i) 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

                        (ii) instructions given in accordance with the
                Applicable Procedures containing information regarding the
                Participant account to be credited with such increase; or

                (B) both:

                        (i) 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

                        (ii) 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; provided that in
                no event shall Definitive Notes be issued upon the transfer or
                exchange of beneficial interests in the Regulation S Temporary
                Global Note prior to (A) the expiration of the Restricted Period
                and (B) the receipt by the Registrar of any certificates
                required pursuant to Rule 903 under the Securities Act. 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)(2) 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.

                (3) Transfer of Beneficial Interests in a Restricted Global Note
        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)(2) 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;

                        (B) if the transferee will take delivery in the form of
                a beneficial interest in the Regulation S Temporary Global Note
                or the Regulation S Global Note, then the

                                       28

<PAGE>

                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, certificates and Opinion
                of Counsel required by item (3) thereof, if applicable.

                (4) Transfer and Exchange of Beneficial Interests in a
        Restricted Global Note for Beneficial Interests in an 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)(2) above and:

                        (A) such exchange or transfer is effected pursuant to
                the Exchange Offer, the Shelf Registration Statement or the
                Exchange Offer Registration Statement in accordance with the
                Registration Rights Agreement; or

                        (B) the Registrar receives the following:

                                (i) 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

                                (ii) 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 (B), 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 (A) or (B)
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
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (A) or (B) 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.

                                       29

<PAGE>

                (1) 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, 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, 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, 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 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)(1) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.

                                       30

<PAGE>

                (2) Beneficial Interests in Regulation S Temporary Global Note
        to Definitive Notes. Notwithstanding Sections 2.06(c)(1)(A) and (C)
        hereof, a beneficial interest in the Regulation S Temporary Global Note
        may not be exchanged for a Definitive Note or transferred to a Person
        who takes delivery thereof in the form of a Definitive Note prior to (A)
        the expiration of the Restricted Period and (B) the receipt by the
        Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B)
        under the Securities Act, except in the case of a transfer pursuant to
        an exemption from the registration requirements of the Securities Act
        other than Rule 903 or Rule 904.

                (3) 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, the Shelf Registration Statement or the
                Exchange Offer Registration Statement in accordance with the
                Registration Rights Agreement; or; or

                        (B) the Registrar receives the following:

                                (i) if the holder of such beneficial interest in
                        a Restricted Global Note proposes to exchange such
                        beneficial interest for an Unrestricted Definitive Note,
                        a certificate from such holder in the form of Exhibit C
                        hereto, including the certifications in item (1)(b)
                        thereof; or

                                (ii) 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 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 (B), 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.

                (4) 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 conditions set forth in Section
        2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount
        of the applicable Global Note to be reduced accordingly pursuant to
        Section 2.06(h) hereof, and the Company will execute and the Trustee
        will 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)(4) will be registered in such name or names and in
        such authorized denomination or denominations as the holder of such
        beneficial interest requests through instructions to the Registrar from
        or through the Depositary and the Participant or Indirect Participant.
        The Trustee will deliver such Definitive Notes to the Persons in whose
        names such Notes are so registered. Any Definitive Note issued in
        exchange

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<PAGE>

        for a beneficial interest pursuant to this Section 2.06(c)(4) will not
        bear the Private Placement Legend.

        (d) Transfer and Exchange of Definitive Notes for Beneficial Interests
in Global Notes.

                (1) 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, 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, 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,
                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,

                the Trustee will 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.

                (2) 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

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<PAGE>

        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, the Shelf Registration Statement or the
                Exchange Offer Registration Statement in accordance with the
                Registration Rights Agreement; or

                        (B) the Registrar receives the following:

                                (i) 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

                                (ii) 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 (B), 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)(2), the Trustee will cancel the
        Definitive Notes and increase or cause to be increased the aggregate
        principal amount of the Unrestricted Global Note.

                (3) 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 will cancel the applicable 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 (2)(B),
        (2)(D) or (3) above at a time when an Unrestricted Global Note has not
        yet been issued, the Company will issue and, upon receipt of an
        Authentication Order in accordance with Section 2.02 hereof, the
        Trustee will 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 will register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder must 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

                                       33

<PAGE>

must provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

                (1) 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,
                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.

                                (2) 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, the Shelf Registration Statement or the
                Exchange Offer Registration Statement in accordance with the
                Registration Rights Agreement; or

                        (B) the Registrar receives the following:

                                (i) 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

                                (ii) 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 (B), if
                the Registrar so requests, 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.

                (3) 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,

                                       34

<PAGE>

        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 will issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee will authenticate:

                (1) 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 accepted for exchange in the
        Exchange Offer

by Persons that certify in the applicable Letters of Transmittal that (A) they
are not Broker-Dealers, (B) 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

                (2) Unrestricted 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 will cause
the aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company will execute and the Trustee will
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Unrestricted Definitive Notes in the appropriate principal
amount.

        (g) Legends. The following legends will 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.

                (1) 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:

"THIS NOTE 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 FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS NOT A U.S.
PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
AND IS ACQUIRING 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"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME
PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE
144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN

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<PAGE>

COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), (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 AT THE TIME OF
TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE,
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND (3) 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. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO
ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. 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)(4), (c)(3),
                (c)(4), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section
                2.06 (and all Notes issued in exchange therefor or substitution
                thereof) will not bear the Private Placement Legend.

                (2) Global Note Legend. Each Global Note will bear a legend in
        substantially the following form:

"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 (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR

                                       36

<PAGE>

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN."

                        (3) Regulation S Temporary Global Note Legend.

"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATES NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."

        (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 will 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 will be
reduced accordingly and an endorsement will 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 will be increased accordingly and
an endorsement will 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.

                (1) To permit registrations of transfers and exchanges, the
        Company will execute and the Trustee will authenticate Global Notes and
        Definitive Notes upon receipt of an Authentication Order in accordance
        with Section 2.02 or at the Registrar's request.

                (2) No service charge will 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).

                (3) The Registrar will not be required to register the transfer
        of or exchange of any Note selected for redemption in whole or in part,
        except the unredeemed portion of any Note being redeemed in part.

                (4) All Global Notes and Definitive Notes issued upon any
        registration of transfer or exchange of Global Notes or Definitive Notes
        will 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.

                                       37

<PAGE>

                (5) Neither the Registrar nor the Company will 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
                selected for redemption in whole or in part, except the
                unredeemed portion of any Note being 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.

                (6) 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.

                (7) The Trustee will authenticate Global Notes and Definitive
        Notes in accordance with the provisions of Section 2.02 hereof.

                (8) 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.

                (9) The Trustee is hereby authorized to enter into a letter of
        representations with the Depositary in the form provided by the Company
        and to act in accordance with such letter.

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 will issue and the Trustee, upon receipt of an
Authentication Order, will 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
will 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(a) hereof.

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<PAGE>

        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 protected 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 will be deemed to be no longer outstanding and will cease to accrue
interest.

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 any Guarantor, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Guarantor, will be considered as though not outstanding, except that for the
purposes of determining whether the Trustee will be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee knows are so
owned will 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,
will authenticate temporary Notes. Temporary Notes will be substantially in the
form of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company will prepare and the Trustee
will authenticate definitive Notes in exchange for temporary Notes.

        Holders of temporary Notes will 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 will forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else will cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and will destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes will 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 will
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 will 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 will fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
may 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

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<PAGE>

name and at the expense
of the Company) will 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 must furnish to the Trustee, at
least 45 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth:

                (1) the clause of this Indenture pursuant to which the
        redemption shall occur;

                (2) the redemption date;

                (3) the principal amount of Notes to be redeemed; and

                (4) the redemption price.

Section 3.02      Selection of Notes to Be Redeemed or Purchased.

        If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee will select Notes for redemption or
purchase as follows:

                (1) 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

                (2) if the Notes are not listed on any national securities
        exchange, on a pro rata basis, by lot or by such method as the Trustee
        shall deem fair and appropriate.

        In the event of partial redemption or purchase by lot, the particular
Notes to be redeemed or purchased will be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption or
purchase date by the Trustee from the outstanding Notes not previously called
for redemption or purchase.

        The Trustee will promptly notify the Company in writing of the Notes
selected for redemption or purchase and, in the case of any Note selected for
partial redemption or purchase, the principal amount thereof to be redeemed or
purchased. Notes and portions of Notes selected will be in amounts of $1,000 or
whole multiples of $1,000; except that if all of the Notes of a Holder are to be
redeemed or purchased, the entire outstanding amount of Notes held by such
Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except
as provided in the preceding sentence, provisions of this Indenture that apply
to Notes called for redemption or purchase also apply to portions of Notes
called for redemption or purchase.

Section 3.03      Notice of Redemption.

        Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company will mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are 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

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<PAGE>

connection with a defeasance of the Notes or a satisfaction and discharge of
this Indenture pursuant to Articles 8 or 12 of this Indenture.

        The notice will identify the Notes to be redeemed and will state:

                (1) the redemption date;

                (2) the redemption price;

                (3) if any Note is being redeemed in part, the portion of the
        principal amount of such Note to be redeemed and that, after the
        redemption date upon surrender of such Note, a new Note or Notes in
        principal amount equal to the unredeemed portion will be issued upon
        cancellation of the original Note;

                (4) the name and address of the Paying Agent;

                (5) that Notes called for redemption must be surrendered to the
        Paying Agent to collect the redemption price;

                (6) 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;

                (7) the paragraph of the Notes and/or Section of this Indenture
        pursuant to which the Notes called for redemption are being redeemed;
        and

                (8) 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 will give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company has 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.

Section 3.04      Effect of Notice of Redemption.

        Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.

Section 3.05      Deposit of Redemption or Purchase Price.

        One Business Day prior to the redemption or purchase date, the Company
will deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption or purchase price of and accrued interest and Liquidated Damages,
if any, on all Notes to be redeemed or purchased on that date. The Trustee or
the Paying Agent will 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 or purchase price of, and accrued interest and
Liquidated Damages, if any, on, all Notes to be redeemed or purchased.

        If the Company complies with the provisions of the preceding paragraph,
on and after the redemption or purchase date, interest will cease to accrue on
the Notes or the portions of Notes called for

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<PAGE>

redemption or purchase. If a Note is redeemed or purchased 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 or purchase is not so paid upon surrender for redemption
or purchase because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
or purchase 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 or Purchased in Part.

        Upon surrender of a Note that is redeemed or purchased in part, the
Company will issue and, upon receipt of an Authentication Order, the Trustee
will authenticate for the Holder at the expense of the Company a new Note equal
in principal amount to the unredeemed or unpurchased portion of the Note
surrendered.

Section 3.07      Optional Redemption.

(a) At any time prior to November 15, 2006, the Company may on any one or more
occasions redeem, in whole or in part, up to 35% of the aggregate principal
amount of Notes issued under this Indenture at a redemption price of 108.75% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, with the net cash proceeds of one or
more Equity Offerings; provided that:

                (1) at least 65% of the aggregate principal amount of Notes
        issued under this Indenture (excluding Notes held by the Company and its
        Subsidiaries) remains outstanding immediately after the occurrence of
        such redemption; and

                (2) notice of redemption is mailed 60 days of the date of the
        closing of such Equity Offering.

        (b) On or after November 15, 2008, the Company may, at its option,
redeem all or a part of the Notes upon not less than 30 nor more than 60 days
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the applicable redemption date, if redeemed during the twelve-month
period beginning on November 15 of the years indicated below, subject to the
rights of the Holders of the Notes on the relevant record date to receive
interest on the relevant interest payment date that is on or prior to the date
fixed for redemption:

        Year                                                          Percentage
        ----                                                          ----------
        2008.......................................................    104.375%
        2009.......................................................    102.917%
        2010.......................................................    101.458%
        2011 and thereafter........................................    100.000%

        (c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.

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<PAGE>

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 is
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it will follow the procedures specified below.

        The Asset Sale Offer shall be made to all Holders of the 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. The Asset Sale Offer
will remain open for a period of at least 20 Business Days following its
commencement and not more than 30 Business Days, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
three Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company will apply all Excess Proceeds (the "Offer Amount") to the
purchase of Notes and such other pari passu Indebtedness (on a pro rata basis,
if applicable) or, if less than the Offer Amount has been tendered, all Notes
and other Indebtedness tendered in response to the Asset Sale Offer. Payment for
any Notes so purchased will 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 and
Liquidated Damages, if any, will 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 will be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.

        Upon the commencement of an Asset Sale Offer, the Company will send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice will contain all instructions and materials necessary
to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The
notice, which will govern the terms of the Asset Sale Offer, will state:

                (1) 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 will remain open;

                (2) the Offer Amount, the purchase price and the Purchase Date;

                (3) that any Note not tendered or accepted for payment will
        continue to accrue interest;

                (4) that, unless the Company defaults in making such payment,
        any Note accepted for payment pursuant to the Asset Sale Offer will
        cease to accrue interest after the Purchase Date;

                (5) 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;

                (6) that Holders electing to have Notes purchased pursuant to
        any Asset Sale Offer will be required to surrender the Note, with the
        form entitled "Option of Holder to Elect Purchase" attached to the Notes
        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;

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<PAGE>

                (7) that Holders will 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;

                (8) that, if the aggregate principal amount of Notes and other
        pari passu Indebtedness surrendered by Holders thereof exceeds the Offer
        Amount, the Company will select the Notes and other pari passu
        Indebtedness to be purchased on a pro rata basis based on the principal
        amount of Notes and such other pari passu Indebtedness surrendered (with
        such adjustments as may be deemed appropriate by the Company so that
        only Notes in denominations of $1,000, or integral multiples thereof,
        will be purchased); and

                (9) that Holders whose Notes were purchased only in part will 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 will, 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 will
deliver or cause to be delivered to the Trustee the Notes properly accepted
together with 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, will 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, will promptly issue a new Note, and the Trustee,
upon written request from the Company will authenticate and mail or deliver (or
cause to be transferred by book entry) 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 will 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 will pay or cause to be paid the principal of, premium, if
any, and interest and Liquidated Damages, if any, on the Notes on the dates and
in the manner provided in the Notes. Principal, premium, if any, and interest
and Liquidated Damages, if any will 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 due. The Company will 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 will 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

                                       44

<PAGE>

interest rate on the Notes to the extent lawful; it will 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 will 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 will 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
fails to maintain any such required office or agency or fails 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 will 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 will 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
hereof.

Section 4.03      Reports.

(a) Whether or not required by the SEC's rules and regulations, so long as any
Notes are outstanding, the Company shall furnish to the Holders of Notes or
cause the Trustee to furnish to the Holders of Notes, within the time periods
specified in the SEC's rules and regulations:

                (1) all quarterly and annual reports that would be required to
        be filed with the SEC on Forms 10-Q and 10-K if the Company were
        required to file such reports; and

                (2) 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.

        All such reports shall be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.
Each annual report on Form 10-K shall include a report on the Company's
consolidated financial statements by the Company's certified independent
accountants. In addition, following the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, the Company shall file a copy
of each of the reports referred to in clauses (1) and (2) above with the SEC for
public availability within the time periods specified in the rules and
regulations applicable to such reports (unless the SEC shall not accept such a
filing).

        (b) For so long as any Notes remain outstanding, at any time the Company
and the Guarantors are not required to file the reports required by paragraph
(a) of this Section 4.03 with the SEC, 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.

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<PAGE>

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 the Security Documents, 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 the Security Documents
and is not in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture or the Security Documents (or, if a
Default or Event of Default has 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 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) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.

        (c) So long as any of the Notes are outstanding, the Company shall
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
(to the extent permitted by law) 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.

