Document:

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                              APPLIED POWER INC.,
                                   as Issuer

                    The SUBSIDIARY GUARANTORS named herein,
                                 as Guarantors

                                      and

                         BANK ONE TRUST COMPANY, N.A.,
                                  as Trustee

                                   INDENTURE

                          Dated as of August 1, 2000

                    13% Senior Subordinated Notes due 2009

================================================================================
<PAGE>

                             CROSS-REFERENCE TABLE
                             ---------------------

<TABLE>
<CAPTION>
  TIA                                                          Indenture
Section                                                         Section
-------                                                ------------------------
<S>                                                    <C>
310 (a)(1)...........................................        7.10
    (a)(2)...........................................        7.10
    (a)(3)...........................................        N.A.
    (a)(4)...........................................        N.A.
    (a)(5)...........................................        7.08; 7.10
    (b)..............................................        7.08; 7.10; 13.02
    (c)..............................................        N.A.
311 (a)..............................................        7.11
    (b)..............................................        7.11
    (c)..............................................        N.A.
312 (a)..............................................        2.05
    (b)..............................................        13.03
    (c)..............................................        13.03
313 (a)..............................................        7.06
    (b)(1)...........................................        N.A.
    (b)(2)...........................................        7.06
    (c)..............................................        7.06; 13.02
    (d)..............................................        7.06
314 (a)..............................................        4.07; 4.08; 13.02
    (b)..............................................        N.A.
    (c)(1)...........................................        13.04
    (c)(2)...........................................        13.04
    (c)(3)...........................................        N.A.
    (d)..............................................        N.A.
    (e)..............................................        13.05
    (f)..............................................        N.A.
315 (a)..............................................        7.01(b)
    (b)..............................................        7.05; 13.02
    (c)..............................................        7.01(a)
    (d)..............................................        7.01(c)
    (e)..............................................        6.11
316 (a)(last sentence)...............................        2.09
    (a)(1)(A)........................................        6.05
    (a)(1)(B)........................................        6.04
    (a)(2)...........................................        N.A.
    (b)..............................................        6.07
    (c)..............................................        9.05
317 (a)(1)...........................................        6.08
    (a)(2)...........................................        6.09
    (b)..............................................        2.04
    318(a)...........................................        13.01
    (c)..............................................        13.01
</TABLE>

N.A. means not applicable
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                            Page

                                  ARTICLE ONE

                  DEFINITIONS AND INCORPORATION BY REFERENCE
<S>                                                                         <C>
SECTION 1.01.  Definitions.....................................................1
SECTION 1.02.  Incorporation by Reference of TIA..............................32
SECTION 1.03.  Rules of Construction..........................................33
SECTION 1.04.  One Class of Securities........................................33

                                  ARTICLE TWO

                                   THE NOTES

SECTION 2.01.  Form and Dating................................................34
SECTION 2.02.  Execution and Authentication; Aggregate
                 Principal Amount.............................................34
SECTION 2.03.  Registrar and Paying Agent.....................................35
SECTION 2.04.  Paying Agent To Hold Assets in Trust...........................36
SECTION 2.05.  Noteholder Lists...............................................36
SECTION 2.06.  Replacement Notes..............................................37
SECTION 2.07.  Outstanding Notes..............................................37
SECTION 2.08.  Treasury Notes.................................................38
SECTION 2.09.  Temporary Notes................................................38
SECTION 2.10.  Cancellation...................................................38
SECTION 2.11.  Defaulted Interest.............................................39
SECTION 2.12.  CUSIP Number...................................................39
SECTION 2.13.  Deposit of Moneys..............................................40

                                 ARTICLE THREE

                                  REDEMPTION

SECTION 3.01.  Notices to Trustee.............................................40
SECTION 3.02.  Selection of Notes To Be Redeemed..............................40
SECTION 3.03.  Notice of Redemption...........................................41
SECTION 3.04.  Effect of Notice of Redemption.................................42
SECTION 3.05.  Deposit of Redemption Price....................................42
SECTION 3.06.  Notes Redeemed in Part.........................................43
SECTION 3.07.  Optional Redemption............................................43

                                 ARTICLE FOUR

                                   COVENANTS

SECTION 4.01.  Payment of Notes...............................................43
SECTION 4.02.  Maintenance of Office or Agency................................43
SECTION 4.03.  Corporate Existence............................................44
</TABLE>

                                      -i-
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<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 4.04.  Payment of Taxes and Other Claims..............................44
SECTION 4.05.  Maintenance of Properties and Insurance........................45
SECTION 4.06.  Compliance Certificate; Notice of Default......................45
SECTION 4.07.  Compliance with Laws...........................................46
SECTION 4.08.  SEC Reports....................................................46
SECTION 4.09.  Waiver of Stay, Extension or Usury Laws........................46
SECTION 4.10.  Limitation on Restricted Payments..............................47
SECTION 4.11.  Limitation on Restrictions on
                 Distributions from Restricted
                 Subsidiaries.................................................50
SECTION 4.12.  Limitation on Transactions with
                 Affiliates...................................................51
SECTION 4.13.  Limitation on Indebtedness.....................................52
SECTION 4.14.  Change of Control..............................................56
SECTION 4.15.  Limitation on Sales of Assets and
                 Subsidiary Stock.............................................58
SECTION 4.16.  Future Subsidiary Guarantors...................................62
SECTION 4.17.  Limitation on Liens............................................62
SECTION 4.18.  Limitation on the Sale or Issuance of
                 Capital Stock of Restricted
                 Subsidiaries.................................................63
SECTION 4.19.  Prohibition on Incurrence of Senior
                 Subordinated Debt............................................63
SECTION 4.20.  Limitation on Sale/Leaseback Transactions......................64
SECTION 4.21.  Limitation of Guarantees by Restricted
                 Subsidiaries.................................................64
SECTION 4.22.  Payments for Consent...........................................65
SECTION 4.23.  Excess Cash Flow Repurchase Offer..............................66

                                 ARTICLE FIVE

                             SUCCESSOR CORPORATION

SECTION 5.01.  Merger, Consolidation and Sale
                 of Assets of the Company.....................................67
SECTION 5.02.  Successor Corporation Substituted
                 for the Company..............................................69
SECTION 5.03.  Merger, Consolidation and Sale of
                 Assets of Any Subsidiary Guarantor...........................69
SECTION 5.04.  Successor Corporation Substituted for
                 Subsidiary Guarantor.........................................70

                                  ARTICLE SIX

                             DEFAULT AND REMEDIES

SECTION 6.01.  Events of Default..............................................70
SECTION 6.02.  Acceleration...................................................72
SECTION 6.03.  Other Remedies.................................................74
SECTION 6.04.  Waiver of Past Defaults........................................74
</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 6.05.  Control by Majority............................................74
SECTION 6.06.  Limitation on Suits............................................75
SECTION 6.07.  Rights of Holders To Receive Payment...........................75
SECTION 6.08.  Collection Suit by Trustee.....................................75
SECTION 6.09.  Trustee May File Proofs of Claim...............................76
SECTION 6.10.  Priorities.....................................................76
SECTION 6.11.  Undertaking for Costs..........................................77

                                 ARTICLE SEVEN

                                    TRUSTEE

SECTION 7.01.  Duties of Trustee..............................................77
SECTION 7.02.  Rights of Trustee..............................................79
SECTION 7.03.  Individual Rights of Trustee...................................80
SECTION 7.04.  Trustee's Disclaimer...........................................80
SECTION 7.05.  Notice of Defaults.............................................80
SECTION 7.06.  Reports by Trustee to Holders..................................80
SECTION 7.07.  Compensation and Indemnity.....................................81
SECTION 7.08.  Replacement of Trustee.........................................82
SECTION 7.09.  Successor Trustee by Merger, Etc...............................83
SECTION 7.10.  Trustee's Capital and Surplus..................................83
SECTION 7.11.  Eligibility; Disqualification..................................83
SECTION 7.12.  Preferential Collection of
                  Claims Against Company......................................84

                                 ARTICLE EIGHT

                      DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.01.  Discharge of Liability on Notes; Defeasance....................84
SECTION 8.02.  Conditions to Defeasance.......................................85
SECTION 8.03.  Application of Trust Money.....................................87
SECTION 8.04.  Repayment to Company...........................................87
SECTION 8.05.  Indemnity for Government Obligations...........................87
SECTION 8.06.  Reinstatement..................................................88

                                 ARTICLE NINE

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01.  Without Consent of Holders.....................................88
SECTION 9.02.  With Consent of Holders........................................89
SECTION 9.03.  Compliance with TIA............................................91
SECTION 9.04.  Revocation and Effect of Consents..............................91
SECTION 9.05.  Notation on or Exchange of Notes...............................92
SECTION 9.06.  Trustee To Sign Amendments, Etc................................92
</TABLE>

                                     -iii-

<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----

                                  ARTICLE TEN

                                  GUARANTEES
<S>                                                                         <C>
SECTION 10.01. Unconditional Guarantee........................................93
SECTION 10.02. Severability...................................................94
SECTION 10.03. Release of Subsidiary Guarantor from the
                 Guarantee....................................................94
SECTION 10.04. Limitation on Amount Guaranteed;
                 Contribution by Subsidiary Guarantors........................95
SECTION 10.05. Waiver of Subrogation..........................................97
SECTION 10.06. Execution of Guarantee.........................................98
SECTION 10.07. Waiver of Stay, Extension or Usury Laws........................98

                                ARTICLE ELEVEN

                            SUBORDINATION OF NOTES

SECTION 11.01. Agreement to Subordinate.......................................99
SECTION 11.02. Liquidation, Dissolution, Bankruptcy...........................99
SECTION 11.03. Default on Senior Indebtedness................................100
SECTION 11.04. Acceleration of Payment of Notes..............................101
SECTION 11.05. When Distribution Must Be Paid Over...........................101
SECTION 11.06. Subrogation...................................................101
SECTION 11.07. Relative Rights...............................................102
SECTION 11.08. Subrogation May Not Be Impaird By The
                 Company.....................................................102
SECTION 11.09. Rights of Trustee and Paying Agent............................102
SECTION 11.10. Distribution or Notice to Representative......................103
SECTION 11.11. Article Eleven Not To Prevent Events of
                 Default or Limit Right To Accelerate........................103
SECTION 11.12. Trust Moneys Not Subordinated.................................103
SECTION 11.13. Trustee Entitled To Rely......................................104
SECTION 11.14. Trustee To Effectuate Subordination...........................104
SECTION 11.15. Trustee Not Fiduciary for Holders of
                 Senior Indebtedness.........................................105
SECTION 11.16. Reliance by Holders of Senior Indebtedness
                 on Subordination............................................105

                                ARTICLE TWELVE

                          SUBORDINATION OF GUARANTEES

SECTION 12.01. Agreement to Subordinate......................................105
SECTION 12.02. Liquidation, Dissolution, Bankruptcy..........................106
SECTION 12.03. Default on Senior Indebtedness................................106
SECTION 12.04. Acceleration of Payment of Notes..............................108
SECTION 12.05. When Distribution Must Be Paid Over...........................108
SECTION 12.06. Subrogation...................................................108
SECTION 12.07. Relative Rights...............................................109
</TABLE>

                                     -iv-
<PAGE>

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SECTION 12.08. Subordination May Not Be Impaired by a
                 Subsidiary Guarantor........................................109
SECTION 12.09. Rights of Trustee and Paying Agent............................109
SECTION 12.10. Distribution or Notice to Representative......................110
SECTION 12.11. Article Twelve Not To Prevent Events of
                 Default or Limit Right To Accelerate........................110
SECTION 12.12. Trust Moneys Not Subordinated.................................110
SECTION 12.13. Trustee Entitled To Rely......................................110
SECTION 12.14. Trustee To Effectuate Subordination...........................111
SECTION 12.15. Trustee Not Fiduciary for Holders of
                 Senior Indebtedness of Subsidiary
                 Guarantors..................................................111
SECTION 12.16. Reliance by Holders of Senior Indebtedness
                 of Subsidiary Guarantors on
                 Subordination Provisions....................................112

                               ARTICLE THIRTEEN

                                 MISCELLANEOUS

SECTION 13.01. TIA Controls..................................................112
SECTION 13.02. Notices.......................................................112
SECTION 13.03. Communications by Holders
                 with Other Holders..........................................114
SECTION 13.04. Certificate and Opinion
                 as to Conditions Precedent..................................114
SECTION 13.05. Statements Required in
                 Certificate or Opinion......................................114
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.....................115
SECTION 13.07. Legal Holidays................................................115
SECTION 13.08. Governing Law.................................................115
SECTION 13.09. No Adverse Interpretation of Other
                 Agreements..................................................115
SECTION 13.10. No Recourse Against Others....................................116
SECTION 13.11. Successors....................................................116
SECTION 13.12. Multiple Originals............................................116
SECTION 13.13. Severability..................................................116
SECTION 13.14. Table of Contents, Cross Reference
                 Table and Headings..........................................116

SIGNATURES...................................................................S-1
</TABLE>

APPENDICES
----------

RULE 144A/REGULATION S APPENDIX
     Exhibit 1 -- Legends

EXHIBITS
--------

EXHIBIT A -- Form of Initial Note

                                      -v-
<PAGE>

                                                                            Page
                                                                            ----

EXHIBIT B -- Form of Exchange Note and Private Exchange Note
EXHIBIT C -- Form of Guarantee

                                     -vi-
<PAGE>

          INDENTURE, dated as of August 1, 2000, among APPLIED POWER INC. (which
intends to change its name to Acutant Corporation), a Wisconsin corporation(the
"Company"), the Subsidiary Guarantors named herein (the "Subsidiary Guarantors")
 -------                                                 ---------------------
and BANK ONE TRUST COMPANY, N.A., a national banking association, as Trustee
(the "Trustee").
      -------

          The Company has duly authorized the creation of an issue of
$200,000,000 13% Series A Senior Subordinated Notes due 2009 in the form of
Initial Notes (as defined below) and, if and when issued in connection with a
registered exchange for such Initial Notes, 13% Series B Senior Subordinated
Notes due 2009 in the form of Exchange Notes (as defined below) and, if and when
issued in connection with a private exchange for such Initial Notes, 13% Senior
Subordinated Private Exchange Notes due 2009 in the form of Private Exchange
Notes (as defined below), and, to provide therefor, the Company and the
Subsidiary Guarantors have duly authorized the execution and delivery of this
Indenture.

          Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Notes.

                                  ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.  Definitions.
               -----------

          "Accounts Receivable Facility" means any credit facility or
           ----------------------------
conditional sale contract or similar arrangement providing financing secured
directly or indirectly only by the accounts receivable of the Company or its
Subsidiaries.

          "Acquired Indebtedness" of any particular Person means Indebtedness of
           ---------------------
any other Person existing at the time such other Person merged with or into or
became a Restricted Subsidiary of such particular Person or assumed by such
particular Person in connection with the acquisition of assets from any other
person, and not incurred by such other person in connection with, or in
contemplation of, such other Person merging with or into such particular Person
or becoming a Restricted Subsidiary of such particular Person or such
acquisition.

          "Additional Assets" means
           -----------------
<PAGE>

                                      -2-

          (1)  any property or assets (other than Indebtedness and Capital
     Stock) in a Related Business,

          (2)  the Capital Stock of a Person that becomes a Restricted
     Subsidiary as a result of the acquisition of such Capital Stock by the
     Company or a Restricted Subsidiary; or

          (3)  Capital Stock constituting a minority interest in any Person that
     at such time is a Restricted Subsidiary;

provided, however, that any such Restricted Subsidiary described in clause (2)
--------  -------
or (3) above is primarily engaged in a Related Business.

          "Adjusted Maximum Amount" has the meaning provided in Section
           -----------------------
10.04(b).

          "Affiliate" of any specified Person means any other Person, directly
           ---------
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person.  For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.  For
purposes of the provisions described in Sections 4.10, 4.12 and 4.15 only,
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
5% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of the Company or of rights or warrants to Purchase such Capital Stock
(whether or not currently exercisable) and any Person who would be an Affiliate
of any such beneficial owner pursuant to the first sentence hereof.

          "Affiliate Transaction" has the meaning provided in Section 4.12.
           ---------------------

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

          "Aggregate Payments" has the meaning provided in Section 10.04(b).
           ------------------

          "Asset Disposition" means any sale, lease, transfer or other
                -----------------
disposition (or series of related sales, leases,
<PAGE>

                                      -3-

transfers or dispositions) by the Company or any Restricted Subsidiary,
including any disposition by means of a merger, consolidation or similar
transaction (each referred to for the purposes of this definition as a
"disposition"), of
 -----------

          (1)  any shares of Capital Stock of a 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),

          (2)  all or substantially all the assets of any division or line of
     business of the Company or any Restricted Subsidiary, or

          (3)  any other assets of the Company or any Restricted Subsidiary
     outside of the ordinary course of business of the Company or such
     Restricted Subsidiary

(other than, in the case of (1), (2) and (3) above, (x) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (y) for purposes of Section 4.15 only,
a disposition that constitutes a Restricted Payment permitted by Section 4.11
and (z) disposition of assets with a fair market value of less than $1.0
million).

          "Attributable Debt" in respect of a Sale/Leaseback Transaction means,
           -----------------
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended).

