Document:

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                                                                     Exhibit 4.1

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                       CORPORACION DURANGO, S.A. DE C.V.,

                                     Issuer

                                       and

                            THE CHASE MANHATTAN BANK

                                   as Trustee

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

                                    INDENTURE

                              Dated as of ___, 2001

                           ____% Senior Notes Due 2008

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                                TABLE OF CONTENTS

                                                                           Page

Parties......................................................................1
Recitals of the Company......................................................1

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS
 OF GENERAL APPLICATION

SECTION 101.   Definitions...................................................1
SECTION 102.   Compliance Certificates......................................29
SECTION 103.   Form of Documents Delivered to Trustee.......................30
SECTION 104.   Acts of Holders; Record Dates................................31
SECTION 105.   Notices, Etc., to Trustee and Company........................32
SECTION 106.   Notice to Holders; Waiver....................................32
SECTION 107.   Conflict with Trust Indenture Act............................32
SECTION 108.   Effect of Headings and Table of Contents.....................33
SECTION 109.   Successors and Assigns.......................................33
SECTION 110.   Separability Clause..........................................33
SECTION 111.   Benefits of Indenture........................................33
SECTION 112.   Governing Law................................................33
SECTION 113.   Legal Holidays...............................................33
SECTION 114.   Consent to Service; Jurisdiction.............................33
SECTION 115.   Language of Notices, Etc.....................................34

ARTICLE TWO SECURITY FORMS

SECTION 201.   Forms Generally..............................................34
SECTION 202.   Form of Face of Security.....................................35
SECTION 203.   Form of Reverse of Security..................................36
SECTION 204.   Form of Trustee's Certificate of Authentication..............45
SECTION 205.   Book-Entry Notes.............................................45

ARTICLE THREE THE SECURITIES

SECTION 301.   Title and Terms..............................................46
SECTION 302.   Denominations................................................47
SECTION 303.   Execution, Authentication, Delivery and Dating...............47
SECTION 304.   Temporary Securities.........................................48
SECTION 305.   Registration of Transfer and Exchange........................48
SECTION 306.   Mutilated, Destroyed, Lost and Stolen Securities.............49
SECTION 307.   Payment of Interest; Interest Rights Preserved...............50
SECTION 308.   Persons Deemed Owners........................................51
SECTION 309.   Cancellation.................................................51
SECTION 310.   Computation of Interest......................................51
SECTION 311.   CUSIP Numbers................................................51
SECTION 312.   Issuance of Additional Securities............................51
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ARTICLE FOUR SATISFACTION AND DISCHARGE

SECTION 401.   Satisfaction and Discharge of Indenture......................52
SECTION 402.   Application of Trust Money...................................53

ARTICLE FIVE REMEDIES

SECTION 501.   Events of Default............................................53
SECTION 502.   Acceleration of Maturity; Rescission and Annulment...........54
SECTION 503.   Collection of Indebtedness and Suits for
                  Enforcement by Trustee....................................55
SECTION 504.   Trustee May File Proofs of Claim.............................55
SECTION 505.   Trustee May Enforce Claims Without Possession
                 of Securities..............................................56
SECTION 506.   Application of Money Collected...............................56
SECTION 507.   Limitation on Suits..........................................56
SECTION 508.   Unconditional Right of Holders to Receive
                 Principal and Interest.....................................57
SECTION 509.   Restoration of Rights and Remedies...........................57
SECTION 510.   Rights and Remedies Cumulative...............................57
SECTION 511.   Delay or Omission Not Waiver.................................58
SECTION 512.   Control by Holders...........................................58
SECTION 513.   Waiver of Past Defaults......................................58
SECTION 514.   Undertaking for Costs........................................59
SECTION 515.   Waiver of Stay or Extension Laws.............................59

ARTICLE SIX THE TRUSTEE

SECTION 601.   Certain Duties and Responsibilities..........................59
SECTION 602.   Notice of Defaults...........................................59
SECTION 603.   Certain Rights of Trustee....................................60
SECTION 604.   Not Responsible for Recitals or Issuance
                 of Securities..............................................61
SECTION 605.   May Hold Securities..........................................61
SECTION 606.   Money Held in Trust..........................................61
SECTION 607.   Compensation and Reimbursement...............................61
SECTION 608.   Disqualification; Conflicting Interests......................62
SECTION 609.   Corporate Trustee Required; Eligibility......................62
SECTION 610.   Resignation and Removal; Appointment of
                 Successor..................................................62
SECTION 611.   Acceptance of Appointment by Successor.......................63
SECTION 612.   Merger, Conversion, Consolidation or
                 Succession to Business.....................................64
SECTION 613.   Preferential Collection of Claims
                 Against Company............................................64

ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.   Company to Furnish Trustee Names and
                 Addresses of Holders.......................................64
SECTION 702.   Preservation of Information; Communications to
                 Holders....................................................64
SECTION 703.   Reports by Trustee...........................................65
SECTION 704.   Reports by Company...........................................65
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ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER
 OR LEASE

SECTION 801.   Company May Consolidate, Etc., Only on
                 Certain Terms..............................................65
SECTION 802.   Successor Substituted........................................66

ARTICLE NINE SUPPLEMENTAL INDENTURES

SECTION 901.   Supplemental Indentures without Consent
                 of Holders.................................................67
SECTION 902.   Supplemental Indentures with Consent of Holders..............67
SECTION 903.   Execution of Supplemental Indentures.........................68
SECTION 904.   Effect of Supplemental Indentures............................68
SECTION 905.   Conformity with Trust Indenture Act..........................69
SECTION 906.   Reference in Securities to Supplemental Indentures...........69
SECTION 907.   Notice of Supplemental Indentures............................69

ARTICLE TEN COVENANTS

SECTION 1001.  Payment of Principal and Interest............................69
SECTION 1002.  Maintenance of Office or Agency..............................69
SECTION 1003.  Money for Security Payments to Be Held in Trust..............70
SECTION 1004.  Statement by Officers as to Default..........................71
SECTION 1005.  Existence....................................................71
SECTION 1006.  Maintenance of Properties....................................71
SECTION 1007.  Payment of Taxes and Other Claims............................71
SECTION 1008.  Limitation on Indebtedness...................................72
SECTION 1009.  Limitation on Restricted Payments............................74
SECTION 1010.  Limitation on Dividend and Other Payment
                Restrictions Affecting Restricted Subsidiaries..............76
SECTION 1011.  Limitation on the Issuance and Sale of Capital
                 Stock of Restricted Subsidiaries...........................77
SECTION 1012.  Limitation on Issuances of Guarantees by Restricted
                 Subsidiaries...............................................78
SECTION 1013.  Limitation on Transactions with Shareholders
                 and Affiliates.............................................79
SECTION 1014.  Limitation on Liens..........................................80
SECTION 1015.  Limitation on Sale-Leaseback Transactions....................80
SECTION 1016.  Limitation on Asset Sales....................................81
SECTION 1017.  Change of Control............................................82
SECTION 1018.  Requirements with respect to the Collateral..................82
SECTION 1019.  Indemnification of Judgment Currency.........................82
SECTION 1020.  Payments of Additional Amounts...............................83
SECTION 1021.  Provision of Financial Information...........................85
SECTION 1022.  Waiver of Certain Covenants..................................86

ARTICLE ELEVEN REDEMPTION OF SECURITIES

SECTION 1101.  Right of Redemption..........................................86
SECTION 1102.  Election to Redeem; Notice to Trustee........................87
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SECTION 1103.  Notice of Redemption.........................................87
SECTION 1104.  Deposit of Redemption Price..................................88
SECTION 1105.  Securities Payable on Redemption Date........................89

ARTICLE TWELVE DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1201.  Defeasance and Discharge of the Indenture....................89
SECTION 1202.  Covenant Defeasance..........................................91
SECTION 1203.  Deposited Money and Government Securities to Be
                 Held in Trust;  Other Miscellaneous Provisions.............92
SECTION 1204.  Reinstatement................................................92
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          INDENTURE,   dated  as  of  _____________  2001,  between  CORPORACION
DURANGO,  S.A. de C.V., a variable capital company  (sociedad anonima de capital
variable)  organized  under the laws of the United Mexican States (herein called
the  "Company"),  having  its  principal  office at Torre  Corporativa  Durango,
Potasio 150, Ciudad Industrial,  Durango,  Durango, United Mexican States 34220,
and THE CHASE MANHATTAN BANK, a banking  corporation duly organized and existing
under the laws of New York, as Trustee (herein called the "Trustee").

                             RECITALS OF THE COMPANY

          The Company has duly  authorized  the  execution  and delivery of this
Indenture  to provide  for the  initial  issuance  of  US$___________  aggregate
principal  amount of the Company's ___% Senior Notes due 2008 (herein called the
"Securities") issuable as provided in this Indenture.

          All things  necessary  to make the  Securities,  when  executed by the
Company  and  authenticated  and  delivered  hereunder  and duly  issued  by the
Company,  the valid  obligations  of the Company,  and to make this  Indenture a
valid  agreement of the Company,  in accordance  with their and its terms,  have
been done.

          This Indenture is subject to, and shall be governed by, the provisions
of the Trust  Indenture Act of 1939, as amended,  that are required to be a part
of and to govern indentures qualified under the Trust Indenture Act.

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

          For and in  consideration  of the  premises  and the  purchase  of the
Securities  by the Holders  thereof,  it is mutually  agreed,  for the equal and
proportionate benefit of all Holders of the Securities, as follows:

                                   ARTICLE ONE
             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101.     Definitions.

          For all  purposes of this  Indenture,  except as  otherwise  expressly
provided or unless the context otherwise requires:

          (a) the terms  defined in this Article  have the meanings  assigned to
     them in this Article and include the plural as well as the singular;

          (b) all  other  terms  used  herein  which  are  defined  in the Trust
     Indenture Act, either directly or by reference  therein,  have the meanings
     assigned to them therein;

          (c) all  accounting  terms  not  otherwise  defined  herein  have  the
     meanings assigned to them in accordance with generally accepted  accounting
     principles in Mexico,  and, except as otherwise herein expressly  provided,
     the term "generally accepted
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     accounting   principles"  with  respect  to  any  computation  required  or
     permitted hereunder shall mean such accounting  principles as are generally
     accepted in Mexico and  consistently  applied by the Company at the date of
     such computation; and

          (d) the words  "herein",  "hereof" and  "hereunder" and other words of
     similar import refer to this Indenture as a whole and not to any particular
     Article, Section or other subdivision.

          "ACM" means  Administradora  Corporativa  y Mercantil  S.A. de C.V., a
Mexican corporation wholly owned by the Existing Shareholders,  whose only asset
is its 28% equity interest in Grupo Industrial Durango S.A. de C.V.

          "ACM Merger"  means the merger of ACM with and into the Company,  with
the Company as the surviving corporation.

          "Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted  Subsidiary or assumed in connection  with
an Asset  Acquisition by a Restricted  Subsidiary and not Incurred in connection
with, or in  anticipation  of, such Person  becoming a Restricted  Subsidiary or
such Asset Acquisition.

          "Act", when used with respect to any Holder, has the meaning specified
in Section 104.

          "Additional  Amounts" shall have the meaning  assigned to such term in
Section 1020.

          "Adjusted   Consolidated  Net  Income"  means,  for  any  period,  the
aggregate  net income (or loss) of the Company and the  Restricted  Subsidiaries
for such period  determined in conformity  with Mexican GAAP;  provided that the
following items shall be excluded in computing Adjusted  Consolidated Net Income
(without duplication):

          (a) the net income (or loss) of any  Person  that is not a  Restricted
Subsidiary,   except  to  the  extent  of  the  amount  of  dividends  or  other
distributions  actually paid to the Company or any of the Subsidiaries or all or
substantially  all of the property and assets of such Person are acquired by the
Company or any of the Restricted Subsidiaries;

          (b) solely for the purposes of  calculating  the amount of  Restricted
Payments that may be made pursuant to subclause  (d)(iii) of the first paragraph
of Section 1009 (and in such case, except to the extent  includable  pursuant to
subclause  (a) of this  definition),  the net  income  (or  loss) of any  Person
accrued  prior to the date it becomes a Restricted  Subsidiary or is merged into
or  consolidated  with  the  Company  or  any  of  the  Subsidiaries  or  all or
substantially  all of the property and assets of such Person are acquired by the
Company or any of the Subsidiaries;

          (c) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar  distributions by such Restricted
Subsidiary  of such net income is not at the time  permitted by the operation of
the terms of its charter or any agreement,  instrument, judgment, decree, order,
statute,   rule  or  governmental   regulation

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applicable to such Restricted Subsidiary,  except to the extent of the amount of
dividends  or other  distributions  actually  paid by the  Company or any of the
Restricted Subsidiaries;

          (d) any gains or losses (on an after-tax basis)  attributable to sales
of assets  outside  the  ordinary  course of  business  of the  Company  and the
Restricted Subsidiaries; and

          (e) all extraordinary gains and extraordinary losses.

          "Adjusted  Consolidated Net Tangible Assets" means the total amount of
assets  of  the  Company  and  the  Restricted   Subsidiaries  (less  applicable
depreciation,  amortization  and  other  valuation  reserves),  after  deducting
therefrom:

          (a)  all  current  liabilities  of  the  Company  and  the  Restricted
Subsidiaries (excluding intercompany items) and

          (b) all goodwill, trade names, trademarks,  patents,  unamortized debt
discount and expense and other like intangibles,

all as set forth on the most recent  quarterly  or annual  consolidated  balance
sheet of the Company and the  Restricted  Subsidiaries,  prepared in  conformity
with Mexican GAAP and filed with the Commission or provided to the Trustee.

          "Affiliate" means, as applied to any Person, any other Person directly
or indirectly  controlling,  controlled  by, or under direct or indirect  common
control  with,  such  Person.   For  purposes  of  this  definition,   "control"
(including,  with correlative meanings, the terms "controlling," "controlled by"
and  "under  common  control  with"),  as  applied  to  any  Person,  means  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, by contract or otherwise.

          "Asset Acquisition" means:

          (a) an investment by the Company or any of the Restricted Subsidiaries
in any other  Person  pursuant to which such Person  shall  become a  Restricted
Subsidiary  or shall be merged into or  consolidated  with the Company or any of
the Restricted  Subsidiaries;  provided that such Person's  primary  business is
related, ancillary or complementary to the Pulp and Paper Business, or

          (b)  an   acquisition   by  the  Company  or  any  of  the  Restricted
Subsidiaries  of the property and assets of any Person other than the Company or
any  of the  Restricted  Subsidiaries  that  constitute  substantially  all of a
division or line of business of such  Person;  provided  that the  property  and
assets acquired are related,  ancillary or  complementary  to the Pulp and Paper
Business.

          "Asset Disposition" means the sale or other disposition by the Company
or any of the  Restricted  Subsidiaries  (other  than to the  Company or another
Restricted Subsidiary) of:

          (a) all or  substantially  all of the Capital Stock of any  Restricted
Subsidiary or

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          (b) all or substantially  all of the assets that constitute a division
or line of business of the Company or any of the Restricted Subsidiaries.

          "Asset Sale" means any sale, transfer or other disposition  (including
by  way  of  merger,   consolidation  or  sale-leaseback   transaction)  in  one
transaction  or a series of related  transactions  by the  Company or any of the
Restricted  Subsidiaries  to any  Person  other  than the  Company or any of the
Restricted Subsidiaries of:

          (a) all or any of the  Capital  Stock  of any  Restricted  Subsidiary,
other than directors'  qualifying shares or shares required by applicable law to
be held by a Person  other than the  Company or a  Restricted  Subsidiary  or de
minimis shares of a Restricted Subsidiary required to be owned by another Person
under  applicable  law in  order  to  maintain  the  corporate  status  of  such
Restricted Subsidiary,

          (b)  all or  substantially  all  of  the  property  and  assets  of an
operating unit or business of the Company or any of the Restricted  Subsidiaries
or

          (c) any other  property  and assets  (other than the Capital  Stock or
other  Investment in an  Unrestricted  Subsidiary)  of the Company or any of the
Restricted  Subsidiaries  outside the ordinary course of business of the Company
or such Restricted Subsidiary and,

in each case, that is not governed by the provisions of the Indenture applicable
to mergers,  consolidations  and sales of assets of the Company;  provided  that
"Asset Sale" shall not include:

          (i) sales or other  dispositions  of inventory,  receivables and other
current assets,

          (ii) sales,  transfers or other dispositions of assets  constituting a
Permitted  Investment or Restricted  Payment  permitted to be made under Section
1009,

          (iii)  sales,  transfers or other  dispositions  of assets with a fair
market  value not in  excess  of $10  million  in any  transaction  or series of
related transactions,

          (iv)  the  sale  or  other  disposition  of  cash  of  Temporary  Cash
Investments,

          (v)  any  sale,  transfer,  assignment  or  other  disposition  of any
property  equipment  that has become  damaged,  worn out,  obsolete or otherwise
unsuitable  for use in  connection  with  the  business  of the  Company  or the
Restricted Subsidiaries, or

          (vi) the sale, conveyance or other transfer of accounts receivable and
related assets customarily  transferred in an asset  securitization  transaction
involving accounts receivable to a Receivables Subsidiary,  in connection with a
Qualified Receivables Transaction.

          "Average Life" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing:

          (a) the sum of the products of

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          (i) the number of years from such date of  determination  to the dates
of each successive scheduled principal payment of such debt security and

          (ii)  the amount of each such principal payment by

          (b) the sum of all such principal payments.

          "Board of  Directors"  means the Board of  Directors of the Company or
any  committee  of such Board of  Directors  duly  authorized  to act under this
Indenture.

          "Board  Resolution"  means a copy  of a  resolution  certified  by the
Secretary or an Assistant  Secretary of the Company to have been duly adopted by
the Board of  Directors  and to be in full  force and effect on the date of such
certification, and delivered to the Trustee.

          "Business Day" means any day except a Saturday, Sunday or other day on
which  commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.

          "Capital Stock" means, with respect to any Person, any and all shares,
interests,  participations or other  equivalents  (however  designated,  whether
voting or  non-voting)  in equity of such  Person,  whether  outstanding  on the
Closing Date or issued thereafter,  including,  without  limitation,  all Common
Stock and Preferred Stock.

          "Capitalized  Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental  obligations of such Person as lessee,  in conformity with Mexican
GAAP, is required to be capitalized on the balance sheet of such Person.

          "Capitalized  Lease Obligations" means the discounted present value of
the rental obligations under a Capitalized Lease.

          "Change of Control" means such time as:

          (a) (i) a Person or any Persons acting together which would constitute
a "group" (a  "Group")  for  purposes  of  Sections  13(d) and  14(d)(2)  of the
Exchange Act, or any successor  provision thereto,  together with any Affiliates
or Related  Persons  thereof  (other than any Person or Group  controlled by the
Existing  Shareholders together with any Affiliates or Related Persons thereof),
has become the beneficial  owner, by way of purchase,  merger,  consolidation or
otherwise, of 35% or more of Voting Stock of the Company and (ii) such Person or
Group (together with any Affiliates or Related  Persons  thereof) has become the
beneficial  owner, by way of purchase,  merger,  consolidation or otherwise of a
greater percentage of Voting Stock of the Company than that held by the Existing
Shareholders (together with Affiliates or Related Persons thereof); or

          (b) at any time during any consecutive two-year period individuals who
at the beginning of such period were members of the Board of Directors (together
with any new  directors  whose  election  by such  Board of  Directors  or whose
nomination  for  election by the  shareholders  of the Company was approved by a
vote of a majority of directors  then still in

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office  who either  were  directors  at the  beginning  of such  period or whose
election or nomination  for election was  previously so approved)  cease for any
reason to constitute a majority of the Board of Directors then in office.

          "Closing  Date" means the date on which the  Securities are originally
issued under the Indenture.

          "Collateral" means an unsubordinated  promissory note issued by GID to
the Company on the Closing Date in an initial  principal amount that is at least
equal  to  the  principal  amount  of  Securities  outstanding,  as  amended  or
supplemented from time to time.

          "Commission" means the Securities and Exchange Commission.

          "Commodity Agreement" means any forward commodity contract,  commodity
swap  agreement,  commodity  option  agreement  or other  similar  agreement  or
arrangement.

          "Common  Stock" of any Person means  Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation,  dissolution or winding-up
of such Person, to shares of Capital Stock of any other class of such Person.

          "Company" has the meaning specified in the Preamble of this Indenture.

          "Company  Request" or "Company Order" means a written request or order
signed in the name of the  Company  (a) by the  Chairman  of the  Board,  a Vice
Chairman of the Board,  the  President or a Vice  President and (b) by the Chief
Financial Officer, the Comptroller, the Treasurer or an Assistant Treasurer, the
Secretary or an assistant  Secretary,  and  delivered to the Trustee;  provided,
however,  that  such  written  request  or order may be signed by any two of the
officers or directors  listed in clause (a) above in lieu of being signed by one
of such officers or directors  listed in such clause (a) and one of the officers
listed in clause (b) above.

          "Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income  for such  period  plus,  to the  extent  such  amount  was  deducted  in
calculating such Adjusted Consolidated Net Income:

          (a)  Consolidated Interest Expense,

          (b)  income and asset taxes,

          (c)  depreciation expense,

          (d)  amortization expense and

          (e)  all other  non-cash  items  reducing  Adjusted  Consolidated  Net
               Income  (other than items that will require cash payments and for
               which an accrual or reserve is, or is required by Mexican GAAP to
               be,  made),   less  all  non-cash   items   increasing   Adjusted
               Consolidated  Net Income,  all as  determined  on a  consolidated
               basis  for  the  Company  and  the  Restricted   Subsidiaries  in
               conformity with Mexican GAAP.

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          "Consolidated  Interest Expense" means, for any period,  the aggregate
amount of interest in respect of Indebtedness  (including,  without  limitation,
amortization  of original  issue discount on any  Indebtedness  and the interest
portion of any deferred payment obligation; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers'  acceptance
financing; the net costs associated with Interest Rate Agreements;  and interest
paid (by the  Company  or any of the  Restricted  Subsidiaries  with  respect to
Indebtedness  that  is  Guaranteed  or  secured  by  the  Company  or any of the
Restricted Subsidiaries to the extent not recovered from the underlying obligor)
and the  component of rentals  allocable  to interest in respect of  Capitalized
Lease Obligations paid,  accrued or scheduled to be paid or to be accrued by the
Company and the Restricted Subsidiaries during such period; excluding, however:

          (a) any amount of such  interest of any  Restricted  Subsidiary if the
net income of such  Restricted  Subsidiary  is  excluded in the  calculation  of
Adjusted Consolidated Net Income pursuant to the definition thereof (but only in
the same proportion as the net income of such Restricted  Subsidiary is excluded
from the  calculation  of  Adjusted  Consolidated  Net  Income  pursuant  to the
definition thereof) and

          (b) any  premiums,  fees and expenses (and any  amortization  thereof)
payable  in  connection   with  the  offering  of  the   Securities   and  other
Indebtedness,  all as determined on a consolidated  basis  (without  taking into
account Unrestricted Subsidiaries) in conformity with Mexican GAAP.

          "Consolidated   Net  Worth"  means,  at  any  date  of  determination,
stockholders'  equity as set forth on the most recently  available  quarterly or
annual consolidated balance sheet of the Company and the Restricted Subsidiaries
(which  shall be as of a date not  more  than 30 days  prior to the date of such
computation,  and which shall not take into account Unrestricted  Subsidiaries),
plus, to the extent not included,  any Preferred Stock of the Company,  less any
amounts  attributable to Disqualified  Stock or any equity security  convertible
into or  exchangeable  for  Indebtedness,  the cost of  treasury  stock  and the
principal  amount  of any  promissory  notes  receivable  from  the  sale of the
Company's  Capital  Stock  or  the  Capital  Stock  of  any  of  its  Restricted
Subsidiaries, each item to be determined in conformity with Mexican GAAP.

          "Consolidated Senior  Indebtedness"  means,  without duplication,  (a)
Indebtedness of the Restricted Subsidiaries, except for Indebtedness owed to the
Company or any other  Restricted  Subsidiary,  and (b) any  Indebtedness  of the
Company  guaranteed  by  any  of  the  Restricted  Subsidiaries,   and  (c)  any
Indebtedness of the Company secured by a Lien.

          "Consolidated  Senior Indebtedness  Interest Coverage Ratio" means, on
any Transaction Date, the ratio of:

          (a)  the aggregate amount of Consolidated  EBITDA for the Four Quarter
               Period prior to such Transaction Date to

          (b)  the aggregate  Consolidated Senior Indebtedness  Interest Expense
               during such Four Quarter Period.

          In making the foregoing calculation,

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     (i) pro forma effect shall be given to any Consolidated Senior Indebtedness
     Incurred or repaid,  repurchased,  defeased or otherwise  discharged during
     the Reference Period (other than Consolidated Senior Indebtedness  Incurred
     or repaid under a revolving credit or similar  arrangement to the extent of
     the commitment  thereunder (or under any  predecessor  revolving  credit or
     similar  arrangement) in effect on the last day of such Four Quarter Period
     unless any portion of such Consolidated  Senior  Indebtedness is projected,
     in the reasonable judgment of the senior management,  to remain outstanding
     for a period  in  excess  of 12  months  from  the  date of the  Incurrence
     thereof), in each case as if such Consolidated Senior Indebtedness had been
     Incurred or repaid,  repurchased,  defeased or otherwise  discharged on the
     first day of such Reference Period;

     (ii)  Consolidated  Senior  Indebtedness  Interest Expense  attributable to
     interest on any Consolidated Senior Indebtedness (whether existing or being
     Incurred)  computed on a pro forma  basis and  bearing a floating  interest
     rate shall be  computed  as if the rate in effect on the  Transaction  Date
     (taking  into  account  any  Interest  Rate  Agreement  applicable  to such
     Consolidated  Senior  Indebtedness  if such Interest  Rate  Agreement has a
     remaining term in excess of 12 months or, if shorter, at least equal to the
     remaining term of such  Indebtedness)  had been the applicable rate for the
     entire period;

     (iii)  pro  forma  effect  shall be given to Asset  Dispositions  and Asset
     Acquisitions  (including  giving  pro forma  effect to the  application  of
     proceeds of any Asset  Disposition) that occur during such Reference Period
     as if they had occurred and such proceeds had been applied on the first day
     of such Reference Period; and

     (iv) pro  forma  effect  shall be given  to asset  dispositions  and  asset
     acquisitions  (including  giving  pro forma  effect to the  application  of
     proceeds of any asset  disposition)  that have been made by any Person that
     has become a  Restricted  Subsidiary  or has been  merged  with or into the
     Company or any Restricted  Subsidiary during such Reference Period and that
     would have constituted  Asset  Dispositions or Asset  Acquisitions had such
     transactions  occurred  when such Person was a Restricted  Subsidiary as if
     such asset  dispositions or asset  acquisitions were Asset  Dispositions or
     Asset Acquisitions that occurred on the first day of such Reference Period;

provided  that to the extent that  subclauses  (iii) or (iv) of this  definition
requires  that pro  forma  effect  be given  to an  Asset  Acquisition  or Asset
Disposition, such pro forma calculation shall be based upon the four full fiscal
quarters  immediately  preceding the Transaction Date of the Person, or division
or line of  business of the  Person,  that is  acquired  or  disposed  for which
financial information is available.

          "Consolidated  Senior  Indebtedness  Interest  Expense" means, for any
period,  the  aggregate  amount of  interest in respect of  Consolidated  Senior
Indebtedness  (including,  without  limitation,  amortization  of original issue
discount on any Consolidated Senior Indebtedness and the interest portion of any
deferred  payment  obligation);  all  commissions,  discounts and other

                                       8
<PAGE>

fees and charges owed with respect to Consolidated Senior Indebtedness; interest
paid (by the  Company  or any of the  Restricted  Subsidiaries  with  respect to
Consolidated Senior Indebtedness that is Guaranteed or secured by the Company or
any of the  Restricted  Subsidiaries  to  the  extent  not  recovered  from  the
underlying  obligor);  and the  component  of rentals  allocable  to interest in
respect of Capitalized Lease  Obligations paid,  accrued or scheduled to be paid
or to be accrued by the  Company  and the  Restricted  Subsidiaries  during such
period  but only to the  extent  that such  Capitalized  Lease  Obligations  are
Consolidated Senior Indebtedness; excluding, however any amount of such interest
of any Restricted  Subsidiary if the net income of such Restricted Subsidiary is
excluded in the  calculation  of Adjusted  Consolidated  Net Income  pursuant to
clause (c) of the definition thereof (but only in the same proportion as the net
income  of such  Restricted  Subsidiary  is  excluded  from the  calculation  of
Adjusted  Consolidated  Net  Income  pursuant  to clause  (c) of the  definition
thereof).

          "Corporate  Trust Office" means the office of the Trustee at which the
corporate  trust  business of the Trustee  shall,  at any  particular  time,  be
principally  administered,  which  office  is,  at the  date of this  Indenture,
located at 450 West 33rd Street, 10th Floor, New York, NY 10001-2697.

          "Covenant  Defeasance"  shall have the  meaning  specified  in Section
1203.

          "Currency  Agreement"  means any foreign exchange  contract,  currency
swap agreement, currency option or other similar agreement or arrangement.

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

          "Defaulted Interest" has the meaning specified in Section 307.

          "Defeasance" shall have the meaning specified in Section 1202.

          "Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is:

          (a)  required  to be  redeemed  prior to the  Stated  Maturity  of the
Securities,

          (b)  redeemable at the option of the holder of such class or series of
Capital Stock at any time prior to the Stated Maturity of the Securities or

          (c) convertible  into or exchangeable for Capital Stock referred to in
clause (a) or (b) above or Indebtedness having a scheduled maturity prior to the
Stated Maturity of the Securities;

provided that any Capital Stock that would not constitute Disqualified Stock but
for provisions  thereof giving holders  thereof the right to require such Person
to  repurchase  or redeem such Capital  Stock upon the  occurrence  of an "asset
sale" or "change of  control"  occurring  prior to the  Stated  Maturity  of the
Securities  shall  not  constitute  Disqualified  Stock if the  "asset  sale" or
"change of control"  provisions  applicable  to such  Capital  Stock are no more
favorable to the holders of such Capital  Stock than the  provisions  of Section
1016 and Section 1017 and such

                                       9
<PAGE>

Capital  Stock  specifically  provides  that such Person will not  repurchase or
redeem  any  such  stock  pursuant  to such  provision  prior  to the  Company's
repurchase  of such  Securities  as are required to be  repurchased  pursuant to
Section 1016 and Section 1017.

          "Depositary" has the meaning specified in Section 205.

          "DTC" shall have the meaning specified in Section 205.

          "Event of Default" shall have the meaning specified in Section 501.

          "Excess  Proceeds"  shall have the  meaning  assigned  to such term in
Section 1016.

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

          "Existing  Stockholders" means (a) Ing. Miguel Rincon, Dr. Jose Rincon
and Sr. Jesus Rincon and members of their  immediate  families and their estates
and heirs and (b) any trust  established  for the  benefit of, or any company or
other entity  controlled by, one or more of those Persons,  and any Successor or
Affiliate thereof.

          "fair  market  value"  means  the  price  that  would  be  paid  in an
arm's-length  transaction  between a willing  seller under no compulsion to sell
and a willing  buyer under no  compulsion to buy, as determined in good faith by
the Board of Directors,  whose determination shall be conclusive if evidenced by
a Board Resolution.

          "Four Quarter Period" means the then most recent four fiscal quarters.

          "GID" shall mean Grupo Industrial Durango, S.A. de C.V.

          "GID Notes" means the 12 5/8% notes due 2003 of GID.

          "GID Refinancing" means the issuance of Indebtedness by the Company to
refinance any other  Indebtedness of GID, provided that any Indebtedness  issued
by the Company  subsequent  to the Pledge  Release  Date will not be included in
this definition.

          "Global Notes" has the meaning provided in Section 205.

          "Group"  has the  meaning  specified  in the  definition  of Change of
Control provided in this Section 101.

          "Government Securities" means direct obligations of, obligations fully
guaranteed by, or participants in pools  consisting  solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee  or  obligations  the full faith and  credit of the  United  States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.

          "Guarantee"  means any  obligation,  contingent or  otherwise,  of any
Person directly or indirectly  guaranteeing  (whether pursuant to a guaranty,  a
fianza,  an aval or

                                       10
<PAGE>

otherwise)  any  Indebtedness  of any other  Person and,  without  limiting  the
generality of the foregoing, any obligation,  direct or indirect,  contingent or
otherwise, of such Person:

          (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by virtue of
partnership  arrangements,  or by agreements to keep-well,  to purchase  assets,
goods,  securities  or  services  (unless  such  purchase  arrangements  are  on
arm's-length terms and are entered into in the ordinary course of business),  to
take-or-pay, or to maintain financial statement conditions or otherwise) or

          (b) entered  into for  purposes  of  assuring in any other  manner the
obligee of such  Indebtedness  of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part);

provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business.  The term  "Guarantee"  used as a
verb has a corresponding meaning.

          "Holder"  means a Person in whose name a Security is registered in the
Note Register.

          "Incur" means,  with respect to any  Indebtedness,  to incur,  create,
issue,  assume,  Guarantee or otherwise become liable for or with respect to, or
become  responsible  for,  the  payment  of,  contingently  or  otherwise,  such
Indebtedness,  including an "Incurrence" of Acquired Indebtedness; provided that
neither the accrual of interest  nor the  accretion of original  issue  discount
shall be considered an Incurrence of Indebtedness.

          "Indebtedness"  means,  with  respect  to any  Person  at any  date of
determination (without duplication):

          (a) all indebtedness of such Person for borrowed money;

          (b) all  obligations  of such Person  evidenced by bonds,  debentures,
notes or other similar instruments;

          (c) all  obligations of such Person in respect of letters of credit or
other similar  instruments  (including  reimbursement  obligations  with respect
thereto, but excluding  obligations with respect to letters of credit (including
trade letters of credit) securing obligations (other than obligations  described
in (a) or (b)  above or (e),  (f) or (g)  below)  entered  into in the  ordinary
course of business  of such Person to the extent such  letters of credit are not
drawn upon or, if drawn upon,  to the extent such drawing is reimbursed no later
than the third  business  day  following  receipt by such Person of a demand for
reimbursement);

          (d) all  obligations  of such  Person to pay the  deferred  and unpaid
purchase  price of property or services,  which  purchase price is due more than
six months after the date of placing such property in service or taking delivery
and title thereto or the completion of such services, excluding Trade Payables;

                                       11
<PAGE>

          (e) all Capitalized Lease Obligations;

          (f) all  Indebtedness  of other Persons secured by a Lien on any asset
of such  Person,  whether or not such  Indebtedness  is assumed by such  Person;
provided that the amount of such Indebtedness shall be the lesser of:

          (i) the fair market value of such asset at such date of  determination
and

          (ii) the amount of such Indebtedness;

          (g) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person; and

          (h)  to  the  extent  not  otherwise   included  in  this  definition,
obligations under Commodity  Agreements,  Currency  Agreements and Interest Rate
Agreements (other than Commodity  Agreements,  Currency  Agreements and Interest
Rate  Agreements  designed  solely to  protect  the  Company  or the  Restricted
Subsidiaries against fluctuations in commodity prices, foreign currency exchange
rates or interest rates and that do not increase the Indebtedness of the obligor
outstanding  at any time other  than as a result of  fluctuations  in  commodity
prices,  foreign currency exchange rates or interest rates or by reason of fees,
indemnities and compensation payable thereunder).