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<PAGE>

Section 4.07      Restricted Payments.

        (a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:

                (1) 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 (i) dividends or
        distributions payable in Equity Interests (other than Disqualified
        Stock) of the Company or (ii) dividends or distributions payable to the
        Company or any Restricted Subsidiary of the Company (and if such
        Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, to
        its holders of the applicable class of Equity Interests on a pro rata
        basis);

                (2) 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 other than those Equity
        Interests owned by the Company or any Restricted Subsidiary of the
        Company;

                (3) make any payment on or with respect to, or purchase, redeem,
        repurchase, defease or otherwise acquire or retire for value any
        Indebtedness of the Company or any Guarantor that is contractually
        subordinated in right of payment to the Notes or any Subsidiary
        Guarantee (excluding any intercompany Indebtedness between or among the
        Company and any of its Restricted Subsidiaries), except a payment of
        interest or principal at the Stated Maturity thereof; or

                (4) make any Restricted Investment

(all such payments and other actions set forth in these clauses (1) through (4)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:

                (1) no Default or Event of Default has occurred and is
        continuing or would occur as a consequence of such Restricted Payment;

                (2) 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 paragraph
        (a) of Section 4.09 hereof; and

                (3) such Restricted Payment, together with the aggregate amount
        of all other Restricted Payments made by the Company and its Restricted
        Subsidiaries since the date of this Indenture (excluding Restricted
        Payments permitted by clauses (2), (3), (4) and (6) of paragraph (b)
        below), 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

                                       47

<PAGE>

                Payment (or, if such Consolidated Net Income for such period is
                a deficit, less 100% of such deficit), plus

                        (B) 100% of the aggregate net cash proceeds, including
                the fair market value of property other than cash, received by
                the Company since the date of this Indenture as a contribution
                to its common equity capital and 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); provided, however, that the Company may not
                include the net cash proceeds to the extent that any such common
                equity capital or Equity Interests are repurchased, redeemed or
                otherwise acquired or retired pursuant to clause (5) of
                paragraph (b) below, 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, plus

                        (D) to the extent that any Unrestricted Subsidiary of
                the Company designated as such after the date of this Indenture
                is redesignated as a Restricted Subsidiary after the date of
                this Indenture, the lesser of (i) the Fair Market Value of the
                Company's Investment in such Subsidiary as of the date of such
                redesignation or (ii) such Fair Market Value as of the date on
                which such Subsidiary was originally designated as an
                Unrestricted Subsidiary after the date of this Indenture, plus

                        (E) 50% of any dividends received by the Company or a
                Wholly-Owned Restricted Subsidiary of the Company that is a
                Guarantor after the date of this Indenture from an Unrestricted
                Subsidiary of the Company, to the extent that such dividends
                were not otherwise included in Consolidated Net Income of the
                Company for such period.

        (b) The provisions of Section 4.07(a) will not prohibit:

                (1) the payment, by the Company or any Restricted Subsidiary, 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;

                (2) so long as no Default has occurred and is continuing, the
        making of any Restricted Payment 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) or from the substantially
        concurrent contribution of common equity capital to the Company;
        provided that the amount of any such net cash proceeds that are utilized
        for any such Restricted Payment will be excluded from clause (3)(b) of
        paragraph (a) above;

                (3) so long as no Default has occurred and is continuing, the
        defeasance, redemption, repurchase, retirement or other acquisition of
        Indebtedness of the Company or any Restricted Subsidiary that is
        contractually subordinated in right of payment to the Notes or to any
        Subsidiary Guarantee with, in exchange for, by conversion into or out of
        the net cash proceeds from a substantially concurrent incurrence of
        Permitted Refinancing Indebtedness;

                                       48

<PAGE>

                (4) the payment of any dividend (or, in the case of any
        partnership or limited liability company, any similar distribution) by a
        Restricted Subsidiary of the Company to the holders of its Equity
        Interests on a pro rata basis;

                (5) so long as no Default has occurred and is continuing, 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 current or former officer, director or employee of
        the Company or any of its Restricted Subsidiaries at no more than Fair
        Market Value in each case net of the aggregate net cash proceeds
        received from such persons after the date of this Indenture from the
        issuance of or equity contributions with respect to, our Equity
        Interests other than Disqualified Stock; provided that the aggregate
        price paid for all such repurchased, redeemed, acquired or retired
        Equity Interests may not exceed $5.0 million for each fiscal year and
        $15.0 million in total;

                (6) the repurchase of Equity Interests deemed to occur upon the
        exercise of stock options to the extent such Equity Interests represent
        a portion of the exercise price of those stock options;

                (7) so long as no Default has occurred and is continuing, the
        declaration and payment of regularly scheduled or accrued dividends to
        holders of any class or series of Disqualified Stock of the Company or
        any Restricted Subsidiary of the Company issued on or after the date of
        this Indenture in accordance with the Fixed Charge Coverage test
        described in Section 4.09 hereof; and

                (8) so long as no Default has occurred and is continuing, other
        Restricted Payments in an aggregate amount not to exceed $15.0 million.

        The amount of all Restricted Payments (other than cash) will 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 Section 4.07 will be determined by the Board of Directors whose
resolution with respect thereto will be delivered to the Trustee. The Board of
Directors' determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
Fair Market Value exceeds $10.0 million. In determining whether any Restricted
Payment is permitted by the covenant described above, the Company may allocate
all or any portion of such Restricted Payment among the categories described in
clauses (1) through (8) of paragraph (b) above or among such categories and the
types of Restricted Payments described in paragraph (a) above; provided that at
the time of such allocation, all such Restricted Payments, or allocated portions
thereof, would be permitted under the various provisions of the covenant
described above.

Section 4.08     Dividend and Other Payment Restrictions Affecting Subsidiaries.

        (a) The Company will not, and will 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:

                (1) 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;

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                (2) make loans or advances to the Company or any of its
        Restricted Subsidiaries; or

                (3) transfer any of its properties or assets to the Company or
        any of its Restricted Subsidiaries.

        (b) The restrictions in Section 4.08(a) will not apply to encumbrances
or restrictions existing under or by reason of:

                (1) the Credit Agreement and other agreements governing Existing
        Indebtedness 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 are not in the good faith judgment of the board of
        directors of the Company, less favorable, taken as a whole, to the
        Holders of the Notes than those contained in those agreements on the
        date of this Indenture;

                (2) the Indenture, the Notes, the Exchange Notes, the Subsidiary
        Guarantees and the Security Documents;

                (3) applicable law, rule, regulation or order;

                (4) (a) 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 the Indenture to be incurred;
        and (b) any amendment, modification, replacement or refinancing thereof;
        provided, however, that such encumbrances or restrictions are not, in
        the good faith judgment of the Board of Directors, less favorable, taken
        as a whole, to the Holders of the Notes than the encumbrances and
        restrictions contained in the agreements governing the Indebtedness
        referred to in clause (a);

        (5) customary non-assignment provisions in contracts and licenses
entered into in the ordinary course of business;

        (6) purchase money obligations for property acquired in the ordinary
course of business and Capital Lease Obligations that impose restrictions on the
property purchased or leased of the nature described in clause (3) of paragraph
(a) above;

        (7) any agreement for the sale or other disposition of all or
substantially all of the Capital Stock or assets of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending the sale or other
disposition;

        (8) Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are in the good faith judgment of the Company's board of directors, not
materially less favorable, taken as a whole, to the Holders, than those
contained in the agreements governing the Indebtedness being refinanced;

        (9) Liens permitted to be incurred under Section 4.12 hereof;

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        (10) provisions limiting the disposition or distribution of assets or
property in joint venture agreements, asset sale agreements, sale-leaseback
agreements, stock sale agreements and other similar agreements entered into with
the approval of the Company's Board of Directors, which limitation is applicable
only to the assets that are the subject of such agreements;

        (11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business; and

        (12) other Indebtedness or Disqualified Stock of Restricted Subsidiaries
permitted to be incurred subsequent to the date of this Indenture pursuant to
the provisions of Section 4.09 hereof; provided that the encumbrances or
restrictions imposed thereby are ordinary and customary with respect to the type
of Indebtedness incurred.

Section 4.09      Incurrence of Indebtedness and Issuance of Preferred Stock.

        (a) The Company will not, and will not permit any of its Restricted
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 will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company or any Guarantor may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock 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 greater
than 2.0 to 1 if such incurrence is on or prior to the first anniversary of the
date of this Indenture and 2.25 to 1 if such incurrence is after such date, in
each case determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been incurred
or Disqualified Stock or the preferred stock had been issued, as the case may
be, at the beginning of such four-quarter period.

        (b) The provisions of Section 4.09(a) will not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):

                (1) the incurrence by the Company and any Guarantor of
        additional Indebtedness under Credit Facilities in an aggregate
        principal amount at any one time outstanding under this clause (1)(with
        letters of credit being deemed to have a principal amount equal to the
        maximum potential liability of the Company and its Restricted
        Subsidiaries thereunder) not to exceed $275.0 million less the aggregate
        amount of all Net Proceeds of Asset Sales applied by the Company or any
        of its Restricted Subsidiaries since the date of this Indenture to
        permanently repay any term Indebtedness under a Credit Facility or to
        repay any revolving credit Indebtedness under a Credit Facility and
        effect a corresponding commitment reduction thereunder pursuant to
        Section 4.10 hereof;

                (2) Existing Indebtedness;

                (3) Indebtedness represented by the Notes and the related
        Subsidiary Guarantees to be issued on the date of this Indenture and the
        Exchange Notes and the related Subsidiary Guarantees to be issued
        pursuant to the Registration Rights Agreement;

                (4) the incurrence by the Company or any of its Restricted
        Subsidiaries of Indebtedness represented by Capital Lease Obligations,
        mortgage financings or purchase money obligations, in

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        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 Restricted
        Subsidiary, in an aggregate principal amount, including all Permitted
        Refinancing Indebtedness incurred to refund, refinance or replace any
        Indebtedness incurred pursuant to this clause (4), not to exceed $5.0
        million at any time outstanding;

                (5) the incurrence by the Company or any of its Restricted
        Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
        the net proceeds of which are used to refund, refinance, replace,
        defease or discharge Indebtedness (other than intercompany Indebtedness)
        that was permitted by this Indenture to be incurred under paragraph (a)
        above or clauses (2), (3), (4), (5) or (13) of this paragraph;

                (6) the incurrence by the Company or any of its Restricted
        Subsidiaries of intercompany Indebtedness between or among the Company
        and any of its Restricted Subsidiaries; provided, however, that:

                        (A) if the Company or any Guarantor is the obligor on
                such Indebtedness and the payee is not the Company or a
                Guarantor, such Indebtedness must be expressly subordinated to
                the prior payment in full in cash of all Obligations then due
                with respect to the Notes, in the case of the Company, or the
                Subsidiary Guarantee, in the case of a Guarantor; and

                        (B) (i) 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 Restricted Subsidiary of the
                Company and (ii) 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;

                will be deemed, in each case, to constitute an incurrence of
                such Indebtedness by the Company or such Restricted Subsidiary,
                as the case may be, that was not permitted by this clause (6);

                (7) the issuance by any of the Company's Restricted Subsidiaries
        to the Company or to any of its Restricted Subsidiaries of shares of
        preferred stock; provided, however, that:

        (a) any subsequent issuance or transfer of Equity Interests that results
in any such preferred stock being held by a Person other than the Company or a
Restricted Subsidiary of the Company; and

        (b) any sale or other transfer of any such preferred stock to a Person
that is not either the Company or a Restricted Subsidiary of the Company;

        will be deemed, in each case, to constitute an issuance of such
        preferred stock by such Restricted Subsidiary that was not permitted by
        this clause (7);

                (8) the incurrence by the Company or any of its Restricted
        Subsidiaries of Hedging Obligations in the ordinary course of business;

                (9) the guarantee by the Company or any of the Guarantors of
        Indebtedness of the Company or a Restricted Subsidiary of the Company
        that was permitted to be incurred by another provision of this covenant;
        provided that if the Indebtedness being guaranteed is subordinated in
        right of payment to the Notes, then the guarantee shall be subordinated
        in right of payment to the same extent as the Indebtedness guaranteed;

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<PAGE>

                (10) the guarantee by any Foreign Subsidiary of Indebtedness of
        another Foreign Subsidiary that was permitted to be incurred by another
        provision of this covenant;

                (11) the incurrence by the Company or any of the Restricted
        Subsidiaries of Indebtedness in respect of letters of credit and bankers
        acceptances issued in the ordinary course and not supporting
        indebtedness, including in respect of workers' compensation claims,
        self-insurance obligations, performance and surety, appeal and similar
        bonds or indemnification, adjustment of purchase price or similar
        obligations incurred in connection with the disposition of any business
        or assets;

                (12) the incurrence by the Company or any of the Restricted
        Subsidiaries of Indebtedness arising from the honoring by a bank or
        other financial institution of a check, draft or similar instrument
        inadvertently drawn against insufficient funds, so long as such
        Indebtedness is covered within five business days;

                (13) Indebtedness of the Company or any of its Restricted
        Subsidiaries, to the extent the net proceeds thereof are promptly
        deposited to defease the Notes in accordance with Section 8.04 hereof;

                (14) the incurrence by the Company or any of the Restricted
        Subsidiaries of additional Indebtedness in an aggregate principal amount
        (or accreted value, as applicable) at any time outstanding not to exceed
        $40.0 million.

        The Company will not incur, and will not permit any Guarantor to incur,
any Indebtedness (including Permitted Debt) that is contractually subordinated
in right of payment to any other Indebtedness of the Company or such Guarantor
unless such Indebtedness is also contractually subordinated in right of payment
to the Notes and the applicable Subsidiary Guarantee on substantially identical
terms; provided, however, that no Indebtedness will be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Company solely by virtue of being unsecured or by virtue of being secured on a
first or junior Lien basis.

        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 (1) through (14) above,
or is entitled to be incurred pursuant to paragraph (a) of this Section 4.09,
the Company will be permitted to classify such item of Indebtedness or any
portion thereof 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
Section 4.09. Indebtedness under Credit Facilities outstanding on the date on
which Notes are first issued and authenticated under this Indenture will
initially be deemed to have been incurred on such date in reliance on the
exception provided by clause (1) of the definition of Permitted Debt. 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
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this Section 4.09; provided, in each such
case, that the amount thereof is included in Fixed Charges of the Company as
accrued. Notwithstanding any other provision of this Section 4.09, the maximum
amount of Indebtedness that the Company or any Restricted Subsidiary may incur
pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a
result of fluctuations in exchange rates or currency values.

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        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;

                (2) the principal amount of the Indebtedness, in the case of any
        other Indebtedness; and

                (3) in respect of Indebtedness of another Person secured by a
        Lien on the assets of the specified Person, the lesser of:

                        (A) the Fair Market Value of such asset at the date of
                determination, and

                        (B) the amount of the Indebtedness of the other Person.

Section 4.10      Asset Sales.

        The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

                (1) 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; and

                (2) at least 75% of the consideration received in the Asset Sale
        by the Company or such Restricted Subsidiary is in the form of cash or
        Cash Equivalents. For purposes of this provision, each of the following
        will be deemed to be cash:

                        (A) any liabilities, as shown on the Company's most
                recent consolidated balance sheet, of the Company or any
                Restricted Subsidiary (other than contingent liabilities and
                liabilities that are by their terms subordinated in right of
                payment to the Notes or any Subsidiary Guarantee) that are
                assumed by the transferee of any such assets pursuant to a
                customary novation agreement that releases the Company or such
                Restricted Subsidiary from further liability;

                        (B) 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 or Cash Equivalents, to the extent of the
                cash or Cash Equivalents received in that conversion; and

                        (C) any property or assets that are used or useful in a
                Permitted Business, or Capital Stock (other than Disqualified
                Stock) of any Person engaged in a Permitted Business if, as a
                result of the acquisition by the Company or any Restricted
                Subsidiary thereof, that person becomes a Restricted Subsidiary.