          "Authenticating Agent" has the meaning provided in Section 2.02.
           --------------------

          "Average Life" means, means, as of the date of determination, with
           ------------
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (x) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (y) the sum of all
such payments.
<PAGE>

                                      -4-

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

          "Board of Directors" means the Board of Directors of the Company or
           ------------------
any Subsidiary Guarantor, as applicable, or any committee thereof duly
authorized to act on behalf of such Board.

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

          "Business Day" means each day which is not a Legal Holiday.
           ------------

          "Capital Lease Obligations" means an obligation that is required to be
           -------------------------
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.

          "Capital Stock" of any Person means any and all shares, interests,
           -------------
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.

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

          (1)  any "person" (as such term is used in Sections 13(d) and 14(d) of
     the Exchange Act) is or becomes the beneficial owner (as defined in Rules
     13d-3 and 13d-5 under the Exchange Act, except that for purposes of this
     clause (1) such person shall be deemed to have "beneficial ownership" of
     all shares that any such person has the right to acquire, whether such
     right is exercisable immediately or only after the passage of time),
     directly or indirectly, of more than 50% of the total voting power of
<PAGE>

                                      -5-

     the Voting Stock of the Company (for the purpose of this clause (1) a
     Person shall be deemed to beneficially own the Voting Stock of a
     corporation that is beneficially owned (as defined above) by another
     corporation (a "parent corporation") if such Person beneficially owns (as
                     ------------------
     defined above) at least 50% of the aggregate voting power of all classes of
     Voting Stock of such parent corporation);

          (2)  during any period of two consecutive years, individuals who at
     the beginning of such period constituted 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 66-2/3% of the directors of the Company then still in office who
     were either 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;

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

          (4)  the merger or consolidation of the Company with or into another
     Person or the merger of another Person with or into the Company, or the
     sale of all or substantially all the assets of the Company to another
     Person, and, in the case of any such merger or consolidation, the
     securities of the Company that are outstanding immediately prior to such
     transaction and which represent 100% of the aggregate voting power of the
     Voting Stock of the Company are changed into or exchanged for cash,
     securities or property, unless pursuant to such transaction such securities
     are changed into or exchanged for, in addition to any other consideration,
     securities of the surviving corporation that represent immediately after
     such transaction, at least a majority of the aggregate voting power of the
     Voting Stock of the surviving corporation.

          "Change of Control Offer" has the meaning provided in Section 4.14.
           -----------------------

          "Change of Control Purchase Date" has the meaning provided in Section
           -------------------------------
4.14.

          "Change of Control Purchase Price" has the meaning specified in
           --------------------------------
Section 4.14.
<PAGE>

                                      -6-

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

          "Company" means the party named as such in this Indenture until a
           -------
successor replaces it and thereafter means such successor.

          "Consolidated Coverage Ratio" as of any date of determination means
           ---------------------------
the ratio of (x) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (y) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that

          (1)  if the Company or any Restricted Subsidiary has Incurred any
     Indebtedness since the beginning of such period that remains outstanding or
     if the transaction giving rise to the need to calculate the Consolidated
     Coverage Ratio is an Incurrence of Indebtedness, or both, EBITDA and
     Consolidated Interest Expense for such period shall be calculated after
     giving effect on a pro forma basis to such Indebtedness as if such
     Indebtedness had been Incurred on the first day of such period and the
     discharge of any other Indebtedness repaid, repurchased, defeased or
     otherwise discharged with the proceeds of such new Indebtedness as if such
     discharge had occurred on the first day of such period,

          (2)  if the Company or any Restricted Subsidiary has repaid,
     repurchased, defeased or otherwise discharged any Indebtedness since the
     beginning of such period or if any Indebtedness is to be repaid,
     repurchased, defeased or otherwise discharged (in each case other than
     Indebtedness Incurred under any revolving credit facility unless such
     Indebtedness has been permanently repaid and has not been replaced) on the
     date of the transaction giving rise to the need to calculate the
     Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
     such period shall be calculated on a pro forma basis as if such discharge
     had occurred on the first day of such period and as if the Company or such
     Restricted Subsidiary has not earned the interest income actually earned
     during such period in respect of cash or Temporary Cash Investments used to
     repay, repurchase, defease or otherwise discharge such Indebtedness,

          (3)  if since the beginning of such period the Company or any
     Restricted Subsidiary shall have made any Asset
<PAGE>

                                      -7-

     Disposition, the EBITDA for such period shall be reduced by an amount equal
     to the EBITDA (if positive) directly attributable to the assets which are
     the subject of such Asset Disposition for such period, or increased by an
     amount equal to the EBITDA (if negative) directly attributable thereto for
     such period, and Consolidated Interest Expense for such period shall be
     reduced by an amount equal to the Consolidated Interest Expense directly
     attributable to any Indebtedness of the Company or any Restricted
     Subsidiary repaid, repurchased, defeased or otherwise discharged with
     respect to the Company and its continuing Restricted Subsidiaries in
     connection with such Asset Disposition for such period (or, if the Capital
     Stock of any Restricted Subsidiary is sold, the Consolidated Interest
     Expense for such period directly attributable to the Indebtedness of such
     Restricted Subsidiary to the extent the Company and its continuing
     Restricted Subsidiaries are no longer liable for such Indebtedness after
     such sale),

          (4)  if since the beginning of such period the Company or any
     Restricted Subsidiary (by merger or otherwise) shall have made an
     Investment in any Restricted Subsidiary (or any Person which becomes a
     Restricted Subsidiary) or an acquisition of assets, including any
     acquisition of assets occurring in connection with a transaction requiring
     a calculation to be made hereunder, which constitutes all or substantially
     all of an operating unit of a business, EBITDA and Consolidated Interest
     Expense for such period shall be calculated after giving pro forma effect
     thereto (including the Incurrence of any Indebtedness) as if such
     Investment or acquisition occurred on the first day of such period and

          (5)  if since the beginning of such period any Person (that
     subsequently became a Restricted Subsidiary or was merged with or into the
     Company or any Restricted Subsidiary since the beginning of such period)
     shall have made any Asset Disposition, any Investment or acquisition of
     assets that would have required an adjustment pursuant to clause (3) or (4)
     above if made by the Company or a Restricted Subsidiary during such period,
     EBITDA and Consolidated Interest Expense for such period shall be
     calculated after giving pro forma effect thereto as if such Asset
     Disposition, Investment or acquisition occurred on the first day of such
     period.
<PAGE>

                                      -8-

          For purposes of this definition, whenever pro forma effect is to be
given to any disposition or acquisition of assets, the pro forma calculations of
any expense or cost reductions or other operating improvements shall be
determined in accordance with Regulation S-X promulgated under the Securities
Act.  If any Indebtedness bears a floating rate of interest and is being given
pro forma effect, the interest on such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months).

          "Consolidated Interest Expense" means, for any period, the total
           -----------------------------
interest expense of the Company and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such total interest expense, and to the
extent incurred by the Company or its Restricted Subsidiaries, without
duplication,

          (1)  interest expense attributable to capital leases,

          (2)  amortization of debt discount and debt issuance cost,

          (3)  capitalized interest,

          (4)  non-cash interest expenses,

          (5)  commissions, discounts and other fees and charges owed with
     respect to letters of credit and bankers' acceptance financing,

          (6)  net costs associated with Hedging Obligations (including
     amortization of fees),

          (7)  Preferred Stock dividends in respect of all Preferred Stock held
     by Persons other than the Company or a Wholly Owned Subsidiary,

          (8)  interest incurred in connection with Investments in discontinued
     operations,

          (9)  interest accruing on any Indebtedness of any other Person to the
     extent such Indebtedness is Guaranteed by (or secured by the assets of) the
     Company or any Restricted Subsidiary and
<PAGE>

                                      -9-

          (10) the cash contributions to any employee stock ownership plan or
     similar trust to the extent such contributions are used by such plan or
     trust to pay interest or fees to any Person (other than the Company) in
     connection with Indebtedness Incurred by such plan or trust.

          "Consolidated Net Income" means, for any period, the net income of the
           -----------------------
Company and its consolidated Subsidiaries; provided, however, that there shall
                                           --------  -------
not be included in such Consolidated Net Income:

          (1)  any net income of any Person (other than the Company) if such
     Person is not a Restricted Subsidiary, except that:

               (A) subject to the exclusion contained in clause (4) below, the
          Company's equity in the net income of any such Person for such period
          shall be included in such Consolidated Net Income up to the aggregate
          amount of cash actually distributed by such Person during such period
          to the Company or a Restricted Subsidiary as a dividend or other
          distribution (subject, in the case of a dividend or other distribution
          paid to a Restricted Subsidiary, to the limitations contained in
          clause (3) below); and

               (B) the Company's equity in a net loss of any such Person for
          such period shall be included in determining such Consolidated Net
          Income;

          (2) any net income (or loss) of any Person acquired by the Company or
     a Subsidiary in a pooling of interests transaction for any period prior to
     the date of such acquisition;

          (3) any net income of any Restricted Subsidiary if such Restricted
     Subsidiary is subject to restrictions, directly or indirectly, on the
     payment of dividends or the making of distributions by such Restricted
     Subsidiary, directly or indirectly, to the Company, except that:

               (A) subject to the exclusion contained in clause (4) below, the
          Company's equity in the net income of any such Restricted Subsidiary
          for such period shall be included in such Consolidated Net Income up
          to the aggregate amount of cash actually distributed by such
          Restricted Subsidiary during such period to the Company or another
          Restricted Subsidiary
<PAGE>

                                      -10-

          as a dividend or other distribution (subject, in the case of a
          dividend or other distribution paid to another Restricted Subsidiary,
          to the limitation contained in this clause); and

               (B) the Company's equity in a net loss of any such Restricted
          Subsidiary for such period shall be included in determining such
          Consolidated Net Income;

          (4) any gain (or loss) realized upon the sale or other disposition of
     any assets of the Company, its consolidated Subsidiaries or any other
     Person (including pursuant to any sale-and-leaseback arrangement) which is
     not sold or otherwise disposed of in the ordinary course of business and
     any gain (or loss) realized upon the sale or other disposition of any
     Capital Stock of any Person;

          (5)  extraordinary gains or losses;

          (6) the cumulative effect of a change in accounting principles; and

          (7) income or loss attributable to discontinued operations (including,
     without limitation, operations disposed of during such period whether or
     not such operations were classified as discontinued).

Notwithstanding the foregoing, for the purposes of Section 4.10 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
the Company or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under such
covenant pursuant to clause (a)(3)(E) thereof.

          "Consolidated Net Worth" means the total of the amounts shown on the
           ----------------------
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending at least 45 days prior to the taking of any
action for the purpose of which the determination is being made, as:

          (1)  the par or stated value of all outstanding Capital Stock of the
     Company plus;

          (2)  paid-in capital or capital surplus relating to such Capital Stock
     plus;
<PAGE>

                                      -11-

          (3)  any retained earnings or earned surplus less (x) any accumulated
     deficit and (y) any amounts attributable to Disqualified Stock.

          "covenant defeasance option" has the meaning provided in Section 8.01.
           --------------------------

          "Credit Facility" means the Credit Agreement (including all documents
           ---------------
entered into by the Company and any subsidiary of the Company in connection
therewith (including Hedging Obligations)), to be dated on or about the
Effective Date among the Company, Credit Suisse First Boston and the other
agents and lenders named therein, and any other bank credit agreement or similar
facility entered into in the future by the Company or any Restricted Subsidiary,
as any of the same, in whole or in part, may be amended, renewed, extended,
increased (but only so long as such increase is permitted under the terms of
this Indenture), substituted, refinanced, restructured or replaced (including,
without limitation, any successive renewals, extensions, increases,
substitutions, refinancings, restructurings, replacements, supplements or other
modifications of the foregoing).

          "Currency Agreement" means in respect of a Person, any foreign
           ------------------
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.

          "Custodian" means any receiver, trustee, assignee, liquidator,
           ---------
sequestrator or similar official under any Bankruptcy Law.

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

          "Depository" means The Depository Trust Company, its nominees and
           ----------
their respective successors.

          "Designated Senior Indebtedness" means
           ------------------------------

          (1)  the Indebtedness under the Credit Facility; and

          (2)  any other Senior Indebtedness of the Company which, at the date
     of determination, has an aggregate principal amount outstanding of, or
     under which, at the date of determination, the holders thereof are
     committed to lend up to, at least $25 million and is specifically
     designated by the Company in the instrument evidencing or
<PAGE>

                                      -12-

     governing such Senior Indebtedness as "Designated Senior Indebtedness" for
     purposes of this Indenture.

          "Disqualified Stock" means, with respect to any Person, any Capital
           ------------------
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event

             (i) matures or is mandatorily redeemable pursuant to a sinking fund
     obligation or otherwise,

             (ii) is convertible or exchangeable for Indebtedness or
     Disqualified Stock or

             (iii)  is redeemable or must be purchased, upon the occurrence of
     certain events or otherwise, by such Person at the option of the holder
     thereof, in whole or in part,

in each case on or prior to the first anniversary of the Stated Maturity of the
Notes; provided, however, that any Capital Stock that would not constitute
       --------  -------
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock, upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if:

(1)  the "asset sale" or "change of control" provisions applicable to such
     Capital Stock are not more favorable to the holders of such Capital Stock
     than the terms applicable to the Notes and described in Sections 4.14 and
     4.15; and

(2)  any such requirement only becomes operative after compliance with such
     terms applicable to the Notes, including the purchase of any Notes tendered
     pursuant thereto.

          "Distribution" means the spin-off of Applied Power Inc.'s integrated
           ------------
electronics enclosures business as a separate publicly traded company.

          "DTC" means The Depository Trust Company, its nominees and their
           ---
respective successors.

          "EBITDA" for any period means the sum of Consolidated Net Income, plus
           ------
Consolidated Interest Expense plus the follow-
<PAGE>

                                      -13-

ing to the extent deducted in calculating such Consolidated Net Income:

          (1)  all income tax expense of the Company and its consolidated
     Restricted Subsidiaries,

          (2)  depreciation expense of the Company and its consolidated
     Restricted Subsidiaries,

          (3)  amortization expense of the Company and its consolidated
     Restricted Subsidiaries (excluding amortization expense attributable to a
     prepaid cash item that was paid in a prior period),

          (4)  non-recurring financing, legal and accounting charges of not more
     than $30.0 million relating to the Transactions,

          (5)  contract termination recoveries of $1.4 million received prior to
     the Issue Date,

          (6)  in the case of any determination that includes one or more fiscal
     quarters ending prior to the Issue Date, an amount equal to the excess of
     actual general corporate expenses for such fiscal quarters over the product
     of $1.25 million times the number of such fiscal quarters included in such
     determination, and

          (7)  all other non-cash charges of the Company and its consolidated
     Restricted Subsidiaries (excluding any such non-cash charge to the extent
     that it represents an accrual of or reserve for cash expenditures in any
     future period), in each case for such period.

Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and non-cash charges of, a
Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
<PAGE>

                                      -14-

          "Effective Date" means the effective date of the Distribution.
           --------------

          "Event of Default" has the meaning provided in Section 6.01.
           ----------------

          "Excess Cash Flow" means, for any fiscal year of the Company, the
           ----------------
excess of (a) EBITDA for such fiscal year over (b) the sum, without duplication,
of (i) the amount of any cash income taxes payable by the Company and its
consolidated Restricted Subsidiaries with respect to such fiscal year, (ii)
scheduled cash interest paid (net of cash interest received) by the Company and
its consolidated Restricted Subsidiaries during such fiscal year, (iii) capital
expenditures (as determined in accordance with GAAP) made in cash by the Company
and its consolidated Restricted Subsidiaries during such fiscal year, except to
the extent financed with the proceeds of Indebtedness, net insurance proceeds or
net condemnation awards, (iv) scheduled permanent repayments of Indebtedness
made by the Company and its consolidated Restricted Subsidiaries during such
fiscal year, and (v) mandatory prepayments of the principal of revolving loans
under the Credit Facility during such fiscal year, but only to the extent that
such prepayments by their terms cannot be reborrowed or redrawn and do not occur
in connection with a refinancing of all or any portion of such revolving loans;
provided that, to the extent otherwise included therein, the Net Available Cash
from Asset Dispositions and dispositions resulting in net insurance proceeds or
net condemnation awards shall be excluded from the calculation of Excess Cash
Flow.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
           ------------
or any successor statute or statutes thereto.

          "Exchange Notes" has the meaning provided in the Appendix.
           --------------

          "Fair Share" has the meaning provided in Section 10.04(b).
           ----------

          "Fair Share Shortfall" has the meaning provided in Section 10.04(c).
           --------------------

          "Foreign Restricted Subsidiary" means a Restricted Subsidiary that is
           -----------------------------
organized and existing under the laws of a jurisdiction other than the United
States, any state thereof or the District of Columbia.
<PAGE>

                                      -15-

          "Fraudulent Transfer Laws" has the meaning provided in Section
           ------------------------
10.04(a).

          "Funding Subsidiary Guarantor" has the meaning provided in Section
           ----------------------------
10.04(b).