The amount of  Indebtedness  of any Person at any date shall be the  outstanding
balance at such date of all  unconditional  obligations as described  above and,
with  respect  to  contingent  obligations,   the  maximum  liability  upon  the
occurrence of the contingency giving rise to the obligation, provided:

          (i) that the amount outstanding at any time of any Indebtedness issued
with original  issue discount is the face amount of such  Indebtedness  less the
remaining   unamortized   portion  of  the  original   issue  discount  of  such
Indebtedness at such time as determined in conformity with Mexican GAAP,

          (ii) that money  borrowed and set aside at the time of the  Incurrence
of any  Indebtedness  in order to refund  the  payment of the  interest  on such
Indebtedness  shall not be deemed to be  "Indebtedness" so long as such money is
held to secure the payment of such interest and

          (iii) that Indebtedness shall not include:

          (A) any  liability  for  federal,  state,  local or other taxes of any
          jurisdiction,

          (B)  performance,  surety or appeal  bonds  provided  in the  ordinary
          course of business or

          (C) agreements providing for  indemnification,  adjustment of purchase
          price or  similar  obligations,  or  Guarantees  or letters of credit,
          surety bonds or  performance  bonds  securing any  obligations  of the
          Company  or  any of  the  Restricted  Subsidiaries  pursuant  to  such
          agreements, in any case Incurred in connection with

                                       12
<PAGE>

          the  disposition  of any business,  assets or a Restricted  Subsidiary
          (other  than  Guarantees  of  Indebtedness   Incurred  by  any  Person
          acquiring  all or any portion of such  business,  assets or Restricted
          Subsidiary for the purpose of financing such acquisition),  so long as
          the principal  amount does not to exceed the gross  proceeds  actually
          received by the Company or any  Restricted  Subsidiary  in  connection
          with such disposition.

For  the  purposes  of  computing  the  amount  of  Indebtedness  of any  Person
outstanding  at any time,  all such items  shall be  excluded to the extent that
they would be  eliminated  as  intercompany  items for  purposes of such Persons
consolidated financial statements.

          "Indenture" means this instrument as originally  executed or as it may
from  time  to  time  be  supplemented  or  amended  by one or  more  indentures
supplemental   hereto  which  were  entered  into  pursuant  to  the  applicable
provisions hereof.

          "Interest  Coverage Ratio" means,  on any Transaction  Date, the ratio
of:

          (a)  the aggregate amount of Consolidated  EBITDA for the Four Quarter
               Period prior to such Transaction Date.

          (b)  the  aggregate  Consolidated  Interest  Expense  during such Four
               Quarter Period.

In making the foregoing calculation,

          (i) pro forma  effect shall be given to any  Indebtedness  Incurred or
repaid,  repurchased,  defeased or  otherwise  discharged  during the  Reference
Period (other than Indebtedness under a revolving credit or similar  arrangement
to the extent of the commitment  thereunder (or under any predecessor  revolving
credit or similar  arrangement)  in effect on the last day of such Four  Quarter
Period unless any portion of such  Indebtedness is projected,  in the reasonable
judgment of the senior management,  to remain outstanding for a period in excess
of 12 months from the date of the Incurrence  thereof),  in each case as if such
Indebtedness  had been Incurred or repaid,  refeased or otherwise  discharged on
the first day of such Reference Period;

          (ii)  Consolidated  Interest  Expense  attributable to interest on any
Indebtedness  (whether existing or being Incurred) computed on a pro forma basis
and bearing a floating  interest rate shall be computed as if the rate in effect
on the  Transaction  Date  (taking  into  account any  Interest  Rate  Agreement
applicable to such  Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months or, if shorter, at least equal to the remaining term
of such Indebtedness) had been the applicable rate for the entire period;

          (iii) pro forma effect shall be given to Asset  Dispositions and Asset
Acquisitions  (including  giving pro forma effect to the application of proceeds
of any Asset Disposition) that occur during such Reference Period as if they had
occurred and such  proceeds had been applied on the first day of such  Reference
Period; and

          (iv) pro forma effect shall be given to asset  dispositions  and asset
acquisitions  (including  giving pro forma effect to the application of proceeds
of any asset  disposition)  that

                                       13
<PAGE>

have been made by any Person that has become a Restricted Subsidiary or has been
merged  with or into  the  Company  or any  Restricted  Subsidiary  during  such
Reference  Period and that would have  constituted  Asset  Dispositions or Asset
Acquisitions  had such  transactions  occurred when such Person was a Restricted
Subsidiary  as if such  asset  dispositions  or asset  acquisitions  were  Asset
Dispositions  or Asset  Acquisitions  that  occurred  on the  first  day of such
Reference Period;

provided  that to the  extent  that  clause  (iii)  or  (iv) of this  definition
requires  that pro  forma  effect  be given  to an  Asset  Acquisition  or Asset
Disposition, such pro forma calculation shall be based upon the four full fiscal
quarters  immediately  preceding the Transaction Date of the Person, or division
or line of  business of the  Person,  that is  acquired  or  disposed  for which
financial information is available.

          "Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.

          "Interest  Rate   Agreement"   means  any  interest  rate   protection
agreement,  interest  rate future  agreement,  interest  rate option  agreement,
interest rate swap agreement,  interest rate cap agreement, interest rate collar
agreement,  interest rate hedge  agreement,  option or future  contract or other
similar agreement or arrangement.

          "Investment" in any Person means any direct or indirect advance,  loan
or  other  extension  of  credit  (including,  without  limitation,  by  way  of
Guarantee;  but excluding  Guarantees of  Indebtedness  that are permitted under
Section 1008 and  advances to  customers or suppliers in the ordinary  course of
business that are recorded as accounts receivable,  prepaid expenses or deposits
on  the  balance  sheet  of  the  Company  or the  Restricted  Subsidiaries  and
endorsements  for  collection  or  deposit  arising  in the  ordinary  course of
business) or capital  contribution to (by means of any transfer of cash or other
property to others or any payment  for  property or services  for the account or
use of others),  or any purchase or acquisition of Capital Stock,  bonds, notes,
debentures  or other  similar  instruments  issued  by,  such  Person  and shall
include:

          (1) the  designation  of a Restricted  Subsidiary  as an  Unrestricted
Subsidiary and

          (2) the  retention of the Capital Stock (or any other  Investment)  by
the Company or any of the  Restricted  Subsidiaries,  of (or in) any Person that
has ceased to be a  Restricted  Subsidiary,  including  without  limitation,  by
reason of any transaction permitted by subclause (c) of Section 1011.

For purposes of the definition of "Unrestricted Subsidiary" and Section 1009:

          (a) the amount of or a reduction  in an  Investment  shall be equal to
the fair market value thereof at the time such Investment is made or reduced and

          (b) in the event  the  Company  or a  Restricted  Subsidiary  makes an
Investment by transferring  assets to any Person and as part of such transaction
receives  Net Cash  Proceeds,  the amount of such  Investment  shall be the fair
market  value of the assets less the amount of Net

                                       14
<PAGE>

Cash  Proceeds so received,  provided  that the Net Cash Proceeds are applied in
accordance with subclauses (a)(i) and (a)(ii) in the second paragraph of Section
1016.

          "Judgment Currency" has the meaning specified in Section 1019.

          "Lien" means any mortgage,  pledge,  security  interest,  encumbrance,
lien or charge of any kind (including,  without limitation, any conditional sale
or  other  title  retention  agreement  or lease in the  nature  thereof  or any
agreement to give any security interest).

          "Maturity,"  when used with respect to any Securities,  means the date
on which the principal (or portion  thereof) of such Securities  becomes due and
payable  as  therein  or therein  provided,  whether  at Stated  Maturity  or by
declaration of acceleration, call for redemption or otherwise.

          "Mexican  GAAP" is defined  to mean  accounting  principles  generally
accepted  in Mexico,  including  accounting  principles  which  account  for the
effects of inflation as provided for under  Bulletin  B-10  "Recognition  of the
Effects of Inflation on the Financial  Information,"  as amended,  issued by the
Mexican Institute of Public Accountants.

          "Mexican  Withholding  Taxes" shall have the meaning  assigned to such
term in Section 1020.

          "Mexico"  means the  Estados  Unidos  Mexicanos  (the  United  Mexican
States) and any branch of power,  ministry,  department,  authority or statutory
corporation or other entity (including a trust), owned or controlled directly or
indirectly by the Estados Unidos Mexicanos or any of the foregoing or created by
law as a public entity.

          "Moody's" means Moody's Investors Service, Inc. and its successors.

          "Net Cash Proceeds" means:

               (a) with  respect to any Asset Sale,  the  proceeds of such Asset
          Sale in the form of cash or cash  equivalents,  including  payments in
          respect of deferred payment  obligations (to the extent  corresponding
          to the principal,  but not interest,  component thereof) when received
          in the  form of  cash  or  cash  equivalents  and  proceeds  from  the
          conversion of other  property  received when converted to cash or cash
          equivalents, net of

               (i) brokerage  commissions and other fees and expenses (including
          fees and expenses of counsel and investment  bankers)  related to such
          Asset Sale;

               (ii)  provisions  for all taxes  (whether  or not such taxes will
          actually  be paid or are  payable)  as a  result  of such  Asset  Sale
          without  regard  to the  consolidated  results  of  operations  of the
          Company and the Restricted Subsidiaries, taken as a whole;

               (iii)   payments   made,   or  required  to  be  made,  to  repay
          Indebtedness or any other  obligation  outstanding at the time of such
          Asset Sale that  either (A) is  secured by a Lien on the  property  or
          assets  sold or (B) is  required  to be paid as a result of such sale;
          and

15
<PAGE>

               (iv)  appropriate  amounts to be  provided  by the Company or any
          Restricted Subsidiary as a reserve against any liabilities  associated
          with such Asset Sale, including, without limitation, pension and other
          post-employment   benefit   liabilities,    liabilities   related   to
          environmental   matters  and  liabilities  under  any  indemnification
          obligations  associated with such Asset Sale,  whether or not required
          by Mexican GAAP; and

               (b) with  respect to any issuance or sale of Capital  Stock,  the
          proceeds  of  such  issuance  or  sale  in the  form  of  cash or cash
          equivalents,   including  payments  in  respect  of  deferred  payment
          obligations  (to the extent  corresponding  to the principal,  but not
          interest, component thereof) when received in the form of cash or cash
          equivalents  and  proceeds  from  the  conversion  of  other  property
          received when converted to cash or cash equivalents, net of attorney's
          fees,  accountants'  fees,  underwriters'  or placement  agents' fees,
          discounts or  commissions  and  brokerage,  consultant  and other fees
          incurred  in  connection  with such  issuance or sale and net of taxes
          paid or payable as a result thereof.

          "Offer  to  Purchase"  means an offer to  purchase  Securities  by the
Company  from the Holders  commenced by mailing a notice to the Trustee and each
Holder stating:

          (a) the  covenant  pursuant  to which the offer is being made and that
all  Securities  validly  tendered  will be  accepted  for payment on a pro rata
basis;

          (b) the  purchase  price and the date of  purchase  (which  shall be a
business  day no earlier  than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date");

          (c) that any Security not tendered  will  continue to accrue  interest
pursuant to its terms;

          (d) that,  unless the Company  defaults in the payment of the purchase
price, any Security accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest on and after the Payment Date;

          (e) that Holders electing to have a Security purchased pursuant to the
Offer to Purchase will be required to surrender the Security,  together with the
form  entitled  "Option of the Holder to Elect  Purchase" on the reverse side of
the  Security  completed,  to the Paying  Agent at the address  specified in the
notice prior to the close of business on the business day immediately  preceding
the Payment Date;

          (f) that  Holders will be entitled to withdraw  their  election if the
Paying  Agent  receives,  not  later  than the  close of  business  on the third
business day  immediately  preceding  the Payment  Date,  a telegram,  facsimile
transmission  or letter  setting  forth the name of such Holder,  the  principal
amount of Securities  delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; and

          (g) that Holders whose  Securities  are being  purchased  only in part
will be issued  new  Securities  equal in  principal  amount to the  unpurchased
portion of the Securities surrendered; provided that each Security purchased and
each New Note  issued  shall be in a  principal  amount of  $1,000  or  integral
multiples of $1,000.

                                       16
<PAGE>

On the Payment Date, the Company shall:

     (i) accept for payment on a pro rata basis  Securities or portions  thereof
     tendered pursuant to an Offer to Purchase;

     (ii)  deposit with the Paying  Agent money  sufficient  to pay the purchase
     price of all Securities or portions thereof so accepted; and

     (iii) deliver,  or cause to be delivered,  to the Trustee all Securities or
     portions  thereof  so  accepted  together  with  an  Officers'  Certificate
     specifying the Securities or portions  thereof  accepted for payment by the
     Company.

The Paying Agent shall  promptly  mail to the Holders of  Securities so accepted
payment in an amount equal to the purchase price, and the Trustee shall promptly
authenticate  and mail to such Holders a new Security equal in principal  amount
to any  unpurchased  portion of the  Security  surrendered;  provided  that each
Security  purchased and each new Security issued shall be in a principal  amount
of $1,000 or integral  multiples of $1,000.  The Company will publicly  announce
the  results of an Offer to Purchase  as soon as  practicable  after the Payment
Date.  The Trustee  shall act as the Paying Agent for an Offer to Purchase.  The
Company  will  comply  with  Rule  14e-1  under the  Exchange  Act and any other
securities  laws  and  regulations  thereunder  to  the  extent  such  laws  and
regulations  are  applicable,  in the event  that the  Company  is  required  to
repurchase  Securities  pursuant to an Offer to Purchase.  If the  provisions of
such  securities  laws conflict with Section 1016,  the Company will comply with
such  securities  laws and will not be deemed to have  breached the  obligations
under the covenant by virtue thereof.

          "Officer's  Certificate" means a certificate signed by the chairman of
the  Board  of  Directors,  or Vice  Chairman  of the  Board of  Directors,  the
President,  or any Vice  President,  and the  Treasurer,  the  Secretary  or any
Assistant Treasurer or Assistant Secretary,  of the Company and delivered to the
Trustee.

          "Opinion  of  Mexican  Counsel"  means a written  opinion  of  Mexican
counsel  admitted to practice in Mexico who shall be  acceptable to the Trustee,
provided  that such  counsel  may rely,  as to any  matters of U.S.  law,  on an
Opinion of U.S. Counsel.

          "Opinion of U.S.  Counsel" means a written opinion of independent U.S.
counsel admitted to practice in the State of New York who shall be acceptable to
the Trustee,  provided  that such counsel may rely, as to any matters of Mexican
law, on an Opinion of Mexican Counsel.

          "Outstanding",  when used with respect to Securities, means, as of the
date of determination,  all Securities  theretofore  authenticated and delivered
under this Indenture, except:

          (a)  Securities  theretofore  cancelled by the Trustee or delivered to
the Trustee for cancellation;

          (b) Securities for whose payment or redemption  money in the necessary
amount has been  theretofore  deposited  with the  Trustee  or any Paying  Agent
(other than the  Company) in trust or set aside and  segregated  in trust by the
Company  (if the Company  shall act

                                       17
<PAGE>

as its own Paying Agent) for the Holders of such  Securities;  provided that, if
such  Securities  are to be redeemed,  notice of such  redemption  has been duly
given  pursuant to this  Indenture or  provision  therefor  satisfactory  to the
Trustee has been made; and

          (c)  Securities  which have been paid  pursuant  to Section  306 or in
exchange for or in lieu of which other  Securities have been  authenticated  and
delivered pursuant to this Indenture,  other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such  Securities  are held by a bona fide  purchaser  in whose  hands  such
Securities are valid obligations of the Company;

provided,  however,  that in  determining  whether the Holders of the  requisite
principal amount of the Outstanding  Securities have given any request,  demand,
authorization,  direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the  Securities or any Affiliate of the
Company  or of such  other  obligor  shall be  disregarded  and deemed not to be
Outstanding,  except that, in determining whether the Trustee shall be protected
in relying upon any such  request,  demand,  authorization,  direction,  notice,
consent or waiver,  only  Securities  which the Trustee  actually knows to be so
owned shall be so  disregarded.  Securities  so owned which have been pledged in
good faith may be regarded as  Outstanding  if the  pledgee  establishes  to the
satisfaction  of the Trustee the pledgee's  right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.

          "Overnight  Bank  Deposits"  means  overnight or time deposits  having
maturities of seven days or less with any financial  institution organized under
the laws of the  United  States,  any state  thereof or Mexico  which  would not
otherwise  qualify as a Temporary Cash Investment,  provided that such financial
institution is not under intervention,  receivership, or any similar arrangement
at the time of making such overnight on time deposit.

          "Pari-Passu Indebtedness" has the meaning specified in Section 1016.

          "Paying  Agent" means any Person  authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company, which shall
initially be The Chase Manhattan Bank.

          "Payment  Date" has the meaning  specified in the definition of "Offer
to Purchase".

          "Permitted Investment" means:

               (a) an Investment in the Company or a Restricted  Subsidiary or a
          Person  which  will,  upon the  making  of such  Investment,  become a
          Restricted  Subsidiary  or be merged or  consolidated  with or into or
          transfer or convey all or substantially all its assets to, the Company
          or a  Restricted  Subsidiary;  provided  that  such  Person's  primary
          business is related,  ancillary or  complementary to the businesses of
          the  Company  and  the  Restricted  Subsidiaries  on the  date of such
          Investment;

               (b) Temporary Cash Investments and Overnight Bank Deposits;

                                       18
<PAGE>

               (c) payroll,  travel and similar  advances to cover  matters that
          are expected at the time of such advances  ultimately to be treated as
          expenses for accounting purposes;

               (d) stock,  obligations or securities received in satisfaction of
          judgments or in  settlement or  obligations  owing to the Company or a
          Restricted   Subsidiary  or  upon  the   perfection,   foreclosure  or
          enforcement  of a  Lien  in  favor  of  the  Company  or a  Restricted
          Subsidiary;

               (e) Commodity  Agreements,  Interest Rate Agreements and Currency
          Agreements  designed  solely to protect the Company or the  Restricted
          Subsidiaries against fluctuations in commodity prices,  interest rates
          or foreign currency exchange rates;

               (f) loans or  advances  made to  employees  of the  Company  or a
          Restricted  Subsidiary in the ordinary  course of business  consisting
          with past  practices  of the  Company or such  Restricted  Subsidiary,
          provided  that such loans in the  aggregate  to all  employees  do not
          exceed  $2.5  million  per year and $5.0  million  prior to the Stated
          Maturity of the Securities;

               (g) extensions of credit in the nature of accounts  receivable or
          Securities  receivable  arising  from the  sale or lease of goods  and
          services in the ordinary course of business;

               (h)  pledges  or  deposits  required  in the  ordinary  course of
          business  in  connection  with  workers'  compensation,   unemployment
          insurance and other types of social security;

               (i) pledges or deposits in connection with (i) the non-delinquent
          performance of bids,  trade contracts (other than for borrowed money),
          leases or statutory obligations,  (ii) continued obligations on surety
          or appeal bonds and (iii) other  non-delinquent  obligations of a like
          nature, in each case incurred in the ordinary course of business;

               (j)  advances,  loans or extensions of credit to suppliers in the
          ordinary   course  of  business  by  the  Company  or  any  Restricted
          Subsidiary;

               (k) Investments  consisting of non-cash consideration received in
          connection with an Asset Sale permitted by Section 1016;

               (l) customary  Investments required by the terms of any Qualified
          Receivables Transaction to the extent such Investments are made in the
          ordinary course of business.

          "Permitted Liens" means:

          (a) Liens for taxes, assessments,  governmental charges or claims that
are being  contested in good faith by  appropriate  legal  proceedings  promptly
instituted and diligently conducted and for which a reserve or other appropriate
provision,  if any, as shall be required in  conformity  with Mexican GAAP shall
have been made;

                                       19
<PAGE>

          (b)  statutory  and  common  law  Liens  of  landlords  and  carriers,
warehousemen,  mechanics,  suppliers,  materialmen,  repairmen or other  similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly  instituted and  diligently  conducted and for which a reserve or other
appropriate  provision,  if any, as shall be required in conformity with Mexican
GAAP shall have been made;

          (c) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security;

          (d) Liens  incurred  or  deposits  made to secure the  performance  of
tenders,   bids,   leases,   statutory  or  regulatory   obligations,   bankers'
acceptances,  surety and appeal bonds,  government  contracts,  performance  and
return-of-money  bonds and other obligations of a similar nature incurred in the
ordinary  course of  business  (exclusive  of  obligations  for the  payment  of
borrowed money);

          (e)  easements,  rights-of-way,  municipal and zoning  ordinances  and
similar charges, encumbrances, title defects or other irregularities that do not
materially interfere with the ordinary course of business of the Company and the
Restricted Subsidiaries taken as a whole;

          (f) Liens  (including  extensions  and renewals  thereof) upon real or
personal property  acquired after the Closing Date;  provided that (i) such Lien
is  created  solely  for the  purpose  of  securing  Indebtedness  Incurred,  in
accordance  with  Section  1008,  to  finance  the cost  (including  the cost of
improvement or  construction)  of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition,  the completion of construction or the commencement of
full operation of such property,  (ii) the principal  amount of the Indebtedness
secured by such Lien does not  exceed  100% of such cost and (iii) any such Lien
shall not  extend to or cover any  property  or assets  other  than such item of
property or assets and any improvements on such item;

          (g)  leases or  subleases  granted  to others  that do not  materially
interfere with the ordinary course of business of the Company and the Restricted
Subsidiaries, taken as a whole;

          (h) Liens encumbering  property or assets under  construction  arising
from progress or partial payments by a customer of the Company or the Restricted
Subsidiaries relating to such property or assets;

          (i) any interest or title of a lessor in the  property  subject to any
Capitalized Lease or operating lease;

          (j) Liens  arising  from  filing  Uniform  Commercial  Code  financing
statements regarding leases;

          (k)  Liens  on  property  of,  or  on  shares  of  Capital   Stock  or
Indebtedness of, any Person existing at the time such Person becomes, or becomes
a part of, any Restricted

                                       20
<PAGE>

Subsidiary;  provided  that such Liens do not extend to or cover any property or
assets of the Company or any  Restricted  Subsidiary  other than the property or
assets acquired;

          (l) Liens in favor of the Company or any Restricted Subsidiary;

          (m) Liens  arising  from the  rendering  of a final  judgment or order
against the Company or any Restricted  Subsidiary  that does not give rise to an
Event of Default;

          (n) Liens securing  reimbursement  obligations with respect to letters
of credit that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof;

          (o) Liens in favor of customs  and  revenue  authorities  arising as a
matter  of law to secure  payment  of  customs  duties  in  connection  with the
importation of goods;

          (p) Liens encumbering  customary initial deposits and margin deposits,
and other Liens, in each case, securing Indebtedness under Commodity Agreements,
Interest Rate Agreements and Currency  Agreements designed solely to protect the
Company or any of the  Restricted  Subsidiaries  from  fluctuations  in interest
rates, currencies or the price of commodities;

          (q)  Liens  arising  out  of  conditional   sale,   title   retention,
consignment  or similar  arrangements  for the sale of goods entered into by the
Company or any of the Restricted Subsidiaries in the ordinary course of business
in  accordance  with  the  past  practices  of the  Company  and the  Restricted
Subsidiaries prior to the Closing Date;

          (r) Liens on any assets  acquired  by the  Company  or any  Restricted
Subsidiary  after the Closing Date,  which Liens were in existence  prior to the
acquisition  of such  assets (to the extent  that such Liens were not created in
contemplation  of or in connection  with such  acquisition),  provided that such
Liens are limited to the assets so acquired and the proceeds thereof;

          (s) Liens  Incurred in  accordance  with the Indenture in favor of the
Trustee under the Indenture;

          (t) Liens arising by virtue of any statutory, regulatory,  contractual
or warranty requirements of the Company or any Restricted Subsidiary, including,
without  limitation,  provisions  relating  to  rights of  offset  and  set-off,
bankers' liens or similar rights and remedies; and

          (u) Liens upon specific items of inventory or other goods and proceeds
of any  Person  securing  such  Person's  obligations  in  respect  of  banker's
acceptance  issued or created for the account of such Person to  facilitate  the
purchase, shipment or storage of such inventory or other goods.

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

                                       21
<PAGE>

          "Pledge   Agreement"   means  the   pledge   agreement   dated  as  of
______________,  2001,  by and between  the  Company as  pledgor,  and The Chase
Manhattan Bank as trustee,  in the form attached hereto as Exhibit A, as amended
or supplemented from time to time.

          "Pledge Release Date" means the date on which the trustee releases the
Collateral, which shall date be concurrent with, or subsequent to, the date that
the trustee receives the Pledge Release Instruction stating that the Refinancing
Condition has occurred.

          "Pledge Release Instruction" means an officers'  certificate signed by
two  officers  of the  Company  stating  that,  as of the date of the  officers'
certificate,  the  Refinancing  Condition  has  occurred  and which  includes  a
calculation of the Refinancing Condition.

          "Predecessor Security" of any particular Security means every previous
Security  evidencing all or a portion of the same debt as that evidenced by such
particular  Security;  and,  for the purposes of this  definition,  any Security
authenticated  and  delivered  under Section 306 in exchange for or in lieu of a
mutilated,  destroyed,  lost or stolen  Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen security.

          "Preferred  Stock"  means,  with  respect to any  Person,  any and all
shares,  interests,  participations  or other equivalents  (however  designated,
whether voting or non-voting) of such Person's  preferred or preference  equity,
whether now  outstanding  or issued after the Closing Date,  including,  without
limitation, all series and classes of such preferred stock or preference stock.

          "Primary  Treasury Dealer" has the meaning specified in the definition
of Reference Treasury Dealer provided in this is Section 101.

          "Public Equity Offering" means an underwritten primary public offering
of Common Stock of the Company pursuant to an effective  registration  statement
under the Securities Act.

          A "Public Market" shall be deemed to exist if:

               (a) a Public Equity Offering has been consummated and

               (b) at least 15% of the total issued and outstanding Common Stock
          of  the  Company  has  been  distributed  by  means  of  an  effective
          registration  statement  under the Securities Act or sales pursuant to
          Rule 144 under the Securities Act.

          "Pulp and Paper  Business"  means the  manufacture of pulp,  paper and
packaging products and businesses related,  ancillary or complementary  thereto,
including,   without  limitation,   (a)  ownership  and  operation  of  forestry
businesses,  (b) the  production  of raw  materials  such as wood,  wood  chips,
kaolin, caustic soda and precipitated calcium carbonate,  (c) the manufacture of
primary  products  such as  hardwood  pulp,  softwood  pulp,  coated or uncoated
freesheet, containerboard,  linerboard, corrugating medium and boxboard, (d) the
manufacture  of converted  products  such as newsprint,  notebooks,  stationary,
corrugated shipping containers,  folding carton boxes,  multiwall sacks and bags
and molded pulp products,  (e) the performance of marketing and other operations
supporting such businesses and (f) the ownership and

                                       22
<PAGE>

operating of assets used in  connection  with any of the  foregoing  businesses,
such as chemical, water treatment and power generation assets.

          "Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or a Restricted  Subsidiary
pursuant  to which the  Company or a  Restricted  Subsidiary  may sell convey or
otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by
the Company or any Restricted  Subsidiary) and (b) any other person (in the case
of a transfer by a Receivables Subsidiary), or may grant a security interest in,
any accounts  receivable  (whether now existing or arising in the future) of the
Company or any Restricted  Subsidiary and any asset related  thereto,  including
without  limitation,  all  collateral  securing  the  accounts  receivable,  all
contracts  and all  guarantees or other  obligations  in respect of the accounts
receivable,  proceeds of the  accounts  receivable  and other  assets  which are
customarily  transferred,   or  in  respect  of  which  security  interests  are
customarily  granted,  in  connection  with  asset  securitization  transactions
involving accounts receivable.

          "Receivables  Subsidiary"  means  a  Wholly  Owned  Subsidiary  of the
Company  which  engages  in no  activities  other  than in  connection  with the
financing  of  accounts  receivables  and  which is  designated  by the Board of
Directors (as provided below) as a Receivables Subsidiary:

          (a)  No  portion  of  the   Indebtedness  or  any  other   obligations
(contingent or otherwise) of which:

               (i)  is  guaranteed  by  the  Company  or  any  other  Restricted
          Subsidiary  (excluding  guarantees  of  obligations  (other  than  the
          principal  of, and  interest  on,  Indebtedness)  pursuant to Standard
          Securitization Undertakings,

               (ii)  is  recourse  to or  obligates  the  Company  or any  other
          Restricted  Subsidiary  in any way other  than  pursuant  to  Standard
          Securitization Undertakings, or

               (iii)  subjects any property or asset of the Company or any other
          Restricted  Subsidiary,   directly  or  indirectly,   contingently  or
          otherwise,  to  the  satisfaction  thereof,  other  than  pursuant  to
          Standard Securitization Undertakings;

          (b) with which neither the Company nor any other Restricted Subsidiary
has any material contract,  agreement or arrangement or understanding (except in
connection with a Qualified Receivables Transaction) other than on terms no less
favorable  to the Company or such other  Restricted  Subsidiary  than those that
might be  obtained  at the time  from  Persons  that are not  Affiliates  of the
Company,  other  than  fees  payable  in the  ordinary  course  of  business  in
connection with servicing accounts receivable; and

          (c) to which neither the Company nor any Restricted Subsidiary has any
obligation to maintain or preserve such  entity's  financial  condition or cause
such entity to achieve certain levels of operating results.

          Any  designation  of a  Subsidiary  of the  Company  as a  Receivables
Subsidiary  shall be  evidenced  to the  Trustee  by filing  with the  Trustee a
certified copy of the board

                                       23
<PAGE>

resolution  giving  effect  to such  designation  and an  officer's  certificate
certifying that the designation  complied with the preceding  conditions and was
permitted by the Indenture.

          "Redemption  Date",  when  used with  respect  to any  Security  to be
redeemed  in whole or in part,  means the date fixed for such  redemption  by or
pursuant to this Indenture.

          "Redemption  Price",  when used with  respect  to any  Security  to be
redeemed, means the price (exclusive of accrued interest, if any) at which it is
to be redeemed pursuant to this Indenture.

          "Reference  Treasury Dealer" means Morgan Stanley & Co.  Incorporated,
and Chase Securities Inc., and their respective successors;  provided,  however,
that if any of the foregoing shall cease to be a primary  Government  securities
dealer  in New York  City (a  "Primary  Treasury  Dealer"),  the  Company  shall
substitute another Primary Treasury Dealer.

          "Reference Period" means the period commencing on the first day of the
Four Quarter Period and ending on the Transaction Date.

          "Reference  Treasury Dealer  Quotations"  means,  with respect to each
Reference  Treasury Dealer and any Redemption Date, the average as determined by
the  Trustee,  of the bid and asked  prices  of the  Comparable  Treasury  Issue
(expressed  in each case as a  percentage  of its  principal  amount)  quoted in
writing to the  Trustee by such  Reference  Treasury  Dealer at 5:00 p.m. on the
third business day preceding such Redemption Date.

          "Refinancing  Condition"  means the first date on which the  Company's
Consolidated Senior Indebtedness,  excluding the Company's 13?% Senior Notes due
2006,  any  Indebtedness  secured  under the  Pledge  Agreement  or  secured  in
connection  with  the GID  Refinancing,  is  equal  to or less  than  15% of the
Company's total consolidated Indebtedness.

          "Regular Record Date" for the interest payable on any Interest Payment
Date means the  January 15 or July 15 (whether  or not a Business  Day),  as the
case may be, next preceding such Interest Payment Date.

          "Related  Person" of any Person means any other  Person that owns,  or
any controlling Affiliate of any other Person that owns:

          (a) 5% or more of the outstanding Common Stock of such Person or

          (b) 5% or more of the Voting Stock of such Person.

          "Released  Indebtedness"  means,  with  respect  to  any  Asset  Sale,
Indebtedness:

          (a) which is owed by the  Company or any  Restricted  Subsidiary  (the
"Obligors") prior to such Asset Sale,

          (b) which is  assumed by the  purchaser  or any  affiliate  thereof or
forgiven or cancelled in connection with such Asset Sale and

                                       24
<PAGE>

          (c) with respect to which the Obligors  receive written  unconditional
releases from each creditor no later than the closing date of such Asset Sale.

          "Remaining Scheduled Payments" means, with respect to each Security to
be redeemed,  the  remaining  scheduled  payments of the  principal  thereof and
interest  thereon  that would be due after the related  Redemption  Date but for
such  redemption;  provided,  however,  that if such  Redemption  Date is not an
interest  payment  date with  respect to such  Security,  the amount of the next
succeeding  schedule  interest  payment thereon will be reduced by the amount of
interest accrued and unpaid thereon to such Redemption Date.

          "Replacement  Assets"  means,  on any date,  property or assets (other
than  current  assets) of a nature or type or that are used in a business (or an
Investment  in a company  having  property  or  assets  of a nature or type,  or
engaged in a business)  similar or related to the nature or type of the property
and assets of, or the business of, the Company and the  Restricted  Subsidiaries
existing on such date.

          "Restricted Payments" shall have the meaning provided in Section 1009.

          "Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.

          "S&P"  means  Standard & Poor's  Ratings  Services,  a division of The
McGraw-Hill Companies, and its successors.

          "Securities"  means any of the  securities,  as  defined  in the first
paragraph of the recitals  hereof,  that are  authenticated  and delivered under
this Indenture.  For all purposes of this Indenture, the term "Securities" shall
include  the  Securities  initially  issued  on the  Closing  Date and any other
Securities  issued after the Closing Date under this Indenture.  For purposes of
this Indenture,  all Securities  shall vote together as one series of Securities
under this Indenture.

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

          "Security  Register"  and  "Security  Registrar"  have the  respective
meanings specified in Section 305.

          "Significant  Subsidiary"  means,  at any date of  determination,  any
Restricted Subsidiary that, together with its Subsidiaries,

          (a) for the most recent fiscal year of the Company, accounted for more
than  10%  of the  consolidated  revenues  of the  Company  and  the  Restricted
Subsidiaries or

          (b) as of the end of such fiscal year,  was the owner of more than 10%
of the consolidated assets of the Company and the Restricted Subsidiaries,

all  as  set  forth  on  the  most  recently  available  consolidated  financial
statements of the Company for such fiscal year.