        The 75% limitation referred to in clause (2) above will not apply to
any Asset Sale in which the cash or Cash Equivalents portion of the
consideration received therefrom, determined in accordance with subclauses (A),
(B) and (C) above, is equal to or greater than what the after-tax proceeds would
have been had that Asset Sale complied with the aforementioned 75% limitation.

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        Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company (or the applicable Restricted Subsidiary, as the case may be)
may apply those Net Proceeds:

                (1)     to repay Priority Lien Debt and, if the Priority Lien
                        Debt being repaid is revolving credit Indebtedness, to
                        correspondingly permanently reduce commitments with
                        respect thereto;

                (2)     to acquire all or substantially all of the assets of, or
                        any Capital Stock (other than Disqualified Stock) of,
                        another Permitted Business, if, after giving effect to
                        any such acquisition of Capital Stock (other than
                        Disqualified Stock), the Permitted Business is or
                        becomes a Restricted Subsidiary of the Company;

                (3)     to make a capital expenditure;

                (4)     to acquire other assets that are not classified as
                        current assets under GAAP and that are used or useful in
                        a Permitted Business;

                (5)     to repay any Indebtedness which is pari passu in right
                        of payment with the Notes, on a pro rata basis with the
                        Notes; or

                (6)     any combination of the foregoing.

Pending the final application of any Net Proceeds, the Company may temporarily
reduce indebtedness 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 will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will 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 will be equal to 100%
of principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase, and will 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 will 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 will be reset at zero.

        The Company will comply with the requirements of Rule 14e-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 this Section
4.10, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.10 by virtue of such conflict.

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Section 4.11      Transactions with Affiliates.

        (a) The Company will not, and will 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 of the Company (each, an "Affiliate Transaction"), unless:

                (1) 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

                (2) the Company delivers to the Trustee:

                        (A) with respect to any Affiliate Transaction or series
                of related Affiliate Transactions involving aggregate
                consideration in excess of $2.0 million, a resolution of the
                Board of Directors set forth in an officers' certificate
                certifying that such Affiliate Transaction complies with this
                covenant and that such Affiliate Transaction has been approved
                by a majority of the disinterested members of the Board of
                Directors; and

                        (B) with respect to any Affiliate Transaction or series
                of related Affiliate Transactions involving aggregate
                consideration in excess of $20.0 million, an opinion as to the
                fairness to the Company or such Subsidiary of such Affiliate
                Transaction from a financial point of view issued by an
                accounting, appraisal or investment banking firm of national
                standing.

        (b) The following items will not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of Section 4.11(a):

                (1) any employment agreement, employee benefit plan, officer and
        director indemnification agreement or any similar arrangement entered
        into by the Company or any of its Restricted Subsidiaries (including the
        payment of, or an agreement providing for the payment of, reasonable
        directors' fees) in the ordinary course of business;

                (2) transactions between or among the Company and/or its
        Restricted Subsidiaries;

                (3) transactions with a Person (other than an Unrestricted
        Subsidiary of the Company) that is an Affiliate of the Company solely
        because the Company owns, directly or through a Restricted Subsidiary,
        an Equity Interest in, or controls, such Person;

                (4) any issuance of Equity Interests (other than Disqualified
        Stock) of the Company to Affiliates of the Company;

                (5) Restricted Payments that do not violate the provisions of
        Section 4.07 hereof; and

                (6) loans or advances to employees in the ordinary course of
        business permitted by applicable law not to exceed $1.0 million in the
        aggregate at any one time outstanding.

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Section 4.12      Liens.

        The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on any asset now owned or hereafter acquired, except
Permitted Liens.

Section 4.13      Business Activities.

        The Company will not, and will not permit any of its Restricted
Subsidiaries 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:

                (1) 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

                (2) 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.

Section 4.15      Offer to Repurchase Upon Change of Control.

        (a) Upon the occurrence of a Change of Control, each Holder of Notes
will 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 such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages, if any, on the Notes repurchased, if any, to
the date of purchase (the "Change of Control Payment"), subject to the rights of
Holders of the Notes on the relevant record date to receive interest due on the
relevant interest payment date that is prior to the date of repurchase. Within
30 days following any Change of Control, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and stating:

                (1) that the Change of Control Offer is being made pursuant to
        this Section 4.15 and that all Notes tendered will be accepted for
        payment;

                (2) the purchase price and the purchase date, which shall be no
        earlier than 30 days and no later than 60 days from the date such notice
        is mailed (the "Change of Control Payment Date");

                (3) that any Note not tendered will continue to accrue interest;

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<PAGE>

                (4) that, unless the Company defaults in the payment of the
        Change of Control Payment, all Notes accepted for payment pursuant to
        the Change of Control Offer will cease to accrue interest after the
        Change of Control Payment Date;

                (5) that Holders electing to have any Notes purchased pursuant
        to a Change of Control Offer will be required to surrender the Notes,
        with the form entitled "Option of Holder to Elect Purchase" attached to
        the Notes completed, or transfer by book-entry transfer, to the Paying
        Agent at the address specified in the notice prior to the close of
        business on the third Business Day preceding the Change of Control
        Payment Date;

                (6) that Holders will be entitled to withdraw their election if
        the Paying Agent receives, not later than the close of business on the
        second Business Day preceding the Change of Control Payment Date, a
        telegram, telex, facsimile transmission or letter setting forth the name
        of the Holder, the principal amount of Notes delivered for purchase, and
        a statement that such Holder is withdrawing his election to have the
        Notes purchased; and

                (7) that Holders whose Notes are being purchased only in part
        will be issued new Notes equal in principal amount to the unpurchased
        portion of the Notes surrendered, which unpurchased portion must be
        equal to $1,000 in principal amount or an integral multiple thereof.

        The Company will comply with the requirements of Rule 14e-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 in Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of Sections 3.09 or 4.15 of this Indenture, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under Section 3.09 or this Section 4.15 by virtue
of such compliance.

        (b) On the Change of Control Payment Date, the Company will, to the
extent lawful:

                (1) accept for payment all Notes or portions of Notes properly
        tendered pursuant to the Change of Control Offer;

                (2) deposit with the Paying Agent an amount equal to the Change
        of Control Payment in respect of all Notes or portions of Notes properly
        tendered; and

                (3) 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 will promptly mail to each Holder of Notes properly
tendered the Change of Control Payment for such Notes, and the Trustee will
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 will be in a
principal amount of $1,000 or an integral multiple of $1,000. Unless the Company
defaults on the Change of Control Payment, any Note accepted for payment will
cease to accrue interest on or after the Change of Control Payment Date.

        The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.

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        (c) Notwithstanding anything to the contrary in this Section 4.15, the
Company will not be required to make a Change of Control Offer upon a Change of
Control if (1) a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered
and not withdrawn under the Change of Control Offer, or (2) notice of redemption
has been given pursuant to Section 3.07 hereof, unless and until there is a
default in payment of the applicable redemption price.

Section 4.16      No Amendment of Subordination Provisions in Existing
Subordinated Notes.

        Without the consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding, the Company will not amend,
modify or alter the Subordinated Note Indenture in any way to:

                (1) increase the rate of or change the time for payment of
        interest on any Subordinated Notes;

                (2) increase the principal of, advance the final maturity date
        of or shorten the Weighted Average Life to Maturity of any Subordinated
        Notes;

                (3) alter the redemption provisions or increase the price or
        terms at which the Company is required to offer to purchase any
        Subordinated Notes; or

                (4) amend the provisions of Article 8 of the Subordinated Note
        Indenture (which relate to subordination).

Section 4.17      Limitation on Issuances and Sales of Equity Interest in
Restricted Subsidiaries.

        The Company will not, and will not permit any of its Restricted
Subsidiaries to, transfer, convey, sell or otherwise dispose of any Capital
Stock in any Restricted Subsidiary of the Company to any Person (other than the
Company or a Wholly-Owned Restricted Subsidiary of the Company), unless:

                (1) such transfer, conveyance, sale or other disposition is of
        all the Equity Interests in such Restricted Subsidiary;

                (2) the Net Proceeds from such transfer, conveyance, sale or
        other disposition are applied in accordance with Section 4.10 hereof ;

                (3) such issuances of shares of Capital Stock constituting
        directors' qualifying shares or issuances to foreign nationals of shares
        of Capital Stock of a Foreign Subsidiary, in each case to the extent
        required by applicable law; and

                (4) if, immediately after giving effect to such issuance or
        sale, such Restricted Subsidiary would no longer constitute a Restricted
        Subsidiary and any investment in such Person remaining after giving
        effect to such issuance or sale would have been permitted to be made
        pursuant to Section 4.07 hereof if made on the date of such issuance or
        sale.

Section 4.18      Payments for Consent.

        The Company will not, and will 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 Holders of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or

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the Notes unless such consideration is offered to be paid and is paid to all
Holders 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 4.19      Additional Subsidiary Guarantees.

        If the Company or any of its Restricted Subsidiaries acquires or
creates another Domestic Subsidiary after the date of this Indenture, then that
newly acquired or created Domestic Subsidiary will become a Guarantor and
execute a supplemental indenture and deliver an opinion of counsel satisfactory
to the Trustee within 20 business days of the date on which it was acquired or
created. The form of such Subsidiary Guarantee is attached as Exhibit E hereto.

Section 4.20      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 designated as Unrestricted will be
deemed to be an Investment made as of the time of the designation and will
reduce the amount available for Restricted Payments under Section 4.07 hereof or
under one or more clauses of the definition of 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 that redesignation would not cause a Default.

        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 resolutions of the Board of Directors 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 by Section 4.09 hereof, 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 by Section 4.09 hereof, 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.

Section 4.21      Collateral.

(1)     The Company and the Guarantors shall furnish to the Trustee, no later
        than 45 days after the date of this Indenture, an Opinion of Counsel
        from counsel in each state where the real property portion of the
        Collateral is located, stating that the Mortgage(s) applicable to the
        real property located in such state constitutes a valid, binding and
        enforceable obligation of the grantor or mortgagor of each such
        mortgage, as well as such other matters incident to the transactions
        contemplated by this Agreement as the Trustee may reasonably require.

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(2)     The Company and the Guarantors shall furnish to the Trustee, no later
        than 45 days after the date of this Indenture, an ALTA loan policy
        -1970 Form B Extended Coverage title insurance policy verifying the
        second priority perfected security interest in the real property
        portion of the Collateral, in amounts and containing such endorsements
        and affirmative coverage to title insurance consistent with the title
        insurance for the Priority Liens.

                                   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:

                (1) either:

                        (A) the Company is the surviving corporation; or

                        (B) 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;

                (2) 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, the Registration Rights Agreement and the Security Documents
        pursuant to agreements reasonably satisfactory to the Trustee;

                (3) immediately before and after giving effect to such
        transaction, no Default or Event of Default shall have occurred and is
        continuing; and

                (4) 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:

                        (A) will 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

                        (B) will, 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 paragraph (a) of Section 4.09 hereof.

        In addition, the Company may 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 will not apply to:

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                (1) a consolidation or merger of the Company with an Affiliate
        solely for the purpose of reincorporating the Company in another
        jurisdiction; and

                (2) any sale, transfer, assignment, conveyance, lease or other
        disposition of assets between or among the Company and its Restricted
        Subsidiaries.

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 a transaction that is subject to, and that complies with the
provisions of, 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" shall refer instead to
the successor corporation and not to the Company), 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 of all of
the Company's assets in a transaction that is subject to, and that complies with
the provisions 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":

                (1) defaults for 30 days in the payment when due of interest on,
        or Liquidated Damages with respect to, the Notes;

                (2) defaults in payment when due of the principal of, or
        premium, if any, on the Notes,;

                (3) default in the payment of principal of and interest on Notes
        required to be purchased pursuant to an offer to purchase as described
        under Section 4.10 and Section 4.15 when due and payable;

                (4) failure to perform or comply with any of the provisions
        described under Section 5.01;

                (5) failure by the Company or any of its Restricted Subsidiaries
        to perform any other covenant or agreement in this Indenture or the
        Notes or the Security Documents for 60 days after written notice to the
        Company by the Trustee or the Holders of at least 25% in aggregate
        principal amount of the Notes then outstanding voting as a single class;

                (6) default under the terms of one or more instruments
        evidencing or securing Indebtedness of the Company or any of its
        Restricted Subsidiaries having an outstanding principal amount of $20.0
        million or more individually or in the aggregate that has resulted in
        the acceleration of the payment of such Indebtedness or failure to pay
        principal when due at the Stated Maturity of any such Indebtedness;

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                (7) the ordering of a final judgment or judgments (not subject
        to appeal) against the Company or any of its Restricted Subsidiaries in
        an amount of $10.0 million or more which remains undischarged or
        unstayed for a period of 60 days after the date on which the right to
        appeal has expired;

                (8) the denial or disaffirmation by the Company or any of its
        Restricted Subsidiaries, or any Person acting on behalf of any of them,
        in writing, of any material obligation of the Company or any of its
        Restricted Subsidiaries set forth in or arising under any Security
        Documents;

                (9) the Company or any of its Restricted Subsidiaries that is a
        Significant Subsidiary or any group of Restricted Subsidiaries of the
        Company that, taken together, would constitute a Significant Subsidiary
        pursuant to or within the meaning of Bankruptcy Law:

                        (A) commences a voluntary case,

                        (B) consents to the entry of an order for relief against
                it in an involuntary case,

                        (C) consents to the appointment of a custodian of it or
                for all or substantially all of its property,

                        (D) makes a general assignment for the benefit of its
                creditors, or

                        (E) generally is not paying its debts as they become
                due;

                (10) a court of competent jurisdiction enters an order or decree
        under any Bankruptcy Law that:

                        (A) is for relief against the Company or any of its
                Restricted Subsidiaries that is a Significant Subsidiary or any
                group of Restricted Subsidiaries of the Company that, taken
                together, would constitute a Significant Subsidiary in an
                involuntary case;

                        (B) appoints a custodian of the Company or any of its
                Restricted Subsidiaries that is a Significant Subsidiary or any
                group of Restricted Subsidiaries of the Company that, taken
                together, would constitute a Significant Subsidiary or for all
                or substantially all of the property of the Company or any of
                its Restricted Subsidiaries that is a Significant Subsidiary or
                any group of Restricted Subsidiaries of the Company that, taken
                together, would constitute a Significant Subsidiary; or

                        (C) orders the liquidation of the Company or any of its
                Restricted Subsidiaries that is a Significant Subsidiary or any
                group of Restricted Subsidiaries of the Company that, taken
                together, would constitute a Significant Subsidiary;

                and, in each case, the order or decree remains unstayed and in
                effect for 60 consecutive days; or

                (11) any Subsidiary Guarantee from a Significant Subsidiary, or
        any group of Restricted Subsidiaries that, taken together, would
        constitute a Significant Subsidiary, ceases to be in full force and
        effect or is declared null and void and unenforceable or is found to be
        invalid or a Guarantor denies in writing its liability under the
        Subsidiary Guarantee (other than by reason of a release of such
        Guarantor from the Subsidiary Guarantee in accordance with the terms of
        this Indenture, the Security Documents and the Subsidiary Guarantee);
        and

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(12)     except as permitted by this Indenture, any Security Document or any
        Note Lien purported to be granted thereby on an asset or assets fails
        to constitute a valid and (to the extent required by the Security
        Documents) perfected Lien on any material part of the Collateral
        purported to be subject thereto.