          "GAAP" means generally accepted accounting principles in the United
           ----
States of America as in effect as of the Issue Date, including those set forth
in

(1)  the opinions and pronouncements of the Accounting Principles Board of the
     American Institute of Certified Public Accountants,
(2)  statements and pronouncements of the Financial Accounting Standards Board,
(3)  such other statements by such other entity as approved by a significant
     segment of the accounting profession, and
(4)  the rules and regulations of the SEC governing the inclusion of financial
     statements (including pro forma financial statements) in periodic reports
     required to be filed pursuant to Section 13 of the Exchange Act, including
     opinions and pronouncements in staff accounting bulletins and similar
     written statements from the accounting staff of the SEC.

          "guarantee" means any obligation, contingent or otherwise, of any
           ---------
Person directly or indirectly guaranteeing any Indebtedness of any Person and
any obligation, direct or indirect, contingent or otherwise, of such Person

     (i)  to purchase or pay (or advance or supply funds for the purchase or
          payment of) such Indebtedness of such Person (whether arising by
          virtue of agreements to keep-well, to take-or-pay or to maintain
          financial statement conditions or otherwise), or

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

provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course
<PAGE>

                                      -16-

of business. The term "guarantee" used as a verb has a corresponding meaning.
The term "guarantor" shall mean any Person guaranteeing any obligation.

          "Hedging Obligations" of any Person means the obligations of such
           -------------------
Person pursuant to any Interest Rate Agreement or Currency Agreement.

          "Holder" or "Noteholder" means the Person in whose name a Note is
           ------      ----------
registered on the Registrar's books.

          "Incur" means issue, assume, guarantee, incur or otherwise become
           -----
liable; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary.  The term "Incurrence" when used
as a noun shall have a correlative meaning.  The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.

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

          (1)  the principal in respect of

               (A) indebtedness of such Person for money borrowed and

               (B) indebtedness evidenced by notes, debentures, bonds or other
          similar instruments for the payment of which such Person is
          responsible or liable, including, in each case, any premium on such
          indebtedness to the extent such premium has become due and payable;

          (2) all Capital Lease Obligations of such Person and all Attributable
     Debt in respect of Sale/Leaseback Transactions entered into by such Person;

          (3) all obligations of such Person issued or assumed as the deferred
     purchase price of property, all conditional sale obligations of such Person
     and all obligations of such Person under any title retention agreement (but
     excluding trade accounts payable arising in the ordinary course of
     business);
<PAGE>

                                      -17-

          (4) all obligations of such Person for the reimbursement of any
     obligor on any letter of credit, banker's acceptance or similar credit
     transaction (other than obligations with respect to letters of credit
     securing obligations (other than obligations described in clauses (1)
     through (3) above) entered into in the ordinary course of business of such
     Person to the extent such letters of credit are not drawn upon or, if and
     to the extent drawn upon, such drawing is reimbursed no later than the
     tenth Business Day following payment on the letter of credit);

          (5) the amount of all obligations of such Person with respect to the
     redemption, repayment or other repurchase of any Disqualified Stock or,
     with respect to any Subsidiary of such Person, the liquidation preference
     with respect to, any Preferred Stock (but excluding, in each case, any
     accrued dividends);

          (6) all obligations of the type referred to in clauses (1) through (5)
     of other Persons and all dividends of other Persons for the payment of
     which, IN either case, such Person is responsible or liable, directly or
     indirectly, as obligor, guarantor or otherwise, including by means of any
     Guarantee;

          (7) all obligations of the type referred to in clauses (1) through (6)
     of other Persons secured by any Lien on any property or asset of such
     Person (whether or not such obligation is assumed by such Person), the
     amount of such obligation being deemed to be the lesser of the value of
     such property or assets or the amount of the obligation so secured; and

          (8) to the extent not otherwise included in this definition, Hedging
     Obligations of such Person.

          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 the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.

          "Indenture" means this Indenture, as amended or supplemented from time
           ---------
to time in accordance with the terms hereof.

          "Initial Notes" has the meaning provided in the Appendix.
           -------------
<PAGE>

                                      -18-

          "Initial Purchaser" has the meaning provided in the Appendix.
           -----------------

          "Interest Payment Date" means the stated maturity of an installment of
           ---------------------
interest on the Notes.

          "Interest Rate Agreement" means in respect of a Person any interest
           -----------------------
rate swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.

          "Investment" by any Person in any other Person means, with respect to
           ----------
any Person, any direct or indirect advance, loan (other than advances to
customers in the ordinary course of business that are recorded as accounts
receivable on the balance sheet of the lender) or other extensions of credit
(including by way of guarantee or similar arrangement) or capital contribution
to (by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by such other Person.  For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and Section 4.10,

          (1)  "Investment" shall include the portion (proportionate to the
     Company's equity interest in such Subsidiary) of the fair market value of
     the net assets of any Subsidiary of the Company at the time that such
     Subsidiary is designated an Unrestricted Subsidiary; provided, however,
                                                          --------  -------
     that upon a redesignation of such Subsidiary as a Restricted Subsidiary,
     the Company shall be deemed to continue to have a permanent "Investment" in
     an Unrestricted Subsidiary equal to an amount (if positive) equal to (x)
     the Company's "Investment" in such Subsidiary at the time of such
     redesignation less (y) the portion (proportionate to the Company's equity
     interest in such Subsidiary) of the fair market value of the net assets of
     such Subsidiary at the time of such redesignation; and

          (2)  any property transferred to or from an Unrestricted Subsidiary
     shall be valued at its fair market value at the time of such transfer, in
     each case as determined in good faith by the Board of Directors of the
     Company.

          "Issue Date" means the date on which the Notes are originally issued.
           ----------
<PAGE>

                                      -19-

          "legal defeasance option" has the meaning provided in Section 8.01.
           -----------------------

          "Legal Holiday" means a Saturday, a Sunday, any day which is a holiday
           -------------
under the laws of the State of New York or the State of Wisconsin or a day on
which banking institutions in the State of New York or the State of Wisconsin
are authorized or required by law to close.  If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.  If a regular
record date is a Legal Holiday, such record date shall not be affected.

          "Leverage Ratio" means, at any date of determination, the ratio of
           --------------
consolidated Indebtedness of the Company and its consolidated Restricted
Subsidiaries on such date to EBITDA for the period of four consecutive fiscal
quarters of the Company most recently ended as of such date; provided, however,
that

          (1)  if the Company or any Restricted Subsidiary has Incurred any
     Indebtedness since the beginning of such period that remains outstanding or
     if the transaction giving rise to the need to calculate the Leverage Ratio
     is an Incurrence of Indebtedness, or both, EBITDA and Indebtedness for such
     period shall be calculated after giving effect on a pro forma basis to such
     Indebtedness as if such Indebtedness had been Incurred on the first day of
     such period and the discharge of any other Indebtedness repaid,
     repurchased, defeased or otherwise discharged with the proceeds of such new
     Indebtedness as if such discharge had occurred on the first day of such
     period,

          (2)  if the Company or any Restricted Subsidiary has repaid,
     repurchased, defeased or otherwise discharged any Indebtedness since the
     beginning of such period or if any Indebtedness is to be repaid,
     repurchased, defeased or otherwise discharged (in each case other than
     Indebtedness Incurred under any revolving credit facility unless such
     Indebtedness has been permanently repaid and has not been replaced) on the
     date of the transaction giving rise to the need to calculate the Leverage
     Ratio, EBITDA and Indebtedness for such period shall be calculated on a pro
     forma basis as if such discharge had occurred on the first day of such
     period and as if the Company or such Restricted Subsidiary had not earned
     the interest income actually earned during such period in respect of cash
     or Temporary Cash Investments used to repay, repurchase, defease or
     otherwise discharge such Indebtedness,
<PAGE>

                                      -20-

          (3)  if since the beginning of such period the Company or any
     Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for
     such period shall be reduced by an amount equal to the EBITDA (if positive)
     directly attributable to the assets which are the subject of such Asset
     Disposition for such period, or increased by an amount equal to the EBITDA
     (if negative) directly attributable thereto for such period, and
     Indebtedness for such period shall be reduced by an amount equal to the
     Indebtedness directly attributable to any Indebtedness of the Company or
     any Restricted Subsidiary repaid, repurchased, defeased or otherwise
     discharged with respect to the Company and its continuing Restricted
     Subsidiaries in connection with such Asset Disposition for such period (or,
     if the Capital Stock of any Restricted Subsidiary is sold, the Indebtedness
     for such period directly attributable to the Indebtedness of such
     Restricted Subsidiary to the extent the Company and its continuing
     Restricted Subsidiaries are no longer liable for such Indebtedness after
     such sale),

          (4)  if since the beginning of such period the Company or any
     Restricted Subsidiary (by merger or otherwise) shall have made an
     Investment in any Restricted Subsidiary (or any Person which becomes a
     Restricted Subsidiary) or an acquisition of assets, including any
     acquisition of assets occurring in connection with a transaction requiring
     a calculation to be made hereunder, which constitutes all or substantially
     all of an operating unit of a business, EBITDA and Indebtedness for such
     period shall be calculated after giving pro forma effect thereto (including
     the Incurrence of any Indebtedness) as if such Investment or acquisition
     occurred on the first day of such period, and

          (5)  if since the beginning of such period any Person that
     subsequently became a Restricted Subsidiary or was merged with or into the
     Company or any Restricted Subsidiary since the beginning of such period
     shall have made any Asset Disposition, any Investment or acquisition of
     assets that would have required an adjustment pursuant to clause (3) or (4)
     above if made by the Company or a Restricted Subsidiary during such period,
     EBITDA and Indebtedness for such period shall be calculated after giving
     pro forma effect thereto as if such Asset Disposition, Investment or
     acquisition occurred on the first day such period.

          For purposes of this definition, whenever pro forma effect is to be
given to any disposition or acquisition of as-
<PAGE>

                                      -21-

sets, the pro forma calculations of any expense or cost reductions or other
operating improvements shall be determined in accordance with Regulation S-X
promulgated under the Securities Act. If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).

          "Lien" means any mortgage, pledge, security interest, encumbrance,
           ----
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).

          "Maturity Date" means May 1, 2009.
           -------------

          "Net Available Cash" from an Asset Disposition means cash payments
           ------------------
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise
and proceeds from the sale or other disposition of any securities received as
consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form), in each case net of

          (1)  all legal, title and recording tax expenses, commissions and
     other fees and expenses incurred, and all Federal, state, provincial,
     foreign and local taxes required to be accrued as a liability under GAAP,
     as a consequence of such Asset Disposition,

          (2)  all payments made on any Indebtedness which is secured by any
     assets subject to such Asset Disposition, in accordance with the terms of
     any Lien upon or other security agreement of any kind with respect to such
     assets, or which must by its terms, or in order to obtain a necessary
     consent to such Asset Disposition, or by applicable law, be repaid out of
     the proceeds from such Asset Disposition,

          (3)  all distributions and other payments required to be made to
     minority interest holders in Restricted Subsidiaries as a result of such
     Asset Disposition, and
<PAGE>

                                      -22-

          (4)  the deduction of appropriate amounts provided by the seller as a
     reserve, in accordance with GAAP, against any liabilities associated with
     the property or other assets disposed in such Asset Disposition and
     retained by the Company or any Restricted Subsidiary after such Asset
     Disposition.

          The amounts in clauses (1) through (4) above, to the extent estimates
are necessary, shall be estimated reasonably and in good faith by the Company.

          "Net Cash Proceeds," with respect to any issuance or sale of Capital
           -----------------
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.

          "Notes" means the Initial Notes, the Exchange Notes and the Private
           -----
Exchange Notes treated as a single class of securities, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.

          "Offering Circular" means the Offering Circular dated July 21, 2000,
           -----------------
pursuant to which the $200.0 million aggregate principal amount of 13% Series A
Senior Subordinated Notes due 2009 in the form of Initial Notes were offered,
and any supplement thereto.

          "Officer" means, with respect to any Person, the Chairman of the
           -------
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, the Treasurer, or the Secretary of such
Person, or any other officer designated by the Board of Directors serving in a
similar capacity.

          "Officers' Certificate" means, with respect to any Person, a
           ---------------------
certificate signed by two Officers or by an Officer and either a Treasurer or
Assistant Treasurer or an Assistant Secretary of such Person and otherwise
complying with the requirements of Sections 13.04 and 13.05, to the extent they
relate to the making of an Officers' Certificate.

          "Opinion of Counsel" means a written opinion from legal counsel, who
           ------------------
may be an employee or counsel for either or both of the Company, and who is
reasonably acceptable to the
<PAGE>

                                      -23-

Trustee complying with the requirements of Sections 13.04 and 13.05, to the
extent they relate to the giving of an Opinion of Counsel.

          "Paying Agent" has the meaning provided in Section 2.03.
           ------------

          "Permitted Interest Rate or Currency Agreement" of any Person means
           ---------------------------------------------
any Interest Rate or Currency Agreement entered into with one or more financial
institutions in the ordinary course of business that is designed to protect such
Person against fluctuations in interest rates or currency exchange rates with
respect to Indebtedness Incurred and which shall have a notional amount no
greater than the payments due with respect to the Indebtedness being hedged
thereby, or in the case of currency protection agreements, against currency
exchange rate fluctuations in the ordinary course of business relating to then
existing financial obligations or then existing or sold production and not for
purposes of speculation.

          "Permitted Investment" means an Investment by the Company or any
           --------------------
Restricted Subsidiary in

          (1)  the Company, a Subsidiary Guarantor, a Wholly Owned Subsidiary or
     a Person that will, upon the making of such Investment, become a Wholly
     Owned Subsidiary; provided, however, that the primary business of such
     Restricted Subsidiary is a Related Business;

          (2)  another Person if as a result of such Investment such other
     Person is merged or consolidated with or into, or transfers or conveys all
     or substantially all its assets to, the Company, a Subsidiary Guarantor or
     a Wholly Owned Subsidiary; provided, however, that such Person's primary
     business is a Related Business;

          (3)  Temporary Cash Investments;

          (4)  receivables owing to the Company or any Restricted Subsidiary if
     created or acquired in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms; provided, however,
     that such trade terms may include such concessionary trade terms as the
     Company or any such Restricted Subsidiary deems reasonable under the
     circumstances;

          (5)  payroll, travel and similar advances to cover matters that are
     expected at the time of such advances ul-
<PAGE>

                                      -24-

     timately to be treated as expenses for accounting purposes and that are
     made in the ordinary course of business;

          (6)  stock, obligations or securities received in settlement of debts
     created in the ordinary course of business and owing to the Company or any
     Restricted Subsidiary or in satisfaction of judgments;

          (7)  any consolidation or merger of a Wholly Owned Subsidiary of the
     Company to the extent otherwise permitted under this Indenture;

          (8)  any investment made as a result of the receipt of non-cash
     consideration from an Asset Disposition that was made pursuant to and in
     compliance with Section 4.15;

          (9)  Investments in Permitted Interest Rate or Currency Agreements;

          (10) other Investments in any Person having an aggregate fair market
     value (measured on the date each such Investment was made and without
     giving effect to subsequent changes in value), when taken together with all
     other Investments made pursuant to this clause (10) since the date of this
     Indenture, not to exceed $5.0 million.

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

          "Preferred Stock," as applied to the Capital Stock of any Person,
           ---------------
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.

          "principal" of a Note means the principal of the Note plus the
           ---------
premium, if any, payable on the Note which is due or overdue or is to become due
at the relevant time.

          "Private Exchange Notes" has the meaning provided in the Appendix.
           ----------------------
<PAGE>

                                      -25-

          "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.

          "Record Date" means each Record Date specified in the Notes, whether
           -----------
or not a Legal Holiday.

          "Redemption Date," when used with respect to any Note to be redeemed,
           ---------------
means the date fixed for such redemption pursuant to this Indenture and the
Notes.

          "Redemption Price," when used with respect to any Note to be redeemed,
           ----------------
means the price fixed for such redemption pursuant to this Indenture and the
Notes.

          "Refinance" means, in respect of any Indebtedness, to refinance,
           ---------
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.

          "Refinancing Indebtedness" means Indebtedness that Refinances any
           ------------------------
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that

          (1)  such Refinancing Indebtedness has a Stated Maturity no earlier
     than the Stated Maturity of the Indebtedness being Refinanced,

          (2)  such Refinancing Indebtedness has an Average Life at the time
     such Refinancing Indebtedness is Incurred that is equal to or greater than
     the Average Life of the Indebtedness being Refinanced, and

          (3)  such Refinancing Indebtedness has an aggregate principal amount
     (or if Incurred with original issue discount, an aggregate issue price)
     that is equal to or less than the aggregate principal amount (or if
     Incurred with original issue discount, the aggregate accreted value) then
     outstanding or committed (plus fees and expenses, including any premium and
     defeasance costs) under the Indebtedness being Refinanced;

provided, further, however, that Refinancing Indebtedness shall not include (x)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (y)
Indebtedness of the Company
<PAGE>

                                      -26-

or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.

          "Registrar" has the meaning provided in Section 2.03.
           ---------

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

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

          "Related Business" means any business related, ancillary or
           ----------------
complementary to the businesses of the Company and the Restricted Subsidiaries
on the Issue Date.

          "Representative" means any trustee, agent or representative (if any)
           --------------
for an issue of Senior Indebtedness of the Company.