                                       25
<PAGE>

          "Special Record Date" for the payment of any Defaulted  Interest means
a date fixed by the Trustee pursuant to Section 307.

          "Standard   Securitization    Undertakings"   means   representations,
warranties,  covenants  and  indemnities  entered  into  by the  Company  or any
Restricted  Subsidiary which are reasonably  customary in an accounts receivable
securitization transaction.

          "Stated Maturity" means:

          (a) with respect to any debt security, the date specified in such debt
security as the fixed date on which the final  installment  of principal of such
debt security is due and payable and

          (b) with  respect to any  scheduled  installment  of  principal  of or
interest on any debt  security,  the date specified in such debt security as the
fixed date on which such installment is due and payable.

          "Subsidiary"  means,  with  respect to any  Person,  any  corporation,
association or other business  entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.

          "Successor Company" shall have the meaning specified in Section 801.

          "Temporary Cash Investment" means any of the following:

          (a) direct  obligations  of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed by the United States
of America or any agency thereof;

          (b) time deposit  accounts,  certificates  of deposit and money market
deposits maturing within 365 days of the date of acquisition thereof issued by a
bank or trust company which is organized  under the laws of the United States of
America,  any state  thereof or any  foreign  country  recognized  by the United
States of  America,  and which bank or trust  company has  capital,  surplus and
undivided profits aggregating in excess of $200 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent  rating)  or  higher  by S&P or  Moody's  or any  money  market  fund
sponsored by a registered broker dealer or mutual fund distributor;

          (c)  repurchase  obligations  with a term of not more than 30 days for
underlying  securities of the types  described in clause (a) above or clause (f)
below  entered  into with a bank or trust  company  meeting  the  qualifications
described in clause (b) above or clause (i) below;

          (d) commercial  paper maturing not more than 90 days after the date of
acquisition,  issued by a  corporation  (other than an Affiliate of the Company)
organized and in existence  under the laws of the United States of America,  any
state thereof or any foreign country  recognized by the United States of America
with a rating at the time as of which any

                                       26
<PAGE>

investment  therein is made of "P-1" (or higher)  according  to Moody's or "A-1"
(or higher) according to S&P;

          (e) securities  with maturities of six months or less from the date of
acquisition  issued  or  fully  and  unconditionally  guaranteed  by any  state,
commonwealth  or territory of the United States of America,  or by any political
subdivision  or  taxing  authority  thereof,  and  rated at least  "A" by S&P or
Moody's;

          (f) Certificados de la Tesoreria de la Federacion  (Cetes) or Bonos de
Desarrollo del Gobierno  Federal  (Bondes) issued by the Mexican  government and
maturing not more than 365 days after the acquisition thereof;

          (g)  Investments  in money  market  funds  substantially  all of whose
assets are comprised of securities of the types described in clauses (a) through
(f) above and clause (i) below, including,  without limitation,  the Chase Vista
Money  Market  Mutual Funds or any other mutual fund for which the Trustee or an
Affiliate  of  the  Trustee   serves  as  investment   manager,   administrator,
shareholder   or   servicing   agent,    and/or   custodian   or   subcustodian,
nothwithstanding  that (i) the Trustee or an affiliate  of the Trustee  receives
fees from  such  funds for  services  rendered,  (ii) the  Trustee  charges  and
collects fees for services rendered  pursuant to this Indenture,  which fees are
separate from the fees received by such funds, and (iii) services  performed for
such funds and pursuant to this Indenture may at times  duplicate those provided
to such funds by the Trustee or its affiliate;

          (h)  demand  deposit  accounts  with  U.S.  banks  (or  Mexican  banks
specified in clause (9) of this definition) maintained in the ordinary course of
business; and

          (i)  certificates  of  deposit,  bank  promissory  notes and  bankers'
acceptances  denominated  in Pesos,  maturing  not more than 365 days  after the
acquisition  thereof  and issued or  Guaranteed  by any one of the four  largest
banks (based on assets as of the  immediately  preceding  December 31) organized
under the laws of Mexico and which are not under  intervention  or controlled by
the Instituto para la Proteccion al Ahorro Bancario or any successor  thereto or
any  banking  subsidiary  of a foreign  bank  which  has  capital,  surplus  and
undivided profits aggregating in excess of $200 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by S&P or Moody's.

          "Trade  Payables"  means,  with  respect to any Person,  any  accounts
payable or any other  indebtedness  or monetary  obligation  to trade  creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary  course of business in connection  with the acquisition of goods
or services.

          "Transaction  Date"  means,  with  respect  to the  Incurrence  of any
Indebtedness,  the date such Indebtedness is to be Incurred and, with respect to
any Restricted Payment, the date such Restricted Payment is to be made.

          "Trust  Indenture  Act"  means the Trust  Indenture  Act of 1939 as in
force at the date as of which this instrument was executed;  provided,  however,
that in the event the Trust

                                       27
<PAGE>

Indenture Act of 1939 is amended after such date,  "Trust  Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.

          "Trustee"  means  the  Person  named  as the  "Trustee"  in the  first
paragraph of this  instrument  until a successor  Trustee shall have become such
pursuant  to  the  applicable  provisions  of  this  Indenture,  and  thereafter
"Trustee" shall mean such successor Trustee.

          "Unrestricted Subsidiary" means:

          (1) any  Subsidiary  of the Company that at the time of  determination
shall be designated an Unrestricted  Subsidiary by the Board of Directors in the
manner provided below; and

          (2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any  Restricted  Subsidiary  (including any
newly acquired or newly formed  Subsidiary of the Company) to be an Unrestricted
Subsidiary  unless such  Subsidiary  owns any Capital Stock of, or owns or holds
any Lien on any property of, the Company or any Restricted Subsidiary;  provided
that:

          (A) any Guarantee by the Company or any  Restricted  Subsidiary of any
Indebtedness  of  the  Subsidiary   being  so  designated  shall  be  deemed  an
"Incurrence"  of such  Indebtedness  and an  "Investment" by the Company or such
Restricted Subsidiary (or both, if applicable) at the time of such designation;

          (B) either

               (i) the Subsidiary to be so designated has total assets of $1,000
          or less or

               (ii) if such  Subsidiary  has assets  greater than  $1,000,  such
          designation would be permitted under Section 1009; and

          (C) if applicable,  the Incurrence of Indebtedness  and the Investment
referred to in subclause (A) of this definition would be permitted under Section
1008 and Section 1009.

The  Board of  Directors  may  designate  any  Unrestricted  Subsidiary  to be a
Restricted Subsidiary; provided that:

               (a) no  Default or Event of Default  shall have  occurred  and be
          continuing at the time of or after giving  effect to such  designation
          and

               (b) all Liens and  Indebtedness of such  Unrestricted  Subsidiary
          outstanding  immediately after such designation  would, if Incurred at
          such time,  have been permitted to be Incurred (and shall be deemed to
          have been Incurred) for all purposes of the Indenture.

                                       28
<PAGE>

Any such designation by the Board of Directors shall be evidenced to the Trustee
by promptly filing with the Trustee a copy of the Board Resolution giving effect
to  such  designation  and  an  Officers'   Certificate   certifying  that  such
designation complied with the foregoing provisions.

          "Voting Stock" means with respect to any Person,  Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.

          "Wholly  Owned" means,  with respect to any  Subsidiary of any Person,
the  ownership  of at  least  97% of  the  outstanding  Capital  Stock  of  such
Subsidiary  (other  than any  director's  qualifying  shares or  Investments  by
foreign nationals mandated by applicable law or de minimis shares required to be
owned by another Person under  applicable law in order to maintain the corporate
status  of  such  Subsidiary)  by  such  Person  or one  or  more  Wholly  Owned
Subsidiaries of such Person.

SECTION 102. Compliance Certificates.

          Upon any  application or request by the Company to the Trustee to take
any action under any provision of this  Indenture,  the Company shall furnish to
the Trustee such  certificates  and opinions as may be required  under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers'  Certificate,  if to be  given by an  officer  of the  Company,  or an
Opinion of Mexican Counsel or an Opinion of U.S. Counsel, as the case may be, if
to be given by  counsel,  and shall  comply with the  requirements  of the Trust
Indenture Act and any other requirement set forth in this Indenture.

          Every  certificate  or  opinion  with  respect  to  compliance  with a
condition or covenant provided for in this Indenture shall include

          (a) a statement  that each  individual  signing  such  certificate  or
opinion has read such covenant or condition and the definitions  herein relating
thereto;

          (b) a brief statement as to the nature and scope of the examination or
investigation   upon  which  the  statements  or  opinions   contained  in  such
certificate or opinion are based;

          (c) a statement that, in the opinion of each such  individual,  he has
made such  examination or investigation as is necessary to enable him to express
an informed  opinion as to whether or not such  covenant or  condition  has been
complied with; and

          (d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.

SECTION 103. Form of Documents Delivered to Trustee.

          In any case where several  matters are required to be certified by, or
covered by an opinion of, any specified  Person,  it is not  necessary  that all
such  matters  be  certified  by, or covered by the  opinion  of,  only one such
Person,  or that they be so certified or covered by only one  document,  but one
such Person may certify or give an opinion  with respect to some matters

                                       29
<PAGE>

and one or more other such Persons as to other matters,  and any such Person may
certify or give an opinion as to such matters in one or several documents.

          Any  certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal  matters,  upon a  certificate  or opinion of, or
representations  by,  counsel,  unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or  representations
with respect to the matters upon which such  certificate or opinion is based are
erroneous.  Any such certificate or opinion of counsel may be based,  insofar as
it  relates  to  factual   matters,   upon  a  certificate  or  opinion  of,  or
representations  by, an officer or  officers  of the  Company  stating  that the
information  with respect to such factual  matters is in the  possession  of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know,  that the certificate or opinion or  representations  with respect to such
matters are erroneous.

          Where any Person is  required  to make,  give or  execute  two or more
applications,  requests, consents,  certificates,  statements, opinions or other
instruments  under this Indenture,  they may, but need not, be consolidated  and
form one instrument.

SECTION 104. Acts of Holders; Record Dates.

          (a) Any request, demand,  authorization,  direction,  notice, consent,
waiver  or  other  action  provided  by this  Indenture  to be given or taken by
Holders  may  be  embodied  in and  evidenced  by one  or  more  instruments  of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing;  and, except as herein otherwise expressly provided,  such
action shall become  effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required,  to the Company. Such
instrument  or  instruments  (and the  action  embodied  therein  and  evidenced
thereby) are herein  sometimes  referred to as the "Act" of the Holders  signing
such instrument or instruments.  Proof of execution of any such instrument or of
a writing  appointing any such agent shall be sufficient for any purpose of this
Indenture  and (subject to Section 601)  conclusive  in favor of the Trustee and
the Company, if made in the manner provided in this Section.

          (b) The fact  and  date of the  execution  by any  Person  of any such
instrument  or  writing  may be proved  by the  affidavit  of a witness  of such
execution or by a certificate of a notary public or other officer  authorized by
law to take  acknowledgments  of deeds,  certifying that the individual  signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution  is  by a  signer  acting  in a  capacity  other  than  such  Person's
individual  capacity,  such  certificate  or  affidavit  shall  also  constitute
sufficient proof of such Person's authority.  The fact and date of the execution
of any such instrument or writing,  or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.

          (c) The  Company  may,  in the  circumstances  permitted  by the Trust
Indenture  Act,  fix any date as the record date for the purpose of  determining
the  Holders  entitled  to give  or take  any  request,  demand,  authorization,
direction,  notice,  consent,  waiver or other action, or to vote on any action,
authorized  or  permitted  to be given or  taken by  Holders.  If not set by the
Company  prior to the  first  solicitation  of a Holder  made by any  Person  in
respect  of any such

                                       30
<PAGE>

action,  or, in the case of any such vote,  prior to such vote,  the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders  required  to be provided  pursuant to Section  701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date,  only the Holders on such date (or their duly  designated  proxies)
shall be entitled to give or take, or vote on, the relevant action.

          (d) The  ownership  of  Securities  shall be  proved  by the  Security
Register.

          (e) Any request, demand,  authorization,  direction,  notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the  same  Security  and  the  Holder  of  every  Security  issued  upon  the
registration of transfer  thereof or in exchange  therefor or in lieu thereof in
respect of anything  done,  omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.

SECTION 105. Notices, Etc., to Trustee and Company.

          Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other  document  provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

          (a) the  Trustee by any Holder or by the Company  shall be  sufficient
for every purpose hereunder if made, given,  furnished or filed in writing to or
with the Trustee at its  Corporate  Trust  Office,  Attention:  Corporate  Trust
Administration, or

          (b) the  Company by the Trustee or by any Holder  shall be  sufficient
for every purpose hereunder  (unless otherwise herein expressly  provided) if in
writing and mailed,  first-class postage prepaid, to the Company addressed to it
at the address of its principal  office specified in the first paragraph of this
instrument  or at any other  address  furnished in writing to the Trustee by the
Company.

SECTION 106. Notice to Holders; Waiver.

          Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly  provided)
if in writing and mailed,  first-class  postage prepaid, to each Holder affected
by such  event,  at the  address of the  Holder as it  appears  in the  Security
Register,  not later than the latest  date (if any),  and not  earlier  than the
earliest date (if any),  prescribed  for the giving of such notice.  In any case
where  notice to  Holders  is given by mail,  neither  the  failure to mail such
notice,  nor any defect in any notice so mailed,  to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders.  Where this
Indenture  provides  for  notice in any  manner,  such  notice  may be waived in
writing by the Person  entitled to receive such notice,  either  before or after
the event,  and such waiver shall be the  equivalent of such notice.  Waivers of
notice by Holders shall be filed with the Trustee,  but such filing shall not be
a condition  precedent to the validity of any action taken in reliance upon such
waiver.

          In case by reason of the  suspension  of  regular  mail  service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such  notification  as shall be

                                       31
<PAGE>

made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.

SECTION 107.  Conflict with Trust Indenture Act.

          If any  provision  hereof  limits,  qualifies  or  conflicts  with (a)
another  provision  hereof which is required to be included in this Indenture by
any of the  provisions of the Trust  Indenture  Act, or (b) any provision of the
Trust  Indenture Act that is required  under such Act to be a part of and govern
this Indenture,  the latter  provision  shall control.  If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or  excluded,  the latter  provision  shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.

SECTION 108.  Effect of Headings and Table of Contents.

          The Article and Section  headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION 109.  Successors and Assigns.

          All  covenants and  agreements in this  Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.

SECTION 110.  Separability Clause.

          In case any provision in this Indenture or in the Securities  shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 111.  Benefits of Indenture.

          Nothing in this  Indenture or in the  Securities,  express or implied,
shall give to any  Person,  other than the parties  hereto and their  successors
hereunder and the Holders of  Securities,  any benefit or any legal or equitable
right, remedy or claim under this Indenture.

SECTION 112.  Governing Law.

          THIS INDENTURE AND THE  SECURITIES  SHALL BE GOVERNED BY AND CONSTRUED
IN  ACCORDANCE  WITH  THE  LAWS OF THE  STATE  OF NEW  YORK  WITHOUT  REGARD  TO
PRINCIPLES OF CONFLICTS OF LAWS.

SECTION 113.  Legal Holidays.

          In any case where any Interest Payment Date,  Redemption Date, Payment
Date or Stated  Maturity  of any  Security  shall not be a  Business  Day,  then
(notwithstanding  any other  provision of this  Indenture or of the  Securities)
payment of interest or principal  need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the Interest  Payment  Date or  Redemption  Date,  Payment Date or at the

                                       32
<PAGE>

Stated Maturity,  provided that no interest shall accrue for the period from and
after such  Interest  Payment  Date,  Redemption  Date,  Payment  Date or Stated
Maturity, as the case may be.

SECTION 114.  Consent to Service; Jurisdiction.

          Each party hereto  irrevocably  agrees that any legal suit,  action or
proceeding arising out of or relating to this Indenture or the Securities may be
instituted in any federal or state court in the Borough of  Manhattan,  The City
of New York,  waives any  objection  which it may now or  hereafter  have to the
laying of the venue of any such legal  suit,  action or  proceeding,  waives any
immunity from jurisdiction or to service of process in respect of any such suit,
action or proceeding, waives any right to which it may be entitled on account of
place of residence or domicile,  and irrevocably  submits to the jurisdiction of
any such court in any such suit, action or proceeding. The Company agrees that a
final  judgment in any such suit,  action or proceeding  shall be conclusive and
may be enforced in other  jurisdictions  by suit on the judgment or in any other
manner  provided by law in accordance  with  applicable  law. The Company hereby
irrevocably waives any right to invoke  jurisdiction it may have to any court by
virtue of Mexican  law.  The  Company  hereby  appoints  Durango  Georgia  Paper
Company,  1000 Osborne Street, St. Marys,  Georgia 31558,  Attention:  Prudencio
Calderon,  as its authorized agent upon which process may be served in any legal
suit,  action or proceeding  arising out of or relating to this Indenture or the
Securities  which may be instituted in any federal or state court in the Borough
of Manhattan, The City of New York, and agrees that service of process upon such
agent,  and written  notice of said service to the Company by the person serving
the same, shall be deemed in every respect effective service of process upon the
Company  in any such suit,  action or  proceeding  and  further  designates  its
domicile,  the domicile of Durango-Georgia Paper Company specified above and any
domicile Durango-Georgia Paper Company may have in the future as its domicile to
receive any notice hereunder  (including service of process).  If for any reason
Durango-Georgia  Paper Company (or any successor  agent for this purpose)  shall
cease to act as agent for service of process as provided above, the Company will
promptly appoint a successor agent for this purpose reasonably acceptable to the
Trustee.  The Company  agrees to take any and all actions as may be necessary to
maintain  such  designation  and  appointment  of such  agent in full  force and
effect.

SECTION 115.  Language of Notices, Etc.

          Any request,  demand,  authorization,  direction,  notice,  consent or
waiver  required  or  permitted  under this  Indenture  shall be in the  English
language, except that any published notice may be in an official language of the
country of publication.

                                   ARTICLE TWO
                                 SECURITY FORMS

SECTION 201.  Forms Generally.

          The Securities and the Trustee's  certificate of authentication  shall
be in substantially  the forms set forth in this Article,  with such appropriate
insertions,  omissions,  substitutions  and other  variations as are required or
permitted by this Indenture,  and may have such letters,  numbers or other marks
of  identification  and such legends or  endorsements  placed

                                       33
<PAGE>

thereon as may be required to comply with the rules of any  securities  exchange
or as may,  consistently  herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.

          In  the  event  that  definitive  Securities  are  issued,  definitive
Securities  shall be  printed,  lithographed  or  engraved  or  produced  by any
combination of these methods on steel engraved borders or may be produced in any
other  manner  permitted  by the rules of any  securities  exchange on which the
Securities  may be listed,  all as  determined  by the officers  executing  such
Securities, as evidenced by their execution of such Securities.

SECTION 202.  Form of Face of Security.

                        CORPORACION DURANGO, S.A. de C.V.

                           ____% SENIOR NOTES DUE 2008

                                                         CUSIP No.______________
                                                         ISIN No._______________

No. ____
$___,000,000

          CORPORACION  DURANGO,   S.A.  de  C.V.,  a  variable  capital  company
(sociedad  anonima de capital  variable)  organized under the laws of the United
Mexican States  (herein called the "Company,"  which term includes any successor
Person under the Indenture hereinafter referred to), for value received,  hereby
promises to pay to _____________,  or registered  assigns,  the principal sum of
______________________ U.S. Dollars on _______, 2008 and to pay interest thereon
from the Closing  Date or from the most recent  Interest  Payment  Date to which
interest has been paid or duly provided  for,  semiannually  on  __________  and
___________ in each year,  commencing on  ____________  at the rate of ____% per
annum,  until the principal  hereof is paid or made  available for payment.  The
interest so payable and  punctually  paid or duly  provided  for on any Interest
Payment  Date will,  as  provided  in the  Indenture  (as defined on the reverse
hereof),  be paid to the  Person  in whose  name this  Security  (or one or more
Predecessor  Securities)  is  registered at the close of business on the Regular
Record Date for such interest, which shall be the _________ or ________ (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date.  Any  such  interest  not so  punctually  paid or duly  provided  for will
forthwith  cease to be payable to the Holder on such Regular Record Date and may
either  be paid to the  Person  in  whose  name  this  Security  (or one or more
Predecessor  Securities)  is  registered  at the close of  business on a Special
Record  Date  for the  payment  at such  Defaulted  Interest  to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days  prior to such  Special  Record  Date,  or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities  exchange
on which the Securities  may be listed,  and upon such notice as may be required
by such exchange,  all as more fully  provided in the Indenture.  Payment of the
principal of and interest on this  Security will be made at the office or agency
of the Company maintained in The City of New York for that purpose, 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

                                       34
<PAGE>

private debts;  provided,  however, that at the option of the Company payment of
interest  may be made by check  mailed to the  address  of the  Person  entitled
thereto as such address shall appear in the Security Register.

          The Company shall pay Additional  Amounts and the Securities  shall be
subject to  redemption  by the Company as provided in Sections  1020 and 1101 of
the Indenture.

          Reference is hereby made to the further  provisions  of this  Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

          Unless the certificate of  authentication  hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall  not be  entitled  to any  benefit  under  the  Indenture  or be  valid or
obligatory for any purpose.

          IN WITNESS WHEREOF,  the Company has caused this instrument to be duly
executed.

                                            CORPORACION DURANGO,
                                            S.A. de C.V.

                                            By:_____________________________
                                            Name:
                                            Title:

SECTION 203  Form of Reverse of Security.

General

          This Security is one of a duly  authorized  issue of Securities of the
Company  designated  as its ____%  Senior  Notes  due 2008  (herein  called  the
"Securities"), issued under an Indenture, dated as of ___________ (herein called
the  "Indenture"),  between the Company and The Chase Manhattan Bank, as Trustee
(herein  called the "Trustee",  which term includes any successor  trustee under
the  Indenture),  to which  Indenture and all  indentures  supplemental  thereto
reference is hereby made for a statement of the respective  rights,  limitations
of rights,  duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities  and of the terms upon which the  Securities  are, and
are to be, authenticated and delivered.

          The  Securities  will rank  senior in right of  payment  to all of the
Company's subordinated indebtedness.

          In  addition,  prior to the  Pledge  Release  Date (as  defined in the
Indenture)  the  Securities  will be secured by the pledge of an  unsubordinated
promissory note issued by Grupo Industrial Durango,  S.A. de C.V. ("GID") to the
Company  on the  date  hereof,  in a  principal  amount  at  least  equal to the
principal amount of the Outstanding Securities,  as amended or supplemented from
time to time.  That  unsubordinated  promissory note will rank equal in right

                                       35
<PAGE>

of  payment  to  all  other  existing  and  future   unsecured,   unsubordinated
indebtedness of GID.  Subsequent to the Pledge Release Date, the Securities will
rank  junior  to  all  of the  secured  indebtedness  of  the  Company  and  the
indebtedness of all of the Subsidiaries of the Company.

Additional Amounts

          Any and all payments made by the Company to the Holders, under or with
respect  to the  Securities,  shall  be  made  free  and  clear  of and  without
withholding  or deduction for or on account of any present or future tax,  duty,
levy, impost, assessment or other governmental charge (including any interest or
penalties with respect  thereto)  imposed or levied by or on behalf of Mexico or
any  political  subdivision  thereof or by any  authority  or agency  therein or
thereof having power to tax (hereinafter  "Mexican Withholding  Taxes"),  unless
the  withholding or deduction of such Mexican  Withholding  Taxes is required by
law or by the interpretation or administration thereof. In the event any Mexican
Withholding Taxes are required to be so withheld or deducted, the Company shall:

          (a) pay  such  additional  amounts  ("Additional  Amounts")  as may be
necessary  so  that  after  making  all  required   deductions  or  withholdings
(including those applicable to additional sums payable under this provision) the
net amount  received  by Holders or other  beneficial  owners of the  Securities
shall not be less than the  amounts as would have been  received  by them had no
such withholding or deduction been required,

          (b) deduct or withhold such Mexican Withholding Taxes and

          (c) remit the full amount so  deducted  or  withheld  to the  relevant
taxing or other authority.

Notwithstanding  the foregoing,  no such Additional Amounts shall be payable for
or on account of:

               (a) any  Mexican  Withholding  Taxes  which  would  not have been
          imposed or levied on a Holder but for the  existence of any present or
          former  connection  between  the  Holder  or  beneficial  owner of the
          Security  and Mexico or any  political  subdivision  or  territory  or
          possession  thereof or area  subject to its  jurisdiction,  including,
          without  limitation,  such Holder or  beneficial  owner:  (i) being or
          having  been a citizen or  resident  of Mexico,  (ii)  maintaining  or
          having maintained an office,  permanent  establishment,  fixed base or
          branch  therein,  or (iii) being or having been  present or engaged in
          trade or business therein, except for a connection solely arising from
          the mere ownership of, or receipt of payment  under,  such Security or
          the  exercise  of  rights  under  such   Security  or  the   Indenture
          (personally or through the Trustee);

               (b) any estate,  inheritance,  gift or similar tax, assessment or
          other governmental charge;

               (c) any Mexican  Withholding  Taxes that are imposed or levied by
          reason  of the  failure  by the  Holder  or  beneficial  owner of such
          Security   to   comply   with   any   certification,   identification,
          information, documentation, declaration or other reporting requirement
          which is required or imposed by a statute, treaty, regulation, general
          rule or

                                       36
<PAGE>

          administrative  practice  as a  precondition  to  exemption  from,  or
          reduction in the rate of, the imposition,  withholding or deduction of
          any Mexican  Withholding  Taxes;  provided that at least 60 days prior
          to: (i) the first payment date with respect to which the Company shall
          apply  this  clause  (c) and (ii) in the  event  of a  change  in such
          certification, identification, information, documentation, declaration
          or other reporting requirements,  the first payment date subsequent to
          such change,

          the Company  shall have  notified  the Trustee,  in writing,  that the
          Holders or  beneficial  owners of the  Securities  will be required to
          provide   such   certification,    identification,    information   or
          documentation, declaration or other reporting;

               (d) any Mexican  Withholding  Taxes that are imposed or levied by
          reason  of the  failure  by the  Holder or  beneficial  owners of such
          Security to timely comply  (subject to the conditions set forth below)
          with a written  request  by or on behalf of the  Company,  to  provide
          information,   documentation   or  other   evidence   concerning   the
          nationality,  residence,  identity,  eligibility  for benefits under a
          treaty for  avoidance  of double  taxation to which Mexico is a party,
          which is in effect,  present or former  connection  with Mexico or any
          political  subdivision  or  territory  or  possession  thereof or area
          subject to its  jurisdiction,  or of the Holder or beneficial owner of
          such  Security  that is necessary  from time to time to determine  the
          appropriate  rate of deduction or withholding  of Mexican  Withholding
          Taxes applicable to such Holder or beneficial owner;  provided that at
          least 60 days prior to the first  payment  date with  respect to which
          the  Company  shall apply this  clause  (d),  the  Company  shall have
          notified the  Trustee,  in writing,  that such  Holders or  beneficial
          owners of the Securities will be required to provide such information,
          documentation or other evidence;

               (e) the  presentation  of such Security  (where  presentation  is
          required)  for  payment  on a date more than 30 days after the date on
          which such payment became due and payable or the date on which payment
          thereof is duly provided for,  whichever  occurs later,  except to the
          extent that the Holder or the beneficial  owner of such Security would
          have been  entitled to  Additional  Amounts in respect of such Mexican
          Withholding  Taxes on presenting such Security for payment on any date
          during such 30-day period; or

               (f) any combination of item (a), (b), (c), (d) or (e) above.

          Notwithstanding  the  foregoing,  the  limitations  on  the  Company's
obligation  to pay  Additional  Amounts  set forth in clauses  (c) and (d) above
shall  not  apply  if  the  provision  of  the  certification,   identification,
information,  documentation,  declaration  or other  evidence  described in such
clauses (c) and (d) would be materially  more onerous,  in form, in procedure or
in the substance of information disclosed,  to a Holder or beneficial owner of a
Security (taking into account any relevant differences between United States and
Mexican law, regulation or administrative  practice) than comparable information
or other applicable reporting  requirements imposed or provided for under United
States federal income tax law  (including  the United  States-Mexico  Income Tax
Treaty),   regulations   (including  proposed  regulations)  and  administrative
practice  (such as IRS Forms  1001,  W-8,  W-8BEN  and W-9).  In  addition,  the
limitations on the Company's  obligation to pay Additional  Amounts set forth in
clauses  (c) and (d) above  shall not apply if Section VI of Article  154 of the
Mexican Income Tax Law is in effect, unless:

                                       37
<PAGE>

          (i) the provision of the certification,  identification,  information,
documentation, declaration or other evidence described in clauses (c) and (d) is
expressly  required  by statute,  regulation,  general  rules or  administrative
practice in order to apply  Section VI of Article 154 of the Mexican  Income Tax
Law, the Company cannot obtain such certification,  identification, information,
or satisfy  any other  reporting  requirements,  on its own  through  reasonable
diligence and the Company  otherwise would meet the requirements for application
of Section VI of Article 154 of the Mexican Income Tax Law, or

          (ii) in the case of a Holder or beneficial owner of a Security that is
a pension fund or other tax-exempt organization, such Holder or beneficial owner
would be subject to Mexican  Withholding  Taxes at a rate that is lower than the
rate resulting from the  application of Section VI of Article 154 of the Mexican
Income Tax Law, if the  information,  documentation  or other evidence  required
under clauses (c) and (d) above were provided.

In addition,  clauses (c) and (d) above shall not be construed to require that a
non-Mexican pension or retirement fund, a non-Mexican tax-exempt organization, a
non-Mexican  financial  institution or any other Holder or beneficial owner of a
Security obtains registration with the Ministry of Finance and Public Credit for
the purpose of  establishing  eligibility  for an exemption from or reduction of
Mexican Withholding Taxes.

          Upon the  Trustee's  receipt of timely  notification  from the Company
that the Holders or beneficial owners will be required to provide information or
documentation,  as  described  in clauses (c) and (d) above,  the Trustee  shall
provide such  notification to the Holders or beneficial  owners, as the case may
be. The Company will, upon written request, provide the Trustee, the Holders and
the Paying  Agent with a duly  certified  or  authenticated  copy of an original
receipt of the  payment of  Mexican  Withholding  Taxes  which the  Company  has
withheld or deducted in respect of any  payments  made under or with  respect to
the Securities.  The Trustee shall, for a period of five years following the due
date for each payment,  maintain in its files each such  certified copy received
from the Company.

          If the Company is obligated to pay Additional  Amounts with respect to
any payment  under or with  respect to the  Securities  (other  than  Additional
Amounts  payable on the date of the  Indenture),  the Company will, upon written
request,  deliver to the Trustee an Officers'  Certificate stating the fact that
such Additional Amounts are payable and the amounts so payable.

          The Trustee shall,  upon written request by the beneficial  owner of a
Security or any Paying Agent,  provide such owner or Paying Agent with a copy of
the  certified  copy of the  receipt  provided  to the  Trustee  by the  Company
regarding  the amount of Mexican tax withheld by the Company with respect to the
Securities  within 30 Business Days following the receipt by the Trustee of such
request.

          All references in this Security to principal or interest in respect of
any Security shall be deemed to mean and include all Additional Amounts, if any,
payable in respect of such principal or interest,  unless the context  otherwise
requires,  and  express  mention  of the  payment of  Additional  Amounts in any
provision  hereof shall not be construed  as excluding  reference to  Additional
Amounts in those  provisions  hereof where such express mention is not made. All

                                       38
<PAGE>

references  in this  Security to principal  in respect of any Security  shall be
deemed to mean and include any  redemption  price or purchase  price  payable in
respect  of such  Security  pursuant  to any  redemption  provided  for above or
pursuant to any Offer to  Purchase,  and  express  mention of the payment of any
redemption  price  or  purchase  price  in any  provision  hereof  shall  not be
construed as excluding  reference to any  redemption  price or purchase price in
those provisions hereof where such express reference is not made.

          In the event that Additional Amounts actually paid with respect to the
Securities  are based on rates of deduction or  withholding  of Mexican taxes in
excess of the appropriate  rate applicable to the Holder or beneficial  owner of
such  Securities,  and, as a result thereof,  such Holder or beneficial owner is
entitled to make a claim for a refund or credit of such excess from  Mexican tax
authorities,  then such Holder or  beneficial  owner  shall,  by  accepting  the
Securities,  be deemed to have  assigned and  transferred  all right,  title and
interest to any such claim for a refund or credit of such excess to the Company.
However,  by making such  assignment,  the Holder or  beneficial  owner makes no
representation  or warranty  that the Company  will be entitled to receive  such
claim  for a refund or  credit  and  incurs  no other  obligation  with  respect
thereto.

          Reference  is  made  to  Section  1020 of the  Indenture  for  further
provisions with respect to the payment of Additional Amounts.

Redemption for Changes in Mexican Withholding Taxes

          In the event that the Company has become or would become  obligated to
pay, on the next date on which any amount would be payable under or with respect
to the  Securities  any Additional  Amounts in excess of those  attributable  to
Mexican Withholding Taxes of 10%, as a result of

          (a) any change in or amendment to the laws,  rules or  regulations  of
Mexico,   or  any   political   subdivision   or  taxing   authority   or  other
instrumentality thereof or therein, or

          (b)  any  amendment  to or  change  in the  rules  or  interpretations
relating to such laws, made by any legislative body,  governmental or regulatory
agency  or  authority  (including  the  enactment  of any  legislation  and  the
publication  of any  regulatory  determination)  of  Mexico,  or  any  political
subdivision or taxing authority or other instrumentality thereof or therein, or

          (c) any official  interpretation,  application or pronouncement by any
legislative body or governmental or regulatory agency or authority that provides
for a position with respect to such laws, rules or regulations that differs from
the  theretofore  generally  accepted  position,  which  amendment  or change is
enacted, promulgated,  issued or announced or which interpretation,  application
or  pronouncement  is issued or announced,  in each case, after the date of this
prospectus, then

the  Company may redeem all,  but not less than all,  of the  Securities  at any
time,  on giving  not less than 30 nor more than 60 days'  notice  mailed to the
Trustee at 100% of the unpaid  principal amount together with accrued and unpaid
interest thereon, if any, to the Redemption Date. This notice, once delivered to
the Trustee,  will be irrevocable,  except if the Company no longer continues to
be obligated to pay those Additional Amounts.

                                       39
<PAGE>

          Such  redemption for tax reasons can only occur in accordance with the
following conditions:

          (a) no such notice of  redemption  may be given  earlier  than 90 days
prior to the earliest date on which, but for such redemption,  the Company would
be obligated  to pay such  Additional  Amounts were a payment on the  Securities
then due; and

          (b) at the time such notice of redemption is given, such obligation to
pay such Additional Amounts remains in effect.