Section 6.02      Acceleration.

        In the case of an Event of Default specified in clause (9) or (10) of
Section 6.01 hereof, with respect to the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company 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 provided, that so long as the Credit Agreement shall be in full
force and effect, if an event of default shall have occurred and be continuing
(other than as specified under clause (9) or (10) of Section 6.01 hereof), the
Notes shall not become due and payable until the earlier to occur of (1) five
Business Days following delivery of a written notice of such acceleration of the
Notes to the agent under the Credit Agreement, if such Event of Default has not
been cured prior to such fifth Business Day, and (2) the acceleration of any
Indebtedness under the Credit Agreement.

        Upon any such declaration, the Notes shall become due and payable
immediately.

        The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may, on behalf of all of the
Holders, rescind an acceleration or waive any existing Default or Event of
Default and its consequences except a continuing Default or Event of Default in
the payment of principal of, interest or Liquidated Damages on, the Notes.

        If an Event of Default occurs on or after November 15, 2008 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to November 15,
2008 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on November 15 of the
years set forth below, as set forth below (expressed as a percentage of the
principal amount of the Notes on the date of payment that would otherwise be due
but for the provisions of this sentence):

        Year                                                     Percentage
        ----                                                     ----------
        2003....................................................   8.750%
        2004....................................................   7.875%
        2005....................................................   7.000%
        2006....................................................   6.125%
        2007....................................................   5.250%

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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 and Liquidated
Damages, 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.

        Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase); provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. 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. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default if it determines that
withholding Notes is in their interest, except a Default or Event of Default
relating to the payment of principal of, or interest or Liquidated Damages on,
the Notes.

Section 6.06      Limitation on Suits.

        Subject to the provisions of this Indenture relating to the duties of
the Trustee, in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under this
Indenture at the request or direction of any Holders of Notes unless such
Holders have offered to the Trustee reasonable indemnity or security against any
loss, liability or expense. Except to enforce the right to receive payment of
principal, premium, if any or interest when due, a Holder may pursue a remedy
with respect to this Indenture or the Notes only if:

                (1) the Holder of a Note gives to the Trustee written notice
        that an Event of Default is continuing;

                (2) Holders of at least 25% in principal amount of the then
        outstanding Notes make a written request to the Trustee to pursue the
        remedy;

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                (3) such Holder or Holders offer and, if requested, provide to
        the Trustee security or indemnity reasonably satisfactory to the Trustee
        against any loss, liability or expense;

                (4) the Trustee does not comply with the request within 60 days
        after receipt of the request and the offer of security or indemnity, if
        requested; and

                (5) during such 60-day period the Holders of a majority in
        aggregate 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 then outstanding to receive payment of principal, premium, if
any, 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(1) or (2) 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 allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Notes), its creditors or its property, to participate as
a member, voting or otherwise, of any official committee of creditors appointed
in any such matter, 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 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

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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 6, 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,
        expenses 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 6.11 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 will
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:

                (1) the duties of the Trustee will 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 Indenture and no
        others, and no implied covenants or obligations shall be read into this
        Indenture against the Trustee; and

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                (2) in the absence of bad faith on its part, the Trustee may
        conclusively rely, as to the truth of the statements and the correctness
        of the opinions expressed therein, upon certificates or opinions
        furnished to the Trustee and conforming to the requirements of this
        Indenture. However, the Trustee will examine the certificates and
        opinions to determine whether or not they conform to the requirements of
        this Indenture but need not confirm or investigate the accuracy of
        mathematical calculations or other facts stated therein or otherwise
        verify the contents thereof.

        (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:

                (1) this paragraph does not limit the effect of paragraph (b) of
        this Section 7.01;

                (2) the Trustee will 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

                (3) the Trustee will 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 7.01.

        (e) No provision of this Indenture will require the Trustee to expend or
risk its own funds or incur any liability. The Trustee will be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder has offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.

        (f) The Trustee will 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 will 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 will 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 will not be
responsible for the misconduct or negligence of any agent appointed with due
care.

        (d) The Trustee will 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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        (e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company will be sufficient if
signed by an Officer of the Company.

        (f) The Trustee will 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 unless such Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.

        (g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless a written notice of any event which is in fact a
Default or Event of Default is received at the Corporate Trust Office of the
Trustee.

        (h) The Trustee shall have no duty (i) to cause the maintenance of any
insurance or (ii) to see to the payment or discharge of any tax levied against
any part of the Collateral.

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 (if this Indenture has been qualified under
the TIA) 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 will not be responsible for and makes no representation as
to the validity or adequacy of this Indenture, the Security Documents, the
Collateral 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 will not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it will 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 will 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 or
Liquidated Damages, 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.

Section 7.06      Reports by Trustee to Holders of the Notes.

        (a) 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 will 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

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transmitted). The Trustee also will comply with TIA ss. 313(b)(2). The Trustee
will also transmit by mail all reports as required by TIA ss. 313(c).

(b) A copy of each report at the time of its mailing to the Holders of Notes
will be mailed by the Trustee to the Company and filed by the Trustee with the
SEC and each stock exchange on which the Notes are listed in accordance with TIA
ss. 313(d). The Company will promptly notify the Trustee when the Notes are
listed on any stock exchange.

Section 7.07      Compensation and Indemnity.

        (a) The Company and the Guarantors will pay to the Trustee from time to
time reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation will not be limited by any law on
compensation of a trustee of an express trust. The Company and the Guarantors
will 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 will include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.

        (b) The Company and the Guarantors will 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 and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors, 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 will notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company will not
relieve the Company or any of the Guarantors of their obligations hereunder. The
Company or such Guarantor will defend the claim and the Trustee will cooperate
in the defense. The Trustee may have separate counsel and the Company will pay
the reasonable fees and expenses of such counsel. Neither the Company nor any
Guarantor need pay for any settlement made without its consent, which consent
will not be unreasonably withheld.

        (c) The obligations of the Company and the Guarantors under this Section
7.07 will survive the satisfaction and discharge of this Indenture.

        (d) To secure the Company's and the Guarantors' payment obligations in
this Section 7.07, the Trustee will 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 will survive the
satisfaction and discharge of this Indenture.

        (e) When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(9) or (10) 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.

        (f) The Trustee will comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.

Section 7.08      Replacement of Trustee.

        (a) A resignation or removal of the Trustee and appointment of a
successor Trustee will become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.

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        (b) 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:

                (1) the Trustee fails to comply with Section 7.10 hereof;

                (2) 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;

                (3) a custodian or public officer takes charge of the Trustee or
        its property; or

                (4) the Trustee becomes incapable of acting.

        (c) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company will 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.

        (d) 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.

        (e) 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 hereof, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

        (f) A successor Trustee will deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee will become effective, and the
successor Trustee will have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee will mail a notice of its succession
to Holders. The retiring Trustee will 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 will 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 will be the successor Trustee.

Section 7.10      Eligibility; Disqualification.

        There will 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 $100.0
million as set forth in its most recent published annual report of condition.

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        This Indenture will 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.

                                   ARTICLE 8.
                  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.

        The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, and 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 8.

Section 8.02      Legal Defeasance and Discharge.

        Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each of the Guarantors will,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their obligations with respect to all
outstanding Notes (including the Subsidiary Guarantees) on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, Legal Defeasance means that the Company and the Guarantors will be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes (including the Subsidiary Guarantees), which will 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 clauses (1) and (2) below,
and to have satisfied all their other obligations under such Notes , the
Subsidiary Guarantees 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 following provisions which will survive until otherwise
terminated or discharged hereunder:

                (1) 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 in Section 8.04 hereof;

                (2) the Company's obligations with respect to such Notes under
        Article 2 and Section 4.02 hereof;

                (3) the rights, powers, trusts, duties and immunities of the
        Trustee hereunder; and the Company's and the Guarantors' obligations in
        connection therewith; and

                (4) this Article 8.

        Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

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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 and each of the Guarantors will,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from each of their obligations under the covenants contained in
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 clauses (3) and (4) of Section 5.01 hereof with respect to
the outstanding Notes on and after the date the conditions set forth in Section
8.04 hereof are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
will 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 will continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes will not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the outstanding Notes and
Subsidiary Guarantees, the Company and the Guarantors may omit to comply with
and will 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 will 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 and Subsidiary Guarantees will 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(3) through 6.01(5)
hereof will not constitute Events of Default.

Section 8.04      Conditions to Legal or Covenant Defeasance.

        In order to exercise either Legal Defeasance or Covenant Defeasance
under either Section 8.02 or 8.03 hereof:

                (1) the Company must irrevocably deposit with the Trustee, in
        trust, for the benefit of the Holders, cash in U.S. dollars, noncallable
        Government Securities, or a combination thereof, in such amounts as will
        be sufficient, in the opinion of a nationally recognized investment
        bank, appraisal firm, or firm of independent public accountants, to pay
        the principal of, premium and Liquidated Damages, if any, and interest
        on the outstanding Notes on the stated date for payment thereof or on
        the applicable redemption date, as the case may be, and the Company must
        specify whether the Notes are being defeased to such stated date for
        payment or to a particular redemption date;

                (2) in the case of an election under Section 8.02 hereof, the
        Company must deliver 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 shall 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;

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                (3) in the case of an election under Section 8.03 hereof, the
        Company must deliver 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;

                (4) 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) and the 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;

                (5) such Legal Defeasance or Covenant Defeasance will 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;

                (6) the Company must deliver 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 any other creditors of the Company or others; and

                (7) the Company must deliver to the Trustee an Officers'
        Certificate and an Opinion of Counsel, each stating that all conditions
        precedent provided for or relating to the Legal Defeasance or the
        Covenant Defeasance have been complied with.

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 noncallable 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
will 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 and Liquidated Damages, if
any, and interest, but such money need not be segregated from other funds except
to the extent required by law.

        The Company will pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or noncallable 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.

        Notwithstanding anything in this Article 8 to the contrary, the Trustee
will deliver or pay to the Company from time to time upon the request of the
Company any money or noncallable 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(1) 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.

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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 or
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, premium or Liquidated Damages, 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) will be discharged from such trust; and the
Holder of such Note will thereafter be permitted to 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, will 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 will 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 noncallable 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 and the Guarantors' obligations under this
Indenture and the Notes and the Subsidiary Guarantees will 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 or Liquidated Damages, if any, or interest on any Note following the
reinstatement of its obligations, the Company will 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
Subsidiary Guarantees, the Security Documents or the Notes without the consent
of any Holder of a Note:

                (1) to cure any ambiguity, defect or inconsistency;

                (2) to provide for uncertificated Notes in addition to or in
        place of certificated Notes;

                (3) to provide for the assumption of the Company's or a
        Guarantor's obligations to the Holders of the Notes by a successor to
        the Company pursuant to Article 5 or Article 10 hereof;

                (4) to make any change that would provide any additional rights
        or benefits to the Holders of the Notes or that does not adversely
        affect the legal rights hereunder of any such Holder;

                (5) to comply with requirements of the SEC in order to effect or
        maintain the qualification of this Indenture under the TIA;

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                (6) to conform the text of this Indenture, the Security
        Documents or the Notes to any provision of the "Description of Notes"
        Section of the Company's Offering Memorandum dated November 12, 2003,
        relating to the initial offering of the Notes, to the extent that such
        provision in that "Description of Notes" was intended to be a verbatim
        recitation of a provision of this Indenture, the Subsidiary Guarantees,
        the Security Documents or the Notes;

                (7) to add any additional assets to the Collateral;

                (8) to reflect the grant of Liens on the Collateral for the
        benefit of an additional secured party, to the extent that such
        Indebtedness and the Lien securing such Indebtedness is permitted by the
        terms of this Indenture;

                (9) to release Collateral from the Lien of this Indenture and
        the Security Documents when permitted or required by this Indenture or
        the Security Documents; or

                (10) to allow any Guarantor to execute a supplemental indenture
        and/or a Subsidiary 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 will join with the Company and the 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 will 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, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture (including,
without limitation, Section 3.09, 4.10 and 4.15 hereof), the Subsidiary
Guarantees, the Security Documents and the Notes with the consent of the Holders
of at least a majority in principal amount of the Notes then outstanding voting
as a single class (including, without limitation, consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium or Liquidated Damages, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the Subsidiary Guarantees or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.02.

        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 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 will
join with the Company and the Guarantors 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 will not be
obligated to, enter into such amended or supplemental Indenture.

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        It is not 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 is sufficient if such consent approves the substance thereof.

        After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company will 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, will 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 then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture, the Notes, the
Security Documents or the Subsidiary Guarantees. However, without the consent of
each Holder affected, an amendment, supplement or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):

                (1) reduce the principal amount of Notes whose Holders must
        consent to an amendment, supplement or waiver;

                (2) reduce the principal of or change the fixed maturity of any
        Note or alter the provisions with respect to the redemption of the Notes
        except as provided above with respect to Sections 3.09, 4.10 and 4.15
        hereof;

                (3) reduce the rate of or change the time for payment of
        interest, on any Note;

                (4) 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
        Notes and a waiver of the payment default that resulted from such
        acceleration);

                (5) make any Note payable in currency other than that stated in
        the Notes;

                (6) make any change in the provisions of this Indenture relating
        to waivers of past Defaults (other than to add sections of this
        Indenture subject thereto) 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;

                (7) waive a redemption payment with respect to any Note (other
        than a payment required by Sections 3.09, 4.10 or 4.15 hereof);

                (8) release any Guarantor from any of its obligations under its
        Subsidiary Guarantee or this Indenture, except in accordance with the
        terms of this Indenture.

                (9) release all or substantially all of the Collateral from the
        Liens created by the Security Documents except as specifically provided
        for in this Indenture and the Security Documents; or

                (10) make any change in the foregoing amendment and waiver
        provisions.

Section 9.03      Compliance with Trust Indenture Act.

        Every amendment or supplement to this Indenture or the Notes will be
set forth in a amended or supplemental indenture that complies with the TIA as
then in effect.

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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 will not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06      Trustee to Sign Amendments, etc.

        The Trustee will sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. In
executing any amended or supplemental indenture, the Trustee will be entitled to
receive and (subject to Section 7.01 hereof) will be fully protected in relying
upon, in addition to the documents required by Section 14.04 hereof, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture and that the amended or supplemental indenture has been duly
authorized, executed and delivered and is enforceable in accordance with its
terms (subject to customary exceptions), and such amended or supplemental
indenture is in compliance with the TIA.

                                  ARTICLE 10.
                          COLLATERAL AND SECURITY

Section 10.01     Security Documents.

        (a) The payment of the principal of and interest and premium and
Liquidated Damages, if any, on, the Notes and the payment and performance of all
Note Obligations are secured as provided in the Security Documents which the
Company and the Guarantors have entered into simultaneously with the execution
and delivery of this Indenture and will be secured by all Security Documents
hereafter delivered as required or permitted by this Indenture.

        (b) The Company will, and will cause each of the Guarantors to, do or
cause to be done all acts and things which may be required, or which the
Collateral Agent from time to time may reasonably request, to assure and confirm
that the Collateral Agent holds, for the benefit of the holders of Note
Obligations, duly created, enforceable and perfected Liens upon the Collateral
as contemplated by this Indenture and the Security Documents.

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Section 10.02     Collateral Agent.

        (a) The Trustee will act as Collateral Agent and as Collateral Agent,
will be entitled to the protections, immunities and indemnities afforded the
Trustee.