          "Restricted Payment" with respect to any Person means
           ------------------

          (1)  the declaration or payment of any dividends or any other
     distributions of any sort in respect of its Capital Stock (including any
     payment in connection with any merger or consolidation involving such
     Person) or similar payment to the direct or indirect holders of its Capital
     Stock (other than dividends or distributions payable solely in its Capital
     Stock (other than Disqualified Stock) and dividends or distributions
     payable solely to the Company or a Restricted Subsidiary, and other than
     pro rata dividends or other distributions made by a Subsidiary that is not
     a Wholly Owned Subsidiary to minority stockholders (or owners of an
     equivalent interest in the case of a Subsidiary that is an entity other
     than a corporation)),

          (2)  the purchase, redemption or other acquisition or retirement for
     value of any Capital Stock of the Company held by any Person or of any
     Capital Stock of a Restricted Subsidiary held by any Affiliate of the
     Company (other than a Restricted Subsidiary), including the exercise of any
     option to exchange any Capital Stock (other than into Capital Stock of the
     Company that is not Disqualified Stock),

          (3)  the purchase, repurchase, redemption, defeasance or other
     acquisition or retirement for value, prior to scheduled maturity, scheduled
     repayment or scheduled sink-
<PAGE>

                                      -27-

     ing fund payment of any Subordinated Obligations (other than the purchase,
     repurchase or other acquisition of Subordinated Obligations purchased in
     anticipation of satisfying a sinking fund obligation, principal installment
     or final maturity, in each case due within one year of the date of
     acquisition), or

          (4)  the making of any Investment in any Person (other than a
     Permitted Investment).

          "Restricted Subsidiary" means any Subsidiary of the Company that is
           ---------------------
not an Unrestricted Subsidiary.

          "Rule 144A" means Rule 144A under the Securities Act.
           ---------

          "Sale/Leaseback Transaction" means an arrangement relating to property
           --------------------------
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.

          "SEC" means the Securities and Exchange Commission.
           ---

          "Securities Act" means the Securities Act of 1933, as amended, or any
           --------------
successor statute or statutes thereto.

          "Senior Indebtedness" of a Person means
           -------------------

          (1) Indebtedness of such Person, whether outstanding on the Issue Date
     or thereafter Incurred,

          (2)  accrued and unpaid interest (including interest accruing on or
     after the filing of any petition in bankruptcy or for reorganization
     relating to such Person to the extent post-filing interest is allowed in
     such proceeding) in respect of (A) indebtedness of such Person for money
     borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
     other similar instruments for the payment of which such Person is
     responsible or liable unless, in the case of (1) and (2), in the instrument
     creating or evidencing the same or pursuant to which the same is
     outstanding, it is provided that such obligations are subordinate in right
     of payment to the Notes, and

          (3)  obligations of such Person under the Credit Facility;

provided, however, that Senior Indebtedness shall not include
<PAGE>

                                      -28-

          (1)  any obligation of such Person to any Subsidiary,

          (2)  any liability for Federal, state, local or other taxes owed or
     owing by such Person,

          (3)  any accounts payable or other liability to trade creditors
     arising in the ordinary course of business (including guarantees thereof or
     instruments evidencing such liabilities),

          (4)  any Indebtedness of such Person (and any accrued and unpaid
     interest in respect thereof) which is subordinate or junior in any respect
     to any other Indebtedness or other obligation of such Person, or

          (5)  that portion of any Indebtedness which at the time of Incurrence
     is Incurred in violation of this Indenture.

          "Senior Subordinated Indebtedness" means (i) with respect to the
           --------------------------------
Company, the Notes and any other Indebtedness of the Company that specifically
provides that such Indebtedness is to have the same rank as the Notes in right
of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior Indebtedness
and (ii) with respect to any Subsidiary Guarantor, the Subsidiary Guarantees and
any other Indebtedness of such Subsidiary Guarantor that specifically provides
that such Indebtedness is to have the same rank as the Subsidiary Guarantees in
right of payment and is not subordinated by its term in right or payment to any
Indebtedness or other obligation of such Subsidiary Guarantor which is not
Senior Indebtedness.

          "Significant Subsidiary" means any Restricted Subsidiary that would be
           ----------------------
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

          "Stated Maturity" means, with respect to any security, the date
           ---------------
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
<PAGE>

                                      -29-

          "Subordinated Obligation" means any Indebtedness of the Company
           -----------------------
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes pursuant to a written
agreement to that effect.

          "Subsidiary" means, in respect of any Person, any corporation,
           ----------
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by

          (1)  such Person,

          (2)  such Person and one or more Subsidiaries of such Person, or

          (3)  one or more Subsidiaries of such Person.

          "Subsidiary Guarantee" means a guarantee by a Subsidiary Guarantor of
           --------------------
the Company's obligations with respect to the Notes.

          "Subsidiary Guarantors" means (1) each of the Company's Restricted
           ---------------------
Subsidiaries providing guarantees under the Credit Facility on the Issue Date
and (2) any Person that becomes a Restricted Subsidiary of the Company and
provides a guarantee under the Credit Facility that pursuant to Section 4.16 or
otherwise in the future executes a supplemental indenture in which such
Restricted Subsidiary unconditionally guarantees on a senior subordinated basis
the Company's obligations under the Notes and this Indenture; provided that any
Person constituting a Subsidiary Guarantor as described above shall cease to
constitute a Subsidiary Guarantor when its respective Subsidiary Guarantee is
released in accordance with the terms of this Indenture.

          "Successor Company" shall have the meaning provided in Section 5.01.
           -----------------

          "Temporary Cash Investments" means any of the following:
           --------------------------

          (1)  any investment in direct obligations of the United States of
     America or any agency thereof or obliga-
<PAGE>

                                      -30-

     tions guaranteed by the United States of America or any agency thereof,

          (2)  investments in time deposit accounts, certificates of deposit and
     money market deposits maturing within 180 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, and which bank or trust company has
     capital, surplus and undivided profits aggregating in excess of $50,000,000
     (or the foreign currency equivalent thereof) and has outstanding debt which
     is rated "A" (or such similar equivalent rating) or higher by at least one
     nationally recognized statistical rating organization (as defined in Rule
     436 under the Securities Act) or any money-market fund sponsored by a
     registered broker dealer or mutual fund distributor,

          (3)  repurchase obligations with a term of not more than 30 days for
     underlying securities of the types described in clause (1) above entered
     into with a bank meeting the qualifications described in clause (2) above,

          (4)  investments in 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 or any foreign country recognized by the United
     States of America with a rating at the time as of which any investment
     therein is made of "P-1" (or higher) according to Moody's Investors
     Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings
     Group, and

          (5)  investments in securities with maturities of six months or less
     from the date of acquisition issued or fully 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 Standard & Poor's Ratings Group or "A" by Moody's Investors Service,
     Inc.

          "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
           ---
Sections 77aaa-77bbbb), as in effect on the date of this Indenture.

          "Trust Officer" means any authorized officer of the Trustee assigned
           -------------
by the Trustee to administer this Indenture,
<PAGE>

                                      -31-

or in the case of a successor trustee, an authorized officer assigned to the
department, division or group performing the corporation trust work of such
successor and assigned to administer this Indenture.

          "Trustee" means the party named as such in this Indenture until a
           -------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.

          "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 Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or holds any Lien on any property of, the Company or
any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
covenant described under Section 4.10.

          The Board of Directors may designate any Unrestricted Subsidiary to be
a Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (x) the Company could Incur $1.00 of additional Indebtedness
under paragraph (a) of Section 4.13 and (y) no Default shall have occurred and
be continuing.  Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.

          "U.S. Dollar Equivalent" means with respect to any monetary amount in
           ----------------------
a currency other than U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars at the spot rate for the purchase
<PAGE>

                                      -32-

of U.S. dollars with the applicable foreign currency as published in The Wall
Street Journal in the "Exchange Rates" column under the heading "Currency
Trading" on the date two Business Days prior to such determination.

          Except as described in Section 4.13, whenever it is necessary to
determine whether the Company has complied with any covenant in this Indenture
or a Default has occurred and an amount is expressed in a currency other than
U.S. dollars, such amount will be treated as the U.S. Dollar Equivalent
determined as of the date such amount is initially determined in such currency.

          "U.S. Government Obligations" means direct obligations (or
           ---------------------------
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.

          "U.S. Legal Tender" means such coin or currency of the United States
           -----------------
of America as at the time of payment shall be legal tender for the payment of
public and private debts.

          "Voting Stock" of a Person means all classes of Capital Stock or other
           ------------
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.

          "Wholly Owned Subsidiary" means a Restricted Subsidiary all the
           -----------------------
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or one or more Wholly Owned Subsidiaries.

SECTION 1.02.  Incorporation by Reference of TIA.
               ---------------------------------

          Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:

          "indenture securities" means the Notes.

          "indenture security holder" means a Holder or a Noteholder.

          "indenture to be qualified" means this Indenture.
<PAGE>

                                      -33-

          "indenture trustee" or "institutional trustee" means the Trustee.

          "obligor" on the indenture securities means the Company or any other
obligor on the Notes.

          All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.

SECTION 1.03.  Rules of Construction.
               ---------------------

          Unless the context otherwise requires:

          (1)  a term has the meaning assigned to it;

          (2)  an accounting term not otherwise defined has the meaning
     assigned to it in accordance with GAAP as in effect from time to time;

          (3)  "or" is not exclusive;

          (4)  words in the singular include the plural, and words in the
     plural include the singular;

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

          (6)  reference to Sections or Articles means reference to such
     Section or Article in this Indenture, unless stated otherwise.

SECTION 1.04.  One Class of Securities.
               -----------------------

          The Initial Notes, the Private Exchange Notes, if any, and the
Exchange Notes shall vote and consent together on all matters as one class and
none of the Initial Notes, the Private Exchange Notes, if any, or the Exchange
Notes shall have the right to vote or consent as a separate class on any matter.
<PAGE>

                                      -34-

                                  ARTICLE TWO

                                   THE NOTES

SECTION 2.01.  Form and Dating.
               ---------------

          (a)  Provisions relating to the Initial Notes, the Private Exchange
Notes and the Exchange Notes are set forth in the Rule 144A/Regulation S
Appendix attached hereto (the "Appendix"), which is hereby incorporated in and
                               --------
expressly made a part of this Indenture.  The Initial Notes and the
corresponding Trustee's certificate of authentication shall be substantially in
the form of Exhibit A hereto.  The Exchange Notes, the Private Exchange Notes
            ---------
and the corresponding Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto.  The Notes may have notations,
                             ---------
legends or endorsements required by law, stock exchange rule, agreements to
which the Company are subject, if any, or depository rule or usage.  The Company
shall approve the forms of the Notes and any notation, legend or endorsement on
them.  Each Note shall be dated the date of its issuance and shall show the date
of its authentication.

          (b)  The terms and provisions contained in the Appendix and in the
forms of the Notes, annexed hereto as Exhibits A and B, shall constitute, and
                                      ----------     -
are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company, the Subsidiary Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.

SECTION 2.02.  Execution and Authentication; Aggregate
               Principal Amount.
               ---------------------------------------

          Two Officers, or an Officer and an Assistant Secretary, shall sign, or
one Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or facsimile
signature.

          If an Officer or Assistant Secretary whose signature is on a Note was
an Officer or Assistant Secretary at the time of such execution but no longer
holds that office or position at the time the Trustee authenticates the Note,
the Note shall nevertheless be valid.
<PAGE>

                                      -35-

          On the Issue Date, the Trustee shall authenticate and deliver $200.0
million of 13% Series A Senior Subordinated Notes due 2009 in the form of
Initial Notes.  In addition, at any time, and from time to time, the Trustee
shall authenticate and deliver Notes upon a written notice of the Company, for
original issuance in the aggregate principal amount specified in such order for
original; provided that Exchange Notes and Private Exchange Notes shall be
issuable only upon the valid surrender for cancellation of such Initial Notes of
a like aggregate principal amount.  Any such order shall specify the amount of
the Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated.

          A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note.  The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.

          The Trustee may appoint an authenticating agent (the "Authenticating
                                                                --------------
Agent") reasonably acceptable to the Company to authenticate Notes.  Unless
-----
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so.  Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent.  An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.

          The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.

SECTION 2.03.  Registrar and Paying Agent.
               --------------------------

          The Company shall maintain or designate an office or agency in
accordance with Section 4.02 (which shall be located in the Borough of Manhattan
in the City of New York, State of New York and which may be the office of the
Trustee) where Notes may be presented or surrendered for registration of
transfer or for exchange ("Registrar") and Notes may be presented or surrendered
                           ---------
for payment ("Paying Agent").  The Registrar shall keep a register of the Notes
              ------------
and of their transfer and exchange.  The Company may have one or more co-
Registrars and one or more additional paying agents.  The term "Paying Agent"
includes any additional Paying Agent.  Either the Company or any of its
Affiliates may act as Paying Agent or Registrar, except that for purposes of
Articles Three and Eight and Sections 4.14, 4.15 and 4.23, neither the Company
nor any of
<PAGE>

                                      -36-

the Subsidiary Guarantors or their respective Affiliates shall act as Paying
Agent. The Company may change any Paying Agent or Registrar without notice to
any Holder.

          The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent.  The Company shall notify the Trustee of the name and address of
any such Agent.  If the Company fails to maintain a Registrar or Paying Agent,
or fails to give the foregoing notice, the Trustee shall act as such.

          The Company initially appoints the Trustee as Registrar and Paying
Agent, until such time as the Trustee has resigned or a successor has been
appointed.  The Paying Agent or Registrar may resign upon 30 days notice to the
Company.

SECTION 2.04.  Paying Agent To Hold Assets in Trust.
               ------------------------------------

          The Company shall require each Paying Agent (other than the Trustee)
to agree in writing that each Paying Agent shall hold in trust for the benefit
of the Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, or interest on, the Notes (whether such assets have
been distributed to it by the Company, the Subsidiary Guarantors or any other
obligor on the Notes), and the Company and the Paying Agent shall notify the
Trustee of any Default by the Company or the Subsidiary Guarantors (or any other
obligor on the Notes) in making any such payment.  The Company at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and to
account for any assets disbursed.  The Trustee may, and upon direction of a
majority of the Holders shall, at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed.  Upon distribution to the Trustee of all assets that shall have
been delivered by the Company, the Subsidiary Guarantors or any other obligor on
the Notes to the Paying Agent, the Paying Agent shall have no further liability
for such assets.

SECTION 2.05.  Noteholder Lists.
               ----------------

          The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders, and shall otherwise comply with TIA Section 312(a).  If the Trustee
is not the Reg-
<PAGE>

                                      -37-

istrar, the Company shall furnish or cause the Registrar to furnish to the
Trustee before each Record Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of the Holders, which list may be
conclusively relied upon by the Trustee and the Company shall otherwise comply
with TIA Section 312(a).

SECTION 2.06.  Replacement Notes.
               -----------------

          If a mutilated Note is surrendered to the Trustee or if the Holder of
a Note claims that the Note has been lost, destroyed or wrongfully taken,
subject to the terms of the next succeeding sentence, the Company shall issue
and the Trustee shall authenticate a replacement Note if the Trustee's
reasonable requirements for replacement Notes are met.  If required by the
Trustee or the Company, such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the Trustee, any
Agent or any Authenticating Agent from any loss which any of them may suffer if
a Note is replaced.  The Company and the Trustee may charge such Holder for
their out-of-pocket expenses in replacing a Note, including reasonable fees and
expenses of counsel, and for any tax that may be imposed in replacing such
Notes.  Every replacement Note shall constitute an additional obligation of the
Company and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.

SECTION 2.07.  Outstanding Notes.
               -----------------

          Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section as not outstanding.
Subject to the provisions of Section 2.08, a Note does not cease to be
outstanding because the Company, any Subsidiary Guarantor or any of their
respective Affiliates holds the Note.

          If a Note is replaced pursuant to Section 2.06 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser.  A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.06.
<PAGE>

                                      -38-

          Except as otherwise provided in Article Eight of this Indenture, if on
a Redemption Date or the Maturity Date the Paying Agent holds U.S. Legal Tender
or U.S. Government Obligations sufficient to pay all of the principal and
interest due on the Notes payable on that date and is not prohibited from paying
such money to the Holders thereof pursuant to the terms of this Indenture, then
on and after that date such Notes shall cease to be outstanding and interest on
them shall cease to accrue.

SECTION 2.08.  Treasury Notes.
               --------------

          In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company, any Subsidiary Guarantor or any of their respective Affiliates
shall be considered as though they are not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver, consent or notice, only Notes which a Trust Officer of
the Trustee actually knows are so owned shall be so considered.  The Company
shall promptly give the Trustee written notice upon the acquisition by the
Company, any Subsidiary Guarantor or any of their respective Affiliates of any
Notes.

SECTION 2.09.  Temporary Notes.
               ---------------

          Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall, upon receipt of a written order by the Company,
authenticate temporary Notes.  The Company's order to authenticate shall specify
the amount of temporary Notes to be authenticated and the date on which the
temporary Notes are to be authenticated.  Temporary Notes shall be substantially
in the form of definitive Notes but may have variations that the Company
consider appropriate for temporary Notes.  Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate upon receipt of a
written order of the Company pursuant to Section 2.02 definitive Notes in
exchange for, and upon surrender of, temporary Notes.  Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits under
this Indenture as definitive Notes authenticated and delivered hereunder.