          Prior to publication of any notice of redemption for tax reasons,  the
Company shall deliver to the Trustee:

          (i) a certificate  signed by a duly authorized  officer of the Company
stating that the Company is entitled to effect such redemption and setting forth
a statement of facts showing that the  conditions  precedent of the right of the
Company to so redeem have occurred; and

          (ii) an Opinion of Mexican Counsel or independent public  accountants,
in both  cases  of  recognized  standing,  selected  by the  Company  reasonably
acceptable  to the  Trustee to the effect  that the  Company  has or will become
obligated to pay such Additional Amounts as a result of such change,  amendment,
official interpretation, application or pronouncement.

Optional Redemption

          On or after _______________  2005, we may buy back the Securities,  in
whole or in part, at the following redemption prices, expressed as percentage of
the  principal  amount,  plus  accrued  and  unpaid  interest,  if  any,  to the
applicable  redemption date, if redeemed during the 12-month period beginning on
_____________ of the years indicated below:

                  Year                                  Percentage

                  2005

                  2006

                  2007 and thereafter                      100%

          In addition,  at any time prior to ____________  2004, the Company may
redeem up to 35% of the  principal  amount of the  Securities  with the Net Cash
Proceeds  of one or more  sales  of the  Company's  Capital  Stock  (other  than
Disqualified  Stock)  at  a  Redemption  Price  (expressed  as a  percentage  of
principal  amount) of ___.___%,  plus accrued  interest to the Redemption  Date;
provided that at least 65% of the aggregate  principal  amount of the Securities
originally  issued on the  Closing  Date  remains  outstanding  after  each such
redemption  and notice of any such  redemption is mailed within 120 days of each
such sale of Capital Stock.

                                       40
<PAGE>

          The  Company  will  give not less than 30 days' nor more than 60 days'
notice of any redemption. If less than all of the Securities are to be redeemed,
selection of the Securities for redemption will be made by the Trustee:

          (a) in compliance  with the  requirements  of the  principal  national
          securities exchange, if any, on which the Securities are listed, or

          (b)  if  the  Securities  are  not  listed  on a  national  securities
          exchange,  by lot or by such other  method as the  Trustee in its sole
          discretion shall deem to be fair and appropriate.

However,  no Security of $1,000 in principal amount or less shall be redeemed in
part.  If any Security is to be redeemed in part only,  the notice of redemption
relating to such Security  will state the portion of the principal  amount to be
redeemed.  A new Security in principal  amount equal to the  unredeemed  portion
will be issued upon cancellation of the original Security.

Other

          The Company shall pay any stamp, issue,  registration,  documentary or
other similar  taxes and other duties  (including  interest and  penalties  with
respect  thereto)  imposed or levied by Mexico (or any political  subdivision or
taxing  authority  thereof or  therein)  in respect of the  creation,  issue and
offering of the Securities.

          Except as specifically provided in this Security or the Indenture, the
Company shall not be required to make any payment with respect to any tax, duty,
assessment or other governmental  charge of whatever nature imposed or levied by
any  government  or any political  subdivision  or taxing  authority  thereof or
therein.

          If an Event of Default shall occur and be continuing, the principal of
all the  Securities  may be declared  due and payable in the manner and with the
effect provided in the Indenture.

          The Indenture  provides that,  subject to certain  conditions,  if (a)
certain Net Cash  Proceeds are  available to the Company as a result of an Asset
Disposition or (b) a Change of Control occurs,  the Company shall be required to
make an Offer to Purchase for all or a specified portion of the Securities.

          The Indenture  contains  provisions  for defeasance at any time of (a)
the entire  indebtedness of this Security or (b) certain  restrictive  covenants
and  Events  of  Default  with  respect  to this  Security,  in each  case  upon
compliance with certain conditions set forth therein.

          The Indenture  permits,  with certain  exceptions as therein provided,
the amendment  thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the  Securities  under the Indenture at
any time by the  Company  and the  Trustee  with the consent of the Holders of a
majority in aggregate  principal  amount of the  Outstanding  Securities  at the
time. The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate  principal amount of the Outstanding  Securities at the
time, on behalf of the Holders of all the Securities, to waive compliance by the
Company

                                       41
<PAGE>

with certain  provisions of the  Indenture  and certain past defaults  under the
Indenture  and their  consequences.  Any such consent or waiver by the Holder of
this  Security  shall be  conclusive  and binding  upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer  hereof or in exchange  therefor or in lieu  hereof,  whether or not
notation of such consent or waiver is made upon this Security.

          As provided in and subject to the  provisions  of the  Indenture,  the
Holder of this  Security  shall not have any right to institute  any  proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder,  unless such Holder shall have previously given
written notice to the Trustee of a continuing  Event of Default,  the Holders of
at least 25% in aggregate  principal amount of the Outstanding  Securities shall
have made a written  request to the Trustee to institute  proceedings in respect
of such Event of Default as Trustee and offered the Trustee reasonable indemnity
against  any cost,  liability  or  expense,  the  Trustee  for 60 days after the
receipt of such notice,  request and offer of indemnity  has failed to institute
any such proceeding,  and no direction inconsistent with such request shall have
been given to the Trustee during such 60-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Securities. The foregoing shall
not  apply  to any  suit  instituted  by the  Holder  of this  Security  for the
enforcement  of any payment of principal  hereof or interest  hereon on or after
the respective due dates expressed herein.

          No reference herein to the Indenture and no provision of this Security
or of the Indenture  shall alter or impair the obligation of the Company,  which
is absolute  and  unconditional,  to pay the  principal  of and interest on this
Security  at the  times,  place and rate,  and in the coin or  currency,  herein
prescribed.

          As  provided  in the  Indenture  and  subject to  certain  limitations
therein set forth,  the transfer of this Security is registrable in the Security
Register,  upon surrender of this Security for  registration  of transfer at the
office or agency of the Company in The City of New York,  duly  endorsed  by, or
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Security  Registrar  duly  executed by the Holder  hereof or an attorney for the
Holder duly authorized in writing, and thereupon one or more new Securities,  of
authorized  denominations and for the same aggregate  principal amount,  will be
issued to the designated transferee or transferees.

          The Securities  are issuable only in fully  registered  form,  without
coupons,  in  denominations  of  $1,000 of  principal  amount  and any  integral
multiple  thereof.   As  provided  in  the  Indenture  and  subject  to  certain
limitations therein set forth,  Securities are exchangeable for a like aggregate
principal  amount of  Securities  of a  different  authorized  denomination,  as
requested by the Holder surrendering the same.

          No service charge shall be made for any such  registration of transfer
or exchange,  but the Company may require  payment of a sum  sufficient to cover
any tax or other governmental charge payable in connection therewith.

          Prior  to  due  presentment  of  this  Security  for  registration  of
transfer,  the Company,  the Trustee and any agent of the Company or the Trustee
may treat the  Person in whose name this  Security  is  registered  as the owner
hereof for all purposes,  whether or not this  Security be

                                       42
<PAGE>

overdue,  and  neither  the  Company,  the  Trustee  nor any such agent shall be
affected by notice to the contrary.

          Interest on this Security  shall be computed on the basis of a 360-day
year of twelve 30-day months.

          All terms used in this  Security  which are  defined in the  Indenture
shall have the meanings assigned to them in the Indenture.

          THE INDENTURE AND THIS SECURITY  SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT  REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this  Security  purchased in its entirety
by the Company pursuant to Section 1016 or 1017 of the Indenture, check the box:

          If you want to elect to have only a part of this Security purchased by
the Company pursuant to Section 1016 or 1017 of the Indenture, state the amount:
$

Dated:                                     Your Signature:
                                           (Sign exactly as name appears
                                           on the other side of this Security)

SECTION 204  Form of Trustee's Certificate of Authentication.

          This  is one of the  Securities  referred  to in the  within-mentioned
Indenture.

Dated:

                                       THE CHASE MANHATTAN BANK,
                                         as Trustee

                                       By:
                                          ------------------------------------
                                                  Authorized Signatory

SECTION 205.  Book-Entry Notes.

          (a) Anything in the other provisions of this Indenture to the contrary
notwithstanding, it is intended that the Securities will be issued only in fully
registered form,  without  coupons,  in denominations of $1,000 and any integral
multiples thereof. The Securities shall be initially  represented by one or more
registered global notes (the "Global Notes") in an amount equal to the aggregate
principal  amount of the Securities  which shall be deposited with, or on behalf
of, The Depository  Trust Company,  New York,  New York (the  "Depositary")  and
registered in the name of the  Depositary's  nominee.  The Global Notes shall be
substantially  in the form provided in Section 201, with such  modifications  as
may be necessary  or  desirable to

                                       43
<PAGE>

reflect the issuance  thereof in global form, and may be  transferred,  in whole
and not in part,  only to another nominee of the Depositary or to a successor of
the  Depositary or its nominee.  If a Company Order  pursuant to Section 303 has
been, or simultaneously is, delivered,  any further  instructions by the Company
with  respect to the  endorsement  or delivery  of the Global  Notes shall be in
writing but need not comply with Section 102 and need not be  accompanied  by an
Opinion of Mexican Counsel or an Opinion of U.S. Counsel.

          The Global Notes shall bear a legend  substantially  to the  following
effect: "Unless this Global Note is presented by an authorized representative of
The  Depository  Trust  Company  ("DTC"),  to  the  Company  or  its  agent  for
registration  of  transfer,  exchange or payment,  and any Global Note issued is
registered in the name of Cede & Co., as nominee of DTC (and any payment  hereon
is made to Cede & Co. or to such other entity as is  requested by an  authorized
representative  of DTC),  any transfer,  pledge or other use hereof for value or
otherwise by or to any other  person is  wrongful,  inasmuch as the record owner
hereof,  Cede & Co.  (or such  other  entity as is  requested  by an  authorized
representative of DTC), has an interest herein."

          (b) So long as a nominee of the Depositary is the registered  owner of
the Global Notes,  such nominee will be considered  the sole owner and holder of
the Securities  represented by the Global Notes under this Indenture.  Except as
provided below,  owners of beneficial  interests in the Global Notes will not be
entitled to have Securities  represented by the Global Notes registered in their
names,  will not  receive or be  entitled  to receive  physical  delivery of the
Securities in certificated form and will not be considered the owners or holders
thereof under this Indenture.

          Neither the Company,  nor the Trustee will have any  responsibility or
liability for any aspect of the records  relating to or payments made on account
of  beneficial  ownership  interests in the Global  Notes,  or for  maintaining,
supervising or reviewing any records relating to such beneficial interests.

          Principal  and  interest  payments on  Securities  represented  by the
Global Notes shall be made to the  Depositary's  nominee as the registered owner
of the Global Notes.  Under the terms hereof,  the Company and the Trustee shall
treat the persons in whose names the  Securities are registered as the owners of
such  Securities for the purpose of receiving  payment of principal and interest
on such Securities and for all other purposes whatsoever. Therefore, neither the
Company nor the  Trustee  has any direct  responsibility  or  liability  for the
payment of  principal  or interest  on the  Securities  to owners of  beneficial
interests in the Global Notes.

          (c) If the  Depositary is at any time  unwilling or unable to continue
as depositary and a successor  depositary is not appointed by the Company within
90 days, the Company shall issue  Securities in definitive  form in exchange for
the Global Notes. In addition, the Company may at any time determine not to have
the Securities  represented by the Global Notes and, in such event,  the Company
will issue  Securities  in  definitive  form in  exchange  for the Global  Notes
representing  such  Securities.  In any such instance,  an owner of a beneficial
interest  in  the  Global  Notes  will  be  entitled  to  physical  delivery  in
certificated  form of Securities  equal in principal  amount to such  beneficial
interest  and to have such  Securities  registered  in its

                                       44
<PAGE>

name.  Securities  so  issued  in  certificated  form  will  be  issued  in  the
denominations and in the form provided in this Indenture.

                                  ARTICLE THREE
                                  THE SECURITIES

SECTION 301.  Title and Terms.

          The Company has  initially  authorized  the  execution and delivery of
US$___________ of Securities under this Indenture. The Securities shall be known
and designated as the "___% Senior Notes due 2008" of the Company.  Their Stated
Maturity  shall be _______,  2008,  and they shall bear  interest at the rate of
___% per annum,  from _________ or from the most recent Interest Payment Date to
which  interest has been paid or duly provided for, as the case may be,  payable
semiannually  on ________  and  ________,  commencing  ________,  2002 until the
principal thereof is paid or made available for payment.

          The  principal of and interest on the  Securities  shall be payable at
the office or agency of the Company in The City of New York  maintained for such
purpose  and at any other  office or agency  maintained  by the Company for such
purpose;  provided,  however,  that at the  option  of the  Company  payment  of
interest  may be made by check  mailed to the  address  of the  Person  entitled
thereto as such address shall appear in the Security Register.

          The Company shall pay Additional Amounts,  and the Securities shall be
subject to redemption by the Company, as provided in Sections 1020 and 1101.

          The Securities  shall be subject to repurchase by the Company pursuant
to an Offer to Purchase as provided in Sections 1016 and 1017.

          The  Securities  shall be subject to  Defeasance  at the option of the
Company as provided in Article Twelve.

          Until  Pledge  Release  Date,  the  Securities  will be secured by the
pledge of an unsubordinated  promissory note issued by GID to the Company on the
date hereof in a  principal  aggregate  amount at least  equal to the  principal
amount of the Outstanding  Securities,  as amended or supplemented  from time to
time. That unsubordinated promissory note will rank equal in right of payment to
all other existing and future  unsecured,  unsubordinated  indebtedness  of GID.
Subsequent to the Pledge Release Date, the Securities will rank junior to all of
the  secured  indebtedness  of the Company  and the  indebtedness  of all of the
Subsidiaries of the Company.

SECTION 302.  Denominations.

          The  Securities  shall  be  issuable  only in fully  registered  form,
without coupons, and only in denominations of $l,000 of principal amount and any
integral multiple thereof.  All payments in respect of principal of and premium,
if any, and interest on the Securities shall be in United States Dollars.

                                       45
<PAGE>

SECTION 303.  Execution, Authentication, Delivery and Dating.

          Subject to Article Ten and  applicable  law, the  aggregate  principal
amount of  Securities  which  may be  authenticated  and  delivered  under  this
Indenture  is  unlimited.  The  Securities  shall be  executed  on behalf of the
Company  by its  Chairman  of the Board,  its Vice  Chairman  of the Board,  its
President or one of its Vice Presidents.  The signature of any of these officers
on the Securities may be manual or facsimile.

          Securities  bearing the manual or facsimile  signatures of individuals
who were at any time the proper  officers of the Company shall bind the Company,
notwithstanding  that such  individuals  or any of them have ceased to hold such
offices prior to the  authentication  and delivery of such Securities or did not
hold such offices at the date of such Securities.

          At any time and from time to time after the  execution and delivery of
this Indenture,  the Company may deliver  Securities  executed by the Company to
the  Trustee  for  authentication,   together  with  a  Company  Order  for  the
authentication and delivery of such Securities;  provided that the Trustee shall
be entitled to receive an Officers'  Certificate and an Opinion of U.S.  Counsel
of the  Company in  connection  with the  authentication  and  delivery  of such
Securities.  Such Company  Order shall  specify the amount of  Securities  to be
authenticated  and the date on which the original  issue of  Securities is to be
authenticated and, in the case of an issuance of Securities  pursuant to Section
312,  shall certify that such  issuance is in compliance  with Article Ten. Upon
receipt of such  documents,  the Trustee in  accordance  with such Company Order
shall authenticate and make such Securities available for delivery.

          Each Security shall be dated the date of its authentication.

          No Security  shall be entitled to any benefit under this  Indenture or
be valid or obligatory  for any purpose  unless there appears on such Security a
certificate  of  authentication  substantially  in the form  provided for herein
executed  by the  Trustee by manual  signature,  and such  certificate  upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.

SECTION 304.  Temporary Securities.

          Pending the  preparation  of  definitive  Securities,  the Company may
execute,  and  upon  Company  Order  the  Trustee  shall  authenticate  and make
available for delivery,  temporary  Securities which are printed,  lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially  of the tenor of the  definitive  Securities in lieu of which they
are issued and with such appropriate  insertions,  omissions,  substitutions and
other  variations as the officers  executing such  Securities may determine,  as
evidenced by their execution of such Securities.

          If temporary  Securities are issued, the Company will cause definitive
Securities to be prepared without  unreasonable  delay. After the preparation of
definitive  Securities,  the  temporary  Securities  shall be  exchangeable  for
definitive  Securities upon surrender of the temporary  Securities at any office
or agency of the Company designated  pursuant to Section 1002, without charge to
the  Holder.  Upon  surrender  for  cancellation  of any one or  more  temporary
Securities the Company shall execute and the Trustee shall authenticate and make

                                       46
<PAGE>

available  for  delivery  in  exchange  therefor  a  like  principal  amount  of
definitive  Securities  of  authorized  denominations.  Until so  exchanged  the
temporary  Securities  shall in all  respects be  entitled to the same  benefits
under this Indenture as definitive Securities.

SECTION 305.  Registration of Transfer and Exchange.

          The Company  shall cause to be kept at the  Corporate  Trust Office of
the Trustee a register (the register  maintained in such office and in any other
office or agency  designated  pursuant to Section  1002 being  herein  sometimes
collectively  referred to as the "Security  Register") in which, subject to such
reasonable  regulations as it may  prescribe,  the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed  "Security  Registrar" for the purpose of  registering  Securities and
transfers of Securities as herein provided.

          Upon  surrender  for  registration  of transfer of any  Security at an
office or agency of the Company  designated  pursuant  to Section  1002 for such
purpose,  the Company  shall  execute,  and the Trustee shall  authenticate  and
deliver,  in the name of the designated  transferee or transferees,  one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.

          At the option of the Holder,  Securities  may be  exchanged  for other
Securities of any authorized  denominations  and of a like  aggregate  principal
amount,  upon  surrender  of the  Securities  to be  exchanged at such office or
agency.  Whenever any Securities are so  surrendered  for exchange,  the Company
shall execute,  and the Trustee shall  authenticate and deliver,  the Securities
which the Holder making the exchange is entitled to receive.

          All Securities issued upon any registration of transfer or exchange of
Securities  shall be the valid  obligations of the Company,  evidencing the same
debt, and entitled to the same benefits under this Indenture,  as the Securities
surrendered upon such registration of transfer or exchange.

          Every Security  presented or surrendered for  registration of transfer
or for  exchange  shall (if so required  by the Company or the  Trustee) be duly
endorsed,  or be  accompanied  by a  written  instrument  of  transfer  in  form
satisfactory to the Company and to the Security Registrar duly executed,  by the
Holder thereof or an attorney for such Holder duly authorized in writing.

          No service  charge shall be made for any  registration  of transfer or
exchange of Securities,  but the Company may require payment of a sum sufficient
to cover any tax or other governmental  charge that may be imposed in connection
with any  registration  of  transfer  or  exchange  of  Securities,  other  than
exchanges  pursuant  to Section  304 or 906 or in  accordance  with any Offer to
Purchase pursuant to Section 1016 or 1017.

          The Company  shall not be required to issue,  register the transfer of
or exchange any  Security  (i) for a period of 15 prior to any Interest  Payment
Date or (ii) called or being called for redemption under Section 1103.

                                       47
<PAGE>

SECTION 306.  Mutilated, Destroyed, Lost and Stolen Securities.

          If any mutilated  Security is surrendered to the Trustee,  the Company
shall  execute  and the  Trustee  shall  authenticate  and  deliver in  exchange
therefor a new Security of like tenor and principal  amount and bearing a number
not contemporaneously outstanding.

          If  there  shall be  delivered  to the  Company  and the  Trustee  (a)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (b) such  security or  indemnity  as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such  Security has been  acquired by a bona fide
purchaser,  the Company  shall execute and the Trustee  shall  authenticate  and
deliver, in lieu of any such destroyed,  lost or stolen Security, a new Security
of like tenor and  principal  amount and bearing a number not  contemporaneously
outstanding.

          In case any such  mutilated,  destroyed,  lost or stolen  Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

          Upon the issuance of any new Security under this Section,  the Company
may  require  the  payment  of a sum  sufficient  to  cover  any  tax  or  other
governmental  charge  that may be  imposed  in  relation  thereto  and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

          Every new  Security  issued  pursuant  to this  Section in lieu of any
destroyed,  lost or stolen  Security  shall  constitute  an original  additional
contractual  obligation of the Company,  whether or not the  destroyed,  lost or
stolen  Security  shall be at any  time  enforceable  by  anyone,  and  shall be
entitled to all the benefits of this Indenture equally and proportionately  with
any and all other Securities duly issued hereunder.

          The  provisions of this Section are  exclusive and shall  preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307. Payment of Interest; Interest Rights Preserved.

          Interest on any Security  which is payable and is  punctually  paid or
duly  provided for on any  Interest  Payment Date shall be paid to the Person in
whose name that Security (or one or more  Predecessor  Securities) is registered
at the close of business on the Regular Record Date for such interest.

          Any interest on any Security  which is payable,  but is not punctually
paid  or  duly  provided  for,  on any  Interest  Payment  Date  (herein  called
"Defaulted  Interest")  shall forthwith cease to be payable to the Holder on the
relevant  Regular  Record  Date by virtue of having been such  Holder,  and such
Defaulted Interest may be paid by the Company,  at its election in each case, as
provided in clause (a) or (b) below:

          (a) The Company may elect to make payment of any Defaulted Interest to
the  Persons in whose  names the  Securities  (or their  respective  Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such  Defaulted  Interest,  which shall be fixed in the following
manner.  The  Company  shall  notify  the  Trustee  in  writing of the amount of
Defaulted  Interest  proposed  to be paid on each  Security  and the date of the
proposed  payment,  and at the same  time the  Company  shall  deposit  with the
Trustee an amount of money equal to the aggregate  amount proposed to be paid in
respect of such Defaulted  Interest or shall make  arrangements  satisfactory to
the Trustee for such  deposit  prior to the date of the proposed  payment,  such
money when deposited to be held in trust for the benefit of the Persons entitled
to such  Defaulted  Interest as in this Clause  provided.  Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more  than 15 days and not less  than 10 days  prior to the date of
the proposed  payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed  payment.  The Trustee shall  promptly  notify the
Company of such  Special  Record Date and, in the name and at the expense of the
Company,  shall cause notice of the proposed payment of such Defaulted  Interest
and the Special Record Date therefor to be mailed,  first-class postage prepaid,
to each  Holder at the  address of such  Holder as it  appears  in the  Security
Register, not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed,  such Defaulted  Interest shall be paid to the Persons in
whose names the  Securities (or their  respective  Predecessor  Securities)  are
registered  at the close of  business on such  Special  Record Date and shall no
longer be payable pursuant to the following clause (b).

          (b) The  Company  may make  payment of any  Defaulted  Interest in any
other lawful manner not  inconsistent  with the  requirements  of any securities
exchange on which the Securities  may be listed,  and upon such notice as may be
required by such exchange,  if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.

          Subject to the foregoing  provisions  of this  Section,  each Security
delivered  under this Indenture upon  registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest  accrued
and unpaid, and to accrue, which were carried by such other Security.

SECTION 308.  Persons Deemed Owners.

          Prior to due  presentment of a Security for  registration of transfer,
the  Company,  the Trustee and any agent of the Company or the Trustee may treat
the  Person  in whose  name such  Security  is  registered  as the owner of such
Security  for the purpose of  receiving  payment of principal of and (subject to
Section 307)  interest on such Security and for all other  purposes  whatsoever,
whether or not such  Security be overdue,  and neither the Company,  the Trustee
nor any agent of the Company or the  Trustee  shall be affected by notice to the
contrary.

SECTION 309.  Cancellation.

          All Securities  surrendered for payment,  redemption,  registration of
transfer  or exchange  or for credit  against any Offer to Purchase  pursuant to
Section 1016 or 1017 shall, if surrendered to any Person other than the Trustee,
be delivered  to the Trustee and shall be promptly  cancelled by it. The Company
may at  any  time  deliver  to  the  Trustee  for  cancellation

                                       49
<PAGE>

any  Securities  previously  authenticated  and  delivered  hereunder  which the
Company  may have  acquired  in any manner  whatsoever,  and all  Securities  so
delivered  shall be promptly  cancelled by the Trustee.  No Securities  shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture.  All cancelled
Securities  held by the  Trustee  shall be  disposed of as directed by a Company
Order.

SECTION 310. Computation of Interest.

          Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.

SECTION 311.  CUSIP Numbers.

          The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use),  and, if so, the Trustee shall use "CUSIP" numbers in notices
of  redemption as a  convenience  to Holders;  provided that any such notice may
state that no  representation  is made as to the  correctness  of such  numbers,
either  as  printed  on  the  Securities  or as  contained  in any  notice  of a
redemption,  and that  reliance  may be placed only on the other  identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in, or omission of, such numbers.

SECTION 312. Issuance of Additional Securities.

          The Company  may,  subject to Article Ten and  applicable  law,  issue
additional Securities under this Indenture. The Securities issued on the Closing
Date and any  additional  Securities  subsequently  issued shall be treated as a
single class for all purposes under this Indenture.

                                  ARTICLE FOUR
                           SATISFACTION AND DISCHARGE

SECTION 401.  Satisfaction and Discharge of Indenture.

          This  Indenture  shall cease to be of further effect (except as to any
surviving  rights of registration  of transfer or exchange of Securities  herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company,  shall  execute  proper  instruments  acknowledging   satisfaction  and
discharge of this Indenture, when:

          (a) either

          (i) all Securities theretofore authenticated and delivered (other than
Securities  which  have  been  destroyed,  lost or stolen  and  which  have been
replaced or paid as provided in Section 306) have been  delivered to the Trustee
for cancellation and the Company has paid all sums payable by it thereunder; or

          (ii) all such Securities not theretofore  delivered to the Trustee for
cancellation have become due and payable or will become due and payable at their
Stated Maturity within

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<PAGE>

one year or will be called for  redemption  within  one year under  arrangements
satisfactory  to the  Trustee  for the  giving of notice  of  redemption  by the
Trustee in the name,  and at the expense,  of the  Company,  and the Company has
deposited  or  caused  to be  deposited  with the  Trustee  funds  in an  amount
sufficient to pay and discharge the entire  indebtedness  on such Securities not
theretofore  delivered  to the  Trustee  for  cancellation,  for  principal  of,
premium,  if any,  and  interest  to the  date of such  deposit  (in the case of
Securities  which have  become due and  payable)  or to the Stated  Maturity  or
Redemption Date, as the case may be (in the case of Securities which will become
due and payable at then Stated  Maturity within one year or which will be called
for redemption within one year);

          (b) the Company  has paid or caused to be paid all other sums  payable
hereunder by the Company; and

          (c) the Company has delivered to the Trustee an Officers' Certificate,
an Opinion of Mexican Counsel and an Opinion of U.S. Counsel,  each stating that
all conditions  precedent  herein provided for relating to the  satisfaction and
discharge of this Indenture  have been complied with and that such  satisfaction
and  discharge  will not result in a breach or  violation  of, or  constitute  a
default hereunder or under any other material agreement or instrument (which, in
the case of the  Opinion of Mexican  Counsel  and the  Opinion of U.S.  Counsel,
would be any other material  agreement or instrument  identified to such counsel
by the Company) to which the Company or any of its Subsidiaries is a party or by
which it is bound.

Notwithstanding   the  satisfaction   and  discharge  of  this  Indenture,   the
obligations  of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of
this Section 401, the  obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402.  Application of Trust Money.

          Subject to the  provisions of the last  paragraph of Section 1003, all
money deposited with the Trustee  pursuant to Section 401 shall be held in trust
and applied by it, in accordance  with the provisions of the Securities 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 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.

                                  ARTICLE FIVE
                                    REMEDIES

SECTION 501.  Events of Default.

          "Event  of  Default",  wherever  used  herein,  means  any  one of the
following  events  (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment,  decree or order of any court or any order,  rule or regulation
of any administrative or governmental body):

                                       51
<PAGE>

               (a) default in the payment of principal  of (or premium,  if any,
          on) any  Security  when the same  becomes due and payable at maturity,
          upon acceleration, redemption or otherwise;

               (b) default in the payment of interest on any  Security  when the
          same becomes due and payable,  and such default continues for a period
          of 30 consecutive days;

               (c) default in the  performance  or breach of the  provisions  of
          Section 801 hereof or the failure by the Company to make or consummate
          an Offer to Purchase in accordance with Sections 1016 or 1017 hereof;

               (d) the Company  defaults in the  performance  of or breaches any
          other covenant or agreement in this Indenture, the Pledge Agreement or
          under the  Securities  (other than a default  specified in clause (a),
          (b) or (c) above) and such default or breach continues for a period of
          30 consecutive days after written notice by the Trustee or the Holders
          of 25% or more in aggregate principal amount of the Securities;

               (e)  there  occurs  with  respect  to  any  issue  or  issues  of
          Indebtedness  of the Company or any Significant  Subsidiary  having an
          outstanding  principal  amount of $25 million or more in the aggregate
          for all such issues of all such Persons, whether such Indebtedness now
          exists or shall hereafter be created, (i) an event of default that has
          caused the holder thereof to declare such  Indebtedness  to be due and
          payable  prior to its Stated  Maturity and such  Indebtedness  has not
          been discharged in full or such acceleration has not been rescinded or
          annulled within 30 consecutive days of such  acceleration  and/or (ii)
          the  failure  to make a  principal  payment  at the final (but not any
          interim) fixed maturity and such defaulted payment shall not have been
          made, waived or extended within 30 days of such payment default;

               (f) any final  judgment or order (not covered by  insurance)  for
          the payment of money in excess of $25 million in the aggregate for all
          such final judgments or orders against all such Persons  (treating any
          deductibles,  self-insurance  or retention as not so covered) shall be
          rendered  against the Company or any Significant  Subsidiary and shall
          not be paid  or  discharged,  and  there  shall  be any  period  of 60
          consecutive  days following  entry of the final judgment or order that
          causes the  aggregate  amount for all such final  judgments  or orders
          outstanding  and not paid or  discharged  against all such  Persons to
          exceed $25 million  during which a stay of  enforcement  of such final
          judgment or order,  by reason of a pending appeal or otherwise,  shall
          not be in effect;

               (g) a court having  jurisdiction  in the premises enters a decree
          or order for: (i) relief in respect of the Company or any  Significant
          Subsidiary in an  involuntary  case under any  applicable  bankruptcy,
          concurso  mercantil,  insolvency or other similar law now or hereafter
          in effect,  (ii)  appointment  of a  receiver,  liquidator,  assignee,
          sindico,  conciliador,  custodian,  trustee,  sequestrator  or similar
          official of the Company or any  Significant  Subsidiary  or for all or
          substantially  all of the  property  and assets of the  Company or any
          Significant Subsidiary;  or (iii) the winding up or liquidation of the
          affairs of the  Company or any  Significant  Subsidiary  and,  in each
          case,  such decree or order shall remain  unstayed and in effect for a
          period of 60 consecutive days; or

                                       52
<PAGE>

               (h) the Company or any  Significant  Subsidiary  (i)  commences a
          voluntary case under any applicable  bankruptcy,  concurso  mercantil,
          insolvency  or  other  similar  law now or  hereafter  in  effect,  or
          consents  to the entry of an order for relief in an  involuntary  case
          under any such law,  (ii)  consents  to the  appointment  of or taking
          possession by a receiver, liquidator,  assignee, sindico, conciliador,
          custodian, trustee, sequestrator or similar official of the Company or
          any  Significant  Subsidiary  or for all or  substantially  all of the
          property and assets of the Company or any  Significant  Subsidiary or,
          (iii) effects any general assignment for the benefit of creditors.

               (i) the Pledge  Agreement  shall for any reason (other than under
          its terms) cease to create a valid and perfected  first  priority lien
          on, and security interest in, the Collateral.

SECTION 502.  Acceleration of Maturity; Rescission and Annulment.

          If an Event of Default  (other than an Event of Default  specified  in
clause (g) or (h) of Section 501 that occurs with respect to the Company) occurs
and is continuing  under this Indenture,  the Trustee or the Holders of at least
25% in aggregate principal amount of the then Outstanding Securities, by written
notice  to the  Company  (and to the  Trustee  if such  notice  is  given by the
Holders), may, and the Trustee at the request of such Holders shall, declare the
principal of,  premium,  if any, and accrued  interest on such  Securities to be
immediately due and payable. Upon a declaration of acceleration,  such principal
of, premium,  if any, and accrued interest shall be immediately due and payable.
In the event of a declaration  of  acceleration  because an Event of Default set
forth  in  clause  (e) of  Section  501 has  occurred  and is  continuing,  such
declaration of acceleration shall be automatically rescinded and annulled if the
event of default  triggering  such Event of  Default  pursuant  to clause (e) of
Section  501  shall  be  remedied  or  cured  by the  Company  or  the  relevant
Significant  Subsidiary  or waived by the holders of the  relevant  Indebtedness
within  consecutive 60 days after the declaration of  acceleration  with respect
thereto.  If an Event of Default  specified  in clause (g) or (h) of Section 501
occurs with respect to the  Company,  the  principal  of,  premium,  if any, and
accrued interest on the then Outstanding  Securities shall automatically  become
and be immediately  due and payable  without any declaration or other act on the
part of the Trustee or any Holder.

SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.

          The Company covenants that if

          (a)  default is made in the payment of any  interest  on any  Security
when such  interest  becomes due and payable and such  default  continues  for a
period of 30 consecutive days, or

          (b) default is made in the payment of the principal of any Security at
the  Maturity  thereof or, with  respect to any  Security  required to have been
purchased  pursuant to an Offer to Purchase made by the Company,  at the Payment
Date thereof,

the Company will, upon demand of the Trustee,  pay to it, for the benefit of the
Holders  of such  Securities,  the whole  amount  then due and  payable  on such
Securities  for principal and interest,  and, to the extent that payment of such
interest shall be legally enforceable,  interest on any

                                       53
<PAGE>

overdue  principal  and on  any  overdue  interest,  at the  rate  borne  by the
Securities, and, in addition thereto, 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.

          If the Company fails to pay such amounts  forthwith  upon such demand,
the Trustee,  in its own name and as Trustee of an express trust,  may institute
judicial  proceedings for the collection of the sums so due and unpaid,  and may
prosecute such proceedings to judgment or final decree, and may enforce the same
against the Company and collect the moneys  adjudged or decreed to be payable in
the  manner  provided  by law  out  of the  property  of the  Company,  wherever
situated.

          If an Event of Default  occurs and is  continuing,  the Trustee may in
its  discretion  proceed to protect and enforce its rights and the rights of the
Holders by such appropriate  judicial proceedings as the Trustee shall deem most
effectual  to protect  and  enforce any such  rights,  whether for the  specific
enforcement  of any  covenant or  agreement  in this  Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504.  Trustee May File Proofs of Claim.