        (b) The Collateral Agent is authorized and empowered to appoint one or
more co-Collateral Agents as it deems necessary or appropriate.

        (c) Neither the Trustee nor the Collateral Agent nor any of their
respective officers, directors, employees, attorneys or agents will be
responsible for the existence, genuineness, value or protection of any
Collateral, for the legality, enforceability, effectiveness or sufficiency of
the Security Documents, for the creation, perfection, priority, sufficiency or
protection of any Note Lien, or for any failure to demand, collect, foreclose or
realize upon or otherwise enforce any of the Note Liens or Security Documents or
for any delay in doing so.

        (d) The Collateral Agent will be subject to such directions as may be
given it by the Trustee from time to time as required or permitted by this
Indenture. Except as directed by the Trustee and as required or permitted by
this Indenture, the Collateral Agent will not be obligated:

                (1) to act upon directions purported to be delivered to it by
            any other Person;

                (2) to foreclose upon or otherwise enforce any Note Lien; or

                (3) to take any other action whatsoever with regard to any or
            all of the Note Liens, Security Documents or Collateral.

        (e) The Collateral Agent will be accountable only for amounts that it
actually receives as a result of the enforcement of the Note Liens or Security
Documents.

        (f) In acting as Collateral Agent or co-Collateral Agent, the
Collateral Agent and each co-Collateral Agent may rely upon and enforce each and
all of the rights, powers, immunities, indemnities and benefits of the Trustee
under Article 7.

        (g) Each successor Trustee will become the successor Collateral Agent
as and when the successor Trustee becomes the Trustee.

        (h) At all times when the Trustee is not itself the Collateral Agent,
the Company will deliver to the Trustee copies of all Second-Lien Security
Documents delivered to the Collateral Agent and copies of all documents
delivered to the Collateral Agent pursuant to the Second-Lien Security
Documents.

Section 10.03     Authorization of Actions to Be Taken.

        (a) Each Holder of Notes, by its acceptance thereof, consents and
agrees to the terms of each Security Document, as originally in effect and as
amended, supplemented or replaced from time to time in accordance with its terms
or the terms of this Indenture, authorizes and directs the Trustee and the
Collateral Agent to enter into the Security Documents, and authorizes and
empowers the Trustee and the Collateral Agent to bind the Holders of Notes and
other holders of Note Obligations as set forth in the Security Documents and to
perform its obligations and exercise its rights and powers thereunder.

        (b) The Trustee and the Collateral Agent are authorized and empowered
to receive for the benefit of the Holders of Notes any funds collected or
distributed under the Security Documents and to

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make further distributions of such funds to the Holders of Notes according to
the provisions of this Indenture.

        (c) Subject to the provisions of Sections 7.01 and 7.02 and Article 13,
the Trustee may, in its sole discretion and without the consent of the Holders
of Notes, direct, on behalf of the Holders of Notes, the Collateral Agent to
take all actions it deems necessary or appropriate in order to:

                (1) foreclose upon or otherwise enforce any or all of the Note
        Liens;

                (2) enforce any of the terms of the Security Documents; or

                (3) collect and receive payment of any and all Note Obligations.

The Trustee is authorized and empowered to institute and maintain, or direct the
Collateral Agent to institute and maintain, such suits and proceedings as it may
deem expedient to protect or enforce the Note Liens or the Security Documents or
to prevent any impairment of Collateral by any acts that may be unlawful or in
violation of the Security Documents or this Indenture, and such suits and
proceedings as the Trustee or the Collateral Agent may deem expedient to
preserve or protect its interests and the interests of the Holders of Notes in
the Collateral, including power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of Holders of Notes, the Trustee or the Collateral Agent.

Section 10.04     Release of Note Liens.

        (a) The Note Liens will be released in whole:

                (1) upon payment in full of the principal of, and accrued and
        unpaid interest, premium and Liquidated Damages, if any, on the
        Notes and payment in full of all other Note Obligations that are
        due and payable at or prior to the time such principal, accrued
        and unpaid interest, premium and Liquidated Damages, if any, are
        paid;

                (2) upon satisfaction and discharge of this Indenture in
        accordance with the terms hereof; or

                (3) upon a Legal Defeasance or Covenant Defeasance in
        accordance with the provisions of Section 8.01, 8.02, 8.03 and
        8.04.

        (b) The Note Liens will be released in part with respect to any asset
constituting Collateral:

                (1) upon delivery by the Company to the Trustee and the
        Collateral Agent of an Officers' Certificate certifying that
        the asset has been sold or otherwise disposed of by the
        Company or a Guarantor to a Person other than the Company or a
        Guarantor in a transaction permitted by this Indenture, at the
        time of such sale or disposition; or

                (2) upon delivery by the Company to the Trustee and the
        Collateral Agent of an Officers' Certificate certifying that
        the asset is owned or has been acquired by a Guarantor that
        has been released from its Note Guarantee (including by virtue
        of a Subsidiary Guarantor becoming an Unrestricted
        Subsidiary).

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        (c) Upon delivery to the Trustee and the Collateral Agent of an
Officers' Certificate requesting release of the Note Liens pursuant to Section
10.04(a) or 10.04(b), accompanied by:

                (1) an Opinion of Counsel confirming that such release is
        required by Section 10.04(a) or 10.04(b), as the case may be;

                (2) all instruments requested by the Company to effectuate or
        confirm such release; and

                (3) such other certificates and documents as the Trustee or
        Collateral Agent may reasonably request to confirm the matters set forth
        in Section 10.04(a) or 10.04(b), as the case may be,

the Trustee will, if such instruments and confirmation are reasonably
satisfactory to the Trustee and Collateral Agent, instruct the Collateral Agent
to execute and deliver, and the Collateral Agent will promptly execute and
deliver, such instruments.

        (d) All instruments effectuating or confirming any release of any Note
Liens will have the effect solely of releasing such Note Liens as to the
Collateral described therein, on customary terms and without any recourse,
representation, warranty or liability whatsoever.

        (e) The Trustee is not required to serve, file, register or record any
instrument releasing Collateral.

        (f) The Company will bear and pay all costs and expenses associated
with any release of Note Liens pursuant to this Section 10.04, including all
reasonable fees and disbursements of any attorneys or representatives acting for
the Trustee or for the Collateral Agent

Section 10.05     Recording and Opinions.

        (a) The Company and the Guarantors will furnish to the Collateral Agent
and the Trustee (i) immediately prior to the issuance of the Exchange
Securities and (ii) on November 1 of each year beginning with November 1, 2004,
an Opinion of Counsel, dated as of such date, either:

                (1) stating that, in the opinion of such counsel, (A) action has
        been taken with respect to the recording, registering, filing,
        re-recording, re-registering and re-filing of all supplemental
        indentures, financing statements, continuation statements or notices,
        recordings or other instruments of further assurance as is necessary to
        maintain the Liens intended to be created by the Security Documents and
        reciting the details of such action or referring to prior Opinions of
        Counsel in which such details are given, and (B) based on relevant laws
        as in effect on the date of such Opinion of Counsel, all financing
        statements and continuation statements have been executed and filed that
        are necessary as of such date and during the succeeding 12 months fully
        to preserve and perfect the Note Liens, to the extent the Note Liens can
        be perfected by the filing of a financing statement; or

                (2) stating that, in the opinion of such counsel, no such action
        is necessary to maintain such Liens as effective and perfected.

        (b) The Company and the Guarantors will otherwise comply with the
provisions of TIA ss.314(b).

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        (c) To the extent applicable, the Company and the Guarantors will cause
TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the release
of property or securities from Note Liens or relating to the substitution
therefor of any property or securities to be subjected to the Lien of the
Security Documents, to be complied with. Any certificate or opinion required by
TIA ss. 314(d) may be made by an Officer of the Company except in cases where
TIA ss. 314(d) requires that such certificate or opinion be made by an
independent Person, which Person will be an independent engineer, appraiser or
other expert reasonably satisfactory to the Trustee and the Collateral Agent.

        (d) Notwithstanding anything to the contrary in this Article 10, the
Company will not be required to comply with all or any portion of TIA ss.314(d)
if it determines, in good faith based on advice of counsel, that under the terms
of TIA ss.314(d) and/or any interpretation or guidance as to the meaning thereof
of the Commission or its staff, including "no action"' letters or exemptive
orders, all or any portion of TIA ss.314(d) is inapplicable to one or a series
of released Collateral.

Section 10.06     Certificates of the Company.

        (a) The Company will furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Collateral pursuant to the Security Documents:

                (1) all documents required by TIA ss.314(d); and

                (2) an Opinion of Counsel to the effect that such accompanying
        documents constitute all documents required by TIA ss.314(d).

        The Trustee may, to the extent permitted by Sections 7.01 and 7.02
hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.

Section 10.07     Certificates of the Trustee.

        If any Collateral is released in accordance with this Indenture or any
Security Document at a time when the Trustee is not itself also the Collateral
Agent and if the Company has delivered the certificates and documents required
by the Security Documents and Section 10.06 hereof, the Trustee will determine
whether it has received all documentation required by TIA ss. 314(d) in
connection with such release and, based on such determination and the Opinion of
Counsel delivered pursuant to Section 10.06 hereof, will deliver a certificate
to the Collateral Agent setting forth such determination.

Section 10.08     Termination of Security Interest.

        Upon the payment in full of all Obligations of the Company under this
Indenture and the Notes, or upon Legal Defeasance, the Trustee will, at the
request of the Company, deliver a certificate to the Collateral Agent stating
that such Obligations have been paid in full, and instruct the Collateral Agent
to release the Liens pursuant to this Indenture and the Security Documents.

                                  ARTICLE 11.
                           SUBSIDIARY GUARANTEES

Section 11.01     Guarantee.

        (a) Subject to this Article 11, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the

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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:

                (1) the principal of, premium and Liquidated Damages, if any,
        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

                (2) 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 guaranteed for whatever reason, the Guarantors will 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.

        (b) The Guarantors hereby agree that their obligations hereunder are
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 Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in the Notes and this
Indenture.

        (c) 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
Subsidiary Guarantee, to the extent theretofore discharged, will be reinstated
in full force and effect.

        (d) Each Guarantor agrees that it will 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, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (2) 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) will forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors will 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 Subsidiary Guarantee.

Section 11.02     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 Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the

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Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor will be limited to the maximum amount
that 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 11, result in the
obligations of such Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.

Section 11.03     Execution and Delivery of Subsidiary Guarantee.

        To evidence its Subsidiary Guarantee set forth in Section 11.01 hereof,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form attached as Exhibit E hereto will be endorsed by an
Officer of such Guarantor either by manual or facsimile signature on each Note
authenticated and delivered by the Trustee and that this Indenture will be
executed on behalf of such Guarantor by one of its Officers.

        Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 11.01 hereof will remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.

        If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee will
be valid nevertheless.

        The delivery of any Note by the Trustee, after the authentication
thereof hereunder, will constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.

        In the event that the Company or any of its Restricted Subsidiaries
creates or acquires any Domestic Subsidiary after the date of this Indenture, if
required by Section 4.19 hereof, the Company will cause such Domestic Subsidiary
to comply with the provisions of Section 4.19 hereof and this Article 11, to the
extent applicable.

Section 11.04     Guarantors May Consolidate, etc., on Certain Terms.

        Except as otherwise provided in Section 11.05 hereof, no Guarantor may
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 either:

                (1) subject to Section 11.05 hereof, such Guarantor is the
        surviving Person or the Person acquiring the property in any such sale
        or disposition or the Person formed by any such consolidation or merger
        assumes all the obligations of that Guarantor under this Indenture, its
        Subsidiary Guarantee and the Registration Rights Agreement pursuant to a
        supplemental indenture and appropriate Security Documents reasonably
        satisfactory to the Trustee; or

                (2) 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.

        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

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form to the Trustee, of the Subsidiary 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 will 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 Subsidiary 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 Subsidiary Guarantees so issued
will in all respects have the same legal rank and benefit under this Indenture
as the Subsidiary Guarantees theretofore and thereafter issued in accordance
with the terms of this Indenture as though all of such Subsidiary 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 will prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or will 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.

Section 11.05     Releases.

        (a) In the event of any sale or other disposition of all or
substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the Capital
Stock of any Guarantor, by the Company or 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 Subsidiary 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
will execute any documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Subsidiary Guarantee.

        (b) Upon designation of any Guarantor as an Unrestricted Subsidiary in
accordance with the terms of this Indenture, such Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee. (c) Upon Legal
Defeasance in accordance with Article 8 hereof or satisfaction and discharge of
this Indenture in accordance with Article 12 hereof, each Guarantor will be
released and relieved of any obligations under its Subsidiary Guarantee.

        Any Guarantor not released from its obligations under its Subsidiary
Guarantee as provided in this Section 11.05 will 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 11.

                                  ARTICLE 12.
                        satisfaction and discharge

Section 12.01      Satisfaction and Discharge.

        This Indenture will be discharged and will cease to be of further
effect as to all Notes issued hereunder, and all security interests in the
Collateral created by the Security Documents in favor of the Holders will be
released when:

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                (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 theretofore 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, noncallable Government
                Securities, or a combination thereof, in such 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;

                (2) no Default or Event of Default has occurred and is
        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) and the 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 has been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section, the provisions of Sections 12.02 and 8.06 will survive. In
addition, nothing in this Section 12.01 will be deemed to discharge those
provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

Section 12.02      Application of Trust Money.

        Subject to the provisions of Section 8.06 hereof, all money deposited
with the Trustee pursuant to Section 12.01 hereof 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 12.01 hereof by reason of any
legal proceeding or by reason of any order or

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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 12.01 hereof; 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 13.
                           RANKING OF NOTE LIENS

Section 13.01     Agreement for the Benefit of Holders of Priority Liens.

        The Trustee and the Collateral Agent agree, and each Holder of Notes by
accepting a Note agrees, that (1) the Note Liens are, to the extent and in the
manner provided in this Article 13, junior and subordinate in ranking to all
Priority Liens, whenever granted, upon any present or future Collateral, but
only to the extent the Priority Liens secure Priority Lien Obligations, and the
Priority Liens, whenever granted, upon any present or future Collateral to the
extent, and only to the extent, securing the Priority Lien Obligations will be
prior and senior to the Note Liens and (2) that such agreements as to the
ranking of the Note Liens:

        (a) are enforceable by the holders of Priority Liens; and

        (b) will remain enforceable by the holders of Priority Liens until the
Discharge of the Priority Lien Obligations.

Section 13.02     Ranking.

        Notwithstanding (a) anything to the contrary contained in the this
Indenture or any of the Security Documents, (b) the time, order or method of
attachment of the Note Liens or the Priority Liens, (c) the time or order of
filing or recording of financing statements or other documents filed or recorded
to perfect any Lien upon any Collateral, (d) the time of taking possession or
control over any Collateral, (e) the rules for determining priority under the
Uniform Commercial Code or any other law governing relative priorities of
secured creditors, (f) that any Priority Lien may not have been perfected, (g)
that any Priority Lien may be or have become subordinated, by equitable
subordination or otherwise, to any other Lien, or (h) any other circumstance of
any kind or nature whatsoever, whether similar or dissimilar to any of the
foregoing, the Note Liens will in all circumstances be junior and subordinate in
ranking to all Priority Liens, whenever granted, upon any present or future
Collateral, but only to the extent such Priority Liens secure Priority Lien
Obligations, and the Priority Liens, whenever granted, upon any present or
future Collateral to the extent the Priority Liens secure the Priority Lien
Obligations will be prior and superior to the Note Liens.