SECTION 2.10.  Cancellation.
               ------------

          The Company at any time may deliver Notes to the Trustee for
cancellation.  The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for
<PAGE>

                                      -39-

transfer, exchange or payment. The Trustee, or at the direction of the Trustee,
the Registrar or the Paying Agent, and no one else, shall cancel and, at the
written direction of the Company, shall dispose of all Notes surrendered for
transfer, exchange, payment or cancellation. Subject to Section 2.06, the
Company may not issue new Notes to replace Notes that it has paid or delivered
to the Trustee for cancellation. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.10.

SECTION 2.11.  Defaulted Interest.
               ------------------

          If the Company defaults in a payment of interest on the Notes (without
regard to any grace period therefor), it shall pay the defaulted interest, plus
(to the extent lawful) any interest payable on the defaulted interest to the
Persons who are Holders on a subsequent special record date, which date shall be
no less than 10 days preceding the date fixed by the Company for the payment of
defaulted interest or the next succeeding Business Day if such date is not a
Business Day.  At least 15 days before the subsequent special record date, the
Company shall mail to each Holder, as of a recent date selected by the Company,
with a copy to the Trustee, a notice that states the subsequent special record
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid.

          Alternatively, 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 Notes may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Company to the
Trustee and the Paying Agent of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee and the Paying Agent.

SECTION 2.12.  CUSIP Number.
               ------------

          The Company in issuing the Notes may use "CUSIP" numbers, and if so,
the Trustee shall use such CUSIP numbers in notices of redemption or exchange as
a convenience to Holders; provided that no representation is hereby deemed to be
made by the Trustee as to the correctness or accuracy of such CUSIP numbers
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers
<PAGE>

                                      -40-

printed on the Notes. The Company shall promptly notify the Trustee of any
change in a CUSIP number.

SECTION 2.13.  Deposit of Moneys.
               -----------------

          Prior to 9:00 a.m. New York City time on each Interest Payment Date
and on the Maturity Date, the Company shall deposit with the Paying Agent in
immediately available funds U.S. Legal Tender sufficient to make cash payments,
if any, due on such Interest Payment Date or Maturity Date, as the case may be,
in a timely manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date or Maturity Date, as the case may be.

                                 ARTICLE THREE

                                   REDEMPTION

SECTION 3.01.  Notices to Trustee.
               ------------------

          If the Company elects to redeem Notes pursuant to Section 3.07 of this
Indenture and Paragraph 5 of the Notes, it shall notify the Trustee and the
Paying Agent in writing of the Redemption Date and the principal amount of the
Notes to be redeemed.

          The Company shall give each notice provided for in this Section 3.01
at least 45 days before the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee, as evidenced in a writing signed on behalf
of the Trustee), together with an Officers' Certificate stating that such
redemption shall comply with the conditions contained herein and in the Notes.

SECTION 3.02.  Selection of Notes To Be Redeemed.
               ---------------------------------

          If fewer than all of the Notes are to be redeemed, selection of the
Notes to be redeemed will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not then listed on a national securities
exchange, on a pro rata basis, by lot or in such other fair and reasonable
manner chosen at the discretion of the Trustee; provided, however, that if a
partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by
<PAGE>

                                      -41-

the Trustee only on a pro rata basis, unless such method is otherwise
prohibited.

          The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be redeemed.
Notes in denominations of $1,000 may be redeemed only in whole.  The Trustee may
select for redemption portions (equal to $1,000 or any integral multiple
thereof) of the principal of Notes that have denominations larger than $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

SECTION 3.03.  Notice of Redemption.
               --------------------

          At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed a notice of redemption by first
class mail, postage prepaid, to each Holder whose Notes are to be redeemed at
its registered address, with a copy to the Trustee and any Paying Agent.  At the
Company's written request no less than 35 days prior to the Redemption Date (or
such shorter period as may be acceptable to the Trustee), the Trustee shall give
the notice of redemption in the Company's name and at the Company's expense.

          Each notice for redemption shall identify the Notes to be redeemed and
shall state:

          (1) the Redemption Date;

          (2) the Redemption Price and the amount of accrued interest, if any,
     to be paid;

          (3) the name and address of the Paying Agent;

          (4) the subparagraph of the Notes and/or Section of this Indenture
     pursuant to which such redemption is being made;

          (5) that Notes called for redemption must be surrendered to the
     Paying Agent to collect the Redemption Price plus accrued interest, if any;

          (6) that, unless the Company defaults in making the redemption
     payment, interest on Notes called for redemption ceases to accrue on and
     after the Redemption Date,
<PAGE>

                                      -42-

     and the only remaining right of the Holders of such Notes is to receive
     payment of the Redemption Price plus accrued interest, if any, upon
     surrender to the Paying Agent of the Notes redeemed;

             (7) if any Note is being redeemed in part, the portion of the
     principal amount of such Note to be redeemed and that, after the Redemption
     Date, and upon surrender of such Note, a new Note or Notes in the aggregate
     principal amount equal to the unredeemed portion thereof will be issued;

             (8) if fewer than all the Notes are to be redeemed, the aggregate
     principal amount of Notes to be redeemed and the aggregate principal amount
     of Notes to be outstanding after such partial redemption and, if the
     redemption is not made pro rata, the identification of the particular Notes
     (or portion thereof) to be redeemed; and

             (9) that no representation is made as to the correctness or
     accuracy of the CUSIP number, if any, listed in such notice or printed on
     the Notes.

SECTION 3.04.    Effect of Notice of Redemption.
                 ------------------------------

          Once notice of redemption is mailed in accordance with Section 3.03,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price plus accrued interest, if any.  Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price plus accrued interest to the Redemption Date payable thereon,
if any.  Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.

SECTION 3.05.    Deposit of Redemption Price.
                 ---------------------------

          On or before 9:00 a.m. New York City time on the Redemption Date, the
Company shall deposit with Trustee or Paying Agent in immediately available
funds U.S. Legal Tender sufficient to pay the Redemption Price plus accrued
interest, if any, of all Notes to be redeemed on that date (other than Notes or
portions of Notes called for redemption which have been delivered by the Company
to the Trustee for cancellation).  The Trustee or Paying Agent shall promptly
return to the Company any U.S. Legal Tender so deposited which is not required
for that purpose, except with respect to monies owed as obligations to the
Trustee pursuant to Article Seven.
<PAGE>

                                      -43-

          If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Notes to be redeemed will cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment.

SECTION 3.06.  Notes Redeemed in Part.
               ----------------------

          Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.

SECTION 3.07.  Optional Redemption.
               -------------------

          The Notes shall not be redeemable at the Company's option except as
set forth in the optional redemption provisions set forth in Paragraph 5 of the
Notes.

                                  ARTICLE FOUR

                                   COVENANTS

SECTION 4.01.  Payment of Notes.
               ----------------

          The Company shall pay or cause to be paid the principal of and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture.  An installment of principal of or interest on the Notes
shall be considered paid on the date it is due if the Trustee or Paying Agent
(other than the Company, any Subsidiary Guarantor or any of their respective
Affiliates) holds on that date U.S. Legal Tender designated for and sufficient
to pay the installment in full and is not prohibited from paying such money to
the Holders pursuant to the terms of this Indenture.

SECTION 4.02.  Maintenance of Office or Agency.
               -------------------------------

          The Company shall maintain in the Borough of Manhattan, the City of
New York, an the office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company or the Subsidiary Guarantors in respect of the
Notes and this Indenture may be served.  The Company shall give prompt written
notice to the Trustee of the
<PAGE>

                                      -44-

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 address of the
Trustee set forth in Section 13.02.

          The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such additional
designations, provided that no such designation or recission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York.  The Company shall give prompt
written notice to the Trustee of any such designation or recission and of any
change in the location of any such other office or agency.

          The Company hereby designates the corporate trust office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 hereof.

SECTION 4.03.  Corporate Existence.
               -------------------

          Except as otherwise permitted by Article Five, the Company shall do or
shall cause to be done, at its own cost and expense, all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate, limited liability company or partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational documents
of each of them (as the same may be amended from time to time) and the material
rights (charter and statutory) and franchises of the Company and the Restricted
Subsidiaries; provided, however, that the Company or any Restricted Subsidiary
shall not be required to preserve any right or franchise, or the corporate,
limited liability company, partnership or other existence of any Restricted
Subsidiary, if the Board of Directors of the Company shall in its sole
discretion determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Restricted Subsidiaries, taken as
a whole.

SECTION 4.04.  Payment of Taxes and Other Claims.
               ---------------------------------

          The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and
<PAGE>

                                      -45-

additions to taxes) levied or imposed upon it or any of its Restricted
Subsidiaries or properties of it or any of its Restricted Subsidiaries and (ii)
all lawful claims for labor, materials and supplies that, if unpaid, might by
law become a Lien upon the property of it or any of its Restricted Subsidiaries;
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 properly instituted and diligently conducted for which
reserves, to the extent required under and in accordance with GAAP, have been
taken.

SECTION 4.05.  Maintenance of Properties and Insurance.
               ---------------------------------------

          (a)  The Company shall, and shall cause each of its Restricted
Subsidiaries to, maintain its or their material properties in good working order
and condition (subject to ordinary wear and tear) and make all necessary
repairs, renewals, replacements, additions, betterments and improvements
thereto; provided, however, that nothing in this Section 4.05 shall prevent the
Company or any of its Restricted Subsidiaries from discontinuing the operation
and maintenance of any of its or their properties, if such discontinuance is, in
the reasonable good faith judgment of the Company, desirable in the conduct of
the business of the Company and its Restricted Subsidiaries, taken as a whole.

          (b)  The Company shall provide, or cause to be provided, for itself
and each of its Restricted Subsidiaries, insurance (including appropriate self-
insurance) against loss or damage of the kinds that, in the reasonable, good
faith judgment of the Board of Directors of the Company is adequate and
appropriate for the conduct of the business of the Company and its Restricted
Subsidiaries.

SECTION 4.06.  Compliance Certificate; Notice of Default.
               -----------------------------------------

          The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Restricted Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company and the Subsidiary Guarantors have kept,
observed, performed and fulfilled their obligations under this Indenture and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge, neither the Company nor any Subsidiary
<PAGE>

                                      -46-

Guarantor is in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company or such
Subsidiary Guarantors is taking or proposes to take with respect thereto).

SECTION 4.07.  Compliance with Laws.
               --------------------

          The Company shall comply, and shall cause each of its Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations, orders
and restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of its and their respective businesses and the ownership of its and
their respective properties, except for such noncompliances as are not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of the Company and its Restricted
Subsidiaries, taken as a whole.

SECTION 4.08.  SEC Reports.
               -----------

          Whether or not subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC (unless such
filing is not permitted under the Exchange Act) within the time periods
specified in the SEC's rules and regulations and provide the Trustee and the
holders of the Notes, within 15 days thereafter, with such annual reports and
such information, documents and other reports as are specified in Sections 13
and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections.

          In addition, for so long as any Notes remain outstanding, the Company
shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, and, to any beneficial owner of
Notes, if not obtainable from the SEC, information of the type that would be
filed with the SEC pursuant to the foregoing provisions, upon the request of any
such holder.

SECTION 4.09.  Waiver of Stay, Extension or Usury Laws.
               ---------------------------------------

          The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead,
<PAGE>

                                      -47-

or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law or any usury law or other law that would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that it may lawfully do so) the Company hereby
expressly waives all benefit or advantage of any such law, and covenant 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.

SECTION 4.10.  Limitation on Restricted Payments.
               ---------------------------------

          (a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to make a Restricted Payment if at the time
the Company or such Restricted Subsidiary makes such Restricted Payment:

          (1) a Default shall have occurred and be continuing (or would result
     therefrom);

          (2) the Company is not able to Incur an additional $1.00 of
     Indebtedness pursuant to paragraph (a) of Section 4.13 or

          (3) the aggregate amount of such Restricted Payment and all other
     Restricted Payments since the Issue Date would exceed the sum of (without
     duplication):

              (A) 50% of the Consolidated Net Income accrued during the period
          (treated as one accounting period) from the beginning of the fiscal
          quarter immediately following the fiscal quarter during which the
          Issue Date occurred to the end of the most recent fiscal quarter
          ending at least 45 days prior to the date of such Restricted Payment
          for which the financial statements have either been included in a
          report filed with the SEC or filed with the Trustee (or, in case such
          Consolidated Net Income shall be a deficit, minus 100% of such
          deficit);

              (B) 100% of the aggregate Net Cash Proceeds received by the
          Company from the issuance or sale of its Capital Stock (other than
          Disqualified Stock) subsequent to the Issue Date (other than an
          issuance or sale to a Subsidiary of the Company and other than
<PAGE>

                                      -48-

          an issuance or sale to an employee stock ownership plan or to a trust
          established by the Company or any of its Subsidiaries for the benefit
          of their employees);

               (C) 100% of the aggregate Net Cash Proceeds received by the
          Company from the issue, sale or exercise of its Capital Stock (other
          than Disqualified Stock) to or by an employee stock ownership plan
          subsequent to the Issue Date; provided, however, that if such employee
          stock ownership plan Incurs any Indebtedness to finance the purchase
          or exercise of such Capital Stock, such Net Cash Proceeds shall be
          included only to the extent that any such proceeds are equal to any
          increase in the Consolidated Net Worth resulting from principal
          repayments made by such employee stock ownership plan with respect to
          Indebtedness Incurred by it to finance the purchase or exercise of
          such Capital Stock;

               (D) the amount by which Indebtedness of the Company or its
          Restricted Subsidiaries (other than Indebtedness owed to the Company
          or a Restricted Subsidiary) is reduced on the Company's balance sheet
          upon the conversion or exchange (other than by a Subsidiary of the
          Company) subsequent to the Issue Date of any Indebtedness of the
          Company or its Restricted Subsidiary convertible or exchangeable for
          Capital Stock (other than Disqualified Stock) of the Company (less the
          amount of any cash, or the fair value of any other property,
          distributed by the Company upon such conversion or exchange); and

               (E) an amount equal to the sum of (1) the net reduction in
          Investments in Unrestricted Subsidiaries resulting from dividends,
          repayments of loans or advances or other transfers of assets, in each
          case to the Company or any Restricted Subsidiary from Unrestricted
          Subsidiaries, and (2) the portion (proportionate to the Company's
          equity interest in such Subsidiary) of the fair market value of the
          net assets of an Unrestricted Subsidiary at the time such Unrestricted
          Subsidiary is designated a Restricted Subsidiary; provided, however,
          that the foregoing sum shall not exceed, in the case of any
          Unrestricted Subsidiary, the amount of Investments previously made
          (and treated as a Restricted Payment) by the Company
<PAGE>

                                      -49-

          or any Restricted Subsidiary in such Unrestricted Subsidiary.

          (b)  The provisions of the foregoing paragraph (a) shall not prohibit:

          (1)  any acquisition of any Capital Stock or Subordinated Obligation
     of the Company made out of the proceeds of the substantially concurrent
     sale of, or made by exchange for, Capital Stock of the Company (other than
     Disqualified Stock and other than Capital Stock issued or sold to a
     Subsidiary of the Company or an employee stock ownership plan or to a trust
     established by the Company or any of its Subsidiaries for the benefit of
     their employees); provided, however, that (A) such acquisition of Capital
     Stock shall be excluded in the calculation of the amount of Restricted
     Payments and (B) the Net Cash Proceeds from such sale shall be excluded
     from the calculation of amounts under clause (3)(B) of paragraph (a) above;

          (2)  any purchase, repurchase, redemption, defeasance or other
     acquisition or retirement for value of Subordinated Obligations made by
     exchange for, or out of the proceeds of the substantially concurrent sale
     of, Indebtedness of the Company which is permitted to be Incurred pursuant
     to Section 4.13; provided, however, that such purchase, repurchase,
     redemption, defeasance or other acquisition or retirement for value shall
     be excluded in the calculation of the amount of Restricted Payments;

          (3)  dividends paid within 60 days after the date of declaration
     thereof if at such date of declaration such dividend would have complied
     with this covenant, provided, however, that at the time of payment of such
     dividend, no other Default shall have occurred and be continuing (or result
     therefrom); provided, further, however, that such dividend shall be
     included in the calculation of the amount of Restricted Payments;

          (4)  the acquisition by the Company of shares of common stock of the
     Company to be contributed by the Company on behalf of its employees to
     employee benefit programs; provided that in each such case the amount to be
     purchased shall not exceed 5% of the compensation of such employee in any
     fiscal year; provided, further, however, that such
<PAGE>

                                      -50-

     acquisitions shall be excluded in the calculation of the amount of
     Restricted Payments; or

          (5)  the Company or any Restricted Subsidiary of the Company from
     making Restricted Payments, in addition to Restricted Payments permitted by
     clause (1) through (4) above, not in excess of $5.0 million in the
     aggregate after the date of this Indenture.