          In case of any  judicial  proceeding  relative  to the Company (or any
other obligor upon the Securities),  its property or its creditors,  the Trustee
shall  be  entitled  and  empowered,  by  intervention  in  such  proceeding  or
otherwise,  to take any and all actions authorized under the Trust Indenture Act
in order to have  claims of the  Holders  and the  Trustee  allowed  in any such
proceeding.  In  particular,  the  Trustee  shall be  authorized  to collect and
receive any moneys or other  property  payable or deliverable on any such claims
and to distribute  the same;  and any custodian,  receiver,  assignee,  trustee,
liquidator,  sequestrator  or  other  similar  official  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 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 607.

          No  provision  of this  Indenture  shall be  deemed to  authorize  the
Trustee  to  authorize  or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities  or the rights of any Holder  thereof or to authorize  the Trustee to
vote in respect of the claim of any Holder in any such proceeding.

SECTION 505.  Trustee May Enforce Claims Without Possession of Securities.

          All rights of action and claims under this Indenture or the Securities
may be prosecuted  and enforced by the Trustee  without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such  proceeding  instituted by the Trustee shall be brought in its own name
as trustee of an express  trust,  and any  recovery  of  judgment  shall,  after
provision   for  the   payment  of  the   reasonable   compensation,   expenses,

                                       54
<PAGE>

disbursements  and advances of the Trustee,  its agents and counsel,  be for the
ratable  benefit  of the  Holders  of the  Securities  in  respect of which such
judgment has been recovered.

SECTION 506.  Application of Money Collected.

          Any money  collected by the Trustee  pursuant to this Article shall be
applied in the following  order,  at the date or dates fixed by the Trustee and,
in case of the  distribution  of such money on account of principal or interest,
upon  presentation of the Securities and the notation  thereon of the payment if
only partially paid and upon surrender thereof if fully paid:

               FIRST:  To the  payment  of all  amounts  due the  Trustee  under
          Section 607; and

               SECOND:  To the  payment of the  amounts  then due and unpaid for
          principal of and interest on the Securities in respect of which or for
          the benefit of which such money has been collected,  ratably,  without
          preference  or priority of any kind,  according to the amounts due and
          payable on such Securities for principal and interest, respectively.

SECTION 507.  Limitation on Suits.

          No Holder  of any  Security  shall  have any  right to  institute  any
proceeding,  judicial or otherwise,  with respect to this Indenture,  or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless

          (a) such Holder has previously  given written notice to the Trustee of
a continuing Event of Default;

          (b) the Holders of at least __% in principal amount of the Outstanding
Securities  shall  have  made  written  request  to  the  Trustee  to  institute
proceedings  in  respect  of such  Event of  Default  in its own name as Trustee
hereunder;

          (c) such  Holder or  Holders  have  offered to the  Trustee  indemnity
satisfactory  to the Trustee  against the costs,  liabilities and expenses to be
incurred in compliance with such request;

          (d) the Trustee for 60 days after its receipt of such notice,  request
and offer of indemnity has failed to institute any such proceeding; and

          (e) no direction inconsistent with such written request has been given
to the  Trustee  during  such  60-day  period by the  Holders of a  majority  in
principal amount of the Outstanding Securities;

it being  understood  and intended  that no one or more  Holders  shall have any
right in any manner  whatever by virtue of, or by availing of, any  provision of
this Indenture to affect,  disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain  priority or preference over any other Holders
or to enforce  any right  under  this  Indenture,  except in the  manner  herein
provided and for the equal and ratable benefit of all the Holders.

                                       55
<PAGE>

SECTION 508.  Unconditional Right of Holders to Receive Principal and Interest.

          Notwithstanding  any other provision in this Indenture,  the Holder of
any  Security  shall have the right,  which is absolute  and  unconditional,  to
receive  payment of the  principal of and  (subject to Section 307)  interest on
such Security on the  respective  Stated  Maturities  expressed in such Security
(or,  in the case of  redemption,  on the  Redemption  Date or in the case of an
Offer to Purchase  made by the  Company  and  required to be accepted as to such
Security,  on the Payment Date) and to institute suit for the enforcement of any
such payment,  and such rights shall not be impaired without the consent of such
Holder.

SECTION 509.  Restoration of Rights and Remedies.

          If the Trustee or any Holder has  instituted any proceeding to enforce
any  right  or  remedy  under  this  Indenture  and  such  proceeding  has  been
discontinued or abandoned for any reason,  or has been  determined  adversely to
the  Trustee or to such  Holder,  then and in every  such  case,  subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored  severally and respectively to their former positions  hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

SECTION 510.  Rights and Remedies Cumulative.

          Except as  otherwise  provided  with  respect  to the  replacement  or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section  306,  no right or remedy  herein  conferred  upon or reserved to the
Trustee or to the  Holders is  intended  to be  exclusive  of any other right or
remedy,  and every right and remedy  shall,  to the extent  permitted by law, be
cumulative  and in addition to every other right and remedy  given  hereunder or
now or hereafter  existing at law or in equity or  otherwise.  The  assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511.  Delay or Omission Not Waiver.

          No delay or omission  of the Trustee or of any Holder of any  Security
to exercise any right or remedy  accruing upon any Event of Default shall impair
any such right or remedy or  constitute a waiver of any such Event of Default or
an acquiescence therein.  Every right and remedy given by this Article or by law
to the  Trustee or to the  Holders may be  exercised  from time to time,  and as
often as may be deemed expedient,  by the Trustee or by the Holders, as the case
may be.

SECTION 512.  Control by Holders.

          The  Holders  of a majority  in  principal  amount of the  Outstanding
Securities  shall  have the  right to  direct  the  time,  method  and  place of
conducting any proceeding for any remedy  available to the Trustee or exercising
any trust or power  conferred on the Trustee,  provided  that the Trustee  shall
have the right to refuse to follow any direction that:

          (a) conflicts with any rule of law or with this Indenture, or

                                       56
<PAGE>

          (b) might involve it in personal liability or be unjustly  prejudicial
to the Holders not taking part in such action; and

the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

SECTION 513.  Waiver of Past Defaults.

          The  Holders  of at  least  a  majority  in  principal  amount  of the
Outstanding  Securities,  by written notice to the Company and the Trustee,  may
waive  all past  defaults  hereunder  and  rescind  and annul a  declaration  of
acceleration and its consequences if:

               (a) all existing Events of Default,  other than the nonpayment of
          the principal of, premium, if any, and interest on the Securities that
          have become due solely by such declaration of acceleration,  have been
          cured or waived; and

               (b) the rescission would not conflict with any judgment or decree
          of a court of competent jurisdiction.

          Upon any such  waiver,  such  defaults  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 514. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an  undertaking  to pay the  costs  of such  suit,  and may  assess  costs,
including attorneys fees, against any such party litigant,  in the manner and to
the extent  provided in the Trust  Indenture  Act;  provided  that  neither this
Section 514 nor the Trust  Indenture  Act shall be deemed to authorize any court
to  require  such an  undertaking  or to make  such an  assessment  in any  suit
instituted by any Holder or group of Holders  holding more than 10% in principal
amount of the Outstanding Securities or the Trustee.

SECTION 515. Waiver of Stay or Extension Laws.

          The Company  covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time  hereafter  in force,  which may affect the  covenants or the
performance  of this  Indenture;  and the  Company  (to the  extent  that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and  covenants  that it will not hinder,  delay or impede the  execution  of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

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                                   ARTICLE SIX
                                   THE TRUSTEE

SECTION 601.  Certain Duties and Responsibilities.

          The duties and responsibilities of the Trustee shall be as provided by
the Trust  Indenture Act.  Notwithstanding  the foregoing,  no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers,  if it shall have  reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not  reasonably  assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting  the  liability of or affording  protection to the Trustee shall be
subject to the provisions of this Section 601.

SECTION 602. Notice of Defaults.

          The Trustee shall give the Holders notice of any default  hereunder as
and to the extent provided by the Trust Indenture Act; provided,  however,  that
in the case of any default of the  character  specified in clause (d) of Section
501 no such  notice to Holders  shall be given  until at least 30 days after the
occurrence  thereof.  For the purpose of this Section,  the term "default" means
any event which is, or after  notice or lapse of time or both would  become,  an
Event of Default.

SECTION 603. Certain Rights of Trustee.

          Subject to the provisions of Section 601:

               (a) the  Trustee  may rely and  shall be  protected  in acting or
          refraining  from acting upon any resolution,  certificate,  statement,
          instrument,  opinion,  report, notice,  request,  direction,  consent,
          order, bond, debenture,  note, other evidence of indebtedness or other
          paper or document believed by it to be genuine and to have been signed
          or presented by the proper party or parties;

               (b) any  request or  direction  of the Company  mentioned  herein
          shall be sufficiently  evidenced by a Company Request or Company Order
          and any  resolution  of the  Board of  Directors  may be  sufficiently
          evidenced by a Board Resolution;

               (c) whenever in the  administration of this Indenture the Trustee
          shall deem it desirable that a matter be proved or  established  prior
          to taking,  suffering  or omitting any action  hereunder,  the Trustee
          (unless other evidence be herein specifically  prescribed) may, in the
          absence of bad faith on its part, rely upon an Officers' Certificate;

               (d) the Trustee may consult with counsel of its selection and the
          written advice of such counsel,  any Opinion of Mexican Counsel or any
          Opinion of U.S. Counsel shall be full and complete  authorization  and
          protection in respect of any action  taken,  suffered or omitted by it
          hereunder in good faith and in reliance thereon;

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<PAGE>

               (e) the Trustee  shall be under no  obligation to exercise any of
          the rights or powers vested in it by this  Indenture at the request or
          direction  of any of the Holders  pursuant to this  Indenture,  unless
          such Holders shall have offered to the Trustee reasonable  security or
          indemnity  against the costs,  expenses and liabilities which might be
          incurred by it in compliance with such request or direction;

               (f) the Trustee shall not be bound to make any investigation into
          the facts or matters stated in any resolution, certificate, statement,
          instrument,  opinion,  report, notice,  request,  direction,  consent,
          order, bond, debenture,  note, other evidence of indebtedness or other
          paper or document,  but the Trustee, in its discretion,  may make such
          further inquiry or investigation  into such facts or matters as it may
          see fit,  and, if the Trustee  shall  determine  to make such  further
          inquiry or  investigation,  it shall be entitled to examine the books,
          records  and  premises  of the  Company,  personally  or by  agent  or
          attorney;

               (g) the Trustee may execute any of the trusts or powers hereunder
          or  perform  any duties  hereunder  either  directly  or by or through
          agents or attorneys and the Trustee shall not be  responsible  for any
          misconduct  or  negligence  on the  part  of  any  agent  or  attorney
          appointed with due care by it hereunder; and

               (h)  the  Trustee  shall  not be  liable  for any  action  taken,
          suffered,  or omitted  to be taken by it in good faith and  reasonably
          believed by it to be authorized or within the  discretion or rights or
          powers conferred upon it by this Indenture.

SECTION 604.  Not Responsible for Recitals or Issuance of Securities.

          The  recitals  contained  herein  and in the  Securities,  except  the
Trustee's  certificates of  authentication,  shall be taken as the statements of
the Company,  and the Trustee assumes no responsibility  for their  correctness.
The Trustee makes no  representations  as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.

SECTION 605.  May Hold Securities.

          The Trustee,  any Paying  Agent,  any Security  Registrar or any other
agent of the Company,  in its individual or any other  capacity,  may become the
owner or  pledgee  of  Securities  and,  subject to  Sections  608 and 613,  may
otherwise  deal with the  Company  with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar or such other agent.

SECTION 606.  Money Held in Trust.

          Money held by the Trustee in trust  hereunder  need not be  segregated
from other  funds  except to the extent  required by law.  The Trustee  shall be
under no liability for interest on any money received by it hereunder  except as
otherwise agreed in writing with the Company.

SECTION 607.  Compensation and Reimbursement.

          The Company agrees:

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<PAGE>

          (a) to pay to the Trustee from time to time such compensation as shall
be agreed in writing  between  the  Company  and the  Trustee  for all  services
rendered  by it  hereunder  (which  compensation  shall  not be  limited  by any
provision  of law in  regard to the  compensation  of a  trustee  of an  express
trust);

          (b) except as otherwise  expressly  provided herein,  to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred  or made by the  Trustee  in  accordance  with  any  provision  of this
Indenture   (including  the  reasonable   compensation   and  the  expenses  and
disbursements of its agents and counsel), except any such expense,  disbursement
or advance as may be attributable to its negligence or bad faith; and

          (c) to indemnify each of the Trustee and any predecessor  trustee for,
and to hold it harmless against, any and all loss,  liability,  damage, claim or
expense,  including taxes (other than taxes based on the income of the Trustee),
incurred  without  negligence  or bad  faith on its part,  arising  out of or in
connection with the acceptance or  administration  of this trust,  including the
costs and  expenses  of  defending  itself  against  any claim or  liability  in
connection  with the  exercise  or  performance  of any of its  powers or duties
hereunder.

          As security  for the  performance  of the  obligations  of the Company
under Section 607, the Trustee  shall have a lien prior to the  Securities as to
all property  and funds held by it  hereunder  for any amount owing to it or any
predecessor  Trustee  pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.

          When the Trustee  incurs  expenses or renders  services in  connection
with an Event of Default specified in Section clauses (g) or (h) of Section 501,
the expenses  (including the reasonable charges and expenses of its counsel) and
the  compensation  for its  services  are  intended  to  constitute  expenses of
administration  under any applicable Federal or state bankruptcy,  insolvency or
other similar law.

          The  provisions of this Section shall survive the  termination of this
Indenture.

SECTION 608.  Disqualification; Conflicting Interests.

          If the Trustee has or shall acquire a conflicting  interest within the
meaning of the Trust  Indenture  Act, the Trustee  shall either  eliminate  such
interest or resign,  to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.

SECTION 609. Corporate Trustee Required; Eligibility.

          There  shall at all  times be a  Trustee  hereunder  which  shall be a
Person that is eligible  pursuant to the Trust  Indenture Act to act as such and
has a combined  capital and surplus of at least $50 million,  and its  Corporate
Trust  Office in The City of New  York.  If such  Person  publishes  reports  of
condition at least annually, pursuant to law or to the requirements of a federal
or state  supervising  or examining  authority,  then,  for the purposes of this
Section,  the combined  capital and surplus of such Person shall be deemed to be
its  combined  capital  and  surplus as set forth in its most  recent  report of
condition so published. If at any time the Trustee

                                       60
<PAGE>

shall cease to be eligible in  accordance  with the  provisions  of this Section
609, it shall resign  immediately in the manner and with the effect  hereinafter
specified in this Article.

SECTION 610.  Resignation and Removal; Appointment of Successor.

          (a) No  resignation  or removal of the Trustee and no appointment of a
successor  Trustee  pursuant to this Article  shall become  effective  until the
acceptance of appointment by the successor Trustee under Section 611.

          (b) The  Trustee  may  resign  at any time by  giving  written  notice
thereof to the Company.

          (c) The  Trustee may be removed at any time by Act of the Holders of a
majority in principal  amount of the  Outstanding  Securities,  delivered to the
Trustee and to the Company.

          (d) If at any time (i) the Trustee  shall fail to comply with  Section
608 after written request  therefor by the Company or by any Holder who has been
a bona fide Holder of a Security  for at least six months,  or, (ii) the Trustee
shall cease to be  eligible  under  Section  609 and shall fail to resign  after
written  request  therefor  by the Company or by any such  Holder,  or (iii) the
Trustee  shall  become  incapable  of acting or shall be  adjudged  bankrupt  or
insolvent or a receiver of the Trustee or of its property  shall be appointed or
any  public  officer  shall  take  charge or  control  of the  Trustee or of its
property  or  affairs  for  the  purpose  of  rehabilitation,   conservation  or
liquidation,  then, in any such case, (A) the Company by a Board  Resolution may
remove the  Trustee,  or (B) subject to Section  514,  any Holder who has been a
bona fide Holder of a Security for at least six months may, on behalf of himself
and all others similarly situated,  petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.

          (e) If an instrument  of  acceptance by a successor  Trustee shall not
have been  delivered to the Trustee within 30 days after the giving of notice of
resignation or removal,  the Trustee resigning or being removed may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

          (f) If the Trustee  shall  resign,  be removed or become  incapable of
acting,  or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution,  shall promptly appoint a successor Trustee. If,
within  one  year  after  such  resignation,  removal  or  incapability,  or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders  of a  majority  in  principal  amount  of  the  Outstanding  Securities
delivered  to the Company and the retiring  Trustee,  the  successor  Trustee so
appointed shall,  forthwith upon its acceptance of such appointment,  become the
successor  Trustee and supersede the successor Trustee appointed by the Company.
If no  successor  Trustee  shall have been so  appointed  by the  Company or the
Holders and accepted appointment in the manner hereinafter provided,  any Holder
who has been a bona fide  Holder of a Security  for at least six months  may, on
behalf of  himself  and all others  similarly  situated,  petition  any court of
competent jurisdiction for the appointment of a successor Trustee.

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<PAGE>

          (g) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner  provided  in Section  106.  Each  notice  shall  include the name of the
successor Trustee and the address of its Corporate Trust Office.

SECTION 611.  Acceptance of Appointment by Successor.

          Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring  Trustee an instrument  accepting
such  appointment,  and  thereupon  the  resignation  or removal of the retiring
Trustee shall become effective and such successor  Trustee,  without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the  retiring  Trustee;  but,  on  request  of the  Company or the
successor  Trustee,  such retiring  Trustee shall,  upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights,  powers  and  trusts of the  retiring  Trustee  and shall  duly  assign,
transfer  and deliver to such  successor  Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company  shall  execute  any and all  instruments  for more fully and  certainly
vesting in and confirming to such successor Trustee all such rights,  powers and
trusts.

          No successor  Trustee shall accept its appointment  unless at the time
of such acceptance such successor  Trustee shall be qualified and eligible under
this Article.

SECTION 612.  Merger, Conversion, Consolidation or Succession to Business.

          Any  corporation  into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion  or  consolidation  to which  the  Trustee  shall be a party,  or any
corporation  succeeding to all or substantially all the corporate trust business
of the Trustee,  shall be the successor of the Trustee hereunder,  provided that
such corporation  shall be otherwise  qualified and eligible under this Article,
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not  delivered,  by the Trustee  then in office,  any  successor  by merger,
conversion  or  consolidation  to such  authenticating  Trustee  may adopt  such
authentication  and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 613.  Preferential Collection of Claims Against Company.

          If and when the  Trustee  shall be or become a creditor of the Company
(or any other obligor upon the Securities),  the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

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<PAGE>

                                  ARTICLE SEVEN
                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

          The Company will furnish or cause to be furnished to the Trustee

               (a) semiannually, not more than 15 days after each Regular Record
          Date, a list, in such form as the Trustee may reasonably  require,  of
          the names and addresses of the Holders as of such Regular Record Date,
          and

               (b) at such other  times as the  Trustee  may request in writing,
          within 30 days after the receipt by the Company of any such request, a
          list of  similar  form and  content as of a date not more than 15 days
          prior to the time such list is furnished;

excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.

SECTION 702.  Preservation of Information; Communications to Holders.

          (a) The Trustee shall preserve,  in as current a form as is reasonably
practicable,  the names and  addresses  of Holders  contained in the most recent
list  furnished  to the  Trustee as  provided  in Section  701 and the names and
addresses  of Holders  received  by the  Trustee  in its  capacity  as  Security
Registrar.  The  Trustee may  destroy  any list  furnished  to it as provided in
Section 701 upon receipt of a new list so furnished.

          (b) The rights of  Holders to  communicate  with  other  Holders  with
respect to their rights under this  Indenture or under the  Securities,  and the
corresponding  rights and duties of the  Trustee,  shall be as  provided  by the
Trust Indenture Act.

          (c) Every Holder of  Securities,  by  receiving  and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any  agent of  either  of them  shall be held  accountable  by reason of any
disclosure of  information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.

SECTION 703.  Reports by Trustee.

          (a) The Trustee shall transmit to Holders such reports  concerning the
Trustee and its actions under this Indenture as may be required  pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
60 days after each April 15  following  the date of this  Indenture,  deliver to
Holders a brief  report,  dated as of such  April 15,  which  complies  with the
provisions of such Section 313(a).

          (b) A copy of each such report shall, at the time of such transmission
to Holders,  be filed by the  Trustee  with each stock  exchange  upon which the
Securities are listed,  with the  Commission  and with the Company.  The Company
will  promptly  notify the Trustee when the  Securities  are listed on any stock
exchange.

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<PAGE>

SECTION 704. Reports by Company.

          The  Company  shall  file with the  Trustee  and the  Commission,  and
transmit to Holders,  such  information,  documents and other reports,  and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner  provided  pursuant to such Act;  provided that any such
information,  documents  or reports  required  to be filed  with the  Commission
pursuant  to  Section  13 or 15(d) of the  Exchange  Act shall be filed with the
Trustee  within  15 days  after  the same is so  required  to be filed  with the
Commission.

          Delivery of such reports,  information and documents to the Trustee is
for  informational  purposes  only and the  Trustee's  receipt of such shall not
constitute   constructive  notice  of  any  information   contained  therein  or
determinable  from  information  contained  therein,   including  the  Company's
compliance  with any of its  covenants  hereunder  (as to which the  Trustee  is
entitled to rely exclusively on Officers' Certificates).

                                  ARTICLE EIGHT
              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801.  Company May Consolidate, Etc., Only on Certain Terms.

          The Company will not  consolidate  with,  merge with or into, or sell,
convey,  transfer, lease or otherwise dispose of all or substantially all of its
property  and  assets  (as an  entirety  or  substantially  an  entirety  in one
transaction  or a series of related  transactions)  to, any Person or permit any
Person to merge with or into it unless:

          (a) it shall be the  continuing  Person,  or the Person (if other than
it) formed by such  consolidation or into which it is merged or that acquired or
leased  such  property  and assets of it shall be a  corporation  organized  and
validly  existing under the laws of Mexico,  the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental  indenture to
the  Indenture,  executed and  delivered to the  Trustee,  all of the  Company's
obligations hereof and under the Securities;

          (b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;

          (c) immediately after giving effect to such transaction on a pro forma
basis,  the  Company  or  any  Person  becoming  the  successor  obligor  of the
Securities,  as the case may be, shall have a Consolidated Net Worth equal to or
greater than the Consolidated Net Worth of the Company immediately prior to such
transaction;

          (d) immediately after giving effect to such transaction on a pro forma
basis  the  Company,  or  any  Person  becoming  the  successor  obligor  of the
Securities, as the case may be, could Incur at least $1.00 of Indebtedness under
the first paragraph of clause (a) of Section 1008; provided that this clause (d)
shall  not  apply to a  consolidation  or merger  with,  or into a Wholly  Owned
Subsidiary with a positive net worth;  provided further that, in connection with
any such merger or consolidation,  no consideration  (other than Common Stock in
the  surviving  Person or the  Company)  shall be issued or  distributed  to the
stockholders; and

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<PAGE>

          (e) the  Company  delivers  to the  Trustee an  Officers'  Certificate
(attaching the arithmetic  computations  to demonstrate  compliance with clauses
(c) and (d)) and  Opinion  of U.S.  Counsel,  in each  case  stating  that  such
consolidation,  merger or transfer and such supplemental indenture complies with
this provision and that all conditions precedent provided for herein relating to
such transaction have been complied with;provided, however, that (i) clauses (c)
and (d) above do not apply if, in the good faith  determination of the Company's
Board  of  Directors,   whose  determination  shall  be  evidenced  by  a  Board
Resolution,  the  principal  purpose  of  such  transaction  is  to  change  the
jurisdiction  of  incorporation  of the Company or to incorporate the Company in
the United States,  (ii) any Restricted  Subsidiary may consolidate  with, merge
into or transfer all or part of its properties and assets to the Company.  Until
the  Refinancing  Condition has occurred,  the Company or any of the  Restricted
Subsidiaries  will not be  permitted  to  consummate  the ACM  Merger.  Once the
Refinancing Condition has occurred,  the ACM Merger may be consummated,  so long
as the Company  complies  with  clause (d) of Section  1008 and so long as ACM's
Indebtedness at the time of the merger does not exceed ACM's total  Indebtedness
on the Closing Date.

SECTION 802.  Successor Substituted.

          Upon any  consolidation  of the Company with, or merger of the Company
into,  any other Person or any  conveyance,  transfer or lease of the properties
and assets of the  Company  substantially  as an  entirety  in  accordance  with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or to which such  conveyance,  transfer or lease is made shall
succeed to, and be  substituted  for, 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, and thereafter,  except in the case
of a lease,  the  predecessor  Person shall be relieved of all  obligations  and
covenants under this Indenture and the Securities.

                                  ARTICLE NINE
                             SUPPLEMENTAL INDENTURES

SECTION 901.  Supplemental Indentures without Consent of Holders.

          Without the consent of any Holders, the Company,  when authorized by a
Board Resolution,  and the Trustee, at any time and from time to time, may enter
into one or more indentures  supplemental  hereto,  in form  satisfactory to the
Trustee, for any of the following purposes:

          (a) to cure any ambiguity,  defect or inconsistency in this Indenture,
provided that such action pursuant to this clause (a) shall not adversely affect
the interests of the Holders in any material respect;

          (b) to comply with the provisions of Section 801 or Section 1012;

          (c) comply with any  requirements of the Commission in connection with
the qualification of this Indenture under the Trust Indenture Act;

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<PAGE>

          (d)  evidence  and  provide for the  acceptance  of  appointment  by a
successor Trustee; or

          (e) make any change that,  in the good faith  opinion of the Company's
Board of Directors,  does not materially and adversely  affect the rights of any
Holder.

SECTION 902.  Supplemental Indentures with Consent of Holders.

          With the  consent  of the  Holders  of not  less  than a  majority  in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the  Trustee,  the Company,  when  authorized  by a
Board  Resolution,  and the Trustee may enter into an  indenture  or  indentures
supplemental  hereto for the purpose of adding any  provisions to or changing in
any  manner  or  eliminating  any of the  provisions  of  this  Indenture  or of
modifying  in any  manner  the  rights  of the  Holders  under  this  Indenture;
provided,  however,  that no such  supplemental  indenture  shall,  without  the
consent of the Holder of each Outstanding Security affected thereby,

          (a) change the Stated Maturity of the principal of, or any installment
of interest on, any Security;

          (b) reduce the  principal  amount of, or premium,  if any, or interest
on, any Security;

          (c) change the optional redemption dates or optional redemption prices
of the Securities from that stated in clause (a) of Section 1101;

          (d)  change the place or  currency  of  payment  of  principal  of, or
premium, if any, or interest on, any Security;

          (e)  impair the right to  institute  suit for the  enforcement  of any
payment on or after the Stated Maturity (or, in the case of a redemption,  on or
after the Redemption Security Date) of any Security;

          (f) reduce the above stated  percentage of Outstanding  Securities the
consent of whose Holders is necessary to modify or amend this Indenture pursuant
to this Section 902;

          (g) waive a default in the payment of principal of,  premium,  if any,
or interest on the Securities;

          (h) reduce the percentage or aggregate principal amount of Outstanding
Securities  the consent of whose  Holders is necessary  for waiver of compliance
with certain  provisions  of this  Indenture  or for waiver of certain  defaults
under Section 513 or Section 1022; or

          (i)  following  the  mailing of an offer  with  respect to an Offer to
Purchase  pursuant  to  Section  1016 or 1017,  modify  the  provisions  of this
Indenture  with  respect to such Offer to Purchase  in a manner  adverse to such
Holder.

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          It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903.  Execution of Supplemental Indentures.

          In  executing,  or accepting  the  additional  trusts  created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture,  the Trustee shall be entitled to receive,
and  (subject  to Section  601) shall be fully  protected  in relying  upon,  an
Opinion of Mexican  Counsel  and an Opinion  of U.S.  Counsel  stating  that the
execution  of such  supplemental  indenture is  authorized  or permitted by this
Indenture.  The Trustee may, but shall not be obligated  to, enter into any such
supplemental  indenture  which  affects  the  Trustee's  own  rights,  duties or
immunities under this Indenture or otherwise.

SECTION 904.  Effect of Supplemental Indentures.

          Upon the execution of any  supplemental  indenture under this Article,
this Indenture shall be modified in accordance therewith,  and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities  theretofore or thereafter  authenticated and delivered  hereunder
shall be bound thereby.

SECTION 905.  Conformity with Trust Indenture Act.

          Every  supplemental  indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

SECTION 906.  Reference in Securities to Supplemental Indentures.

          Securities  authenticated  and  delivered  after the  execution of any
supplemental  indenture  pursuant to this  Article may, and shall if required by
the  Trustee,  bear a notation in form  approved by the Trustee as to any matter
provided for in such supplemental  indenture. If the Company shall so determine,
new Securities so modified as to conform,  in the opinion of the Trustee and the
Company, to any such supplemental  indenture may be prepared and executed by the
Company  and  authenticated  and  delivered  by  the  Trustee  in  exchange  for
Outstanding Securities.

SECTION 907.  Notice of Supplemental Indentures.

          Promptly after the effective date of each supplemental indenture,  the
Company  shall  mail or shall  cause to be  mailed to  Holders a notice  briefly
describing  the  substance of such  supplemental  indenture;  provided  that the
failure  to give such  notice to any  Holder,  or any defect  therein,  will not
impair or affect the validity or such supplemental indenture.

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<PAGE>

                                   ARTICLE TEN
                                    COVENANTS

SECTION 1001.  Payment of Principal and Interest.

          The Company will duly and punctually pay the principal of and interest
on the  Securities  in  accordance  with the  terms of the  Securities  and this
Indenture.

SECTION 1002.  Maintenance of Office or Agency.

          The Company will  maintain in The City of New York an office or agency
where  Securities may be presented or surrendered for payment,  where Securities
may be surrendered  for  registration  of transfer or exchange and where notices
and  demands  to or upon the  Company  in  respect  of the  Securities  and this
Indenture  may be served.  The 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  shall fail to maintain  any such  required
office or agency or shall fail to furnish the Trustee with the address  thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate  Trust  Office of the  Trustee,  and the Company  hereby  appoints the
Trustee as its agent to receive all such presentations,  surrenders, notices and
demands.

          The  Company  may also from time to time  designate  one or more other
offices or agencies  (in or outside the Borough of  Manhattan in The City of New
York) where the Securities  may be presented or surrendered  for any or all such
purposes and may from time to time rescind such  designations.  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.

SECTION 1003.  Money for Security Payments to Be Held in Trust.

          If the Company shall at any time act as its own Paying Agent, it will,
on or  before  each  due  date of the  principal  of or  interest  on any of the
Securities,  segregate and hold in trust for the benefit of the Persons entitled
thereto a sum  sufficient to pay the principal or interest so becoming due until
such sums  shall be paid to such  Persons  or  otherwise  disposed  of as herein
provided  and will  promptly  notify the  Trustee of its action or failure so to
act.

          Whenever the Company  shall have one or more Paying  Agents,  it will,
prior  to each due  date of the  principal  of or  interest  on any  Securities,
deposit with a Paying Agent a sum sufficient to pay such amount,  such sum to be
held as provided by the Trust  Indenture  Act,  and (unless such Paying Agent is
the  Trustee)  the  Company  will  promptly  notify the Trustee of its action or
failure so to act.

          The  Company  will cause each  Paying  Agent other than the Trustee to
execute  and  deliver to the Trustee an  instrument  in which such Paying  Agent
shall agree with the Trustee,  subject to the  provisions of this Section,  that
such Paying Agent will (a) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (b) during the continuance of any default
by the Company (or any other obligor upon the  Securities)  in the making of any
payment in respect of the  Securities,  upon the written request of the Trustee,
forthwith  pay to the  Trustee  all sums held in trust by such  Paying  Agent as
such.

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<PAGE>

          The  Company  may at any  time,  for  the  purpose  of  obtaining  the
satisfaction  and discharge of this Indenture or for any other purpose,  pay, or
by Company order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying  Agent,  such sums to be held by the Trustee
upon the same  trusts as those upon which such sums were held by the  Company or
such Paying  Agent;  and,  upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further  liability  with respect to
such money.

          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 or interest on any
Security and remaining  unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company  Request,  or
(if then held by the  Company)  shall be  discharged  from such  trust;  and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment  thereof,  and all  liability  of the Trustee or
such Paying  Agent with respect to such trust  money,  and all  liability of the
Company as trustee thereof, shall thereupon cease;  provided,  however, that the
Trustee or such Paying Agent,  before being required to make any such repayment,
may at the expense of the Company  cause to be  published  once,  in a newspaper
published in the English  language,  customarily  published on each Business Day
and of  general  circulation  in The City of New York,  notice  that such  money
remains unclaimed and that, after a date specified  therein,  which shall not be
less than 30 days from the date of such  publication,  any unclaimed  balance of
such money then remaining will be repaid to the Company.

SECTION 1004.  Statement by Officers as to Default.

          The Company will deliver to the Trustee,  within 90 days after the end
of each fiscal year,  an Officers'  Certificate,  stating that a review has been
conducted of the activities of the Company and its Restricted  Subsidiaries  and
the Company's and its Restricted Subsidiaries'  performance under this Indenture
and that the Company has fulfilled all obligations  hereunder,  or, if there has
been a default in the fulfillment of any such  obligation,  specifying each such
default  and the  nature and status  thereof.  In  addition,  the  Company  must
immediately  notify the Trustee of any default or defaults in the performance of
any covenants or agreements under this Indenture.

SECTION 1005.  Existence.

          Subject to Article Eight,  the Company will do or cause to be done all
things  necessary to preserve  and keep in full force and effect its  existence,
rights  (charter and  statutory) and  franchises;  provided,  however,  that the
Company  shall not be required to preserve  any such right or  franchise  if the
Company shall determine that the preservation  thereof is no longer desirable in
the conduct of the  business  of the  Company  and that the loss  thereof is not
disadvantageous in any material respect to the Holders.

SECTION 1006.  Maintenance of Properties.

          The Company will cause all  properties  material to the conduct of its
business or the business of any  Subsidiary  to be  maintained  and kept in good
condition,  repair and working

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<PAGE>

order and supplied  with all  necessary  equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the  judgment  of the Company may be  necessary  so that the  business
carried on in connection therewith may be properly and advantageously  conducted
at all times; provided,  however, that nothing in this Section shall prevent the
Company  from  discontinuing  the  operation  or  maintenance  of  any  of  such
properties if such discontinuance is, in the judgment of the Company,  desirable
in the  conduct  of its  business  or the  business  of any  Subsidiary  and not
disadvantageous in any material respect to the Holders.

SECTION 1007.  Payment of Taxes and Other Claims.