Section 13.03     Collateral Sharing with Additional Notes.

        Any Additional Notes issued under this Indenture and permitted to be
incurred under the Credit Agreement and by Section 4.09 hereof will be treated
as Note Obligations for all purposes under this Indenture and the Security
Documents.

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Section 13.04     Restriction on Enforcement of Note Liens.

        (a) Until the Discharge of Priority Lien Obligations, the holders of
Priority Liens will have the exclusive right to manage, perform and enforce the
terms of the Priority Lien Documents with respect to all Collateral and to
exercise and enforce all privileges and rights thereunder as permitted by the
Priority Lien Documents and applicable law, including, without limitation, the
exclusive right to take any actions to enforce, collect, foreclose or realize
upon any Collateral. Subject to clauses (1) through (4) and Section 13.06 below,
the Holders of Notes will not authorize or instruct the Trustee, and the Trustee
will not, and will not authorize or direct any Person acting for it, or any
holder of Note Obligations, to exercise any right or remedy with respect to any
Collateral (including any right of set-off) or take any action to enforce,
collect or realize upon any Collateral, except that, in any event, any such
right or remedy may be exercised and any such action may be taken, authorized or
instructed:

                (1) without any condition or restriction whatsoever, at any time
        after the Discharge of Priority Lien Obligations;

                (2) as necessary to redeem any Collateral in a creditor's
        redemption permitted by law or to deliver any notice or demand necessary
        to enforce (subject to the prior Discharge of Priority Lien Obligations)
        any right to claim, take or receive proceeds of Collateral remaining
        after Discharge of Priority Lien Obligations in the event of foreclosure
        or other enforcement of any prior Lien;

                (3) as necessary to perfect a Lien upon any Collateral by any
        method of perfection except through possession or control; or

                (4) as necessary to prove, preserve or protect (but not enforce)
        the Note Liens,

        in each case, subject to the provisions of the Security Documents.

        (b) Except for payments received free from the Priority Liens as
provided in this Section, all proceeds of Collateral received by the Trustee or
the Collateral Agent at any time prior to the Discharge of Priority Lien
Obligations will be held by the Trustee or the Collateral Agent for account of
the holders of Priority Liens and remitted to the Priority Lien Agent upon
demand by the Priority Lien Agent. To the extent provided by applicable law, the
Note Liens will remain attached to and, subject to this Article 13, enforceable
against all proceeds so held or remitted.

        (c) Except for payments that are made from or constitute proceeds of
property subject to Priority Liens and that are received by the Trustee or the
Collateral Agent or any holder of Note Obligations at any time prior to the
Discharge of Priority Lien Obligations and after (i) the commencement of any
Insolvency or Liquidation Proceeding in respect of the Company or the grantor of
any Priority Lien or (ii) the Trustee has received written notice from the
Priority Lien Agent stating that (A) the Priority Lien Debt has become due and
payable in full (whether at maturity, upon acceleration or otherwise) or (B) the
holders of Priority Liens have become entitled to, and desire to, enforce any or
all of the Priority Liens by reason of a default under Priority Lien Documents:

                (1) no payment of money (or the equivalent of money) made by the
        Company or a Guarantor to the Trustee, the Collateral Agent, any Holder
        of Notes or any other holder of Note Obligations (including, without
        limitation, payments and prepayments made for application to Note
        Obligations and all other payments and deposits made pursuant to any
        provision of this Indenture, the Notes, the Guarantees or the Security
        Documents) will in any event be subject to

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        the foregoing provisions of this Section 13.04 or otherwise affected
        by any of the provisions of Article 13; and

                (2) all payments permitted to be received under Section
        13.04(c)(1) will be received by the Trustee, the Collateral Agent, the
        Holders of Notes and the other holders of Note Obligations free from the
        Priority Liens and all other Liens thereon except the Note Liens.

Section 13.05     Insolvency or Liquidation Proceedings.

(a) The provisions of Article 13 will be applicable both before and after the
filing of any petition by or against any Obligor under any insolvency or
bankruptcy law and all converted or succeeding cases in respect thereof, and all
references herein to any Obligor shall be deemed to apply to the trustee for
such Obligor and such Obligor as a debtor-in-possession. The relative rights of
secured creditors in or to any distributions from or in respect of any
Collateral or proceeds of Collateral shall continue after the filing of such
petition on the same basis as prior to the date of such filing, subject to any
court order approving the financing of, or use of cash collateral by any Obligor
as debtor-in-possession.

        Without limiting the other provisions of the indenture, upon the
commencement of a case under the Bankruptcy Code by or against any Obligor:

                (1) the Priority Lien Documents shall remain in full force and
        effect and enforceable pursuant to their respective terms.

                (2) in any such case under the Bankruptcy Code, the Trustee and
        each of the Holders of Notes (a) agree not to take any action or vote in
        any way so as to contest (i) the validity or enforceability of any of
        the Priority Lien Documents or any of the Priority Lien Obligations
        thereunder, (ii) the validity, priority or enforceability of the Liens,
        mortgages, assignments and security interests granted pursuant to the
        Priority Lien Documents with respect to the Priority Lien Obligations,
        or (iii) the relative rights and duties of the holders of the Priority
        Lien Obligations and the Note Obligations granted and/or established in
        any Priority Lien Document with respect to such Liens, mortgages,
        assignments and security interests, and (b) acknowledge that the
        Priority Lien Obligations include interest accruing on or after the
        filing of any petition in bankruptcy or for reorganization, only to the
        extent a claim for post-petition interest is allowed in any such case.

                (3) so long as any Priority Lien Obligations are outstanding,
        without the express written consent of the Priority Lien Agent, none of
        the Trustee or the Holders of Notes (or their representatives) shall (a)
        with respect to any rights under any Priority Lien Documents or
        applicable law, seek in respect of any part of the Collateral or
        proceeds thereof or any Lien which may exist thereon, any relief from or
        modification of the automatic stay as provided in Section 362 of the
        Bankruptcy Code, (b) oppose or object to the determination of the extent
        of any Liens held by any of the holders of the Priority Lien Obligations
        or the value of any claims of holders of the Priority Lien Obligations
        under Section 506(a) of the Bankruptcy Code, or (c) oppose or object to
        the payment of interest and expenses as provided under Sections 506(b)
        and (c) of the Bankruptcy Code.

        If, in any Insolvency or Liquidation Proceeding and prior to the
Discharge of Priority Lien Obligations, all of the Lenders (or such number of
the Lenders as may have the power to bind all of them):

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                (1)     consent to any order for use of cash collateral or agree
                        to the extension of any Priority Lien Debt to any
                        Obligor;

                (2)     consent to any order granting any priming lien,
                        replacement lien, cash payment or other relief on
                        account of Priority Lien Obligations as adequate
                        protection (or its equivalent) for the interests of the
                        holders of Priority Liens in the property subject to
                        such Priority Liens; or

                (3)     consent to any order relating to a sale of assets of the
                        Company or any Guarantor that:

                        (i) provides, to the extent the sale is to be free
                and clear of Liens, that all Priority Liens and Note Liens
                shall attach to the proceeds of the sale; and

                        (ii) grants Credit Bid Rights to the Holders of Notes,

then, so long as none of the Lenders, the Priority Lien Agent or any
representative acting for one or more of the Lenders in any respect opposes or
otherwise contests any request made by the holders of Note Obligations for the
grant to the Collateral Agent, for the benefit of the holders of Note
Obligations and as adequate protection (or its equivalent) for the Collateral
Agent's interest in the Collateral under the Note Liens, of a junior lien upon
any property upon which a Lien is (or is to be) granted under such order to
secure the Priority Lien Obligations, co-extensive in all respects with, but
subordinated (as set forth in this Article 13) in all respects to, such Lien and
all Priority Liens upon such property, the Holders of Notes, the Trustee and the
Collateral Agent will not oppose or otherwise contest the entry of such order,
except that any such order approving a sale of assets or the bidding procedures
for any sale of assets may be opposed or otherwise contested by them based on
any ground that may be asserted by a holder of unsecured claims.

        (b) The Holders of Notes, the Trustee and the Collateral Agent will not
file or prosecute in any Insolvency or Liquidation Proceeding any motion for
adequate protection (or any comparable request for relief) based upon their
interests in the Collateral under the Note Liens, except that:

                (1) they may freely seek and obtain relief:

                        (A) granting a junior lien co-extensive in all respects
                with, but subordinated (as set forth in this Article 13) in all
                respects to, all Liens granted in such Insolvency or Liquidation
                Proceeding to the holders of Priority Lien Debt; or

                        (B) in connection with the confirmation of any plan of
                reorganization or similar dispositive restructuring plan; and

                (2) they may freely seek and obtain any relief upon a motion for
        adequate protection (or any comparable relief), without any condition or
        restriction whatsoever, at any time after the Discharge of Priority Lien
        Obligations.

                (c) If, in any Insolvency or Liquidation Proceeding, debt
        obligations of the reorganized debtor secured by Liens upon any property
        of the reorganized debtor are distributed, both on account of Priority
        Lien Debt and on account of the Notes, then, to the extent the debt
        obligations distributed on account of the Priority Lien Debt and on
        account of the Notes are secured by Liens upon the same property, the
        provisions of this Article 13 will survive the distribution of such debt
        obligations pursuant to such plan and will apply with like effect to the
        Liens securing such debt obligations.

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<PAGE>

        (d) The Holders of Notes and the Trustee will not assert or enforce, at
any time prior to the Discharge of Priority Lien Obligations, any claim under
ss.506(c) of the United States Bankruptcy Code senior to or on a parity with the
Priority Liens for costs or expenses of preserving or disposing of any
Collateral.

Section 13.06     Relative Rights.

        This Article 13 defines the relative rights, as lienholders, of holders
of Note Liens and holders of Priority Liens. Nothing in this Indenture will:

                (1) impair, as between the Company and Holders, the obligation
        of the Company, which is absolute and unconditional, to pay principal
        of, premium and interest and Liquidated Damages, if any, on the Notes
        in accordance with their terms or to perform any other obligation of
        the Company or any other Obligor under the Security Documents or this
        Indenture;

                (2) affect the relative rights of Holders and creditors of the
        Company or any of its Restricted Subsidiaries (other than holders of
        Priority Liens);

                (3) restrict the right of any Holder to sue for payments that
        are then due and owing (but not enforce any judgment in respect thereof
        against any Collateral other than any action not specifically
        prohibited by this Article 13);

                (4) prevent the Trustee, the Collateral Agent or any Holder of
        Notes from exercising against the Company or any other Guarantor any of
        its other available remedies upon a Default or Event of Default not
        specifically prohibited by this Article 13; or

                (5) restrict the right of the Trustee, the Collateral Agent or
        any Holder of Notes to take any lawful action in an Insolvency or
        Liquidation Proceeding not specifically prohibited by this Article 13.

        If the Company or any Restricted Subsidiary fails because of this
Article 13 to perform any obligation binding upon it under any Security
Document, the failure is still a Default or Event of Default.

                                  ARTICLE 14.
                                  MISCELLANEOUS

Section 14.01      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 will control.

Section 14.02      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:

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<PAGE>

        If to the Company and/or any Guarantor:

        Tekni-Plex, Inc.
        260 N. Denton Tap Road Suite 150
        Coppell, Texas
        Telecopier No.:  (972) 304-6297
        Attention:  Dr. F. Patrick Smith

        With a copy to:
        Davis Polk & Wardwell
        450 Lexington Avenue
        New York, New York 10017
        Telecopier No.:  (212) 450-4800
        Attention:  Francis Morison, Esq.

        If to the Trustee and/or the Collateral Agent:
        HSBC Bank USA
        452 Fifth Avenue
        New York, NY 10018-2706
        Telecopier No.:  (212) 525-1300
        Attention:  Issuer Services

        With a copy to:
        Winston & Strawn LLP
        200 Park Avenue
        New York, New York 10166
        Telecopier No.:  (212) 294-4700
        Attention:  Jeffrey H. Elkin, Esq.

        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) will
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. All notices to
the Trustee or the Collateral Agent shall be deemed duly given and effective
only upon receipt.

        Any notice or communication to a Holder will 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 will 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 will 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.

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        If the Company mails a notice or communication to Holders, it will mail
a copy to the Trustee and each Agent at the same time.

Section 14.03     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).

Section 14.04      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:

                (1) an Officers' Certificate in form and substance reasonably
        satisfactory to the Trustee (which must include the statements set forth
        in Section 14.05 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

                (2) an Opinion of Counsel in form and substance reasonably
        satisfactory to the Trustee (which must include the statements set forth
        in Section 14.05 hereof) stating that, in the opinion of such counsel,
        all such conditions precedent and covenants have been satisfied.

Section 14.05     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)) must comply with the provisions of TIA ss. 314(e)
and must include:

                (1) a statement that the Person making such certificate or
        opinion has read such covenant or condition;

                (2) a brief statement as to the nature and scope of the
        examination or investigation upon which the statements or opinions
        contained in such certificate or opinion are based;

                (3) a statement that, in the opinion of such Person, he or she
        has made such examination or investigation as is necessary to enable him
        or her to express an informed opinion as to whether or not such covenant
        or condition has been satisfied; and

                (4) a statement as to whether or not, in the opinion of such
        Person, such condition or covenant has been satisfied.

Section 14.06     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 14.07     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, will have any liability
for any obligations of the Company or the Guarantors

                                       93

<PAGE>

under the Notes, this Indenture the Subsidiary Guarantees, the Security
Documents 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.

Section 14.08     Governing Law.

        THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES 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.

Section 14.09     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 14.10     Successors.

        All agreements of the Company in this Indenture and the Notes will bind
its successors. All agreements of the Trustee in this Indenture will bind its
successors. All agreements of each Guarantor in this Indenture will bind its
successors, except as otherwise provided in Section 11.05 hereof.

Section 14.11     Severability.

        In case any provision in this Indenture or in the Notes is invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.

Section 14.12     Counterpart Originals.

        The parties may sign any number of copies of this Indenture. Each
signed copy will be an original, but all of them together represent the same
agreement.

Section 14.13     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 will in no
way modify or restrict any of the terms or provisions hereof.

Section 14.14     Waivers under Subordinated Note Indenture.

        To the extent the Notes are deemed to have been incurred under the
Credit Agreement for purposes of the Subordinated Note Indenture and, as a
result thereof, the Notes constitute "Designated Senior Debt" as defined
therein, at all times prior to the time the aggregate commitments and all
letters of credit under the Credit Agreement have been terminated and all
Priority Lien Debt has been paid in full in cash in accordance with the terms of
the Priority Lien Documents, neither the Trustee nor any Holder of Notes may
exercise any rights as a holder of Designated Senior Debt under the Subordinated
Note

                                       94

<PAGE>

Indenture, including, without limitation, giving any "Payment Blockage Notice"
pursuant to Section 8.02(a) or 12.02(a) of the Subordinated Note Indenture
commencing, a "Payment Blockage Period" thereunder.

                       [Signatures on following page]

                                       95

<PAGE>

                                SIGNATURES

Dated as of November 21, 2003
                                     TEKNI-PLEX, INC.