SECTION 4.11.  Limitation on Restrictions on Distributions
               from Restricted Subsidiaries.
               -------------------------------------------

          The Company shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to
the Company or any other Restricted Subsidiary, (b) make any loans or advances
to the Company or (c) transfer any of its property or assets to the Company or
any other Restricted Subsidiary, except:

          (1)  any encumbrance or restriction pursuant to an agreement in effect
     at or entered into on the Issue Date, including the Credit Facility;

          (2)  any encumbrance or restriction with respect to a Restricted
     Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
     by such Restricted Subsidiary on or prior to the date on which such
     Restricted Subsidiary was acquired by the Company (other than Indebtedness
     Incurred as consideration in, or to provide all or any portion of the funds
     or credit support utilized to consummate, the transaction or series of
     related transactions pursuant to which such Restricted Subsidiary became a
     Restricted Subsidiary or was acquired by the Company) and outstanding on
     such date;

          (3)  any encumbrance or restriction pursuant to an agreement effecting
     a Refinancing of Indebtedness Incurred pursuant to an agreement referred to
     in clause (1) or (2) of this covenant or this clause (3) or contained in
     any amendment to an agreement referred to in clause (1) or (2) of this
     covenant or this clause (3); provided, however, that the encumbrances and
     restrictions with respect to such Restricted Subsidiary contained in any
     such refinancing agreement or amendment are no less favorable to the
<PAGE>

                                      -51-

     Noteholders than encumbrances and restrictions with respect to such
     Restricted Subsidiary contained in such predecessor agreements;

          (4)  any such encumbrance or restriction consisting of customary non-
     assignment provisions in leases governing leasehold interests to the extent
     such provisions restrict the transfer of the lease or the property leased
     hereunder;

          (5)  in the case of clause (c) above, restrictions contained in
     security agreements or mortgages securing Indebtedness of a Restricted
     Subsidiary to the extent such restrictions restrict the transfer of the
     property subject to such security agreements or mortgages; and

          (6)  any restriction with respect to a Restricted Subsidiary imposed
     pursuant to an agreement entered into for the sale or disposition of all or
     substantially all the Capital Stock or assets of such Restricted Subsidiary
     pending the closing of such sale or disposition.

SECTION 4.12.  Limitation on Transactions with Affiliates.
               ------------------------------------------

          (a)  The Company shall not, and shall not permit any Restricted
Subsidiary to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") unless the terms thereof
     ---------------------

          (1)  are no less favorable to the Company or such Restricted
     Subsidiary than those that could be obtained at the time of such
     transaction in arm's-length dealings with a Person who is not such an
     Affiliate;

          (2)  if such Affiliate Transaction involves an amount in excess of
     $2.0 million, (x) are set forth in writing and (y) have been approved by a
     majority of the members of the Board of Directors having no personal stake
     in such Affiliate Transaction; and

          (3)  if such Affiliate Transaction involves an amount in excess of
     $10.0 million, have been determined by a nationally recognized investment
     banking firm to be fair, from a financial standpoint, to the Company and
     its Restricted Subsidiaries.
<PAGE>

                                      -52-

          (b)  The provisions of the foregoing paragraph (a) shall not prohibit:

          (1)  any Restricted Payment permitted to be paid pursuant to Section
4.10;

          (2)  any employment agreement or employee benefit arrangement with any
     officer or director entered into in the ordinary course of business and
     consistent with past practice;

          (3)  the payment of reasonable fees to directors of the Company and
     its Restricted Subsidiaries who are not employees of the Company or its
     Restricted Subsidiaries;

          (4)  any Affiliate Transaction between the Company and a Wholly Owned
     Subsidiary or between Wholly Owned Subsidiaries;

          (5)  the issuance or sale of any Capital Stock (other than
     Disqualified Stock) of the Company;

          (6)  reasonable and customary indemnification of officers and
     directors of the Company or any Restricted Subsidiary pursuant to bylaws,
     statutory provisions or indemnification agreements;

          (7)  purchases and sales of goods and services in the ordinary course
     of business on terms customary in the industry;

          (8)  any transaction pursuant to agreements in effect on the Issue
     Date; and

          (9)  written agreements entered into or assumed in connection with
     acquisitions of other businesses with persons who were not Affiliates prior
     to such transactions.

SECTION 4.13.  Limitation on Indebtedness.
               --------------------------

          (a)  The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided,
however, that the Company and the Subsidiary Guarantors may Incur Indebtedness
if, on the date of such Incurrence and after giving effect thereto on a pro
forma basis, no Default or Event of Default has occurred and is continuing and
the Consolidated Coverage Ratio exceeds 2.25 to 1.0.
<PAGE>

                                      -53-

          (b)  Notwithstanding the foregoing paragraph (a), so long as no
Default or Event of Default has occurred and is continuing, the Company and the
Restricted Subsidiaries may Incur any or all of the following Indebtedness:

          (1)  Indebtedness of the Company and any borrower under the Credit
     Facility incurred pursuant to the Credit Facility; provided, however, that,
     after giving effect to any such Incurrence, the aggregate principal amount
     of such Indebtedness then outstanding does not exceed (a) in the case of
     the term loan facilities, $240.0 million at any one time outstanding, less
     the sum of all permanent repayments or reductions in commitments (so long
     as and to the extent that any required payments in connection therewith are
     actually made) theretofore made with respect to such Indebtedness, and (b)
     in the case of the revolving loan facility, the greater of (i) $100.0
     million at any one time outstanding and (ii) the sum of (a) 50% of the book
     value of the inventory of the Company and its Restricted Subsidiaries and
     (b) 85% of the book value of the accounts receivable of the Company and its
     Restricted Subsidiaries;

          (2)  Indebtedness owed to and held by the Company or a Wholly Owned
     Subsidiary; provided, however, that: (A) any subsequent issuance or
     transfer of any Capital Stock which results in any such Wholly Owned
     Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
     transfer of such Indebtedness (other than to the Company or a Wholly Owned
     Subsidiary) shall be deemed, in each case, to constitute the Incurrence of
     such Indebtedness by the obligor thereon, and (B) if the Company is the
     obligor on such Indebtedness, such Indebtedness is expressly subordinated
     to the prior payment in full in cash of all obligations with respect to the
     Notes;

          (3)  the Notes, the Exchange Notes and the Private Exchange Notes and
     the Subsidiary Guarantees;

          (4)  Indebtedness of the Company of any of its Restricted Subsidiaries
     outstanding on the Issue Date (other than Indebtedness described in clause
     (1), (2) or (3) of this Section 4.13(b)) other than Indebtedness to be
     repaid from the proceeds of the sale of the Notes and the Credit Facility
     as described in the Offering Circular;

          (5)  Indebtedness of a Restricted Subsidiary Incurred and outstanding
     on or prior to the date on which such Re
<PAGE>

                                      -54-

     stricted Subsidiary was acquired by the Company or another Restricted
     Subsidiary (other than Indebtedness Incurred in connection with, or to
     provide all or any portion of the funds or credit support utilized to
     consummate, the transaction or series of related transactions pursuant to
     which such Restricted Subsidiary became a Restricted Subsidiary or was
     acquired by the Company or other Restricted Subsidiary); provided, however,
     that on the date of such acquisition, and after giving effect thereto, the
     Company would have been able to Incur at least $1.00 of additional
     Indebtedness pursuant to clause (a) above;

          (6)  Refinancing Indebtedness in respect of Indebtedness Incurred
     pursuant to paragraph (a) above or pursuant to clause (3), (4) or (5) above
     or this clause (6); provided, however, that to the extent such Refinancing
     Indebtedness directly or indirectly Refinances Indebtedness of a Subsidiary
     Incurred pursuant to clause (5) above, such Refinancing Indebtedness shall
     be Incurred only by such Subsidiary;

          (7)  Indebtedness consisting of Permitted Interest Rate or Currency
     Price Agreements;

          (8)  Indebtedness consisting of guarantees provided by the Company of
     Indebtedness of current employees incurred to purchase Capital Stock of the
     Company pursuant to the Company's employee stock purchase plan in an amount
     not to exceed $6.0 million at any one time outstanding;

          (9)  Indebtedness of Foreign Restricted Subsidiaries in an aggregate
     principal amount which, together with all other Indebtedness of such
     Foreign Restricted Subsidiaries outstanding on the date of such Incurrence
     does not exceed $15.0 million; provided, that the Indebtedness outstanding
     under this clause (9) when added to any Indebtedness outstanding pursuant
     to clause (10) below does not exceed $20.0 million; and

          (10) Indebtedness of the Company in an aggregate principal amount
     which, together with all other Indebtedness of the Company outstanding on
     the date of such Incurrence (other than Indebtedness permitted by clauses
     (1) through (9) above or paragraph (a)) does not exceed $15.0 million;
     provided, that the Indebtedness outstanding under this clause (10) when
     added to any Indebtedness out-
<PAGE>

                                      -55-

     standing pursuant to clause (9) above does not exceed $20.0 million.

          (c)  Notwithstanding the foregoing, none of the Company or any
Subsidiary Guarantor shall Incur any Indebtedness pursuant to the foregoing
paragraph (b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations of the Company or any Subsidiary
Guarantor unless such Indebtedness shall be subordinated to the Notes or the
applicable Guarantee to at least the same extent as such Subordinated
Obligations.

          (d)  For purposes of determining compliance with the foregoing
covenant, (1) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Company, in its
sole discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(2) an item of Indebtedness may be divided and classified in more than one of
the types of Indebtedness described above.

          (e)  For purposes of determining compliance with any U.S. dollar
denominated restriction on the Incurrence of Indebtedness where the Indebtedness
Incurred is denominated in a different currency, the amount of such Indebtedness
will be the U.S. Dollar Equivalent determined on the date of the Incurrence of
such Indebtedness, provided, however, that if any such Indebtedness denominated
in a different currency is subject to a Permitted Interest Rate or Currency
Agreement with respect to U.S. dollar covering all principal, premium, if any,
and interest payable on such Indebtedness, the amount of such Indebtedness
expressed in U.S. dollar will be as provided in such Permitted Interest Rate or
Currency Agreement.  The principal amount of any Refinancing Indebtedness
Incurred in the same currency as the Indebtedness being Refinanced will be the
U.S. Dollar Equivalent of the Indebtedness Refinanced, except to the extent that
(i) such U.S. Dollar Equivalent was determined based on a Permitted Interest
Rate or Currency Agreement, in which case the Refinancing Indebtedness will be
determined in accordance with the preceding sentence, and (ii) the principal
amount of the Refinancing Indebtedness exceeds the principal amount of the
Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such
excess will be determined on the date such Refinancing Indebtedness is Incurred.
<PAGE>

                                      -56-

SECTION 4.14.  Change of Control.
               -----------------

             (a)  Upon a Change of Control, each Holder shall have the right to
require that the Company repurchase all or any part of such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, thereon to the date of purchase, in
accordance with the terms contemplated in Section 4.14(b).

             (b)  Within 30 days following any Change of Control, unless the
Company shall have provided an irrevocable notice of redemption to the Trustee
with respect to a redemption of all the outstanding Notes at a time when such
redemption is permitted under this Indenture pursuant to the provisions of
Sections 3.03 and 3.04, the Company shall mail a notice to each Holder with a
copy to the Trustee (the "Change of Control Offer") stating:
                          -----------------------

             (1) that a Change of Control has occurred and that such Holder has
     the right to require the Company to purchase such Holder's Notes at a
     purchase price in cash equal to 101% of the principal amount (the "Change
                                                                        ------
     of Control Purchase Price") thereof plus accrued and unpaid interest, if
     -------------------------
     any, to the date of purchase (subject to the right of holders of record on
     the relevant record date to receive interest on the relevant interest
     payment date);

             (2) the circumstances and relevant facts regarding such Change of
     Control (including information with respect to pro forma historical income,
     cash flow and capitalization after giving effect to such Change of
     Control);

             (3) the repurchase date (the "Change of Control Purchase
                                           --------------------------
     Date")(which shall be no earlier than 30 days nor later than 60 days from
     the date such notice is mailed); and

             (4) the instructions determined by the Company, consistent with the
     covenant described hereunder, that a Holder must follow in order to have
     its Notes purchased.

             The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
<PAGE>

                                      -57-

          (c)  On or before the Change of Control Purchase Date, the Company
shall, to the extent lawful, (i) accept for payment Notes or portions thereof
properly tendered and not validly withdrawn pursuant to the Change of Control
Offer (together with the appropriate form as provided for in Exhibit A or B),
                                                             ---------    -
(ii) deposit with the Trustee or Paying Agent an amount in U.S. Legal Tender
sufficient to pay the Change of Control Purchase Price (together with accrued
and unpaid interest, if any), of all Notes so tendered and (iii) deliver or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers' Certificate listing the Notes or portions thereof being purchased by
the Company.  The Trustee or Paying Agent promptly will pay the Holders of Notes
so accepted an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest, if any), and the Trustee promptly will
authenticate and deliver to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered.  Any Notes not so accepted will
be delivered promptly by the Company to the Holders thereof.

          (d)  On the Change of Control Purchase Date, all Notes purchased by
the Company under this Section 4.14 shall be delivered to the Trustee for
cancellation, and the Company shall pay or cause to be paid the purchase price
plus accrued and unpaid interest, if any, to the Holders entitled thereto.

          (e)  At the time the Company delivers Notes to the Trustee which are
to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Notes are to be accepted by the Company pursuant
to and in accordance with the terms of this Section 4.14.  A Note shall be
deemed to have been accepted for purchase at the time the Trustee, directly or
through an agent, mails or delivers payment therefor to the surrendering Holder.

          (f)  The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section.  To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
<PAGE>

                                      -58-

SECTION 4.15.  Limitation on Sales of Assets and
               Subsidiary Stock.
               ---------------------------------

          (a)  The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, consummate any Asset Disposition unless:

          (1)  the Company or such Restricted Subsidiary receives consideration
     at the time of such Asset Disposition at least equal to the fair market
     value (including the value of all non-cash consideration), as determined in
     good faith by the Board of Directors, of the shares and assets subject to
     such Asset Disposition and at least 85% of the consideration thereof
     received by the Company or such Restricted Subsidiary is in the form of
     cash or cash equivalents and

          (2)  an amount equal to 100% of the Net Available Cash from such Asset
     Disposition is applied by the Company (or such Restricted Subsidiary, as
     the case may be):

               (A) first, to either (x) the extent the Company elects (or is
          required by the terms of any Indebtedness), to prepay, repay, redeem
          or purchase (and permanently reduce the commitments thereunder) Senior
          Indebtedness within one year from the later of the date of such Asset
          Disposition or the receipt of such Net Available Cash or (y) to the
          extent the Company elects, to acquire Additional Assets within one
          year from the later of the date of such Asset Disposition or the
          receipt of such Net Available Cash; provided that, with respect to any
          Net Available Cash from an Asset Disposition of accounts receivable in
          conjunction with an Accounts Receivable Facility, the Company shall be
          required to apply such Net Available Cash first to prepay, repay,
          redeem or repurchase (and permanently reduce the commitments
          thereunder) Senior Indebtedness consisting of term loans under the
          Credit Facility and then otherwise as provided elsewhere herein
          (including clause (y) of this paragraph (A));

               (B) second, to the extent of the balance of such Net Available
          Cash after application in accordance with clause (A) above, to make an
          offer to the holders of the Notes (and to holders of other Senior
          Subordinated Indebtedness designated by the Company) to purchase Notes
          (and such other Senior Subordinated
<PAGE>

                                      -59-

          Indebtedness) pursuant to and subject to the conditions contained in
          this Indenture; and

               (C) third, to the extent of the balance of such Net Available
          Cash after application in accordance with clause (A) or (B) above, to
          any other application or use not prohibited by this Indenture;

provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A) above, the Company or such Restricted
Subsidiary shall permanently retire such Indebtedness and shall cause the
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased.

          Notwithstanding the foregoing provisions of this Section, the Company
and the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this Section exceeds $10.0 million.  Pending application of Net Available
Cash pursuant to this Section, such Net Available Cash shall be invested in
Permitted Investments.

          For the purposes of this Section 4.15, the following are deemed to be
cash or cash equivalents:

          (1)  the assumption of Indebtedness of the Company or any Restricted
     Subsidiary and the release of the Company or such Restricted Subsidiary
     from all liability on such Indebtedness in connection with such Asset
     Disposition, and

          (2)  securities received by the Company or any Restricted Subsidiary
     from the transferee that are promptly converted by the Company or such
     Restricted Subsidiary into cash.

          (b)  In the event of an Asset Disposition that requires the purchase
of the Notes (and other Senior Subordinated Indebtedness) pursuant to clause
(a)(2)(B) above, the Company will be required to purchase Notes tendered
pursuant to an offer by the Company for the Notes (and other Senior Subordinated
Indebtedness) at a purchase price of 100% of their principal amount (without
premium) plus accrued but unpaid interest (or, in respect of such other Senior
Subordinated Indebtedness, such lesser price, if any, as may be provided for by
the terms of
<PAGE>

                                      -60-

such Senior Subordinated Indebtedness) in accordance with the procedures
(including prorating in the event of oversubscription) set forth below (the
"Asset Disposition Offer"). If the aggregate purchase price of Notes (and any
 -----------------------
other Senior Subordinated Indebtedness) tendered pursuant to such offer is less
than the Net Available Cash allotted to the purchase thereof, the Company will
be required to apply the remaining Net Available Cash in accordance with clause
(a)(2)(C) above. The Company shall not be required to make such an offer to
purchase Notes (and other Senior Subordinated Indebtedness) pursuant to this
Section 4.15 if the Net Available Cash available therefor is less than $10.0
million (which lesser amount shall be carried forward for purposes of
determining whether such an offer is required with respect to the Net Available
Cash from any subsequent Asset Disposition).