          The Company will pay or  discharge or cause to be paid or  discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental  charges  levied or imposed upon the Company or any  Subsidiary  or
upon the income,  profits or property of the Company or any Subsidiary,  and (b)
all lawful material  claims for labor,  materials and supplies which, if unpaid,
might by law become a lien upon the  property of the Company or any  Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax,  assessment,  charge or claim whose
amount,   applicability  or  validity  is  being  contested  in  good  faith  by
appropriate  proceedings  and  for  which  a  reserve  is  being  maintained  in
accordance with Mexican GAAP.

SECTION 1008.  Limitation on Indebtedness.

          (a)  Other  than the  Securities,  and  Indebtedness  existing  on the
Closing  Date,  the Company will not, and will not permit any of the  Restricted
Subsidiaries  to, Incur any  Indebtedness;  provided  that the Company may Incur
Indebtedness if, after giving effect to the Incurrence of such  Indebtedness and
the receipt and  application of the proceeds  therefrom,  the Interest  Coverage
Ratio would be no less than 2.0:1.

          Notwithstanding   the  foregoing,   the  Company  and  any  Restricted
Subsidiary  (except as specified below) may Incur each and all of the following:
(i)  Indebtedness  of the Company or a  Restricted  Subsidiary  if, after giving
effect to the Incurrence of such Indebtedness and receipt and application of the
proceeds therefrom,  (A) the Interest Coverage Ratio would be no less than 2.0:1
and (B) the Consolidated Senior Indebtedness Interest Coverage Ratio would be no
less than  4.0:1;  provided  that no  Indebtedness  may be  incurred  under this
subclause  (a)(i)  unless  the  Refinancing  Condition  has  occurred  or occurs
simultaneously  with the  incurrence of any  Indebtedness  under this  subclause
(a)(i), and provided further that any Indebtedness incurred under this subclause
(a)(i) may only be Incurred to finance Asset Acquisitions;  (ii) Indebtedness of
the Company or a Restricted  Subsidiary  not to exceed the greater of (A) $150.0
million or (B) 7.5% of Adjusted Consolidated Net Tangible Assets;  provided that
the  Restricted  Subsidiaries  may not Incur in the  aggregate  more than $100.0
million of Indebtedness under this subclause (a)(ii),  and provided further that
any  indebtedness  incurred or assumed under this  subclause  (a)(ii) may not be
incurred or assumed in connection with the ACM Merger;  (iii) Indebtedness owed:
(A)  to  the  Company  by a  Restricted  Subsidiary  which  is  evidenced  by an
unsubordinated promissory note, (B) to any Restricted Subsidiary by the Company,
or (C) to a Restricted Subsidiary by a Restricted Subsidiary;  provided that (I)
any event  which  results  in any such  Restricted  Subsidiary  ceasing  to be a
Restricted  Subsidiary or any subsequent  transfer of such

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<PAGE>

Indebtedness (other than to the Company or another Restricted  Subsidiary) shall
be deemed,  in each case, to constitute an Incurrence of such  Indebtedness  not
permitted by this  subclause  (a)(iii) and (II) if the Company is the obligor on
such Indebtedness,  such Indebtedness must be expressly subordinated in right of
payment to the  Securities,  once they have become due and  payable,  whether at
Stated  Maturity,  by acceleration  or otherwise;  (iv)  Indebtedness  issued in
exchange for, or the net proceeds of which are used to refinance or refund, then
outstanding  Indebtedness  (other than Indebtedness  outstanding under subclause
(a)(iii)) and any refinancings  thereof in an amount not to exceed the amount so
refinanced or refunded (plus  premiums,  accrued  interest,  fees and expenses);
provided  that (A)  Indebtedness  the proceeds of which are used to refinance or
refund the Securities or  Indebtedness  that is pari passu with, or subordinated
in right of  payment  to, the  Securities  shall  only be  permitted  under this
subclause(a)(iv)  if (I) in case the  Securities  are  refinanced in part or the
Indebtedness  to be  refinanced  is pari  passu  with the  Securities,  such new
Indebtedness,  by its  terms or by the  terms  of any  agreement  or  instrument
pursuant to which such new  Indebtedness is outstanding,  is expressly made pari
passu with, or subordinate in right of payment to, the remaining Securities,  or
(II) in case the  Indebtedness  to be  refinanced  is  subordinated  in right of
payment to the Securities,  such new Indebtedness,  by its terms or by the terms
of any agreement or instrument pursuant to which such new Indebtedness is issued
or remains outstanding, is expressly made subordinate in right of payment to the
Securities  at least to the extent that the  Indebtedness  to be  refinanced  is
subordinated to the Securities; (B) such new Indebtedness,  determined as of the
date of Incurrence  of such new  Indebtedness,  does not have a Stated  Maturity
earlier  than the  Stated  Maturity  of the  Indebtedness  to be  refinanced  or
refunded, and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded; and (C)
such new Indebtedness is Incurred by the Company or by the Restricted Subsidiary
who is the  obligor  on the  Indebtedness  to be  refinanced  or  refunded;  and
provided  further that in no event may Indebtedness of the Company be refinanced
by means of any  Indebtedness  of any  Restricted  Subsidiary  pursuant  to this
subclause  (a)(iv);  (v)  Indebtedness  (A) in  respect  of bid,  reimbursement,
performance,  surety or appeal  bonds or  obligations  provided in the  ordinary
course of business,  including  Guarantees and letters of credit  functioning or
supporting these bonds or obligations (in each case other than for an obligation
for money borrowed);  (B) under Currency  Agreements,  Commodity  Agreements and
Interest Rate Agreements,  provided that such agreements (I) are designed solely
to protect the Company or its Restricted  Subsidiaries  against  fluctuations in
foreign currency exchange rates,  commodity prices or interest rates and (II) do
not increase the Indebtedness of the obligor  outstanding at any time other than
as a result of fluctuations in foreign currency  exchange rates,  interest rates
or commodity prices or by reason of fees,  indemnities and compensation  payable
thereunder;  and (C) arising  from  agreements  providing  for  indemnification,
adjustment  of purchase  price or similar  obligations,  or from  Guarantees  or
letters of credit, surety bonds or performance bonds securing any obligations of
the Company or any of its Restricted  Subsidiaries  pursuant to such agreements,
in any case Incurred in connection with the disposition of any business,  assets
or Restricted  Subsidiary of the Company (other than  Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business,  assets or
Restricted  Subsidiary  of  the  Company  for  the  purpose  of  financing  such
acquisition),  in a principal  amount not to exceed the gross proceeds  actually
received by the Company or any  Restricted  Subsidiary in  connection  with such
disposition;  (vi)  Indebtedness of the Company,  to the extent the net proceeds
thereof are  promptly  (A) used to purchase  Securities  tendered in an Offer to
Purchase made as a result of

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<PAGE>

a Change in Control or (B) deposited to defease the  Securities as allowed under
Article  Twelve  hereof;  (vii)  Guarantees of the  Securities and Guarantees of
Indebtedness  of the  Company or any  Restricted  Subsidiary  by any  Restricted
Subsidiary  provided the Guarantee of such Indebtedness is permitted by and made
in  accordance  with  Section  1012;   (viii)   Guarantees  by  the  Company  of
Indebtedness of any Restricted Subsidiary permitted hereunder.

          (b)  Notwithstanding  any other  provision of this Section  1008,  the
maximum  amount of  Indebtedness  that may be Incurred  pursuant to this Section
1008  will  not be  deemed  to be  exceeded,  with  respect  to any  outstanding
Indebtedness  due solely to the result of  fluctuations in the exchange rates of
currencies.

          (c) For purposes of determining any particular  amount of Indebtedness
under this Section 1008: (i)  Guarantees,  Liens or obligations  with respect to
letters  of  credit   supporting   Indebtedness   otherwise   included   in  the
determination of such particular amount shall not be included and (ii) any Liens
granted  pursuant to the equal and ratable  provisions of Section 1014 shall not
be treated as Indebtedness.

          (d)  Irrespective of whether or not the Company could incur additional
indebtedness  under  clause (a) of this Section  1008,  the Company will not and
will not  permit  any of the  Restricted  Subsidiaries  to incur or  assume  any
Indebtedness  in connection  with the ACM Merger prior to the  occurrence of the
Refinancing Condition.  Subsequent to the Refinancing Condition, the Company may
incur or assume  additional  Indebtedness with respect to the ACM Merger if: (i)
the  incurrence  of that  Indebtedness  is  permitted  under  clause (a) of this
Section 1008, and (ii) that Indebtedness is subordinated or made subordinated in
right  of  payment  to the  Securities  and  the  subordination  provisions  are
substantially similar to those attached herein as Exhibit B.

          For purposes of determining  compliance with this Section 1008, in the
event that an item of  Indebtedness  meets the  criteria of more than one of the
types of Indebtedness  described in this Section 1008, including under the first
paragraph thereof, the Company, in its sole discretion, shall classify, and from
time to time may reclassify, such item of Indebtedness.

SECTION 1009.  Limitation on Restricted Payments.

          The Company  will not, and will not permit any  Restricted  Subsidiary
to,  directly  or  indirectly  (a)  declare  or pay any  dividend  or  make  any
distribution on or with respect to its Capital Stock other than (i) dividends or
distributions  payable  solely  in  shares  of its  Capital  Stock  (other  than
Disqualified Stock) or in options, warrants or other rights to acquire shares of
such Capital Stock, (ii) dividends or distributions  payable to the Company or a
Restricted Subsidiary,  and (iii) pro rata dividends or distributions on Capital
Stock of Restricted  Subsidiaries held by minority  stockholders,  provided that
such  dividends do not in the aggregate  exceed the minority  stockholders'  pro
rata share of such Restricted Subsidiaries' net income from the first day of the
fiscal quarter beginning  immediately following the Closing Date held by Persons
other than the Company or any of its Restricted Subsidiaries; (b) purchase, call
for  redemption or redeem,  retire or otherwise  acquire for value any shares of
Capital Stock of (i) the Company (including options, warrants or other rights to
acquire  such shares of Capital  Stock) held by any Person or (ii) a  Restricted
Subsidiary  (including options,  warrants or other rights

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<PAGE>

to acquire such shares of Capital Stock) held by any of the Company's Affiliates
(other  than a  Wholly  Owned  Restricted  Subsidiary)  or any  holder  (or  any
Affiliate of such holder) of 5% or more of the Capital Stock of the Company; (c)
make any  voluntary  or optional  principal  payment,  or  voluntary or optional
redemption,  repurchase,  defeasance,  or other  acquisition  or retirement  for
value,  of  Indebtedness of the Company that is subordinated in right of payment
to the Securities prior to the Stated Maturity of such Indebtedness; or (d) make
any Investment,  other than a Permitted Investment, in any Person (such payments
or any other  actions  described  in  subclauses  (a)  through  (d) above  being
collectively  "Restricted Payments") if, at the time of, and after giving effect
to, the proposed  Restricted  Payment:  (i) a Default or Event of Default  shall
have occurred and be continuing, (ii) the Company could not Incur at least $1.00
of Indebtedness under the first paragraph of clause (a) of Section 1008 or (iii)
the  aggregate  amount of all  Restricted  Payments  made after the Closing Date
shall  exceed  the  sum of  (A)  50% of the  aggregate  amount  of the  Adjusted
Consolidated Net Income (or, if the Adjusted  Consolidated Net Income is a loss,
minus 100% of the amount of such loss) (determined by excluding income resulting
from  transfers  of assets  by the  Company  or a  Restricted  Subsidiary  to an
Unrestricted  Subsidiary) accrued on a cumulative basis during the period (taken
as one  accounting  period)  beginning  on the first day of the  fiscal  quarter
immediately  following  the Closing  Date and ending on the last day of the last
fiscal quarter  preceding the Transaction  Date, plus (B) the aggregate Net Cash
Proceeds   received  by  the  Company  after  the  Closing  Date  as  a  capital
contribution  or from the  issuance and sale  permitted by the  Indenture of the
Company's Capital Stock (other than Disqualified Stock) to a Person who is not a
Restricted Subsidiary of the Company, including an issuance or sale permitted by
the Indenture of  Indebtedness of the Company for cash subsequent to the Closing
Date upon the conversion of such  Indebtedness  into the Company's Capital Stock
(other than  Disqualified  Stock), or from the issuance to a Person who is not a
Restricted Subsidiary of the Company of any options, warrants or other rights to
acquire the Company's Capital Stock (in each case, exclusive of any Disqualified
Stock or any options, warrants or other rights that are redeemable at the option
of the holder,  or are required to be redeemed,  prior to the Stated Maturity of
the  Securities),  plus (C) an amount equal to the net reduction in  Investments
(other than reductions in Permitted  Investments)  in any Person  resulting from
payments  of  interest  on  Indebtedness,  dividends,  repayments  of  loans  or
advances,  or other  transfers  of  assets,  in each case to the  Company or any
Restricted  Subsidiary or from the Net Cash Proceeds from the sale or redemption
of any such Investment  (except, in each case, to the extent any such payment or
proceeds are included in the calculation of Adjusted  Consolidated  Net Income),
or from redesignations of Unrestricted  Subsidiaries as Restricted  Subsidiaries
(valued in each case as provided in the  definition  of  "Investments"),  not to
exceed,  in each case,  the amount of  Investments  (and treated as a Restricted
Payment)  previously  made by the Company or any  Restricted  Subsidiary in such
Person or Unrestricted Subsidiary, plus (D) $20 million.

          The  foregoing  covenant  shall not be  violated  by reason of (a) the
payment of any dividend or  redemption of any Capital Stock within 60 days after
the  related  date of  declaration  or call for  redemption  if, at said date of
declaration or call for redemption, such payment or redemption would comply with
the first  paragraph  of this  Section  1009;  (b) the  redemption,  repurchase,
defeasance or other  acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Securities,  including premium,  if any,
and accrued  interest,  with the proceeds of, or in exchange  for,  Indebtedness
Incurred under  subclause (iv) of the second  paragraph of clause (a) of Section
1008  hereof;  (c)  the  making  of any  principal

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payment  or  the  repurchase,   redemption,   retirement,  defeasance  or  other
acquisition for value of Indebtedness  which is subordinated in right of payment
to the  Securities in exchange  for, or out of the proceeds of, a  substantially
concurrent  offering  of,  shares of the  Company's  Capital  Stock  (other than
Disqualified Stock) or options, warrants or other rights to acquire such Capital
Stock,  provided that such options,  warrants or other rights are not redeemable
prior to the Stated Maturity of the Securities;  (d) the repurchase,  redemption
or other  acquisition  of the Company's  Capital  Stock or options,  warrants or
other  rights to acquire  such  Capital  Stock in  exchange  for,  or out of the
proceeds of a  substantially  concurrent  offering of,  shares of the  Company's
Capital  Stock  (other than  Disqualified  Stock) or options,  warrants or other
rights to acquire such Capital  Stock,  provided that such options,  warrants or
other rights are not redeemable  prior to the Stated Maturity of the Securities;
(e) the repurchase,  redemption or other  acquisition of shares of Capital Stock
of the Company or any Restricted Subsidiary from employees,  directors or former
directors  (or  transferees   thereof)  pursuant  to  the  terms  of  agreements
(including employment agreements) or plans approved by the Board of Directors of
the Company or the relevant Restricted  Subsidiary,  provided that the aggregate
amount of such repurchases,  redemptions or other  acquisitions shall not exceed
$2.5  million in any year and $5.0 million  prior to the Stated  Maturity of the
Securities;  (f) payments or distributions,  to dissenting stockholders pursuant
to applicable law or constituent documents (as in effect on the Closing Date or,
in the case of the constituent  documents of any Restricted  Subsidiary acquired
after the Closing Date, on the date of such  acquisition),  or pursuant to or in
connection with a consolidation, merger or transfer of assets that complies with
the provisions of of Article VIII of this Indenture; or (g) Investments acquired
as a capital  contribution  or in  exchange  for,  or out of the  proceeds  of a
substantially  concurrent  offering of, the Company's  Capital Stock (other than
Disqualified Stock); provided that, except in the case of subclauses (a) and (d)
of this  paragraph of Section  1009,  no Default or Event of Default  shall have
occurred and be continuing or occur as a consequence  of the actions or payments
set forth therein.

          Each Restricted  Payment permitted pursuant to the second paragraph of
this Section 1009 (other than the  Restricted  Payment  referred to in subclause
(b)  thereof,  an exchange of Capital  Stock for Capital  Stock or  Indebtedness
referred to in  subclause  (c) or (d) thereof  and an  Investment  acquired as a
capital  contribution  or in exchange for Capital Stock referred to in subclause
(g)  thereof),  and the Net Cash  Proceeds  from any  issuance of Capital  Stock
referred to in subclause  (c) or (d) of the second  paragraph  of Section  1009,
shall be included in calculating  whether the  conditions of subclause  (iii) of
clause  (d) of the  first  paragraph  of this  Section  1009  have been met with
respect to any subsequent  Restricted Payments.  In the event the proceeds of an
issuance of the Company's Capital Stock are used for the redemption,  repurchase
or other acquisition of the Securities,  or Indebtedness that is pari passu with
the Securities, then the Net Cash Proceeds of such issuance shall be included in
subclause (iii) of clause (d) of the first paragraph of Section 1009 only to the
extent  such  proceeds  are not used for such  redemption,  repurchase  or other
acquisition of Indebtedness.

          For purposes of determining  compliance with this Section 1009 (a) the
amount, if other than in cash, of any Restricted  Payment shall be determined in
good faith by the Board of Directors,  whose  determination  shall be conclusive
and  evidenced  by a Board  Resolution  and (b) in the event  that a  Restricted
Payment meets the criteria of more than one of the types of Restricted  Payments
described in this Section 1009, the Company,  in its sole discretion,  may order
and classify,  and from time to time may reclassify,  such Restricted Payment if
it would

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have been permitted at the time such Restricted Payment was made and at the time
of such reclassification.

SECTION 1010.  Limitation on Dividend  and  Other Payment Restrictions Affecting
               Restricted Subsidiaries.

          The Company  will not, and will not permit any  Restricted  Subsidiary
to,  create  or  otherwise  cause or suffer  to exist or  become  effective  any
consensual  encumbrance  or  restriction  of  any  kind  on the  ability  of any
Restricted  Subsidiary  to (a) pay  dividends  or make any  other  distributions
permitted by applicable law on any Capital Stock of such  Restricted  Subsidiary
owned  by  the  Company  or  any  other  Restricted  Subsidiary,   (b)  pay  any
Indebtedness  owed to the Company or any other Restricted  Subsidiary,  (c) make
loans or  advances  to the Company or any other  Restricted  Subsidiary,  or (d)
transfer  any of its  property or assets to the Company or any other  Restricted
Subsidiary.

          The  foregoing  provisions  shall not  restrict  any  encumbrances  or
restrictions  (a) existing on the Closing Date in this  Indenture,  or any other
agreements  in effect on the Closing  Date,  and any  extensions,  refinancings,
renewals or replacements of such agreements;  provided that the encumbrances and
restrictions  in any such  extensions,  refinancings,  renewals or  replacements
taken as a whole are no less  favorable in any  material  respect to the Holders
than those  encumbrances  or  restrictions  that are then in effect and that are
being extended, refinanced, renewed or replaced; (b) existing under or by reason
of  applicable  law; (c) existing  with respect to any Person or the property or
assets of such  Person  acquired by the  Company or any  Restricted  Subsidiary,
existing  at the time of such  acquisition  and not  incurred  in  contemplation
thereof,  which encumbrances or restrictions are not applicable to any Person or
the  property or assets of any Person  other than such Person or the property or
assets of such  Person so  acquired;  (d) in the case of clause (d) of the first
paragraph  of this  Section  1010 (i) that  restrict in a  customary  manner the
subletting,  assignment  or transfer  of any  property or asset that is a lease,
license,  conveyance or contract or similar property or asset,  (ii) existing by
virtue of any transfer of,  agreement to transfer,  option or right with respect
to,  or Lien on,  any  property  or  assets  of the  Company  or any  Restricted
Subsidiary not otherwise prohibited by the Indenture, or (iii) arising or agreed
to in the ordinary  course of business,  not relating to any  Indebtedness;  (e)
with respect to a  Restricted  Subsidiary  and imposed  pursuant to an agreement
that has been entered into for the sale or disposition  of all or  substantially
all of the  Capital  Stock  of, or  property  and  assets  of,  such  Restricted
Subsidiary;  (f) contained in the terms of (i) any Indebtedness  Incurred by any
Restricted  Subsidiary for the purpose of an Asset Acquisition if the Incurrence
of such  Indebtedness  otherwise  complies  with  subclause (i) of clause (a) of
Section 1008 or (ii) any Indebtedness  Incurred by any Restricted  Subsidiary as
allowed under  subclause (ii) of clause (a) of Section 1008, and any extensions,
refinancings,  renewals or  replacements of such  agreements,  provided that the
encumbrances and restrictions in any such extensions,  refinancings, renewals or
replacements  taken as a whole are no less favorable in any material  respect to
the Holders than those  encumbrances or restrictions that are then in effect and
that are being extended,  refinanced,  renewed or replaced; (g) contained in the
terms of any Indebtedness or any agreement  pursuant to which such  Indebtedness
was issued if (i) the encumbrance or restriction  applies only in the event of a
payment default or a default with respect to a financial  covenant  contained in
such  Indebtedness  or agreement,  (ii) the  encumbrance  or  restriction is not
materially  more  disadvantageous  to the  Holders  of the  Securities  than  is
customary in comparable financings (as

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<PAGE>

determined by the Company in good faith),  and (iii) the Company determines that
any such  encumbrance  or restriction  will not materially  affect the Company's
ability  to make  principal  or  interest  payments  on the  Securities;  or (h)
contained  in  Standard  Securitization  Undertakings  made in  connection  with
Qualified Receivables Transactions.

          Nothing  contained in this  Section 1010 shall  prevent the Company or
any Restricted Subsidiary from (a) creating, incurring, assuming or suffering to
exist any Liens  otherwise  permitted  under Section 1014 or (b) restricting the
sale or other  disposition  of  property  or assets of the Company or any of its
Restricted  Subsidiaries  that secure  Indebtedness of the Company or any of its
Restricted Subsidiaries.

SECTION 1011.  Limitation   on  the  Issuance  and  Sale  of  Capital  Stock  of
               Restricted Subsidiaries.

          The  Company  will  not  sell,  and  will not  permit  any  Restricted
Subsidiary,  directly  or  indirectly,  to issue or sell,  any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase  shares of such  Capital  Stock)  except (a) to the Company or a Wholly
Owned Restricted  Subsidiary;  (b) issuances of director's  qualifying shares or
sales to  foreign  nationals  of shares of Capital  Stock of foreign  Restricted
Subsidiaries,  to the extent  required by  applicable  law; (c) 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 under Section 1009 if made on the date of such issuance or sale;  (d)
issuance of Common Stock in connection with dividends or  distributions  payable
by a Restricted  Subsidiary  solely in shares of Common Stock of that Restricted
Subsidiary,  provided  that  subsequent  to the  dividend or  distribution,  the
Company's direct or indirect equity interest in that Restricted Subsidiary is at
least  equal  to the  Company's  direct  or  indirect  equity  interest  in that
Restricted  Subsidiary  prior to the dividend or  distribution,  or (e) sales of
Common Stock (including options,  warrants or other rights to purchase shares of
such Common  Stock) of a  Restricted  Subsidiary  by the Company or a Restricted
Subsidiary,  provided that the Company or such Restricted Subsidiary applies the
Net Cash Proceeds of any such sale in accordance with Section 1016.

SECTION 1012.  Limitation on Issuances of Guarantees by Restricted Subsidiaries.

          The Company  will not permit any  Restricted  Subsidiary,  directly or
indirectly, to Guarantee any Indebtedness of the Company or any other Restricted
Subsidiary  which is pari passu with or  subordinate  in right of payment to the
Securities  ("Guaranteed  Indebtedness"),  unless (a) such Restricted Subsidiary
simultaneously  executes and delivers a supplemental  indenture to the Indenture
providing  for  a  Guarantee  (a  "Subsidiary  Guarantee")  of  payment  of  the
Securities by such  Restricted  Subsidiary  and (b) such  Restricted  Subsidiary
waives  and will not in any  manner  whatsoever  claim  or take the  benefit  or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted  Subsidiary under its Subsidiary  Guarantee until the
Securities have been paid in full, in U.S. Dollars, provided that this paragraph
shall not be  applicable  to any  Guarantee of any  Restricted  Subsidiary  that
existed  at the time such  Person  became a  Restricted  Subsidiary  and was not
Incurred in connection  with,

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<PAGE>

or in  contemplation  of, such Person becoming a Restricted  Subsidiary.  If the
Guaranteed  Indebtedness  is (i)  pari  passu  with  the  Securities,  then  the
Guarantee  of  such  Guaranteed  Indebtedness  shall  be  pari  passu  with,  or
subordinated  to,  the  Subsidiary   Guarantee  or  (ii)   subordinated  to  the
Securities,  then  the  Guarantee  of  such  Guaranteed  Indebtedness  shall  be
subordinated  to the  Subsidiary  Guarantee  at  least  to the  extent  that the
Guaranteed Indebtedness is subordinated to the Securities.

          Notwithstanding  the foregoing,  (a) the Company may permit any of the
Restricted Subsidiaries to issue Guarantees otherwise restricted by this Section
1012 to secure Indebtedness  Incurred for the purpose of acquiring any Person or
asset  engaged  in the  Pulp  and  Paper  Business  if the  Incurrence  of  such
Indebtedness  otherwise  complies  with  subclause  (i) of clause (a) of Section
1008, and (b) any Subsidiary Guarantee by a Restricted Subsidiary may provide by
its  terms  that it shall be  automatically  and  unconditionally  released  and
discharged upon any sale,  exchange or transfer,  to any Person not an Affiliate
of the Company, of all of the Company's and each Restricted Subsidiary's Capital
Stock in, or all or substantially all the assets of, such Restricted  Subsidiary
(which sale,  exchange or transfer is not  prohibited  by the  Indenture) or the
release or discharge  of the  Guarantee  which  resulted in the creation of such
Subsidiary Guarantee, except a discharge or release by or as a result of payment
under such Guarantee.

SECTION 1013.  Limitation on Transactions with Shareholders and Affiliates.

          The Company  will not, and will not permit any  Restricted  Subsidiary
to,  directly  or  indirectly,  enter  into,  renew or  extend  any  transaction
(including,  without  limitation,  the  purchase,  sale,  lease or  exchange  of
property or assets,  or the  rendering of any  service)  with any holder (or any
Affiliate  of such holder) of 5% or more of any class of the  Company's  Capital
Stock or with any Affiliate of the Company or any Restricted  Subsidiary  (other
than the  Company  or a  Restricted  Subsidiary),  except (a) upon terms no less
favorable  to the  Company  or such  Subsidiary  than  could  be  obtained  in a
comparable  arm's-length  transaction with a Person that is not such a holder or
Affiliate,  provided  that,  with respect to a transaction  or series of related
transactions  involving  aggregate  payments by the  Company or such  Subsidiary
having a fair market  value  equal to or in excess of (i) $5.0  million but less
than $15.0 million,  the Company's Board of Directors  approves such transaction
(or series of transactions) and, in its good faith judgment,  believes that such
transaction  (or  series  of  transactions)  complies  with  clause  (a) of this
paragraph as evidenced by a Board  Resolution  and (ii) $15.0  million,  (A) the
Company  receives the written  opinion of an investment  banking firm nationally
recognized   in  the  United  States  that  such   transaction   (or  series  of
transactions)  is fair,  from a financial  point of view, to the Company or such
Restricted  Subsidiary  and (B) the Board of Directors  of the Company  approves
such  transaction (or series of  transactions)  and, in its good faith judgment,
believes that such transaction (or series of transactions)  complies with clause
(a) of this paragraph, as evidenced by a Board Resolution.

          The foregoing  limitation  does not limit,  and shall not apply to (a)
any   transaction   solely  between  the  Company  and  any  of  its  Restricted
Subsidiaries  or  solely  among  Restricted  Subsidiaries;  (b) any  transaction
between  the  Company or any  Restricted  Subsidiary  and any Person  that is an
Affiliate of the Company or of any Restricted Subsidiary,  if (i) such Person is
engaged in the Pulp and Paper Business, (ii) such transaction is in the ordinary
course of business of the Company or such Restricted Subsidiary, as the case may
be, and such Person,

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(iii) such  transaction is on fair and reasonable terms no less favorable to the
Company or such  Restricted  Subsidiary  than could be obtained in a  comparable
arm's-length  transaction  with a Person  that is not an  Affiliate,  (iv)  such
transaction  is in  the  best  interests  of  the  Company  or  such  Restricted
Subsidiary,  and (v) such  Person  is an  Affiliate  solely  by  virtue of being
directly or indirectly controlled by the Company or a Restricted Subsidiary; (c)
the payment of reasonable and customary regular fees to the Company's  directors
and officers and indemnification arrangements entered into by the Company in the
ordinary course of business and consistent with its past practices; (d) loans or
advances by the Company or any Restricted Subsidiary to employees thereof in the
ordinary  course of  business in an  aggregate  amount to all  employees  not to
exceed US$2.5 million per year and US$5.0  million prior to the Stated  Maturity
of the  Securities;  (e) any  payments  or other  transactions  pursuant  to any
tax-sharing  agreement  between the Company  and any  Subsidiary  with which the
Company files a  consolidated  tax return or with which the Company is part of a
consolidated  group for tax  purposes;  (f) any sale of shares of the  Company's
Capital Stock (other than Disqualified  Stock);  (g) any merger or consolidation
with an  Affiliate,  including  (but not limited  to) the ACM  Merger,  which is
permitted  under  Section  801;  (h)  Qualified  Receivables  Transactions;  (i)
contributions  in cash to the  common  equity  of the  Company  by the  Existing
Shareholders;  (j) any  Permitted  Investments  or any  Restricted  Payments not
prohibited  by Section 1009;  (k) any issuance of securities or other  payments,
awards  or grants  in cash,  securities  or  otherwise  pursuant  to, or for the
funding of, employment  compensation  plans, stock option plans or other similar
incentive  plans  approved  by  the  Board  of  Directors,   provided  that  all
distributions under this clause (k) shall not exceed US$2.5 million per year and
US$5.0  million  prior to the Stated  Maturity  of the  Securities,  and (l) any
payment to ACM,  provided  that any payments  made under this clause (l) will be
treated as a Restricted  Payment  under  Section  1009,  and may only be made in
accordance with such Section 1009.

SECTION 1014.  Limitation on Liens.

          The Company  will not, and will not permit any  Restricted  Subsidiary
to,  create,  incur,  assume or suffer to exist any Lien on any of its assets or
properties of any character,  or any shares of Capital Stock or  Indebtedness of
any Restricted  Subsidiary,  without making  effective  provision for all of the
Securities and all other amounts due under the Indenture to be directly  secured
equally and ratably  with (or, if the  obligation  or liability to be secured by
such Lien is subordinated  in right of payment to the Securities,  prior to) the
obligation or liability secured by such Lien.

          The foregoing  limitation  does not apply to (a) Liens existing on the
Closing  Date;  (b)  the  Lien  securing  the  Collateral,  (c)  Liens  securing
Indebtedness  of the  Company  issued in  connection  with the GID  Refinancing,
provided  that (i) the assets  allowed to be secured  under this  clause (c) can
only be  unsubordinated  promissory  notes issued by GID to the Company that are
equal  in  right  of  payment  to  all  other  existing  and  future  unsecured,
unsubordinated  indebtedness  of GID,  and (ii) the Liens  created on the assets
described  in subclause  (i) will be created  under a pledge  agreement  that is
substantially similar to the form of Pledge Agreement attached hereto as Exhibit
A, and  provided  further that any Liens  created  under this clause (c) must be
terminated on the Pledge  Release Date, (d) Liens granted after the Closing Date
on any assets or Capital  Stock of the  Company or its  Restricted  Subsidiaries
created  in favor of the  Holders;  (e) Liens  with  respect  to the assets of a
Restricted  Subsidiary granted by such Restricted

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Subsidiary  to the Company or a  Restricted  Subsidiary  to secure  Indebtedness
owing to the Company or such other  Restricted  Subsidiary;  (f) Liens  securing
Indebtedness  which is  Incurred  to  refinance  secured  Indebtedness  which is
permitted to be Incurred under subclause (iv) of the second  paragraph of clause
(a) of  Section  1008;  provided  that such  Liens do not extend to or cover any
property or assets of the Company or any  Restricted  Subsidiary  other than the
property  or  assets  securing  the  Indebtedness  being  refinanced;  (g) Liens
Incurred  under  subclause (i) of the second  paragraph of clause (a) of Section
1008; or (h) Permitted Liens.

SECTION 1015.  Limitation on Sale-Leaseback Transactions.

          The Company  will not, and will not permit any  Restricted  Subsidiary
to, enter into any sale-leaseback transaction involving any assets or properties
whether now owned or  hereafter  acquired,  whereby the Company or a  Restricted
Subsidiary  sells or transfers  such assets or properties and then or thereafter
leases  such assets or  properties  or any part  thereof or any other  assets or
properties which the Company or such Restricted Subsidiary,  as the case may be,
intends to use for  substantially  the same purpose or purposes as the assets or
properties sold or transferred.

          The  foregoing  restriction  does  not  apply  to  any  sale-leaseback
transaction if (a) the lease is for a period,  including  renewal rights, of not
in excess of three years;  (b) the transaction is solely between the Company and
any Wholly Owned Restricted Subsidiary or solely between Wholly Owned Restricted
Subsidiaries; or (c) the Company or such Restricted Subsidiary, within 12 months
after the sale or transfer of any assets or properties is completed,  applies an
amount not less than the net proceeds received from such sale in accordance with
Section 1016.

SECTION 1016.  Limitation on Asset Sales.

          The Company  will not, and will not permit any  Restricted  Subsidiary
to,  consummate  any Asset Sale,  unless (a) the  consideration  received by the
Company or such Restricted Subsidiary is at least equal to the fair market value
of the  assets  sold or  disposed  of and (b) at least 75% of the  consideration
received  (including  any amount of Released  Indebtedness)  consists of cash or
Temporary Cash Investments.