                                     By: /s/ Kenneth W.R. Baker
                                         ---------------------------------------
                                         Name:  Kenneth W.R. Baker
                                         Title: President and Chief Operating
                                                Officer

                                     PURETEC CORPORATION
                                     PLASTIC SPECIALTIES AND TECHNOLOGIES. INC.
                                     PLASTIC SPECIALTIES AND TECHNOLOGIES
                                         INVESTMENTS, INC.
                                     BURLINGTON RESINS, INC.
                                     DISTRIBUTORS RECYCLING, INC.
                                     REI DISTRIBUTORS, INC.
                                     NATVAR HOLDINGS, INC.
                                     TRI-SEAL HOLDINGS, INC.
                                     TP-ELM ACQUISITION SUBSIDIARY, INC.
                                     TPI ACQUISITION SUBSIDIARY, INC.
                                         collectively, the Guarantors

                                     By: /s/ Kenneth W.R. Baker
                                         ---------------------------------------
                                         Name:  Kenneth W.R. Baker
                                         Title: President and Chief Operating
                                                Officer

                                      HSBC BANK USA

                                      By: /s/ Frank J. Godino
                                          --------------------------------------
                                          Name: Frank J. Godino
                                          Title: Vice President

                        Signature Page to Indenture

<PAGE>

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

                                                         CUSIP/CINS ____________

                    8 3/4% Senior Secured Notes due 2013

No. ___                                                            $____________

                             TEKNI-PLEX, INC.

promises to pay to ________ or registered assigns,

the principal sum of __________________________________________________ DOLLARS
on November 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated:  _______________, 2003

                                        TEKNI-PLEX, INC.

                                        By:____________________________________
                                           Name:
                                           Title:

                                        By:____________________________________
                                           Name:
                                           Title:

This is one of the Global Notes referred to
in the within-mentioned Indenture:

HSBC BANK USA,
  as Trustee

By: ____________________________________________
               Authorized Signatory

===============================================================================

<PAGE>

                    8 3/4% Senior Secured Notes due 2013

[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 have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

          (1) INTEREST. Tekni-Plex, Inc., a Delaware corporation (the
     "Company"), promises to pay interest on the principal amount of this Note
     at 8 3/4% per annum from November 21, 2003 until maturity, including
     Liquidated Damages, if any, payable pursuant to Section 5 of the
     Registration Rights Agreement referred to below. The Company will pay
     interest and Liquidated Damages, if any, semi-annually in arrears on May
     15 and November 15 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 to which
     interest has been paid or, if no interest has been paid, from November 21,
     2003; 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,
     2004. The Company will 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 will pay interest (including
     post-petition interest in any proceeding under any Bankruptcy Law) on
     overdue installments of interest and Liquidated Damages, if any, (without
     regard to any applicable grace periods) 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, if any, to the Persons
     who are registered Holders of Notes at the close of business on the May 1
     or November 1 immediately 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, if any, may be made by check
     mailed to the Holders at their addresses set forth in the register of
     Holders; provided that payment by wire transfer of immediately available
     funds will be required with respect to principal of and interest, premium
     and Liquidated Damages, if any, on, all Global Notes and all other Notes
     the Holders of which will have provided wire transfer instructions to the
     Company or the Paying Agent. Such payment will 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, HSBC Bank USA, 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 Holder. The
     Company or any of its Subsidiaries may act in any such capacity.

                                     A1-2

<PAGE>

          (4) INDENTURE AND SECURITY DOCUMENTS. The Company issued the Notes
     under an Indenture dated as of November 21, 2003 (the "Indenture") among
     the Company, the Guarantors 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 TIA (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
     secured obligations of the Company limited to $275.0 million in aggregate
     principal amount. Additional Notes may be issued pursuant to the Indenture
     and will be part of the same series as the Initial Notes. The Notes are
     secured on a second priority basis by security interests in the Collateral
     pursuant to the Security Documents referred to in the Indenture (the
     "Security Documents").

          (5) OPTIONAL REDEMPTION.

     (a) At any time prior to November 15, 2006, the Company may on any one or
more occasions redeem, in whole or in part, up to 35% of the aggregate
principal amount of Notes issued under this Indenture at a redemption price of
108.75% of the principal amount of the Notes redeemed, plus accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date, with the net
cash proceeds of one or more Equity Offerings; provided that:

          (1) at least 65% of the aggregate principal amount of Notes issued
     under this Indenture (excluding Notes held by the Company and its
     Subsidiaries) remains outstanding immediately after the occurrence of such
     redemption; and

          (2) notice of redemption is mailed within 60 days of the date of the
     closing of such Equity Offering.

     (b) On or after November 15, 2008, the Company may, at its option, redeem
all or a part of the Notes upon not less than 30 nor more than 60 days notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any, on
the Notes redeemed, to the applicable redemption date, if redeemed during the
twelve-month period beginning on November 15 of the years indicated below,
subject to the rights of the Holders of the Notes on the relevant record date
to receive interest on the relevant interest payment date that is on or prior
to the date fixed for redemption:

        Year                                              Percentage
        ----                                              ----------
        2008..........................................     104.375%
        2009..........................................     102.917%
        2010..........................................     101.458%
        2011 and thereafter...........................     100.000%

          (6) MANDATORY REDEMPTION.

        The Company will not be required to make mandatory redemption payments
with respect to the Notes.

          (7) REPURCHASE AT THE OPTION OF HOLDER.

          (a) If there is a Change of Control, each Holder will have the right
     to require the Company to repurchase all or any part (equal to $1,000 or
     an integral multiple thereof) of each Holder's Notes ("Change of Control
     Offer") at a purchase price equal to 101% of the aggregate

                                     A1-3

<PAGE>

     principal amount thereof plus accrued and unpaid interest and Liquidated
     Damages thereon, if any, to the date of purchase (the "Change of Control
     Payment"). Within 30 days following any Change of Control, the Company
     will mail a notice to each Holder setting forth the procedures governing
     the Change of Control Offer as required by the Indenture.

          (b) Any Net Proceeds from Asset Sales that are not applied or
     invested as provided in Section 4.10 of the Indenture will be deemed to
     constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
     exceeds $15.0 million, the Company will commence an 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 the Indenture
     with respect to offers to purchase or redeem with the proceeds of sales of
     assets (an "Asset Sale Offer") pursuant to Section 3.09 of the Indenture
     to purchase the maximum principal amount of Notes (including any
     Additional Notes) and other pari passu Indebtedness 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 and
     Liquidated Damages thereon, 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) and other pari passu Indebtedness tendered pursuant to an Asset
     Sale Offer is less than the Excess Proceeds, the Company (or such
     Restricted Subsidiary) may use such deficiency for any purpose not
     otherwise prohibited by the Indenture. If the aggregate principal amount
     of Notes and other pari passu Indebtedness surrendered by holders thereof
     exceeds the amount of Excess Proceeds, the Trustee shall select the Notes
     and such other pari passu Indebtedness to be purchased as set forth in
     Sections 3.02 and 3.03 of the Indenture. Upon completion of such Asset
     Sale Offer, the amount of "Excess Proceeds" shall be reset to zero.
     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" attached to 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, 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 or discharge of the Indenture. 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.

                                     A1-4

<PAGE>

          (11) AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
     the Indenture, the Subsidiary Guarantees, the Security Documents 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 Event of Default (other than a Default or an Event of Default
     in the payment of principal of, premium or Liquidated Damages, if any, or
     interest on the Notes, except a payment default resulting from an
     acceleration that has been rescinded), or compliance with any provision of
     the Indenture 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 Subsidiary Guarantees, the
     Security Documents 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 or any Guarantor's obligations to Holders of
     the Notes in case of a merger or consolidation, to make any change that
     would provide any additional rights or benefits to the Holders of the
     Notes or that does not adversely affect the legal rights under the
     Indenture of any such Holder, to comply with the requirements of the SEC
     in order to effect or maintain the qualification of the Indenture under
     the TIA, to conform the text of the Indenture, the Security Documents or
     the Notes to any provision of the "Description of Notes" Section of the
     Company's Offering Memorandum dated November 12, 2003, relating to the
     initial offering of the Notes, to the extent that such provision in that
     "Description of Notes" was intended to be a verbatim recitation of a
     provision of the Indenture, the Subsidiary Guarantees or the Notes; to add
     any additional assets to the Collateral; to reflect the grant of Liens on
     the Collateral for the benefit of an additional secured party, to the
     extent that such Indebtedness and the Lien securing such Indebtedness is
     permitted by the terms of the Indenture; to release Collateral from the
     Lien of the Indenture and the Security Documents when permitted or
     required by the Indenture or the Security Documents; or to allow any
     Guarantor to execute a supplemental indenture to the Indenture and/or a
     Subsidiary 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,
     if any, with respect to the Notes; (ii) default in payment when due of
     principal of or premium, if any, on the Notes when the same becomes due
     and payable at maturity, upon redemption (including in connection with an
     offer to purchase) or otherwise, (iii) default in the payment of principal
     of and interest on Notes required to be purchased pursuant to an offer to
     purchase as described under Section 4.10 and Section 4.15 of the Indenture
     (iv) failure by the Company to perform or comply with any of the
     provisions described under Section 5.01 of the Indenture; (v) failure by
     the Company for 60 days after notice to the Company by the Trustee or the
     Holders of at least 25% in principal amount of the Notes then outstanding
     voting as a single class to comply with certain other agreements in the
     Indenture, the Notes or the Security Documents; (vi) defaults under the
     terms of one or more instruments evidencing or securing Indebtedness of
     the Company or any of its Restricted Subsidiaries having an outstanding
     principal amount of $20.0 million or more individually or in the aggregate
     that has resulted in the acceleration of the payment of such Indebtedness
     or failure to pay principal when due at the Stated Maturity of any such
     Indebtedness; (vii) there shall have been rendered a final judgment or
     judgments (not subject to appeal) against the Company or any of its
     Restricted Subsidiaries in an amount of $10.0 million or more which
     remains undischarged or unstayed for a period of 60 days after the date on
     which the right to appeal has expired; (viii) the denial or disaffirmation
     by the Company or any of its Restricted Subsidiaries, or any person acting
     on behalf of any of them, in writing, of any material obligation of the
     Company or any of its Restricted Subsidiaries set forth in or arising
     under any Security Documents; (ix) certain events of bankruptcy,
     insolvency or reorganization described in the Indenture with respect to
     the Company or any of its Restricted Subsidiaries that is a Significant
     Subsidiary or any group of Restricted

                                     A1-5

<PAGE>

     Subsidiaries that, taken together, would constitute a Significant
     Subsidiary; (x) any Subsidiary Guarantee from a Significant Subsidiary, or
     any group of Restricted Subsidiaries that, taken together, would
     constitute a Significant Subsidiary, ceases to be in full force and effect
     or is declared null and void and unenforceable or is found to be invalid
     or a Guarantor denies in writing its liability under the Subsidiary
     Guarantee (other than by reason of a release of such Guarantor from the
     Subsidiary Guarantee in accordance with the terms of the indenture, the
     security documents and the Subsidiary Guarantee); and (xi) except as
     permitted by the Indenture, any Security Document or any Note Lien
     purported to be granted thereby on an asset or assets fails to constitute
     a valid and (to the extent required by the security documents) perfected
     Lien on any material part of the Collateral purported to be subject
     thereto. 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 immediately,
     provided, that so long as the Credit Agreement shall be in full force and
     effect, if an Event of Default shall have occurred and be continuing
     (other than as specified under clause (ix) above), the Notes shall not
     become due and payable until the earlier to occur of (1) five Business
     Days following delivery of a written notice of such acceleration of the
     Notes to the agent under the Credit Agreement, if such Event of Default
     has not been cured prior to such fifth Business Day, and (2) the
     acceleration of any Indebtedness under the Credit Agreement..
     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.

          (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 any of the Guarantors, as
     such, will not have any liability for any obligations of the Company or
     such Guarantor under the Notes, the Subsidiary Guarantees or the Indenture
     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) LIEN RANKING. The Notes, the Subsidiary Guarantees and the other
     Note Obligations are secured by Note Liens upon the Collateral pursuant to
     the Security Documents. The Note Liens are subordinate in ranking to all
     current and future Priority Liens as set forth in Article 13 of the
     Indenture.

                                     A1-6

<PAGE>

          (16) AUTHENTICATION. This Note will not be valid until authenticated
     by the manual signature of the Trustee or an authenticating agent.

          (17) 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).

          (18) 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 will have all the rights set forth in the
     Registration Rights Agreement dated as of November 21, 2003, among the
     Company, the Guarantors and the other parties named on the signature pages
     thereof or, in the case of Additional Notes, Holders of Restricted Global
     Notes and Restricted Definitive Notes will have the rights set forth in
     one or more registration rights agreements, if any, among the Company, the
     Guarantors and the other parties thereto, relating to rights given by the
     Company and the Guarantors to the purchasers of any Additional Notes
     (collectively, the "Registration Rights Agreement").

          (19) 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, the Registration Rights Agreement and/or any of
the Security Agreements. Requests may be made to:

Tekni-Plex, Inc.
201 Industrial Parkway
Somerville, New Jersey 08876

Attention:  Chief Financial Officer

                                     A1-7

<PAGE>

                              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).

                                     A1-8

<PAGE>

                     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).

                                     A1-9

<PAGE>

            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>

                                                                      Principal Amount
                                                                     at maturity of this
                        Amount of decrease    Amount of increase in       Global Note          Signature of
                        in Principal Amount      Principal Amount      following such       authorized officer
                          at maturity of         at maturity of            decrease            of Trustee or
    Date of Exchange     this Global Note        this Global Note       (or increase)           Custodian
    ----------------    ------------------    --------------------   --------------------   ------------------
<S>                     <C>                  <C>                    <C>                    <C>
</TABLE>

                                     A1-10

<PAGE>

                                                                   [EXHIBIT A2]

                [Face of Regulation S Temporary Global Note]
________________________________________________________________________________

                                                       CUSIP/CINS __________

                    8 3/4% Senior Secured Notes due 2013

No. ___                                                          $__________

                             TEKNI-PLEX, INC.

promises to pay to _______ or registered assigns,

the principal sum of ________________________________________________ DOLLARS
on November 15, 2013.

Interest Payment Dates:  May 15 and November 15

Record Dates:  May 1 and November 1

Dated:  _______________, 2003

                                                TEKNI-PLEX, INC.

                                                By:_____________________________
                                                   Name:
                                                   Title:

                                                By:_____________________________
                                                   Name:
                                                   Title:

This is one of the Global Notes referred to
 in the within-mentioned Indenture:

HSBC BANK USA,
  as Trustee

By:______________________________
       Authorized Signatory

________________________________________________________________________________

                                      A-2

<PAGE>

                [Back of Regulation S Temporary Global Note]
                    8 3/4% Senior Secured Notes due 2013

[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]

THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.

        Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

          (1) INTEREST. Tekni-Plex, Inc., a Delaware corporation (the
     "Company"), promises to pay interest on the principal amount of this Note
     at 8 3/4% per annum from November 21, 2003 until maturity, including
     Liquidated Damages, if any, payable pursuant to Section 5 of the
     Registration Rights Agreement referred to below. The Company will pay
     interest and Liquidated Damages, if any, semi-annually in arrears on May
     15 and November 15 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 to which
     interest has been paid or, if no interest has been paid, from November 21,
     2003; 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,
     2004. The Company will 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 will pay interest (including
     post-petition interest in any proceeding under any Bankruptcy Law) on
     overdue installments of interest and Liquidated Damages, if any, (without
     regard to any applicable grace periods) 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, if any, to the Persons
     who are registered Holders of Notes at the close of business on the May 1
     or November 1 immediately 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, if any, may be made by check
     mailed to the Holders at their addresses set forth in the register of
     Holders; provided that payment by wire transfer of immediately available
     funds will be required with respect to principal of and interest, premium
     and Liquidated Damages, if any, on, all Global Notes and all other Notes
     the Holders of which will have provided wire transfer instructions to the
     Company or the Paying Agent. Such payment will 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.