          (c)  With respect to any Asset Disposition Offer effected pursuant to
this Section 4.15, to the extent the aggregate principal amount of Notes
tendered pursuant to such Asset Disposition Offer exceeds the Net Available Cash
to be applied to the repurchase thereof, such Notes shall be purchased pro rata
based on the aggregate principal amount of such Notes tendered by each Holder.

          Notice of an Asset Disposition shall be mailed by the Company not more
than 20 days after the obligation to make such Asset Disposition Offer arises to
the Holders of Notes at their last registered addresses with a copy to the
Trustee and the Paying Agent.  The Asset Disposition Offer shall remain open
from the time of mailing for at least 30 Days or such longer period as may be
required by applicable law.  The notice, which shall govern the terms of the
Asset Disposition Offer, shall include such disclosures as are required by law
and shall state:

          (i)  that an Asset Disposition has occurred and that such Holder has
     the right to require the Company to purchase such Holder's Notes at a
     purchase price in cash equal to 100% of the principal amount (the "Asset
                                                                        -----
     Disposition Purchase Price") thereof plus accrued and unpaid interest, if
     --------------------------
     any, thereon to the date of the purchase (subject to proration as described
     above)

          (ii) the circumstances and relevant facts regarding such Asset
     Disposition;
<PAGE>

                                      -61-

     (iii)  the purchase date (the "Asset Disposition Purchase Date") (which
                               -------------------------------
            shall be no earlier than 30 days nor later than 60 days from the
            date such notice is mailed);

     (iv)   the instructions determined by the Company, consistent with the
            covenant described hereunder, that a Holder must follow in order to
            have its Notes purchased; and

     (v)    information concerning the business of the Company, the most recent
            annual and quarterly reports of the Company filed with the SEC
            pursuant to the Exchange Act (or, if the Company is not permitted to
            file any such reports with the SEC, the comparable reports prepared
            pursuant to Section 4.08), a description of material developments in
            the Company's business, information with respect to pro forma
            historical financial position and results of operations after giving
            effect to such Asset Disposition and such other information
            concerning the circumstances and relevant facts regarding such Asset
            Disposition and Asset Disposition Offer as would, in the good faith
            judgment of the Company, be material to a Holder in connection with
            the decisions of such Holder as to whether or not it should tender
            Notes pursuant to the Asset Disposition Offer.

          (d)  On or before the Asset Disposition Purchase Date, the Company
shall, to the extent lawful, (i) accept for payment (subject to proration as
described above) Notes or portions thereof properly tendered and not validly
withdrawn pursuant to the Asset Disposition Offer (together with the appropriate
form as provided for in Exhibit A or B), (ii) deposit with the Trustee or Paying
                        ---------    -
Agent an amount in U.S. Legal Tender sufficient to pay the Asset Disposition
Purchase Price (together with accrued and unpaid interest, if any), of all Notes
so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes
so accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company.  The Trustee or Paying Agent promptly
will pay the Holders of Notes so accepted an amount equal to the Asset
Disposition Purchase Price (together with accrued and unpaid interest, if any),
and the Trustee promptly will authenticate and deliver to such Holders a new
Note equal in principal amount to any unpurchased portion of the Note
surrendered.  Any Notes not so accepted will be delivered promptly by the
Company to the Holders thereof.
<PAGE>

                                      -62-

          (e)  On the Asset Disposition Purchase Date, all Notes purchased by
the Company under this Section 4.15 shall be delivered to the Trustee for
cancellation, and the Company shall pay or cause to be paid the Asset
Disposition Purchase Price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.

          (f)  The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section.  To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.

SECTION 4.16.  Future Subsidiary Guarantors.
               ----------------------------

          If the Company or any of its Restricted Subsidiaries transfers or
causes to be transferred, in one transaction or a series of related
transactions, any property to any Restricted Subsidiary that provides a
guarantee under the Credit Facility and that is not a Subsidiary Guarantor, or
if the Company or any of its Restricted Subsidiaries shall organize, acquire or
otherwise invest in another Restricted Subsidiary that provides a guarantee
under the Credit Facility, then such transferee or acquired or other Restricted
Subsidiary shall (1) by a supplemental indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, unconditionally guarantee on a
senior subordinated basis all of the Company's obligations under the Notes and
this Indenture; and (2) deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such supplemental indenture complies with
this Indenture.  Thereafter, such Restricted Subsidiary shall be a Subsidiary
Guarantor for all purposes of this Indenture.

SECTION 4.17.  Limitation on Liens.
               -------------------

          The Company shall not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Liens of any kind
against or upon any of their respective property or assets, or any proceeds,
income or profit therefrom which secure Senior Subordinated Indebtedness or
Subordinated Obligations, unless:

          (1)  in the case of Liens securing Subordinated Obligations, the Notes
     are secured by a Lien on such property,
<PAGE>

                                      -63-

     assets, proceeds, income or profit that is senior in priority to such Liens
     at least to the same extent that the Notes are subordinated to Senior
     Indebtedness; and

          (2)  in the case of Liens securing Senior Subordinated Indebtedness,
     the Notes are equally and ratably secured by a Lien on such property,
     assets, proceeds, income or profit.

SECTION 4.18.  Limitation on the Sale or Issuance of Capital Stock of Restricted
                                                     ---------------------------
               Subsidiaries.
               ------------

          The Company shall not sell or otherwise dispose of any Capital Stock
of a Restricted Subsidiary, and shall not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except:

          (1)  to the Company or a Wholly Owned Subsidiary;

          (2)  directors' qualifying shares or shares required by applicable law
     to be held by a Person other than the Company or a Restricted Subsidiary;

          (3)  if, immediately after giving effect to such issuance, sale or
     other disposition, neither the Company nor any of its Subsidiaries own any
     Capital Stock of such Restricted Subsidiary; or

          (4)  if, immediately after giving effect to such issuance, sale or
     other disposition, such Restricted Subsidiary would no longer constitute a
     Restricted Subsidiary and any investment in such Person remaining after
     giving effect thereto would have been permitted to be made under the
     covenant described under Section 4.10 if made on the date of such issuance
     sale or other disposition.

SECTION 4.19.  Prohibition on Incurrence of Senior Subordinated Debt.
                                                  -------------------

          Neither the Company nor any Subsidiary Guarantor will incur or suffer
to exist Indebtedness that is senior in right of payment to the Notes or such
Subsidiary Guarantor's Subsidiary Guarantee and subordinate in right of payment
to any other Indebtedness of the Company or such Subsidiary Guarantor, as the
case may be.
<PAGE>

                                      -64-

SECTION 4.20.  Limitation on Sale/Leaseback Transactions.
               -----------------------------------------

          The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale/Leaseback Transaction with respect to any
property unless:

          (1)  the Company or such Restricted Subsidiary would be entitled to
     (A) Incur Indebtedness in an amount equal to the Attributable Debt with
     respect to such Sale/Leaseback Transaction pursuant to Section 4.13 and (B)
     create a Lien on such property securing such Attributable Debt without
     equally and ratably securing the Notes pursuant to Section 4.17;

          (2)  the net proceeds received by the Company or any Restricted
     Subsidiary in connection with such Sale/Leaseback Transaction are at least
     equal to the fair value (as determined by the Board of Directors) of such
     property; and

          (3)  the Company applies the proceeds of such transaction in
     compliance with Section 4.15.

SECTION 4.21.  Limitation of Guarantees by Restricted Subsidiaries.
                                                      -------------

          The Company shall not permit any of its Restricted Subsidiaries,
directly or indirectly, by way of the pledge of any intercompany note or
otherwise, to assume, guarantee or in any other manner become liable with
respect to any Indebtedness of the Company (other than Indebtedness under
Permitted Interest Rate or Currency Agreements) unless, in any such case:

          (1)  such Restricted Subsidiary executes and delivers a supplemental
     indenture to this Indenture, providing a guarantee of payment of the Notes
     by such Restricted Subsidiary, and

          (2)  (a) if any such assumption, guarantee or other liability of such
     Restricted Subsidiary is provided in respect of Senior Indebtedness, the
     guarantee or other instrument provided by such Restricted Subsidiary in
     respect of such Senior Indebtedness may be superior to such guarantee of
     the Notes pursuant to subordination provisions no less favorable to the
     Holders of the Notes than those contained in this Indenture and (b) if such
     assumption, guarantee or other liability of such Restricted Subsidiary is
     provided in respect of Indebtedness that is expressly subordinated
<PAGE>

                                      -65-

     to the Notes, the guarantee or other instrument provided by such Restricted
     Subsidiary in respect of such subordinated Indebtedness shall be
     subordinated to such guarantee at least to the same extent that the Notes
     are subordinated to Senior Indebtedness.

          Notwithstanding the foregoing, any such Subsidiary Guarantee by a
Restricted Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged, without any further
action required on the part of the Trustee or any Holder, upon:

          (1)  the unconditional release of such Restricted Subsidiary from its
     liability in respect of the Indebtedness in connection with which such
     Subsidiary Guarantee was executed and delivered pursuant to the preceding
     paragraph;

          (2)  any sale or other disposition (by merger or otherwise) to any
     Person which is not a Restricted Subsidiary of the Company of all of the
     Company's Capital Stock in, or all or substantially all of the assets of,
     such Restricted Subsidiary; provided that (a) such sale or disposition of
     such Capital Stock or assets is otherwise in compliance with the terms of
     this Indenture and (b) such assumption, guarantee or other liability of
     such Restricted Subsidiary has been released by the holders of the other
     Indebtedness of this Company so guaranteed;

          (3)  the legal defeasance of the Notes as described in Article Eight;
     and

          (4)  such Restricted Subsidiary being designated as an Unrestricted
     Subsidiary as described under the definition of "Unrestricted Subsidiary."

SECTION 4.22.  Payments for Consent.
               --------------------

          The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder of Notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Notes
unless such consideration is offered to be paid and is paid to all Holders of
the Notes that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
<PAGE>

                                      -66-

SECTION 4.23.  Excess Cash Flow Repurchase Offer.
               ---------------------------------

          (a)  If the Company has Excess Cash Flow for any fiscal year
(commencing with fiscal 2001), the Company shall apply an amount equal to 50% of
the Excess Cash Flow in such fiscal year:

          (1)  first, to the extent the Company elects (or is required by the
     terms of any Indebtedness), to prepay, repay, redeem or purchase (and
     permanently reduce the commitments thereunder) Senior Indebtedness with
     such percentage of Excess Cash Flow;

          (2)  second, to the extent of the balance of such percentage of Excess
     Cash Flow after application in accordance with clause (1), to make an offer
     to the holders of the Notes (and to holders of other Senior Subordinated
     Indebtedness designated by the Company) to purchase Notes (and such other
     Senior Subordinated Indebtedness) pursuant to and subject to the conditions
     contained in this Indenture (an "Excess Cash Flow Offer"); and
                                      ----------------------

          (3)  third, to the extent of the balance of such percentage of Excess
     Cash Flow after application in accordance with clause (1) or (2) above, to
     any other application or use not prohibited by this Indenture;

provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (1) above, the Company shall permanently
retire such Indebtedness and shall cause the related loan commitment (if any) to
be permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased; and provided, further, that no Excess Cash Flow Offer shall
be required to be made if the Leverage Ratio is less than 3.0 to 1.0 on the last
day of such fiscal year.

          Notwithstanding the foregoing, the amount of Excess Cash Flow included
in any Excess Cash Flow Offer shall be reduced by the aggregate amount of any
optional prepayments of Senior Indebtedness during such fiscal year, but only to
the extent that such prepayments by their terms cannot be reborrowed or redrawn
and do not occur in connection with a refinancing of all or any portion of such
Senior Indebtedness.

          (b)  In the event of an Excess Cash Flow Offer, the Company will be
required to purchase Notes tendered pursuant to
<PAGE>

                                      -67-

an offer by the Company for the Notes (and other Senior Subordinated
Indebtedness) at a purchase price of 100% of their principal amount (without
premium) plus accrued but unpaid interest (or, in respect of such other Senior
Subordinated Indebtedness, such lesser price, if any, as may be provided for by
the terms of such Senior Subordinated Indebtedness) in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
this Indenture. If the aggregate purchase price of Notes (and any other Senior
Subordinated Indebtedness) tendered pursuant to such offer is less than the
Excess Cash Flow allotted to the purchase thereof, the Company will be required
to apply the remaining Excess Cash Flow in accordance with clause (a)(3) above.
The Company shall not be required to make an Excess Cash Flow Offer to purchase
Notes (and other Senior Subordinated Indebtedness) pursuant to this Section 4.23
if the Excess Cash Flow available therefor is less than $1.0 million (which
lesser amount shall be carried forward for purposes of determining whether such
an offer is required with respect to the Excess Cash Flow in any subsequent
fiscal year).

          (c)  The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 4.23. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this clause by virtue thereof.

                                  ARTICLE FIVE

                             SUCCESSOR CORPORATION

SECTION 5.01.  Merger, Consolidation and Sale
               of Assets of the Company.
               -------------------------

          The Company shall not consolidate with or merge with or into, or
convey, transfer or lease, in one transaction or a series of transactions, all
or substantially all its assets to, any Person, unless:

          (1) the resulting, surviving or transferee Person (the "Successor
                                                                  ---------
     Company") shall be a Person organized and existing under the laws of the
     -------
     United States of America, any State thereof or the District of Columbia and
     the Successor
<PAGE>

                                      -68-

     Company (if not the Company) shall expressly assume, by an indenture
     supplemental thereto, executed and delivered to the Trustee, in form
     satisfactory to the Trustee, all the obligations of the Company under the
     Notes, this Indenture and the Registration Rights Agreement;

             (2) immediately after giving effect to such transaction (and
     treating any Indebtedness which becomes an obligation of the Successor
     Company or any Subsidiary as a result of such transaction as having been
     Incurred by such Successor Company or such Subsidiary at the time of such
     transaction), no Default shall have occurred and be continuing;

             (3) immediately after giving effect to such transaction, the
     Successor Company would be able to Incur an additional $1.00 of
     Indebtedness pursuant to paragraph (b) of Section 4.13;

             (4) immediately after giving effect to such transaction, the
     Successor Company shall have Consolidated Net Worth in an amount that is
     not less than the Consolidated Net Worth of the Company immediately prior
     to such transaction;

             (5) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger or transfer and such supplemental indenture (if any)
     comply with this Indenture; and

             (6) the Company shall have delivered to the Trustee an Opinion of
     Counsel to the effect that the Holders will not recognize income, gain or
     loss for Federal income tax purposes as a result of such transaction and
     will be subject to Federal income tax on the same amounts, in the same
     manner and at the same times as would have been the case if such
     transaction had not occurred.

             Notwithstanding the foregoing, any Restricted Subsidiary may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company.
<PAGE>

                                      -69-

SECTION 5.02.  Successor Corporation Substituted
               for the Company.
               ----------------

          Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with Section
5.01, in which the Company is not the continuing corporation, the Successor
Company formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Notes with the same effect as if such surviving entity
had been named as such, and the predecessor company, other than in the case of a
conveyance, transfer or lease, shall be released from the obligation to pay the
principal of and interest on the Notes.

SECTION 5.03.  Merger, Consolidation and Sale of
               Assets of Any Subsidiary Guarantor.
               ----------------------------------

          The Company shall not permit any Subsidiary Guarantor to consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
a series of transactions, all or substantially all of its assets to, any Person
(other than to the Company or another Subsidiary Guarantor) unless:

          (1) the resulting, surviving or transferee Person (if not such
     Subsidiary) shall be a Person organized and existing under the laws of the
     jurisdiction under which the Subsidiary Guarantor was organized or under
     the laws of the United States of America, any State thereof or the District
     of Columbia, and such Person (if not the Subsidiary Guarantor) shall
     expressly assume, by a supplemental indenture, executed and delivered to
     the Trustee, in a form satisfactory to the Trustee, all the obligations of
     the Subsidiary Guarantor, if any, under its Subsidiary Guarantee;

          (2) immediately after giving effect to such transaction or
     transactions on a pro forma basis (and treating any Indebtedness which
     becomes an obligation of the resulting, surviving or transferee Person as a
     result of such transaction as having been issued by such Person at the time
     of such transaction), no Default shall have occurred and be continuing; and

          (3) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger or transfer and
<PAGE>

                                      -70-

     such supplemental indenture (if any) comply with this Indenture.

          The provisions of clauses (1) and (2) above shall not apply to any
transactions that constitute an Asset Disposition if the Company complied with
the applicable provisions of Section 4.15.