          In the event and to the extent that the Net Cash Proceeds  received by
the Company or any of its Restricted  Subsidiaries  from one or more Asset Sales
occurring  on or after the Closing Date in any period of 12  consecutive  months
exceed 10% of Adjusted  Consolidated  Net Tangible Assets  (determined as of the
date  closest  to  the   commencement  of  such  12-month  period  for  which  a
consolidated  balance sheet of the Company and its  Subsidiaries  has been filed
with the Commission or provided to the Trustee), then the Company shall or shall
cause the relevant  Restricted  Subsidiary to (a) within twelve months after the
date Net Cash  Proceeds so  received  exceed 10% of  Adjusted  Consolidated  Net
Tangible  Assets,  (i) apply an amount equal to such excess Net Cash Proceeds to
permanently repay unsubordinated  Indebtedness of the Company or Indebtedness of
any other Restricted  Subsidiary,  in each case owing to a Person other than the
Company or any of the Restricted  Subsidiaries,  or (ii) invest an equal amount,
or the amount not so applied  pursuant to subclause  (i) of this  paragraph  (or
enter into a definitive agreement committing to so invest within 12 months after
the date of such agreement), in

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Replacement  Assets; and (b) apply (no later than the end of the 12-month period
referred to in clause (a) of this  paragraph)  such excess Net Cash Proceeds (to
the extent not applied  pursuant to clause (a) of this paragraph) as provided in
the following paragraph of this Section 1016. The amount of such excess Net Cash
Proceeds  required to be applied (or to be committed to be applied)  during such
12-month  period as set forth in clause (a) of the  preceding  sentence  and not
applied  as so  required  by the end of such  period  shall  constitute  "Excess
Proceeds."

          If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 1016 totals at least $5 million,  the Company must  commence,  not later
than the  fifteenth  Business  Day of such  month,  and  consummate  an Offer to
Purchase from the Holders (and if required by the terms of any Indebtedness that
is pari passu with the Securities ("Pari Passu Indebtedness"),  from the holders
of such Pari  Passu  Indebtedness)  on a pro rata basis an  aggregate  principal
amount of Securities (and Pari Passu  Indebtedness) equal to the Excess Proceeds
on such date, at a purchase price equal to 100% of their principal amount, plus,
in each case, accrued interest (if any) to the Payment Date.

SECTION 1017.  Change of Control.

          (a) Upon the occurrence of a Change of Control, each Holder shall have
the right to have its  Securities  repurchased  by the  Company on the terms and
conditions set forth in this Section 1017 and this Indenture.  Within 30 days of
the occurrence of Change of Control, the Company shall make an Offer to Purchase
all Outstanding  Securities at a Purchase Price equal to 101% of their aggregate
principal amount plus accrued interest,  if any, to the Payment Date (subject to
the right of Holders of record on the relevant  Record Date to receive  interest
due on an Interest Payment Date that is on or prior to the Payment Date).

          (b) One  Business  Day prior to the Payment  Date,  the Company  shall
deposit  with the Paying  Agent (or,  if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) money sufficient
to pay the Redemption  Price of all Securities or portions  thereof so accepted.
On the Payment  Date,  the Company  shall (i) accept for payment  Securities  or
portions thereof tendered  pursuant to the Offer to Purchase,  and (ii) deliver,
or cause to be delivered, to the Trustee all Securities,  or portions thereof so
accepted  together with an Officers'  Certificate  specifying  the Securities or
portions  thereof  accepted for payment by the  Company.  The Paying Agent shall
promptly mail or deliver to the Holders of Securities so accepted  payment in an
amount equal to the Purchase Price, and the Trustee shall promptly  authenticate
and mail or  deliver  to such  Holders a new  Security  or  Securities  equal in
principal  amount to any  unpurchased  portion of the  Security  surrendered  as
requested by the Holder.  The Company shall publicly announce the results of the
Offer to Purchase on or as soon as practicable after the Payment Date.

SECTION 1018.  Requirements with respect to the Collateral.

          Prior to the Pledge Release Date the Company  shall:  (a) maintain the
priority and  perfection  of the liens on the  Collateral  created by the Pledge
Agreement,  (b) not assign,  sell,  transfer or otherwise  dispose of any right,
title or interest in the Collateral to another  person,  and (c) at our expense,
execute and deliver to the Trustee,  all documents,  instruments  and agreements

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and do all other acts as my be required  to enable the  Trustee to exercise  and
enforce its rights in respect to the Collateral.

          Until the  Securities  are repaid in full, the Company shall cause the
principal amount and interest rate of the GID unsubordinated  promissory note to
be no less  than the  principal  amount  and  interest  rate of the  Outstanding
Securities.

SECTION 1019.  Indemnification of Judgment Currency.

          The Company agrees that U.S.  dollars are the sole currency of account
and payment for all sums payable by the Company under or in connection with this
Indenture or the Securities, including damages. Any amount received or recovered
in a currency (the "Judgment  Currency") other than dollars (whether as a result
of,  or  of  the  enforcement  of,  a  judgment  or  order  of a  court  of  any
jurisdiction,  in the  winding-up or dissolution of the Company or otherwise) by
any  Holder in  respect of any sum  expressed  to be due to it from the  Company
shall only  constitute  a  discharge  to the Company to the extent of the dollar
amount which the  recipient  is able to purchase  with the amount so received or
recovered in that other currency on the date of that receipt or recovery (or, if
it is not  practicable  to make that purchase on that date, on the first date on
which it is practicable to do so). If that dollar amount is less than the dollar
amount  expressed to be due to the  recipient  under any  Security,  the Company
shall indemnify the recipient  against any loss sustained by it as a result.  In
any event, the Company shall indemnify the recipient  against the cost of making
any such purchase.  For the purposes of this Section 1019, it will be sufficient
for the Holder to certify in a satisfactory  manner  (indicating  the sources of
information  used) that it would have suffered a loss had an actual  purchase of
dollars been made with the amount so received in that other currency on the date
of receipt or  recovery  (or, if a purchase of dollars on such date had not been
practicable, on the first date on which it would have been practicable, it being
required that the need for a change of date be certified in the manner mentioned
above). These indemnities  constitute a separate and independent obligation from
other obligations of the Company,  shall give rise to a separate and independent
cause of action,  shall  apply  irrespective  of any  indulgence  granted by any
Holder and shall continue in full force and effect  despite any other  judgment,
order,  claim or proof for a  liquidated  amount in respect of any sum due under
any Security.

Section 1020.  Payment of Additional Amounts.

          Any and all payments made by the Company to the Holders, under or with
respect  to the  Securities,  will  be  made  free  and  clear  of  and  without
withholding  or deduction for or on account of any present or future tax,  duty,
levy, impost, assessment or other governmental charge (including any interest or
penalties with respect  thereto)  imposed or levied by or on behalf of Mexico or
any  political  subdivision  thereof or by any  authority  or agency  therein or
thereof having power to tax (hereinafter  "Mexican Withholding  Taxes"),  unless
the  withholding or deduction of such Mexican  Withholding  Taxes is required by
law or by the interpretation or administration thereof. In the event any Mexican
Withholding  taxes are  required to be so withheld or deducted  the Company will
(a) pay such additional  amounts  ("Additional  Amounts") as may be necessary so
that after making all  required  deductions  or  withholdings  (including  those
applicable  to  additional  sums payable  under this  provision)  the net amount
received by Holders or other  beneficial  owners of the  Securities  will not be
less  than  the  amounts  as  would

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<PAGE>

have been received by them had no such  withholding  or deduction been required,
(b) deduct or withhold  such  Mexican  Withholding  Taxes and (c) remit the full
amount so deducted or withheld to the relevant taxing or other authority.

          Notwithstanding  the foregoing,  no such  Additional  Amounts shall be
payable for or on account of (a) any Mexican  Withholding  Taxes which would not
have been imposed or levied on a Holder but for the  existence of any present or
former  connection  between the Holder or beneficial owner of the Securities and
Mexico or any political  subdivision or territory or possession  thereof or area
subject to its  jurisdiction,  including,  without  limitation,  such  Holder or
beneficial owner (i) being or having been a citizen or resident of Mexico,  (ii)
maintaining or having maintained an office, permanent establishment,  fixed base
or branch therein,  or (iii) being or having been present or engaged in trade or
business therein, except for a connection solely arising from the mere ownership
or, or receipt of payment under, such Securities or the exercise of rights under
such  Securities or the Indenture  (personally or through the Trustee);  (b) any
estate  inheritance,  gift or  similar  tax,  assessment  or other  governmental
charge;  (c) any Mexican  Withholding Taxes that are imposed or levied by reason
of the failure by the Holder or  beneficial  owner of such  Securities to comply
with any certification,  identification, information, documentation, declaration
or other  reporting  requirement  which is  required  or  imposed  by a statute,
treaty, regulation, general rule or administrative practice as a precondition to
exemption  from,  or reduction in the rate of, the  imposition,  withholding  or
deduction of any Mexican Withholding Taxes; provided that at least 60 days prior
to (i) the first payment date with respect to which the Company shall apply this
clause  (c)  and  (ii)  in  the  event  of  a  change  in  such   certification,
identification,  information,  documentation,  declaration  or  other  reporting
requirements,  the first  payment date  subsequent  to such change,  the Company
shall have  notified the  Trustee,  in writing,  that the Holders or  beneficial
owners  of the  Securities  will be  required  to  provide  such  certification,
identification,  information or  documentation,  declaration or other reporting;
(d) any  Mexican  Withholding  Taxes that are imposed or levied by reason of the
failure by the Holder or beneficial  owners of such  Securities to timely comply
(subject to the  conditions  set forth  below)  with a written  request by or on
behalf of the Company, to provide  information,  documentation or other evidence
concerning the nationality,  residence, identity, eligibility for benefits under
a treaty for avoidance of double  taxation to which Mexico is a party,  which is
in effect, present or former connection with Mexico or any political subdivision
or territory or possession  thereof or area subject to its  jurisdiction,  or of
the Holder or beneficial owner of such Securities that is necessary from time to
time to determine the  appropriate  rate of deduction or  withholding of Mexican
Withholding Taxes applicable to such Holder or beneficial  owner;  provided that
at least 60 days  prior to the  first  payment  date with  respect  to which the
Company  shall apply this  clause  (d),  the  Company  shall have  notified  the
Trustee,  in writing,  that such Holders or beneficial  owners of the Securities
will be required to provide such  information,  documentation or other evidence;
(e) the  presentation  of such Securities  (where  presentation is required) for
payment on a date more than 30 days after the date on which such payment  became
due and  payable  or the date on which  payment  thereof is duly  provided  for,
whichever  occurs later,  except to the extent that the Holder or the beneficial
owner of such  Securities  should have been  entitled to  Additional  Amounts in
respect of such Mexican  Withholding  Taxes on presenting  such  Securities  for
payment on any date during such 30-day period;  or (f) any  combination of items
(a), (b), (c), (d) or (e) above.

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<PAGE>

          Notwithstanding  the  foregoing,  the  limitations  on  the  Company's
obligation  to pay  Additional  Amounts  set forth in clauses (c) and (d) of the
preceding  paragraph  shall not  apply if the  provision  of the  certification,
identification,   information,  documentation,  declaration  or  other  evidence
described in such clauses (c) and (d) would be materially more onerous, in form,
in  procedure  or in the  substance  of  information  disclosed,  to a Holder or
beneficial  owner of a Security  (taking into  account any relevant  differences
between United States and Mexican law,  regulation or  administrative  practice)
than comparable  information or other applicable reporting  requirements imposed
or provided for under United States federal income tax law (including the United
States-Mexico Income Tax Treaty),  regulations  (including proposed regulations)
and  administrative  practice (such as IRS Forms 1001,  W-8, W-8BEN and W-9). In
addition,  the limitations on the Company's obligation to pay Additional Amounts
set forth in  clauses  (c) and (d) above of the  preceding  paragraph  shall not
apply if Section VI of Article 154 of the Mexican  Income Tax Law is in effect ,
unless (a) the  provision  of the  certification,  identification,  information,
documentation, declaration or other evidence described in above referred clauses
(c) and (d) is  expressly  required by  statute,  regulation,  general  rules or
administrative  practice  in order to apply  Section  VI of  Article  154 of the
Mexican  Income  Tax  Law,  the  Company   cannot  obtain  such   certification,
identification, information, or satisfy any other reporting requirements, on its
own  through  reasonable  diligence  and the  Company  otherwise  would meet the
requirements  for application of Section VI of Article 154 of the Mexican Income
Tax Law or (b) in the case of a Holder or beneficial owner of Securities that is
a pension fund or other tax-exempt organization, such Holder or beneficial owner
would be subject to Mexican  Withholding  Taxes at a rate that is lower than the
rate resulting from the  application of Section VI of Article 154 of the Mexican
Income Tax Law if the  information,  documentation  or other  evidence  required
under  above  referred  clauses  (c) and  (d) of the  preceding  paragraph  were
provided. In addition,  clauses (c) and (d) of the preceding paragraph shall not
be  construed  to require  that a  non-Mexican  pension or  retirement  fund,  a
non-Mexican tax-exempt organization,  a non-Mexican financial institution or any
other Holder or beneficial  owner of a Security  obtains  registration  with the
Ministry  of  Finance  and  Public  Credit  for  the  purpose  of   establishing
eligibility of an exemption from or reduction of Mexican Withholding Taxes.

          Upon the  Trustee's  receipt of timely  notification  from the Company
that the Holders or beneficial owners will be required to provide information or
documentation,  as  described  in clauses (c) and (d) above,  the Trustee  shall
provide such  notification to the Holders or beneficial  owners, as the case may
be. The Company will, upon written request, provide the Trustee, the Holders and
the Paying  Agent with a duly  certified  or  authenticated  copy of an original
receipt of the  payment of  Mexican  Withholding  Taxes  which the  Company  has
withheld or deducted in respect of any  payments  made under or with  respect to
the Securities.  The Trustee shall, for a period of five years following the due
date for each payment,  maintain in its files each such  certified copy received
from the Company.

          If the Company is obligated to pay Additional  Amounts with respect to
any payment  under or with  respect to the  Securities  (other  than  Additional
Amounts  payable on the date of the  Indenture),  the Company will, upon written
request,  deliver to the Trustee an Officers'  Certificate stating the fact that
such Additional Amounts are payable and the amounts so payable.

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<PAGE>

          The Company shall pay any stamp, issue,  registration,  documentary or
other similar  taxes and other duties  (including  interest and  penalties  with
respect  thereto)  imposed or levied by Mexico (or any political  subdivision or
taxing  authority  thereof or  therein)  in respect of the  creation,  issue and
offering of the Securities.

          Except as specifically provided in the Security or this Indenture, the
Company shall not be required to make any payment with respect to any tax, duty,
assessment or other governmental  charge of whatever nature imposed or levied by
any  government  or any political  subdivision  or taxing  authority  thereof or
therein.

SECTION 1021.  Provision of Financial Information.

          Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any  successor  provision  thereto,  the Company shall file all
reports and other  information  with the SEC which the  Company  would have been
required to file with the Commission  pursuant to such Section 13(a) or 15(d) of
the Exchange Act if the Company were so subject.  In addition to annual  reports
on Form 20-F, the Company shall file on Form 6-K interim  consolidated  reports,
including consolidated  financial statements,  as soon as they become available,
but in no  event  later  than 60 days  after  the  end of each  interim  period,
prepared in accordance  with Mexican  GAAP.  The Company shall file such interim
consolidated  reports  with the SEC  whether  or not the  Company  is subject to
corporate reporting requirements under Mexican law.

          If the  SEC  does  not  permit  the  filings  described  in the  first
paragraph of this Section 1021, the Company shall provide such reports and other
information to the Trustee (within the same time periods  described above or, if
earlier,  that would be applicable if the Company were required and permitted to
file reports with the  Commission) and instruct the Trustee to mail such reports
and other  information  to Holders at their  addresses set forth on the Security
Register.  The Company  shall  supply to the Trustee and to each Holder or shall
supply to the Trustee for  forwarding to each such Holder,  without cost to such
Holder, copies of such reports and other information.

          SECTION 1022. Waiver of Certain Covenants. The Company may omit in any
particular  instance  to comply  with any  covenant  or  condition  set forth in
Sections 1008 to 1020,  inclusive,  if before the time for such  compliance  the
Holders of at least a majority in principal amount of the Outstanding Securities
shall, by Act of such Holders,  either waive such compliance in such instance or
generally waive  compliance with such covenant or condition,  but no such waiver
shall  extend to or affect such  covenant or  condition  except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such  covenant or
condition shall remain in full force and effect; provided, however, with respect
to an Offer to Purchase as to which an offer has been mailed, no such waiver may
be made or shall be effective against any Holder tendering  Securities  pursuant
to such  offer,  and the  Company  may not omit to comply with the terms of such
offer as to such Holder.

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                                 ARTICLE ELEVEN
                            REDEMPTION OF SECURITIES

SECTION 1101.  Right of Redemption.

          (a) Optional Redemption. On or after _______________ 2005, the Company
may buy back the  Securities,  in whole or in part, at the following  redemption
prices, expressed as percentage of the principal amount, plus accrued and unpaid
interest,  if any, to the  applicable  redemption  date, if redeemed  during the
12-month period beginning on _____________ of the years indicated below:

                  Year                                     Percentage

                  2005

                  2006

                  2007 and thereafter                          100%

          In addition,  at any time prior to ____________,  2004 the Company may
redeem up to 35% of the  principal  amount of the  Securities  with the Net Cash
Proceeds  of one or more  sales  of the  Company's  Capital  Stock  (other  than
Disqualified  Stock)  at  a  Redemption  Price  (expressed  as a  percentage  of
principal  amount) of ___.___%,  plus accrued  interest to the Redemption  Date;
provided that at least 65% of the aggregate  principal  amount of the Securities
originally  issued on the  Closing  Date  remains  outstanding  after  each such
redemption  and notice of any such  redemption is mailed within 120 days of each
such sale of the Company's Capital Stock.

          The Company will give notice of any  redemption as provided in Section
1103. If less than all of the  Securities  are to be redeemed,  selection of the
Securities  for  redemption  will be made by the Trustee in compliance  with the
requirements of the principal national securities exchange, if any, on which the
Securities  are  listed,  or if the  Securities  are not  listed  on a  national
securities  exchange,  by lot or by such other method as the Trustee in its sole
discretion  shall  deem to be fair and  appropriate.  No  Security  of $1,000 in
principal amount or less shall be redeemed in part.

          (b) Redemption for Changes in Mexican  Withholding Taxes. In the event
that the Company has become or would  become  obligated to pay, on the next date
on which any amount would be payable  under or with  respect to the  Securities,
any Additional  Amounts in excess of those  attributable to Mexican  Withholding
Taxes of 10%, as a result of (i) any change in or amendment  to the laws,  rules
or regulations of Mexico,  or any political  subdivision or taxing  authority or
other instrumentality  thereof or therein, or (ii) any amendment to or change in
the rules or  interpretations  relating  to such laws,  made by any  legislative
body, governmental or regulatory agency or authority (including the enactment of
any legislation and the publication of any regulatory  determination) of Mexico,
or any  political  subdivision  or  taxing  authority  or other  instrumentality
thereof  or  therein,  or (iii)  any  official  interpretation,  application  or
pronouncement  by any legislative  body or governmental or regulatory  agency or
authority  that  provides  for a position  with  respect to such laws,  rules or
regulations that differs from the

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<PAGE>

theretofore  generally accepted position,  which amendment or change is enacted,
promulgated,  issued  or  announced  or  which  interpretation,  application  or
pronouncement is issued or announced,  in each case, after the date hereof, then
the  Company may redeem all,  but not less than all,  of the  Securities  at any
time,  on giving  notice  as  provided  in  Section  1103 at 100% of the  unpaid
principal amount together with accrued and unpaid interest  thereon,  if any, to
the Redemption Date. This notice, once delivered, will be irrevocable, except if
the Company no longer continues to be obligated to pay those Additional Amounts.

SECTION 1102.  Election to Redeem; Notice to Trustee.

          The  election  of the  Company to redeem any  Securities  pursuant  to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the  Company,  the Company  shall,  not more than 60 nor less
than 30 days prior to the Redemption Date fixed by the Company (unless a shorter
notice  shall be  satisfactory  to the  Trustee),  notify  the  Trustee  of such
Redemption Date and of the principal amount of Securities to be redeemed.

SECTION 1103.  Notice of Redemption.

          Notices  to  redeem  Securities  shall be given to each  Holder in the
manner set forth in Section 106. Such notice will be given once not more than 60
days nor less than 30 days prior to the date fixed for redemption.  Such notices
will be deemed  to have been  given on the date of  mailing.  Notices  to redeem
Securities  shall  identify  the  Securities  to be  redeemed  (including  CUSIP
numbers),  specify the Redemption Date, the places of payment, that payment will
be made upon  presentation and surrender of the Securities to be redeemed,  that
interest  accrued to the date,  fixed for  redemption  (subject  to the right of
Holders of record on the relevant Record Date to receive interest on an Interest
Payment  Date  that  is on or  prior  to the  Redemption  Date)  will be paid as
specified in said notice,  and that on and after said date interest thereon will
cease to accrue.  Such notice shall also state that the conditions  precedent to
such redemption have occurred and the Redemption Price.

          Notice of  redemption  of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's  request,  by the
Trustee in the name and at the expense of the Company.

          If any  Security  is to be  redeemed  in  part  only,  the  notice  of
redemption  relating to such  Security  will state the portion of the  principal
amount  to be  redeemed.  A new  Security  in  principal  amount  equal  to  the
unredeemed portion will be issued upon cancellation of the original Security.

          In  connection  with a  notice  of  redemption  for tax  reasons,  the
following shall apply:

          (a) no such notice of  redemption  may be given  earlier  than 90 days
prior to the earliest date on which, but for such redemption,  the Company would
be obligated  to pay such  Additional  Amounts were a payment on the  Securities
then due; and

          (b) at the time such notice of redemption is given, such obligation to
pay such Additional Amounts remains in effect.

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<PAGE>

          Prior to publication of any notice of redemption for tax reasons,  the
Company shall deliver to the Trustee:

          (a) a certificate  signed by a duly authorized  officer of the Company
stating that the Company is entitled to effect such redemption and setting forth
a statement of facts showing that the  conditions  precedent of the right of the
Company to so redeem have occurred; and

          (b) an Opinion of Mexican Counsel or independent  public  accountants,
in both  cases  of  recognized  standing,  selected  by the  Company  reasonably
acceptable  to the  Trustee to the effect  that the  Company  has or will become
obligated to pay such Additional Amounts as a result of such change,  amendment,
official interpretation, application or pronouncement.

SECTION 1104.  Deposit of Redemption Price.

          Prior to any  Redemption  Date,  the Company  shall  deposit  with the
Trustee or with a Paying  Agent (or,  if the Company is acting as its own Paying
Agent,  segregate  and hold in trust as provided  in Section  1003) an amount of
money  sufficient to pay the Redemption  Price of, and (except if the Redemption
Date shall be an Interest  Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.

SECTION 1105.  Securities Payable on Redemption Date.

          If notice of  redemption  has been  given in the  manner  set forth in
Section 1103, the Securities shall become due and payable on the Redemption Date
specified in such notice and upon  presentation  and surrender of the Securities
at the place or places  specified in such notice,  the Securities  shall be paid
and redeemed by the Company at the places and in the manner herein specified and
at the Redemption Price herein specified together with accrued interest (subject
to the right of  Holders  of  record  on the  relevant  Record  Date to  receive
interest on an Interest Payment Date that is on or prior to the Redemption Date)
to the Redemption  Date.  From and after the Redemption  Date, if monies for the
redemption of Securities called for redemption shall have been made available at
the office of the Paying  Agent (or,  if the Company is acting as its own Paying
Agent, segregated and held in trust as provided in Section 1003), for redemption
on the Redemption Date, the Securities called for redemption shall cease to bear
interest,  and the only  right of the  Holders  of such  Securities  shall be to
receive payment of the Redemption Price together with accrued interest  (subject
to the right of  Holders  of  record  on the  relevant  Record  Date to  receive
interest on an Interest Payment Date that is on or prior to the Redemption Date)
to the  Redemption  Date as  aforesaid.  If  monies  for the  redemption  of the
Securities are not made  available for payment until after the Redemption  Date,
the Securities called for redemption shall not cease to bear interest until such
monies have been so made available.

          If any  Security  called  for  redemption  shall  not be so paid  upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security.

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<PAGE>

                                 ARTICLE TWELVE
                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1201.  Defeasance and Discharge of the Indenture.

          The Company shall be deemed to have paid and shall be discharged  from
any and  all  obligations  in  respect  of the  Outstanding  Securities  and the
provisions  of this  Indenture  will no longer be in effect with  respect to the
Securities and the Trustee, at the expense of the Company,  shall execute proper
instruments acknowledging the same if:

          (a) the Company has irrevocably  deposited or caused to be irrevocably
deposited with the Trustee,  in trust,  money and/or Government  Securities that
through the payment of interest and  principal in respect  thereof in accordance
with their terms will provide money in an amount sufficient to pay the principal
of,  premium,  if any,  and  accrued  interest on the  Securities  on the Stated
Maturity of such payments in accordance with the terms of this Indenture and the
Securities,

          (b)  the Company has delivered to the Trustee:

          (i) either:

                    (A) an Opinion of U.S.  Counsel to the effect  that  Holders
               will not recognize  income,  gain or loss for U.S. federal income
               tax purposes as a result of the Company's  exercise of its option
               under  this  Section  1201 and will be  subject  to U.S.  federal
               income tax on the same  amount and in the same  manner and at the
               same  times  as  would  have  been  the  case  if  such  deposit,
               defeasance and discharge had not occurred,  which Opinion of U.S.
               Counsel  must be  based  upon  (and  accompanied  by a copy of) a
               ruling of the Internal  Revenue Service to the same effect unless
               there  has been a change in  applicable  federal  income  tax law
               after the Closing  Date such that a ruling is no longer  required
               or

                    (B) a  ruling  directed  to the  Trustee  received  from the
               Internal Revenue Service to the same effect as the aforementioned
               Opinion of U.S. Counsel,

          (ii) either:

                    (A) an Opinion of Mexican Counsel to the effect that,  based
               upon  Mexican  law then in  effect,  Holders  will not  recognize
               income,  gain or loss for Mexican tax (including  withholding tax
               except for withholding tax then payable on interest payments due)
               purposes  as a result of the  Company's  exercise  of its  option
               under  this  Section  1201 and will be  subject  to  Mexican  tax
               (including  withholding  tax  except  for  withholding  tax  then
               payable on interest  payments  due) on the same amount and in the
               same  manner  and at the same time as would have been the case if
               such deposit, defeasance and discharge had not occurred, or

                                       88
<PAGE>

                    (B) a  ruling  directed  to the  Trustee  received  from the
               Mexican tax authorities to the same effect as the  aforementioned
               Opinion of Mexican Counsel, and

          (iii) an Opinion of U.S.  Counsel to the effect  that the  creation of
          the defeasance  trust does not violate the  Investment  Company Act of
          1940 and the trust  fund will not be  subject to the effect of Section
          547 of the United States Bankruptcy Code or Section 15 of the New York
          Debtor and Creditor Law,

          (c)  immediately  after  giving  effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or lapse of
time or both  would  become an Event of  Default,  shall  have  occurred  and be
continuing  on the date of such deposit or during the period ending on the 271st
day after  the date of such  deposit,  and such  deposit  shall not  result in a
breach or  violation  of, or  constitute  a default  under,  any other  material
agreement  or  instrument  to  which  the  Company  or  any  of  its  Restricted
Subsidiaries  is a  party  or by  which  the  Company  or any of its  Restricted
Subsidiaries is bound,

          (d) if at such time the Securities are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of U.S. Counsel to
the effect that the Securities will not be delisted as a result of such deposit,
defeasance and discharge, and

          (e) the Company has delivered to the Trustee an Officers'  Certificate
and an  Opinion  of U.S.  Counsel,  in each  case  stating  that all  conditions
precedent  provided for herein  relating to the defeasance  contemplated by this
Section 1201 have been complied with.

          The  following   provisions,   which  shall  survive  until  otherwise
terminated or discharged hereunder: (a) the rights of Holders of such Securities
to receive,  solely from the trust fund, payments in respect of the principal of
and interest on such  Securities  when such  payments are due, (b) the Company's
obligations  with respect to such Securities  under Sections 304, 305, 306, 1002
and 1003, (c) the rights,  powers,  trusts, duties and immunities of the Trustee
hereunder,  including,  without  limitation,  the  rights of the  Trustee  under
Section 607 hereunder, and (d) this Article Twelve.

          After  any  irrevocable   deposit,  the  Trustee  upon  request  shall
acknowledge  in writing the  discharge of the  Company's  obligations  under the
Securities  and this  Indenture  except for those  surviving  obligations in the
immediately preceeding paragraph.

SECTION 1202.  Covenant Defeasance.

          This Indenture will no longer be in effect with respect to clauses (c)
and (d) under  Sections  801,  clause  (c) of Section  501 with  respect to such
clauses (c) and (d) under Section 801, Sections 1008 through 1017, Section 1020,
Section  1021,  clause (d) of Section 501 with respect to such other  covenants,
and  clauses  (e) and (f) of  Section  501 and,  with  respect  to a  Restricted
Subsidiary, clause (g) of Section 501(hereinafter, "Covenant Defeasance") if,

          (a) the  Company  shall  have  irrevocably  deposited  or caused to be
irrevocably  deposited  with the  Trustee,  in trust,  money  and/or  Government
Securities that through the payment of interest and principal in respect thereof
in accordance with their terms will provide

                                       89
<PAGE>

money in an amount  sufficient  to pay the principal  of,  premium,  if any, and
accrued  interest on the  Securities on the Stated  Maturity of such payments in
accordance with the terms of this Indenture and the Securities,

          (b) the Company  shall have  satisfied  the  provisions  of subclauses
(b)(iii), (c) and (d) of Section 1201,

          (c) the Company  shall have  delivered to the Trustee of an Opinion of
U.S.  Counsel to the effect  that,  among other  things,  the  Holders  will not
recognize  income,  gain or loss for federal  income tax purposes as a result of
such deposit and defeasance of certain  covenants and Events of Default and will
be subject to federal  income tax on the same  amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred,

          (d) if at such time the Securities are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of U.S. Counsel to
the effect that the Securities will not be delisted as a result of such Covenant
Defeasance, and

          (e) the Company has delivered to the Trustee an Officers'  Certificate
and an  Opinion  of U.S.  Counsel,  in each  case  stating  that all  conditions
precedent  provided for herein relating to Covenant  Defeasance  contemplated by
this Section 1202 have been complied with.

                                       90
<PAGE>

SECTION 1203.  Deposited Money and Government Securities to Be Held in Trust;
               Other Miscellaneous Provisions.

          Subject to the  provisions of the last  paragraph of Section 1003, all
money and Government  Securities (including the proceeds thereof) deposited with
the Trustee (or other  qualifying  trustee--collectively,  for  purposes of this
Section  1205,  the  "Trustee")  pursuant  to  Section  1204 in  respect  of the
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such  Securities 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 Holders of such  Securities,
of all sums due and to become due thereon in respect of principal  and interest,
but such money need not be  segregated  from  other  funds  except to the extent
required by law.

          The Company shall pay and  indemnify the Trustee  against any tax, fee
or other  charge  imposed  on or  assessed  against  the  Government  Securities
deposited  pursuant to Section 1203 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 Securities.

          Anything in this Article Twelve to the contrary  notwithstanding,  the
Trustee  shall  deliver  or pay to the  Company  from time to time upon  Company
Request  any money or U.S.  Government  Obligations  held by it as  provided  in
Section  1202  which,  in  the  opinion  of  a  nationally  recognized  firm  of
independent  public  accountants  expressed in a written  certification  thereof
delivered to the Trustee,  are in excess of the amount  thereof which would then
be required  to be  deposited  to effect an  equivalent  Defeasance  or Covenant
Defeasance.

SECTION 1204.  Reinstatement.

          If the  Trustee  or the  Paying  Agent is unable to apply any money in
accordance  with  Section 1201 or 1202 by reason of any order or judgment of any
court or governmental authority enjoining,  restraining or otherwise prohibiting
such  application,  then the Company's  obligations under this Indenture and the
Securities  shall be revived and  reinstated  as though no deposit had  occurred
pursuant to this  Article  Twelve until such time as the Trustee or Paying Agent
is  permitted to apply all such money in  accordance  with Section 1201 or 1202;
provided,  however,  that if the Company  makes any payment of  principal  of or
interest on any Security  following the  reinstatement of its  obligations,  the
Company shall be  subrogated to the rights of the Holders of such  Securities to
receive such payment from the money held by the Trustee or the Paying Agent.

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

          This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original,  but all such  counterparts
shall together constitute but one and the same instrument.

                                       91
<PAGE>

          IN WITNESS  WHEREOF,  the parties hereto have caused this Indenture to
be duly executed,  and the Trustee has caused its corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.

                       CORPORACION DURANGO, S.A.
                                de C.V.

                       By:
                           ---------------------------------------
                            Name:
                            Title:

                       THE CHASE MANHATTAN BANK, as
                                Trustee

                       By:
                           ---------------------------------------
                            Name:
                            Title
<PAGE>

FORM OF PLEDGE AGREEMENT                                               Exhibit A
------------------------
<PAGE>

FORM OF SUBORDINATION PROVISION                                        Exhibit B
-------------------------------

                              SELECTED DEFINITIONS

          "Bank" means the bank party to the Credit Agreement. (1)

          "Credit  Agreement"  means the Credit Agreement dated as of __________
__, 20__ between the Company and the Bank,  as such  Agreement  may hereafter be
amended or otherwise modified from time to time.

          "Event of Default"  means an "Event of Default"  described  in Section
501 of the  Indenture.

          "Indenture"  means the Indenture  dated as of _________,  2001 between
the Company and The Chase Manhattan Bank, as Trustee,  as the same may hereafter
be amended or otherwise modified from time to time.

          "Notes" means the  promissory  note[s]  issued to the Bank pursuant to
the Credit  Agreement,  as such  promissory  note[s] may hereafter be amended or
otherwise  modified  from  time  to  time.

--------

(1)  This form assumes that there is only one Bank party to the Credit Agreement
     and that there is no agent acting on behalf of the Bank or Banks.  The form
     should be appropriately  modified given the facts and  circumstances of the
     proposed subordinated loan.
<PAGE>

          "Senior  Indebtedness"  means all  obligations  of the  Company now or
hereafter  existing  under the  Indenture  and the  Senior  Notes,  whether  for
principal,  interest,  Additional  Amounts (as defined in the Indenture),  fees,
expenses or otherwise  including,  without  limitation,  amounts  payable (i) in
respect of any indemnity, (ii) in respect of any breach of a representation or a
warranty  or (iii) to  acquire  any Senior  Notes on  account of the  redemption
provisions of the Indenture or any of the Senior Notes.

          "Senior  Notes"  means the __%  Senior  Notes due 2008 of the  Company
issued under the  Indenture as such notes may  hereafter be amended or otherwise
modified from time to time.

          "Subordinated  Debt"  means  all  obligations  of the  Company  now or
hereafter  existing under the Credit  Agreement and the Notes  (whether  created
directly  or acquired  by  assignment  or  otherwise),  whether  for  principal,
interest (including, without limitation,  interest, as provided under the Credit
Agreement and the Notes,  accruing after the filing of a petition initiating any
proceeding referred to in Section _____(a) [Events of Subordination], whether or
not such interest  accrues after the filing of such petition for purposes of the
Bankruptcy  Code  or  Mexican  bankruptcy  law or is an  allowed  claim  in such
proceeding), fees, expenses or otherwise.