                                     A2-2

<PAGE>

          (3) PAYING AGENT AND REGISTRAR. Initially, HSBC Bank USA, 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 Holder. The
     Company or any of its Subsidiaries may act in any such capacity.

          (4) INDENTURE AND SECURITY DOCUMENTS. The Company issued the Notes
     under an Indenture dated as of November 21, 2003 (the "Indenture") among
     the Company, the Guarantors 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 TIA (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
     secured obligations of the Company limited to $275.0 million in aggregate
     principal amount. Additional Notes may be issued pursuant to the Indenture
     and will be part of the same series as the Initial Notes. The Notes are
     secured on a second priority basis by security interests in the Collateral
     pursuant to the Security Documents referred to in the Indenture (the
     "Security Documents").

          (5) OPTIONAL REDEMPTION.

     (a) At any time prior to November 15, 2006, the Company may on any one or
more occasions redeem, in whole or in part, up to 35% of the aggregate
principal amount of Notes issued under this Indenture at a redemption price of
108.75% of the principal amount of the Notes redeemed, plus accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date, with the net
cash proceeds of one or more Equity Offerings; provided that:

          (1) at least 65% of the aggregate principal amount of Notes issued
     under this Indenture (excluding Notes held by the Company and its
     Subsidiaries) remains outstanding immediately after the occurrence of such
     redemption; and

          (2) notice of redemption is mailed within 60 days of the date of the
     closing of such Equity Offering.

     (b) On or after November 15, 2008, the Company may, at its option, redeem
all or a part of the Notes upon not less than 30 nor more than 60 days notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any, on
the Notes redeemed, to the applicable redemption date, if redeemed during the
twelve-month period beginning on November 15 of the years indicated below,
subject to the rights of the Holders of the Notes on the relevant record date
to receive interest on the relevant interest payment date that is on or prior
to the date fixed for redemption:

        Year                                                  Percentage
        ----                                                  ----------
        2008.................................................   104.375%
        2009.................................................   102.917%
        2010.................................................   101.458%
        2011 and thereafter..................................   100.000%

          (6) MANDATORY REDEMPTION.

     The Company will not be required to make mandatory redemption payments
with respect to the Notes.

                                     A2-3

<PAGE>

(7) REPURCHASE AT THE OPTION OF HOLDER.

         (a) If there is a Change of Control, each Holder will have the right
to require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of each Holder's Notes ("Change of Control Offer")
at a purchase price equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase (the "Change of Control Payment"). Within 30 days following
any Change of Control, the Company will mail a notice to each Holder setting
forth the procedures governing the Change of Control Offer as required by the
Indenture.

         (b) Any Net Proceeds from Asset Sales that are not applied or invested
as provided in Section 4.10 of the Indenture will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company will commence an 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 the Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (an "Asset Sale
Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes (including any Additional Notes) and other pari passu
Indebtedness 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 and Liquidated Damages thereon, 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) and other pari passu Indebtedness tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Restricted Subsidiary) may use such deficiency for any purpose not otherwise
prohibited by the Indenture. If the aggregate principal amount of Notes and
other pari passu Indebtedness surrendered by holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes and such other pari
passu Indebtedness to be purchased as set forth in Sections 3.02 and 3.03 of
the Indenture. Upon completion of such Asset Sale Offer, the amount of "Excess
Proceeds" shall be reset to zero. 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" attached to
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, 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 or discharge of the Indenture. 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

                                     A2-4

<PAGE>

     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 Subsidiary Guarantees, the Security Documents 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 Event of Default (other than a Default or an Event of Default
     in the payment of principal of, premium or Liquidated Damages, if any, or
     interest on the Notes, except a payment default resulting from an
     acceleration that has been rescinded), or compliance with any provision of
     the Indenture 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 Subsidiary Guarantees, the
     Security Documents 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 or any Guarantor's obligations to Holders of
     the Notes in case of a merger or consolidation, to make any change that
     would provide any additional rights or benefits to the Holders of the
     Notes or that does not adversely affect the legal rights under the
     Indenture of any such Holder, to comply with the requirements of the SEC
     in order to effect or maintain the qualification of the Indenture under
     the TIA, to conform the text of the Indenture, the Security Documents or
     the Notes to any provision of the "Description of Notes" Section of the
     Company's Offering Memorandum dated November 12, 2003, relating to the
     initial offering of the Notes, to the extent that such provision in that
     "Description of Notes" was intended to be a verbatim recitation of a
     provision of the Indenture, the Subsidiary Guarantees or the Notes; to add
     any additional assets to the Collateral; to reflect the grant of Liens on
     the Collateral for the benefit of an additional secured party, to the
     extent that such Indebtedness and the Lien securing such Indebtedness is
     permitted by the terms of the Indenture; to release Collateral from the
     Lien of the Indenture and the Security Documents when permitted or
     required by the Indenture or the Security Documents; or to allow any
     Guarantor to execute a supplemental indenture to the Indenture and/or a
     Subsidiary 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,
     if any, with respect to the Notes; (ii) default in payment when due of
     principal of or premium, if any, on the Notes when the same becomes due
     and payable at maturity, upon redemption (including in connection with an
     offer to purchase) or otherwise, (iii) default in the payment of principal
     of and interest on Notes required to be purchased pursuant to an offer to
     purchase as described under Section 4.10 and Section 4.15 of the Indenture
     (iv) failure by the Company to perform or comply with any of the
     provisions described under Section 5.01 of the Indenture; (v) failure by
     the Company for 60 days after notice to the Company by the Trustee or the
     Holders of at least 25% in principal amount of the Notes then outstanding
     voting as a single class to comply with certain other agreements in the
     Indenture, the Notes or the Security Documents; (vi) defaults under the
     terms of one or more instruments evidencing or securing Indebtedness of
     the Company or any of its Restricted Subsidiaries having an outstanding
     principal amount of $20.0 million or more individually or in the aggregate
     that has resulted in the acceleration of the payment of such Indebtedness
     or failure to pay principal when due at the Stated Maturity of any such
     Indebtedness; (vii) there shall have been rendered a final judgment or
     judgments (not subject to appeal) against the Company or any of its
     Restricted Subsidiaries in an amount of $10.0 million or more which
     remains undischarged or unstayed for a

                                     A2-5

<PAGE>

     period of 60 days after the date on which the right to appeal has expired;
     (viii) the denial or disaffirmation by the Company or any of its
     Restricted Subsidiaries, or any person acting on behalf of any of them, in
     writing, of any material obligation of the Company or any of its
     Restricted Subsidiaries set forth in or arising under any Security
     Documents; (ix) certain events of bankruptcy, insolvency or reorganization
     described in the Indenture with respect to the Company or any of its
     Restricted Subsidiaries that is a Significant Subsidiary or any group of
     Restricted Subsidiaries that, taken together, would constitute a
     Significant Subsidiary; (x) any Subsidiary Guarantee from a Significant
     Subsidiary, or any group of Restricted Subsidiaries that, taken together,
     would constitute a Significant Subsidiary, ceases to be in full force and
     effect or is declared null and void and unenforceable or is found to be
     invalid or a Guarantor denies in writing its liability under the
     Subsidiary Guarantee (other than by reason of a release of such Guarantor
     from the Subsidiary Guarantee in accordance with the terms of the
     indenture, the security documents and the Subsidiary Guarantee); and (xi)
     except as permitted by the Indenture, any Security Document or any Note
     Lien purported to be granted thereby on an asset or assets fails to
     constitute a valid and (to the extent required by the security documents)
     perfected Lien on any material part of the Collateral purported to be
     subject thereto. 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
     immediately, provided, that so long as the Credit Agreement shall be in
     full force and effect, if an Event of Default shall have occurred and be
     continuing (other than as specified under clause (ix) above), the Notes
     shall not become due and payable until the earlier to occur of (1) five
     Business Days following delivery of a written notice of such acceleration
     of the Notes to the agent under the Credit Agreement, if such Event of
     Default has not been cured prior to such fifth Business Day, and (2) the
     acceleration of any Indebtedness under the Credit Agreement..
     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.

          (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 any of the Guarantors, as
     such, will not have any liability for any obligations of the Company or
     such Guarantor under the Notes, the Subsidiary Guarantees or the Indenture
     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.

                                     A2-6

<PAGE>

          (15) LIEN RANKING. The Notes, the Subsidiary Guarantees and the other
     Note Obligations are secured by Note Liens upon the Collateral pursuant to
     the Security Documents. The Note Liens are subordinate in ranking to all
     current and future Priority Liens as set forth in Article 13 of the
     Indenture.

          (16) AUTHENTICATION. This Note will not be valid until authenticated
     by the manual signature of the Trustee or an authenticating agent.

          (17) 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).

          (18) 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 will have all the rights set forth in the
     Registration Rights Agreement dated as of November 21, 2003, among the
     Company, the Guarantors and the other parties named on the signature pages
     thereof or, in the case of Additional Notes, Holders of Restricted Global
     Notes and Restricted Definitive Notes will have the rights set forth in
     one or more registration rights agreements, if any, among the Company, the
     Guarantors and the other parties thereto, relating to rights given by the
     Company and the Guarantors to the purchasers of any Additional Notes
     (collectively, the "Registration Rights Agreement").

          (19) 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, the Registration Rights Agreement and/or any of
the Security Agreements. Requests may be made to:

Tekni-Plex, Inc.
201 Industrial Parkway
Somerville, New Jersey 08876

Attention:  Chief Financial Officer

                                     A2-7

<PAGE>

                              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).

                                     A2-9

<PAGE>

                     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)

Signature Guarantee*: ___________________________

*    Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

                                     A2-10

<PAGE>

          SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE

        The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or exchanges in part of another
other Restricted Global Note for an interest in this Regulation S Temporary
Global Note, have been made:

<TABLE>
                                                                    Principal Amount
                                                                   at maturity of this
                     Amount of decrease    Amount of increase in        Global Note         Signature of
                     in Principal Amount      Principal Amount        following such     authorized officer
                       at maturity of         at maturity of           decrease            of Trustee or
 Date of Exchange      this Global Note       this Global Note        (or increase)          Custodian
 ----------------    -------------------   ---------------------   -------------------   ------------------
<S>                   <C>                    <C>                    <C>                  <C>

</TABLE>

                                     A2-11

<PAGE>

                                                                      EXHIBIT B

                       FORM OF CERTIFICATE OF TRANSFER

Tekni-Plex, Inc.
260 N. Denton Tap Road Suite 150
Coppell, Texas 75019

HSBC Bank USA
452 Fifth Avenue
New York, NY 10018-2706
Telecopier No.:  (212) 525-1300

        Re:  8 3/4% Senior Secured Notes due 2013

        Reference is hereby made to the Indenture, dated as of November 21,
2003 (the "Indenture"), among Tekni-Plex, Inc. as issuer (the "Company"), the
Guarantors party thereto and HSBC Bank USA, 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 Restricted Definitive Note pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the 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
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 Restricted 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 Temporary Global Note, the Regulation S Permanent Global Note
or a Restricted 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 Securities
Act, (iii) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act and (iv) if the

                                      B-1

<PAGE>

proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). 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 Permanent Global Note, the Regulation S Temporary Global Note
and/or the Restricted 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 Restricted 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, Rule 903 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 Restricted 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

                                      B-2

<PAGE>

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.

     (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>

                     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>

                                                                      EXHIBIT C

                       FORM OF CERTIFICATE OF EXCHANGE

Tekni-Plex, Inc.
260 N. Denton Tap Road Suite 150
Coppell, Texas 75019

HSBC Bank USA
452 Fifth Avenue
New York, NY 10018-2706
Telecopier No.:  (212) 525-1300

        Re:  8 3/4% Senior Secured Notes due 2013

                           (CUSIP ____________)

        Reference is hereby made to the Indenture, dated as of November 21,
2003 (the "Indenture"), among Tekni-Plex, Inc. as issuer (the "Company"), the
Guarantors party thereto and HSBC Bank USA, 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 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>

       (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>

                                            By:_________________________________
                                               Name:
                                               Title:

Dated:  ______________________

                                      C-3

<PAGE>

                                                                      EXHIBIT D

                         FORM OF CERTIFICATE FROM
                 ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Tekni-Plex, Inc.
260 N. Denton Tap Road Suite 150
Coppell, Texas 75019

HSBC Bank USA
452 Fifth Avenue
New York, NY 10018-2706
Telecopier No.:  (212) 525-1300

        Re:  8 3/4% Senior Secured Notes due 2013

        Reference is hereby made to the Indenture, dated as of November 21,
2003 (the "Indenture"), among Tekni-Plex, Inc. as issuer (the "Company"), the
Guarantors party thereto and HSBC Bank USA, 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 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>

        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>

                                                                      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 15, 2003 (the "Indenture")
among Tekni-Plex, Inc. (the "Company"), the Guarantors party thereto and HSBC
Bank USA, as trustee (the "Trustee"), (a) the due and punctual payment of the
principal of, premium and Liquidated Damages, if any, and interest on, the
Notes, whether at maturity, by acceleration, redemption or otherwise, the due
and punctual payment of interest on overdue principal of and interest on the
Notes, if any, if lawful, 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 Subsidiary Guarantee and the Indenture are expressly set forth
in Article 11 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Subsidiary Guarantee.

        Capitalized terms used but not defined herein have the meanings given
to them in the Indenture.

                                                [NAME OF GUARANTOR(S)]

                                                By:_____________________________
                                                   Name:
                                                   Title:

                                      E-1

<PAGE>

                                                                      EXHIBIT F

                        [FORM OF SUPPLEMENTAL INDENTURE
                   TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

        SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, 200__, among __________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Tekni-Plex, Inc. (or its permitted successor), a
Delaware corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and HSBC Bank USA 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 21, 2003 providing
for the issuance an aggregate principal amount of $275,000,000 of 8 3/4% Senior
Secured Notes due 2013 plus Additional Notes (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 "Subsidiary 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 to
provide an unconditional Guarantee on the terms and subject to the conditions
set forth in the Subsidiary Guarantee and in this Indenture, including but not
limited to Article 11 hereof.

        4. 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 Subsidiary 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.

        5. 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.

        6. 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.

                                      F-1

<PAGE>

        7. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.

        8. 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.

                                      F-2

<PAGE>

        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:  _______________, 20__

                                                [GUARANTEEING SUBSIDIARY]

                                                By: ____________________________
                                                    Name:
                                                    Title:

                                                Tekni-Plex, Inc.

                                                By: ____________________________
                                                    Name:
                                                    Title:

                                                [EXISTING GUARANTORS]

                                                By: ____________________________
                                                    Name:
                                                    Title:

                                                HSBC Bank USA,
                                                  as Trustee

                                                By: ____________________________
                                                    Authorized Signatory

                                      F-3

<PAGE>

                                                                      EXHIBIT G

                   FORM OF SECOND LIEN SECURITY AGREEMENT

                                      G-1

<PAGE>

                                                                      EXHIBIT H

                    FORM OF SECOND LIEN PLEDGE AGREEMENT

                                      H-1

<PAGE>

                                                                      EXHIBIT I

                 FORM OF SECOND LIEN SHARE PLEDGE AGREEMENT

                                      I-1

<PAGE>

                                                                      EXHIBIT J

               FORM OF SECOND LIEN COPYRIGHT SECURITY AGREEMENT

                                      J-1

<PAGE>

                                                                      EXHIBIT L

                FORM OF SECOND LIEN PATENT SECURITY AGREEMENT

                                      K-1

<PAGE>

                                                                      EXHIBIT L

                             FORM OF MORTGAGES

                                      L-1

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