                                     * * *

                                  ARTICLE ____
                                  SUBORDINATION
<PAGE>

          Section _____.  Subordinated Debt Subordinate to Senior  Indebtedness.
The Company agrees, and the Bank also agrees,  that the Subordinated Debt is and
shall be subordinate,  to the extent and in the manner hereinafter set forth, to
the prior payment in full of all Senior Indebtedness.

          Section  _________.  Events of Subordination.  (a) In the event of any
dissolution,   winding  up,  concurso   mercantil,   liquidation,   arrangement,
reorganization,  adjustment, protection, relief or composition of the Company or
its debts,  whether  voluntary or involuntary,  in any  bankruptcy,  insolvency,
arrangement,  reorganization,  receivership,  relief  or other  similar  case or
proceeding under any U.S. Federal or State or Mexican  bankruptcy or similar law
or upon an assignment  for the benefit of creditors or any other  marshalling of
the assets and  liabilities  of the Company or  otherwise,  Senior  Indebtedness
shall first be paid in full before the holders of any Subordinated Debt shall be
entitled to receive any payment of all or any of the Subordinated  Debt, and any
payment or  distribution  of any kind (whether in cash,  property or securities)
that  otherwise  would be payable  or  deliverable  upon or with  respect to the
Subordinated  Debt in any such  case,  proceeding,  assignment,  marshalling  or
otherwise  (including  any  payment  that may be  payable by reason of any other
indebtedness of the Company being  subordinated  to payment of the  Subordinated
Debt) shall be paid or delivered  directly to the Trustee for the benefit of the
holders  of the  Senior  Notes for  application  (in the case of cash) to, or as
collateral (in the case of non-cash  property or securities) for, the payment or
prepayment of the Senior  Indebtedness until the Senior  Indebtedness shall have
been paid in full.

         (b) In the event that an Event of Default described in Section 501(a)
or (b) of the Indenture shall have occurred and be continuing then no payment
(including any payment that may be payable by reason of any other indebtedness
of the Company being subordinated to
<PAGE>

payment of the  Subordinated  Debt) shall be made by or on behalf of the Company
for or on  account  of any  Subordinated  Debt,  and the Bank  shall not take or
receive from the Company,  directly or indirectly,  in cash or other property or
by set-off or in any other manner, including, without limitation, from or by way
of collateral, payment of all or any of the Subordinated Debt.

          Section  ________.  In the event  that an  acceleration  of the Senior
Notes as provided under Section 502 of the Indenture  shall have occurred and be
continuing, then no payment (including any payment that may be payable by reason
of any other  indebtedness  of the Company being  subordinated to payment of the
Subordinated  Debt)  shall  be made by or on  behalf  of the  Company  for or on
account of any  Subordinated  Debt,  and the Bank shall not take or receive from
the Company,  directly or indirectly, in cash or other property or by set-off or
in  any  other  manner,  including,  without  limitation,  from  or  by  way  of
collateral,  payment  of all or any of the  Subordinated  Debt,  during a period
commencing on the date that notice of  acceleration  is given to the Company and
ending  on the  date  that  such  acceleration  is  automatically  rescinded  in
accordance with the terms of Section 502 of the Indenture.<PAGE>

                                                                     Exhibit 4.4

                                                            Draft: June 26, 2001

                     AMENDED AND RESTATED PLEDGE AGREEMENT

                        Dated as of ____________ , 2001

                                    Between

                 CORPORACION DURANGO, S.A. DE C.V., as Pledgor

                                      and

                      THE CHASE MANHATTAN BANK, as Trustee

<PAGE>

                     AMENDED AND RESTATED PLEDGE AGREEMENT

          This  PLEDGE  AGREEMENT  (this  "Pledge  Agreement")  is  amended  and
restated as of ____________,  2001 between CORPORACION DURANGO,  S.A. DE C.V., a
variable capital company (sociedad anonima de capital variable)  organized under
the laws of the United  Mexican  States (the  "Pledgor"),  having its  principal
office at Torre Corporativa  Durango,  Potasio 150, Ciudad Industrial,  Durango,
Durango,  United Mexican States 34220,  and THE CHASE  MANHATTAN BANK, a banking
corporation  duly organized and existing  under the laws of New York,  having an
office at 450 West 33rd Street, 10th Floor, New York, NY 10001-2697,  as trustee
(the  "Trustee")  for the  holders  (the  "Holders")  of the Notes  (as  defined
herein).  Capitalized  terms used herein and not otherwise  defined herein shall
have the meanings given to such terms in the Indenture.

                              W I T N E S S E T H

          WHEREAS,  the  Pledgor  and the  Trustee  entered  into  that  certain
indenture  dated  February  5,  2001  (as  amended,  restated,  supplemented  or
otherwise  modified from time to time, the  "Indenture"),  pursuant to which the
Pledgor  issued its 13 1/8% Senior Notes due 2006 (the  "Notes") in an aggregate
principal amount of US$180 million; and

          WHEREAS,  to secure the obligations of the Pledgor under the Indenture
and the Notes (the "Obligations") the Pledgor (i) pledged to the Trustee for its
benefit and the ratable benefit of the Holders of the Original Notes, a security
interest in a US$180 million  unsubordinated  promissory  note dated February 5,
2001 (as  amended or  supplemented  from time to time,  the  "Promissory  Note")
issued by Grupo  Industrial  Durango,  S.A. de C.V., a variable  capital company
(sociedad  anonima de capital  variable)  organized under the laws of the United
Mexican States ("GID"), to the Pledgor, and all interest,  cash, instruments and
other property from time to time received,  receivable or otherwise  distributed
in respect of or in  exchange  for the  Promissory  Note and (ii)  executed  and
delivered this Pledge  Agreement in order to secure the payment and  performance
by the Pledgor of the Obligations; and

          WHEREAS,  in accordance with the terms of the Indenture the Pledgor is
issuing an additional US$___ million in aggregate principal amount of the Notes;

          WHEREAS,  Section 1018 of the  Indenture  requires  that the principal
amount  outstanding  under  the  Promissory  Note to be at  least  equal  to the
outstanding principal amount of the Notes; and

          WHEREAS,  the Promissory  Note has been amended and restated as of the
date hereof in order to increase the  principal  amount  outstanding  thereunder
from US$180  million to US$___  million in order to comply with  Section 1018 of
the Indenture; and
<PAGE>

          WHEREAS,  the Pledgor and the Trustee are amending and restating  this
agreement in order to confirm the  continuation of the security  interest in the
Promissory Note, as amended and restated on the date hereof; and

          WHEREAS,  it is a condition  precedent to the  issuance of  additional
Notes by the  Pledgor  that the  Pledgor  shall have  entered  into this  Pledge
Agreement;

          NOW,  THEREFORE,  in  consideration  of  the  mutual  promises  herein
contained,  and in order to induce  the  Holders of the Notes to  purchase  such
Notes,  the  Pledgor  hereby  agrees  with the  Trustee,  for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes, as follows:

          SECTION 1. Pledge and Grant of Security  Interest.  The Pledgor hereby
assigns and  pledges to the Trustee for its benefit and for the ratable  benefit
of the  Holders of the Notes,  and hereby  grants to the Trustee for its benefit
and for the ratable benefit of the Holders of the Notes, a security  interest in
the following (the "Collateral"):

          (a) the  Promissory  Note, as amended and restated on the date hereof,
     issued  by  GID  to  the  Pledgor  in  an  aggregate  principal  amount  of
     US$_________,  a copy of which is  attached  hereto as  Exhibit  A, and all
     interest,  cash, instruments and other property from time to time received,
     receivable  or otherwise  distributed  in respect of or in exchange for the
     Promissory Note, and

          (b) all proceeds of any or all of the foregoing.

          SECTION 2.  Security for  Obligation.  This Pledge  Agreement  and the
grant of a security interest in the Collateral  hereunder secures the prompt and
complete  payment  and  performance  when due  (whether at stated  maturity,  by
acceleration  or  otherwise)  of all the  Obligations,  whether  for  principal,
interest,  fees or  otherwise,  now or  hereafter  existing,  under this  Pledge
Agreement,  the Notes or the Indenture (all such Obligations  being the "Secured
Obligations").  Without  limiting the generality of the  foregoing,  this Pledge
Agreement  and the grant of a  security  interest  in the  Collateral  hereunder
secures  the  payment  of all  amounts  that  constitute  part  of  the  Secured
Obligations and would be owed by the Pledgor to the Trustee or the Holders under
the Notes or the Indenture but for the fact that they are  unenforceable  or not
allowable  due to the  existence  of a  bankruptcy,  reorganization  or  similar
proceeding involving the Pledgor.

          SECTION 3.  Delivery  of  Collateral.  The  Promissory  Note is hereby
endorsed and  delivered by the Pledgor to the Trustee and is  accompanied  by an
Acknowledgement  and  Consent  Agreement  (the   "Acknowledgement   and  Consent
Agreement"),  substantially  in the form of Exhibit B hereto,  executed  by GID,
whereby GID, among other things,  acknowledges and consents to the pledge of the
Promissory Note by the Pledgor.

                                       2
<PAGE>

          SECTION  4.   Representations  and  Warranties.   The  Pledgor  hereby
represents and warrants as of the date hereof that:

         (a) The execution and delivery by the Pledgor of, and the  performance
     by the Pledgor of its obligations  under,  this Pledge Agreement do not and
     will not  contravene  any  provision  of  applicable  law or the  estatutos
     sociales  of the  Pledgor  or any  material  agreement  or  other  material
     instrument  binding  upon the  Pledgor  or any of its  subsidiaries  or any
     judgment, order, decree, license or permit of any governmental body, agency
     or court  having  jurisdiction  over the  Pledgor or any of its  Restricted
     Subsidiaries,  or result in the creation or  imposition  of any Lien on any
     assets of the Pledgor, except for the security interests granted under this
     Pledge Agreement.

          (b) No consent of any other  person  and no  approval,  authorization,
     order of, action by or  qualification  with,  any  governmental  authority,
     regulatory  body,  agency  or other  third  party is  required  (i) for the
     execution,  delivery or performance by the Pledgor of its obligations under
     this Pledge  Agreement,  (ii) for the grant by the Pledgor of the  security
     interest  created  hereby,  for the pledge by the Pledgor of the Collateral
     pursuant to this Pledge  Agreement or (iii) for the exercise by the Trustee
     of the rights  provided  for in this Pledge  Agreement  or the  remedies in
     respect of the Collateral pursuant to this Pledge Agreement.

          (c) The Pledgor is the owner of the Collateral,  free and clear of any
     Lien or claims of any person or entity  (except for the security  interests
     created by this Pledge Agreement).

          (d)  This  Pledge  Agreement  has been  duly  authorized  and  validly
     executed and  delivered by the Pledgor and  constitutes a valid and binding
     agreement of the  Pledgor,  enforceable  against the Pledgor in  accordance
     with its terms  except as the  enforceability  thereof  may be  limited  by
     bankruptcy, insolvency, reorganization, or other similar laws affecting the
     enforcement  of  creditors'  rights  generally  and  to  general  equitable
     principles (regardless of whether the issue of enforceability is considered
     in a proceeding in equity or at law).

          (e) Upon the delivery of the Promissory Note to the Trustee the pledge
     and grant of a security interest in the Collateral  pursuant to this Pledge
     Agreement  for the benefit of the Trustee and the Holders of the Notes will
     constitute a valid and perfected  first priority  security  interest in the
     Collateral, securing the payment of the Secured Obligations.

                                       3
<PAGE>

          (f) There are no legal or governmental  proceedings pending or, to the
     best of the Pledgor's knowledge,  threatened to which the Pledgor or any of
     its  Restricted  Subsidiaries  is a party  that  would  affect the power or
     ability of the  Pledgor  to  perform  its  obligations  under  this  Pledge
     Agreement or to consummate the transactions contemplated hereby.

          (g)  Neither  the Pledgor nor the  Collateral  has any  immunity  from
     jurisdiction  of any court or from  set-off or any legal  process  (whether
     through service of notice, attachment prior to judgment,  attachment in aid
     of execution, execution or otherwise).

          (h) There is no tax, levy,  impost,  deduction,  charge or withholding
     imposed by the Pledgor's  jurisdiction of incorporation or any organization
     or any  political  subdivision  thereof on or by virtue of the execution or
     delivery of this Agreement.

          (i) To ensure the legality, validity,  enforceability or admissibility
     in  evidence  of  this   Agreement  in  the   Pledgor's   jurisdiction   of
     incorporation,  it is not necessary that this Pledge Agreement or any other
     document be filed or  recorded  with any court or other  authority  in such
     jurisdiction  or that any stamp or similar  tax be paid on or in respect of
     this Pledge Agreement.

          (j) GID has  duly  executed  and  delivered  the  Acknowledgement  and
     Consent Agreement.

          SECTION 5. Further Assurances. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor,  it will promptly  execute and
deliver all further  instruments and documents,  and take all reasonable further
action,  that may be necessary,  or that the Trustee may reasonably  request, in
order to perfect and protect any  security  interest  granted or purported to be
granted  hereby or to enable the Trustee to exercise  and enforce its rights and
remedies hereunder with respect to the Collateral.

          SECTION 6.  Covenants.  The  Pledgor  covenants  and  agrees  with the
Trustee and the Holders of the Notes that from and after the date of this Pledge
Agreement  until the date that this Pledge  Agreement is terminated  pursuant to
Section 20 hereof:

          (a) that (i) it will not (and will not purport  to) sell or  otherwise
     dispose of the Collateral or its beneficial  interest therein,  and (ii) it
     will not create or permit to exist any Lien or other adverse interest in or
     with respect to its beneficial  interest in the Collateral  (except for the
     security interests granted under this Pledge Agreement);

          (b) that it will not (i) enter  into any  agreement  or  understanding
     that restricts or inhibits or purports to restrict or inhibit the Trustee's
     rights or remedies  hereunder,  or (ii) fail to pay or  discharge  any tax,
     assessment or levy of any nature with respect to its beneficial interest in
     the  Collateral  not later than five days prior to the date of any proposed
     sale under any judgment, writ or warrant of attachment with respect to such
     beneficial interest; and

                                       4
<PAGE>

          (c) that it will not amend,  waive or otherwise modify any term of the
     Promissory Note except as permitted thereunder.

          SECTION  7.  Power  of  Attorney.  The  Pledgor  hereby  appoints  and
constitutes  the Trustee as the Pledgor's  attorney-in-fact  (with full power of
substitution),  with full authority in the place and stead of the Pledgor and in
the  name of the  Pledgor  or  otherwise,  from  time  to time in the  Trustee's
discretion  following the occurrence and during the  continuation of an Event of
Default to take any action and to execute  any  instrument  that the Trustee may
deem necessary or advisable to accomplish the purposes of this Pledge Agreement;
provided,  however,  that the Trustee shall have no obligation to perform any of
the foregoing actions. The Pledgor agrees that if the power-of-attorney  granted
hereunder  shall  require any  formalities  under Mexican law, the pledgor shall
take any and all action  reasonably  requested  by the Trustee to complete  such
formalities.

          SECTION 8. No Assumption of Duties;  Reasonable  Care.  The rights and
powers conferred on the Trustee hereunder are solely to preserve and protect the
security  interest  of the  Trustee  and the  Holders of the Notes in and to the
Collateral  granted hereby and shall not be interpreted to, and shall not impose
any duties on the Trustee in  connection  therewith  other than those  expressly
provided  herein  or  imposed  under  applicable  law.  Except  as  provided  by
applicable  law or by the  Indenture,  the  Trustee  shall  be  deemed  to  have
exercised  reasonable care in the custody and  preservation of the Collateral in
its possession if the Collateral is accorded  treatment  substantially  equal to
that which the Trustee accords similar  property held by the Trustee for its own
account,  it being understood that the Trustee in its capacity as such shall not
have any  responsibility  for (a)  ascertaining or taking action with respect to
calls,  conversions,  exchanges,  maturities  or other  matters  relative to any
Collateral,  whether or not the  Trustee has or is deemed to have  knowledge  of
such matters,  (b) taking any  necessary  steps to preserve  rights  against any
parties with respect to any  Collateral or (c) investing or  reinvesting  any of
the Collateral or any loss on any investment.

          SECTION 9.  Indemnity;  Trustee's  Limitation of Liability to Pledgor.
(a) The Pledgor shall indemnify, reimburse, hold harmless and defend the Trustee
and its directors,  officers, agents and employees, from and against any and all
claims,  actions,  obligations,  liabilities and expenses,  including reasonable
defense costs,  reasonable  investigative  fees and costs,  and reasonable legal
fees and damages  arising from the Trustee's  performance or lack of performance
as Trustee  under this Pledge  Agreement,  except to the extent that such claim,
action,  obligation,  liability or expense is directly  attributable  to the bad
faith, gross negligence or willful misconduct of such indemnified  person.  This
indemnity  shall be a  continuing  obligation  of the  Pledgor,  its  respective
successors  and  assigns,   notwithstanding   the  termination  of  this  Pledge
Agreement.

                                       5
<PAGE>

          (b) If at any  time  the  Trustee  is  served  with  any  judicial  or
     administrative order, judgment, decree, writ or other form of judicial or
     administrative process which in any way affects Collateral (including, but
     not limited to, orders of attachment or garnishment or other forms of
     levies or injunctions or stays relating to the transfer of Collateral), the
     Trustee is authorized to comply therewith in any manner as it or its legal
     counsel of its own choosing deems appropriate and if the Trustee complies
     with any such judicial or administrative order, judgment, decree, writ or
     other form of judicial or administrative process, the Trustee shall not be
     liable to the Pledgor even though such order, judgment, decree, writ or
     process may be subsequently modified or vacated or otherwise determined to
     have been without legal force or effect.

          (c) The Trustee  shall not incur any  liability to the Pledgor for not
     performing any act or fulfilling any duty, obligation or responsibility
     hereunder by reason of any occurrence beyond the control of the Trustee
     (including, but not limited to, any act or provision or any present or
     future law or regulation or governmental authority, any act of God or war,
     or the unavailability of the Federal Reserve Bank wire or telex or other
     wire or communication facility).

          (d) The Trustee shall not be  responsible in any respect for the form,
     execution, validity, value or genuineness of documents or securities
     deposited hereunder, or for any description therein, or for the identity,
     authority or rights of persons executing or delivering or purporting to
     execute or deliver any such document, security or endorsement.

          SECTION 10.  Remedies  Upon Event of Default.  If any Event of Default
under the Indenture  (any such Event of Default being referred to in this Pledge
Agreement as an "Event of Default") shall have occurred and be continuing:

          (a) The Trustee may exercise in respect of the Collateral, in addition
     to other rights and remedies provided for herein or otherwise  available to
     it, all the rights and remedies of a secured  party upon default  under the
     Uniform  Commercial  Code in  effect  in the State of New York at such time
     (the "N.Y.  Uniform  Commercial  Code")  (whether  or not the N.Y.  Uniform
     Commercial  Code applies to the affected  Collateral)  and also may without
     notice except as specified  below,  sell the Collateral or any part thereof
     in one or more parcels at public or private  sale,  at any of the Trustee's
     offices or elsewhere,  for cash, on credit or for future delivery, and upon
     such other terms as the Trustee may deem  commercially  reasonable.  To the
     extent notice of sale shall be required by law, at least 10 Business  Days'
     notice to the  Pledgor of the time and place of any public sale or the time
     after  which any  private  sale is to be made shall  constitute  reasonable
     notification.  The  Trustee  shall  not be  obligated  to make  any sale of
     Collateral  regardless of notice of sale having been given. The Trustee may
     adjourn any public or private sale from time to time by announcement at the
     time and place fixed therefor,  and such sale may,  without further notice,
     be made at the time and place to which it was so adjourned.

                                       6
<PAGE>

          (b) All cash  proceeds  received by the Trustee in respect of any sale
     of,  collection  from,  or  other  realization  upon all or any part of the
     Collateral may, in the discretion of the Trustee, be held by the Trustee as
     collateral for,  and/or then or at any time thereafter  applied in whole or
     in part by the Trustee for the ratable  benefit of the Holders of the Notes
     against,  all or any part of the Secured  Obligations  in such order as the
     Trustee shall elect.  Any surplus of such cash or cash proceeds held by the
     Trustee and remaining after payment in full of all the Secured  Obligations
     shall be paid over to the Pledgor or to whomsoever may be lawfully entitled
     to receive such surplus.

          SECTION 11. Security Interest Absolute. The obligations of the Pledgor
under this Agreement are independent of the Secured Obligations,  and a separate
action or actions may be brought and  prosecuted  against the Pledgor to enforce
this Pledge Agreement, irrespective of whether any action is brought against the
Pledgor or whether  the  Pledgor is joined in any such  action or  actions.  All
rights of the Trustee  and the  Holders of the Notes and the pledge,  assignment
and security interest  hereunder,  and all obligations of the Pledgor hereunder,
shall be absolute and unconditional, irrespective of:

          (a) any lack of validity or  enforceability  of the Indenture or Notes
     or any other agreement or instrument relating thereto;

          (b) any change in the time,  manner or place of payment  of, or in any
     other  term  of,  all  or  any of the  Secured  Obligations,  or any  other
     amendment or waiver of or any consent to any departure from the Indenture;

          (c) any taking, exchange,  surrender, release or non-perfection of any
     Liens on any other collateral for all or any of the Secured Obligations;

          (d) any manner of application of collateral,  or proceeds thereof,  to
     all or any of the  Secured  Obligations,  or any  manner  of sale or  other
     disposition of any collateral for all or any of the Secured  Obligations or
     any other assets of the Pledgor;

          (e)  any  change,   restructuring  or  termination  of  the  corporate
     structure or existence of the Pledgor; or

          (f) any other circumstance which might otherwise  constitute a defense
     available  to, or a  discharge  of, the  Pledgor in respect of the  Secured
     Obligations or of this Pledge Agreement.

          SECTION 12. Notices. Any notice or communication given hereunder shall
be sufficiently  given if in  writing  and  delivered  in  person  or mailed by
reputable commercial courier service or telecopier  communication,  addressed as
follows:

                                       7
<PAGE>

          if to the Pledgor:

             Corporacion Durango, S.A. de C.V.
             Torre Corporacion Durango
             Potasio 150
             Ciudad Industrial
             Durango, Durango
             United Mexican States
             Attention: Legal Counsel

          if to the Trustee:

             The Chase Manhattan Bank
             450 West 33rd Street
             15th Floor
             New York, NY 10001-2697
             Attention: Catherine Donohue

All  such  notices  and  other  communications  shall,  when  sent by  reputable
commercial  courier,  telecopied  or telexed,  respectively,  be effective  when
couriered,   transmitted  by  telecopier  or  confirmed  by  telex   answerback,
respectively, addressed as aforesaid.

          Section 13. Severability.  The provisions of this Pledge Agreement are
severable,  and if any clause or  provision  shall be held  invalid,  illegal or
unenforceable in whole or in part in any  jurisdiction,  then such invalidity or
unenforceability   shall  affect  in  that  jurisdiction  only  such  clause  or
provision,  or part  thereof,  and shall not in any manner affect such clause or
provision  in any other  jurisdiction  or any other  clause or provision of this
Pledge Agreement in any jurisdiction.

          Section 14. Headings.  The headings in this Pledge Agreement have been
inserted for  convenience  of reference  only,  are not to be  considered a part
hereof and shall in no way  modify or  restrict  any of the terms or  provisions
hereof.

          Section 15. Counterpart Originals. This Pledge Agreement may be signed
in two or more counterparts,  each of which shall be deemed an original, but all
of which shall together constitute one and the same agreement.

          Section  16.  Benefits  of Pledge  Agreement.  Nothing in this  Pledge
Agreement,  express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Notes, any benefit
or any legal or equitable right, remedy or claim under this Pledge Agreement.

                                       8
<PAGE>

          Section 17. Amendments,  Waivers and Consents. Any amendment or waiver
of any  provision of this Pledge  Agreement  and any consent to any departure by
the Pledgor from any provision of this Pledge  Agreement shall be effective only
if made or duly given in compliance  with all of the terms and provisions of the
Indenture,  and then  such  waiver or  consent  shall be  effective  only in the
specific  instance  and for the specific  purpose for which  given.  Neither the
Trustee nor any Holder of Notes shall be deemed, by any act, delay,  indulgence,
omission or otherwise,  to have waived any right or remedy  hereunder or to have
acquiesced  in any  Default  or Event of  Default or in any breach of any of the
terms and  conditions  hereof.  Failure of the Trustee or any Holder of Notes to
exercise, or delay in exercising,  any right, power or privilege hereunder shall
not preclude any other or further  exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Trustee or any Holder of Notes of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the  Trustee or such  Holder of Notes  would  otherwise
have on any future  occasion.  The  rights  and  remedies  herein  provided  are
cumulative, may be exercised singly or concurrently and are not exclusive of any
rights or remedies provided by law.

          Section 18.  Interpretation of Agreement.  As long as the Trustee acts
in good  faith  to the  extent  a term or  provision  of this  Pledge  Agreement
conflicts  with the Indenture,  the Indenture  shall control with respect to the
subject matter of such term or provision.  Notwithstanding the foregoing and any
other  provision of this Pledge  Agreement or the  Indenture,  the Trustee shall
have no fiduciary responsibility under this Pledge Agreement.

          Section 19. Continuing Security Interest.  This Pledge Agreement shall
create a continuing security interest in and to the Collateral and shall, unless
otherwise  provided  in this Pledge  Agreement,  remain in full force and effect
until  the  payment  in full in cash of the  Secured  Obligations.  This  Pledge
Agreement  shall be binding upon the Pledgor,  its  transferees,  successors and
assigns,  and shall inure,  together with the rights and remedies of the Trustee
hereunder,  to the  benefit of the  Trustee,  the Holders of the Notes and their
respective successors, transferees and assigns.

          Section  20.  Termination.  So long as no Event of Default  shall have
occurred and be  continuing,  this Pledge  Agreement  shall  terminate  upon the
earlier of (i) the payment in full in cash of the Secured  Obligations  and (ii)
the Pledge  Release Date (as defined in the  Supplemental  Indenture).  Upon any
such  termination,  the Trustee  will,  at the  Pledgor's  expense,  execute and
deliver to the Pledgor such documents as the Pledgor shall reasonably request to
evidence such termination.

          Section  21.   Survival  of   Representations   and   Covenants.   All
representations,  warranties and covenants of the Pledgor contained herein shall
survive the execution and delivery of this Pledge Agreement, and shall terminate
only upon the termination of this Pledge Agreement.

                                       9
<PAGE>

          Section 22.  Authority of the Trustee.  (a) The Trustee shall have and
be entitled to exercise all powers  hereunder that are  specifically  granted to
the Trustee by the terms  hereof,  together  with such powers as are  reasonably
incident  thereto.  The Trustee may  perform any of its duties  hereunder  or in
connection  with the  Collateral by or through  agents or employees and shall be
entitled to retain  counsel  and to act in  reliance  upon the advice of counsel
concerning  all such  matters.  Except as otherwise  expressly  provided in this
Pledge  Agreement  or the  Indenture,  neither  the  Trustee  nor any  director,
officer,  employee,  attorney  or agent of the  Trustee  shall be  liable to the
Pledgor  for any  action  taken or omitted  to be taken by the  Trustee,  in its
capacity as Trustee,  hereunder,  except for its own bad faith, gross negligence
or  willful  misconduct,  and  the  Trustee  shall  not be  responsible  for the
validity,  effectiveness  or  sufficiency  hereof or of any document or security
furnished pursuant hereto. The Trustee and its directors,  officers,  employees,
attorneys and agents shall be entitled to rely on any communication,  instrument
or  document  believed  by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.

          (b) The Pledgor  acknowledges that the rights and  responsibilities of
the Trustee under this Pledge  Agreement with respect to any action taken by the
Trustee or the  exercise or  non-exercise  by the Trustee of any option,  right,
request,  judgment or other right or remedy  provided for herein or resulting or
arising  out of this  Pledge  Agreement  shall,  as between  the Trustee and the
Holders of the Notes, be governed by the Indenture and by such other  agreements
with respect  thereto as may exist from time to time among them, but, as between
the Trustee and the Pledgor,  the Trustee shall be  conclusively  presumed to be
acting as agent for the Holders of the Notes with full and valid authority so to
act or refrain from acting,  and the Pledgor  shall not be obligated or entitled
to make any inquiry respecting such authority.

          Section 23.  Rights of Holders of the Notes.  No Holder of Notes shall
have any  independent  rights  hereunder  other  than  those  rights  granted to
individual Holders of the Notes pursuant to the Indenture; provided that nothing
in this subsection shall limit any rights granted to the Trustee under the Notes
or the Indenture.

          Section 24. Governing Law; Submission to Jurisdiction; Terms. (a) This
Pledge  Agreement  shall be governed by, and construed in accordance  with,  the
laws of the State of New York. Unless otherwise defined herein, terms defined in
Article  9 of the  Uniform  Commercial  Code of the  State  of New York are used
herein as therein defined.

          (b) The Pledgor hereby irrevocably  submits to the jurisdiction of any
New York State or Federal  court (to the extent  such court has  subject  matter
jurisdiction)  sitting in New York City and to the  courts of its own  corporate
domicile in respect of any  actions  brought  against it as a defendant  and any
appellate  court from any thereof in any action or proceeding  arising out of or
relating to this Pledge  Agreement,  and the Pledgor hereby  irrevocably  agrees
that all  claims  in  respect  of such  action  or  proceeding  may be heard and
determined in any such court.

                                      10
<PAGE>

The Pledgor hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding and any right which it may be entitled on account of place of
residence or domicile. Solely for the purposes of this Pledge Agreement, to the
full extent permitted by law the Pledgor hereby irrevocably appoints Durango
Paper Company, 1000 Osborne Street, St. Marys, Georgia 31558, Attention:
Prudencio Calderon, as its agent to receive on behalf of the Pledgor and its
property service of copies of the summons and complaint and any other process
which may be served in any such action or proceeding. Such service may be made
by mailing or delivering a copy of such process to the Pledgor in care of the
Durango Paper Company at such its address stated above, and the Pledgor hereby
irrevocably authorizes and directs Durango Paper Company to accept such service
on its behalf. The Pledgor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by applicable law.

          (c) Nothing in this  Section 24 shall  affect the right of the Trustee
to serve legal process in any other manner permitted by applicable law or affect
any  right  which  the  Trustee  would  otherwise  have to bring  any  action or
proceeding  against  the  Pledgor  or  its  property  in  the  courts  of  other
jurisdictions.

          (d) To the extent that the Pledgor  has or  hereafter  may acquire any
immunity  from  jurisdiction  of any  court or from any legal  process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution,  execution or otherwise) with respect to itself or its property,  the
Pledgor to the extent permitted by law hereby  irrevocably  waives such immunity
in respect of its obligations  under this Pledge Agreement and, without limiting
the  generality  of the  foregoing,  agrees  that the  waivers set forth in this
subsection  (d) shall have the fullest scope  permitted  under the United States
Foreign  Sovereign  Immunities  Act of 1976, as amended,  and are intended to be
irrevocable for purposes of such Act.

          Section 25. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES  ALL RIGHT TO TRIAL BY JURY IN ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM
(WHETHER  BASED ON CONTRACT,  TORT OR  OTHERWISE)  ARISING OUT OF OR RELATING TO
THIS PLEDGE AGREEMENT,  THE TRANSACTIONS  CONTEMPLATED THEREBY OR THE ACTIONS OF
THE  PLEDGOR  OR THE  TRUSTEE  OR ANY  HOLDER  OF NOTES  IN THE  ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

                                      11
<PAGE>

         Section 26.  Waiver of Liability.  The Pledgor  agrees that neither
the Holder of Notes nor the Trustee in its  capacity  as Trustee  shall have any
liability to the Pledgor  (whether  arising in tort,  contract or otherwise) for
losses suffered by the Pledgor in connection with, arising out of, or in any way
related to, the transactions  contemplated by this Pledge Agreement, or any act,
omission or event occurring in connection therewith,  unless it is determined by
a final nonappealable judgment of a court that is binding on the Trustee or such
Holder of Notes, as the case may be, that such losses were the result of acts or
omissions on the part of the Trustee or such  Holders of Notes,  as the case may
be, constituting bad faith, gross negligence, or willful misconduct.

                                      12
<PAGE>

          IN WITNESS WHEREOF,  the Pledgor and the Trustee have each caused this
Pledge  Agreement to be duly  executed and  delivered as of the date first above
written.

                                    Pledgor:

                                    CORPORACION DURANGO, S.A. DE C.V.

                                    By:______________________________
                                       Name:
                                       Title:

                                    Trustee:

                                    THE CHASE MANHATTAN BANK

                                    By:____________________________
                                       Name:
                                       Title:
<PAGE>

                                                                       EXHIBIT A

                   Form of GID Unsubordinated Promissory Note
<PAGE>

                                                                       EXHIBIT B

                  Form of Acknowledgment and Consent Agreement

          The  undersigned  hereby  acknowledges  notice of, and consents to the
terms and  provisions  of,  the Pledge  Agreement  as amended  and  restated  on
_________,  2001 (the "Pledge  Agreement",  the terms defined therein being used
herein as therein  defined)  between  Corporacion  Durango,  S.A.  de C.V.  (the
"Pledgor")  and The Chase  Manhattan  Bank, as Trustee (the  "Trustee")  for the
holders of the 13 1/8% Senior Notes due 2006 (the "Senior  Notes")  issued under
the Indenture  dated as of February 5, 2001 between the Pledgor and the Trustee,
and hereby agrees with the Trustee that:

     (a)  The  Trustee  shall be  entitled  to  exercise  any and all rights and
          remedies  of the  Pledgor  under the  unsubordinated  promissory  note
          issued by the  undersigned  to the Pledgor (as amended and restated on
          the date hereof,  the "GID Note") in accordance  with the terms of the
          Pledge  Agreement,  and the  undersigned  shall comply in all respects
          with such exercise.

     (b)  The  undersigned  will not make any prepayment of principal  under the
          GID Note, except as expressly provided therein.

          This  Acknowledgement  and Consent Agreement shall be binding upon the
undersigned and its successors and assigns,  and shall inure,  together with the
rights and remedies of the Trustee hereunder, to the benefit of the Trustee, the
holders of the Senior  Notes and their  permitted  successors,  transferees  and
assigns.  This  Acknowledgement  and Consent  Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

          [The remainder of this page has been left intentionally blank]
<PAGE>

          IN  WITNESS   WHEREOF,   the   undersigned   has  duly  executed  this
Acknowledgement  and  Consent  Agreement  as of the date set  opposite  its name
below.

Dated:  _______________            GRUPO INDUSTRIAL DURANGO, S.A. DE C.V.

                                   By______________________________________
                                     Name:
                                     Title:

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