SECTION 5.04.  Successor Corporation Substituted for Subsidiary Guarantor.
                                                     ---------------------

          Upon any consolidation, combination or merger or any transfer of all
or substantially all of the assets of any Subsidiary Guarantor in accordance
with Section 5.03, in which such Subsidiary Guarantor is not the continuing
corporation, the successor Person formed by such consolidation or into which
such Subsidiary Guarantor is merged or to which such conveyance, lease or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, such Subsidiary Guarantor under this Indenture with
the same effect as if such surviving entity had been named as such, and the
predecessor company, other than in the case of a conveyance, transfer or lease,
shall be released from the obligation to pay the principal of and interest on
the Notes.

                                  ARTICLE SIX

                              DEFAULT AND REMEDIES

SECTION 6.01.  Events of Default.
               -----------------

          Each of the following is an "Event of Default":

          (1) a default in the payment of interest on the Notes when due,
     continued for 30 days,

          (2) a default in the payment of principal of any Note when due at
     its Stated Maturity, upon optional redemption, upon required repurchase,
     upon acceleration or otherwise (including the failure to pay the Mandatory
     Redemption Price if required);

          (3) the failure by the Company to comply with its obligations under
     Section 5.01 or of any Subsidiary Guarantor to comply with its obligations
     under Section 5.03;
<PAGE>

                                      -71-

          (4) the failure by the Company to comply for 30 days after notice
     with any of its obligations under Section 4.14 (other than a failure to
     purchase Notes) or under Sections 4.08, 4.10, 4.11, 4.12, 4.13, 4.15 (other
     than a failure to purchase the Notes) and 4.18;

          (5) the failure by the Company or any Subsidiary Guarantor to
     comply for 60 days after notice with their other agreements contained in
     this Indenture;

          (6) Indebtedness of the Company, any Subsidiary Guarantor or any
     Significant Subsidiary (other than Indebtedness owed to the Company or its
     Restricted Subsidiaries) is not paid within any applicable grace period
     after final maturity or is accelerated by the holders thereof because of a
     default and the total amount of such Indebtedness unpaid or accelerated
     exceeds $7.5 million (the "cross-acceleration provision");
                                ----------------------------

          (7) the Company, any Subsidiary Guarantor or any Significant
     Subsidiary of the Company (A) commences a voluntary case or proceeding
     under any Bankruptcy Law with respect to itself, (B) consents to the entry
     of a judgment, decree or order for relief against it in an involuntary case
     or proceeding under any Bankruptcy Law, (C) consents to the appointment of
     a Custodian of it or for substantially all of its property, or (D) makes a
     general assignment for the benefit of its creditors;

         (8) a court of competent jurisdiction enters a judgment, decree or
     order for relief in respect of the Company, any Subsidiary Guarantor or any
     Significant Subsidiary of the Company in an involuntary case or proceeding
     under any Bankruptcy Law, which shall (A) order reorganization,
     arrangement, adjustment or composition in respect of the Company, any
     Subsidiary Guarantor or any such Significant Subsidiary, (B) appoint a
     Custodian of the Company, any Subsidiary Guarantor or any such Significant
     Subsidiary or for substantially all of its property or (C) order the
     winding-up or liquidation of its affairs; and such judgment, decree or
     order shall remain unstayed and in effect for a period of 60 consecutive
     days;

         (9) any judgment or decree for the payment of money in excess of
     $7.5 million (excluding judgments to the extent covered by insurance by one
     or more reputable insurers and as to which such insurers have acknowledged
     coverage for) is entered against the Company, any Subsidiary
<PAGE>

                                      -72-

     Guarantor or any Significant Subsidiary, remains outstanding for a period
     of 60 days following entry of such judgment and is not discharged, bonded,
     waived or stayed within 30 days after written notice (the "judgment default
                                                                ----------------
     provision"); or
     ---------

               (10) a Subsidiary Guarantee of a Significant Subsidiary ceases to
     be in full force and effect (other than in accordance with the terms of
     such Subsidiary Guarantee) or is declared to be null and void and
     unenforceable or the Subsidiary Guarantee of a Significant Subsidiary is
     found to be invalid or a Subsidiary Guarantor that is a Significant
     Subsidiary denies its liability under its Subsidiary Guarantee (other than
     by reason of release of the Subsidiary Guarantor in accordance with the
     terms of this Indenture); provided, however, that an Event of Default will
     also be deemed to occur with respect to Subsidiaries that are not
     Significant Subsidiaries ("Insignificant Subsidiaries") if the Subsidiary
                                --------------------------
     Guarantees of such Insignificant Subsidiaries cease to be in full force and
     effect or are declared null and void and unenforceable or such
     Insignificant Subsidiaries deny their liability under their Subsidiary
     Guarantees, if when aggregated and taken as a whole the Insignificant
     Subsidiaries subject to this clause (10) would meet the definition of a
     Significant Subsidiary.

               However, a default under clause (4), (5) or (9) will not
constitute an Event of Default until the Trustee or the Holders of 25% in
principal amount of the outstanding Notes notify the Company in writing of the
default and the Company does not cure such default within the time specified
after receipt of such notice.

               The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice of any Event of Default under clause (6)
or (10) and any event which with the giving of notice or the lapse of time would
become an Event of Default under clause (4), (5) or (9), its status and what
action the Company is taking or proposes to take with respect thereto.

SECTION 6.02.  Acceleration.
               ------------

          (a)  If an Event of Default (other than an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company) occurs and is continuing,
and has not been waived pursuant to Section 6.04, then the Trustee, by written
notice to
<PAGE>

                                      -73-

the Company, or the Holders of at least 25% in principal amount of outstanding
Notes, by notice in writing to the Company and the Trustee, may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. All such notices shall specify the respective Event of Default and that
it is a "notice of acceleration". Upon any such declaration, such amount shall
be immediately due and payable; provided, however, that if upon such declaration
there are any amounts outstanding under the Credit Facility and the amounts
thereunder have not been accelerated, such principal and interest shall be due
and payable upon the earlier of the time such amounts are accelerated or five
(5) Business Days after receipt by the Company and the Representative under the
Credit Facility of such declaration.

          (b)  If an Event of Default specified in Section 6.01(7) or (8) with
respect to the Company occurs and is continuing, the principal of and interest
on all the Notes will ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.

          (c)  The Holders of a majority in principal amount of the Notes may,
on behalf of the Holders of all of the Notes, rescind and cancel an acceleration
and its consequences (i) if the rescission would not conflict with any judgment
or decree, (ii) if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due solely because of
the acceleration, (iii) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses, disbursements and
advances and (iv) in the event of the cure or waiver of an Event of Default of
the type described in Section 6.01(7) or (8), the Trustee shall have received an
Officers' Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived.  No such rescission shall affect any subsequent Default or
impair any right consequent thereto.

          (d)  In the event of any Event of Default specified in clause (6)
above, such Event of Default and all consequences thereof (including, without
limitation, any acceleration or resulting payment default) shall be annulled,
waived or rescinded, automatically and without any action by the Trustee or the
Holders of the Notes, if within 20 days after such Event of Default arose (x)
the Indebtedness or guarantee that is the basis for such Event of Default has
been discharged in a manner that does not violate the terms of this Indenture or
(y) the holders thereof have rescinded or waived the acceleration, notice
<PAGE>

                                      -74-

or action (as the case may be) giving rise to such Event of Default.

SECTION 6.03.  Other Remedies.
               --------------

          If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding.  A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default.  No remedy is exclusive of
any other remedy.  All available remedies are cumulative to the extent permitted
by law.

SECTION 6.04.  Waiver of Past Defaults.
               -----------------------

          Subject to Sections 2.08, 6.07 and 9.02, the Holders of a majority in
principal amount of the then outstanding Notes by notice to the Trustee may, on
behalf of the Holders of all of the Notes, waive an existing Default or Event of
Default and its consequences, except a Default in the payment of principal of or
interest on any Note as specified in clauses (i) and (ii) of Section 6.01.  When
a Default or Event of Default is waived, it is cured and ceases to exist for
every purpose of this Indenture.

SECTION 6.05.  Control by Majority.
               -------------------

          Subject to Section 2.08, the Holders of a majority in principal amount
of the then outstanding Notes may 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 it, including, without limitation, any remedies
provided for in Section 6.03.  Subject to Section 7.01, however, the Trustee may
refuse to follow any direction that conflicts with any law or this Indenture,
that the Trustee determines is unduly prejudicial to the rights of another
Holder, or that may involve the Trustee in personal liability and the Trustee
may take any other action it deems proper that is not inconsistent with any such
direction received from Holders of the Notes.
<PAGE>

                                      -75-

SECTION 6.06.  Limitation on Suits.
               -------------------

          Subject to Article Seven, if an Event of Default occurs and is
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under this Indenture at the request or direction of any of the
Holders unless such Holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense.  Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no Holder
of a Note may pursue any remedy with respect to this Indenture or the Notes
unless

             (1) such Holder has previously given the Trustee notice that an
     Event of Default is continuing,

             (2) Holders of at least 25% in principal amount of the outstanding
     Notes have requested the Trustee to pursue the remedy,

             (3) such Holders have offered the Trustee reasonable security or
     indemnity against any loss, liability or expense,

             (4) the Trustee has not complied with such request within 60 days
     after the receipt thereof and the offer of security or indemnity and

             (5) the Holders of a majority in principal amount of the
     outstanding Notes have not given the Trustee a direction inconsistent with
     such request within such 60-day period.

SECTION 6.07.  Rights of Holders To Receive Payment.
               ------------------------------------

          Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Note, on or
after the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

SECTION 6.08.  Collection Suit by Trustee.
               --------------------------

          If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.01 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company, any Subsidiary Guarantor or any other obligor on the Notes for
<PAGE>

                                      -76-

the whole amount of principal and accrued interest remaining unpaid, together
with interest on overdue principal and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest at the rate set
forth in Section 4.01 and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents, consultants and
counsel.

SECTION 6.09.  Trustee May File Proofs of Claim.
               --------------------------------

          The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company, any
Subsidiary Guarantor or any other obligor upon the Notes, any of their
respective creditors or any of their respective property and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, if the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, taxes, disbursements and advances of the
Trustee, its agents, consultants and counsel, and any other amounts due the
Trustee under Section 7.07.  Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

SECTION 6.10.  Priorities.
               ----------

          If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money in the following order:

          First:  to the Trustee for amounts due under Section 7.07;

          Second:  to Holders for amounts due and unpaid on the Notes for
     principal and interest, ratably, without preference or priority of any
     kind, according to the amounts due
<PAGE>

                                      -77-

     and payable on the Notes for principal and interest, respectively; and

          Third:  the balance, if any, to the Company or any other obligor on
     the Notes.

          The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.10.

SECTION 6.11.  Undertaking for Costs.
               ---------------------

          In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in
principal amount of the outstanding Notes.

                                 ARTICLE SEVEN

                                    TRUSTEE

SECTION 7.01.  Duties of Trustee.
               -----------------

          (a)  If an Event of Default has occurred and is continuing and is
known to the Trustee, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.

          (b)  Except during the continuance of an Event of Default:

          (1)  The Trustee need perform only those duties as are specifically
     set forth in this Indenture and no covenants or obligations shall be
     implied in this Indenture against the Trustee.
<PAGE>

                                      -78-

          (2)   In the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     the Trustee shall examine the certificates and opinions to determine
     whether or not they conform to the requirements of this Indenture.

          (c)   Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

          (i)   This paragraph does not limit the effect of paragraph (b) of
     this Section 7.01.

         (ii)   The Trustee shall not be liable for any error of judgment made
     in good faith by a Trust Officer, unless it is proved that the Trustee was
     negligent in ascertaining the pertinent facts.

        (iii)   The Trustee shall not be liable with respect to any action
     it takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.02, 6.04 or 6.05 hereof.

          (d)   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 assured to it.

          (e)   Whether or not herein expressly provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (d) of this Section 7.01.

          (f)   The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company or any Subsidiary Guarantor.  Assets held in trust by the Trustee need
not be segregated from other assets except to the extent required by law.

          (g)   Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protec
<PAGE>

                                      -79-

tion to the Trustee shall be subject to the provisions of this Section and to
the provisions of the TIA.

SECTION 7.02.  Rights of Trustee.
               -----------------

          Subject to Section 7.01:

          (a)  The Trustee may rely on any document believed by it to be genuine
     and to have been signed or presented by the proper person.  The Trustee
     need not investigate any fact or matter stated in the document.

          (b)  Before the Trustee acts or refrains from acting, it may require
     an Officers' Certificate or an Opinion of Counsel.  The Trustee shall not
     be liable for any action it takes or omits to take in good faith in
     reliance on such Officers' Certificate or Opinion of Counsel.

          (c)  The Trustee may act through agents and shall not be responsible
     for the misconduct or negligence of any agent appointed with due care.

          (d)  The Trustee shall not be liable for any action it takes or omits
     to take in good faith in accordance with a direction received by it
     pursuant to Section 6.05.

          (e)  The Trustee may refuse to perform any duty or exercise any right
     or power which it reasonably believes may expose it to any loss, liability
     or expense unless it receives indemnity satisfactory to it against such
     loss, liability or expense.

          (f)  The Trustee shall not be liable for interest on any money
     received by it except as the Trustee may agree with the Company.  Money
     held in trust by the Trustee need not be segregated from other funds except
     to the extent required by law.

          (g)  The Trustee shall have no duty with respect to a Default unless a
     Trust Officer has actual knowledge of the Default.  As used herein, the
     term "actual knowledge" means the actual fact or statement of knowing,
           ----------------
     without any duty to make any investigation with regard thereto.

          (h)  The Trustee shall not be liable for any action it takes or omits
     to take in good faith which it believes to be authorized and within its
     powers.
<PAGE>

                                      -80-

          (i)  Any Agent shall have the same rights and be protected to the same
     extent as if it were Trustee.

          (j)  The Trustee shall not be required to give any bond or surety in
     respect of the performance of its powers and duties hereunder.

SECTION 7.03.  Individual Rights of Trustee.
               ----------------------------

          The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes or coupons and may otherwise deal with the Company or
an Affiliate with the same rights it would have if it were not Trustee.  Any
Agent may do the same with like rights.

SECTION 7.04.  Trustee's Disclaimer.
               --------------------

          The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes or any coupons; it shall not be accountable for the
Company's use of the proceeds from the Notes; it shall not be responsible for
any  statement in the Notes or any coupons; it shall not be responsible for any
overissue; it shall not be responsible for determining whether the form and
terms of any Notes or coupons were established in conformity with this
Indenture; it shall not be responsible for determining whether any Notes were
issued in accordance with this Indenture; and it shall not be responsible for
the acts or omissions of any other Trustees appointed hereunder.

SECTION 7.05.  Notice of Defaults.
               ------------------

          If a Default occurs and is continuing on a series and if a Trust
Officer has actual knowledge of such Default, the Trustee shall mail a notice of
the Default within 90 days after it occurs to Holders of Registered Securities
of the series.  Except in the case of a Default in payment on a series, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the interest
of Holders of the series.  The Trustee shall withhold notice of a Default
described in Section 6.01(4) until at least 60 days after it occurs.

SECTION 7.06.  Reports by Trustee to Holders.
               -----------------------------

          Any report required by TIA (S) 313(a) to be mailed to Noteholders
shall be mailed by the Trustee on or before July 15th of each year.
<PAGE>

                                      -81-

          A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange on which any Notes are listed.
The Company shall notify the Trustee when any Notes are listed on a stock
exchange.

SECTION 7.07.  Compensation and Indemnity.
               --------------------------

          The Company and the Subsidiary Guarantors shall pay to the Trustee
from time to time reasonable compensation for its services.  The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust.  The Company and the Subsidiary Guarantors shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred by it.
Such expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.

          The Company and the Subsidiary Guarantors shall, jointly and
severally, indemnify the Trustee against any loss or liability incurred by it.
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity.  The Company and the Subsidiary Guarantors shall defend the claim and
the Trustee shall cooperate in the defense.  The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel.  The Company need not pay for any settlement made without its consent.

          The Company and the Subsidiary Guarantors need not reimburse any
expense or indemnify against any loss or liability incurred by the Trustee
through negligence or willful misconduct.

          To secure the Company's and the Subsidiary Guarantors' payment
obligations in this Section, the Trustee shall have a lien prior to the Notes
and any coupons on all money or property held or collected by the Trustee,
except that held in trust to pay principal or interest on particular securities.

          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (6) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.

          The provisions of this Section shall survive any termination or
discharge of this Indenture (including without limitation any termination under
any Bankruptcy Law) and the resignation or removal of the Trustee.
<PAGE>

                                      -82-

SECTION 7.08.  Replacement of Trustee.
               ----------------------

          A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.

          The Trustee may resign by so notifying the Company.  The Holders of a
majority in principal amount of the Notes may remove the Trustee by so notifying
the Trustee and may appoint a successor Trustee with the Company's consent.

          The Company may remove the Trustee if:

          (1)  the Trustee fails to comply with TIA (S) 310(a) or (S) 310(b)
     or with Section 7.09;

          (2)  the Trustee is adjudged a bankrupt or an insolvent;

          (3)  a Custodian or other public officer takes charge of the Trustee
     or its property;

          (4)  the Trustee becomes incapable of acting; or

          (5)  an event of the kind described in Section 6.01(7) or (8) occurs
     with respect to the Trustee.

          The Company also may remove the Trustee with or without cause if the
Company so notifies the Trustee three months in advance and if no Default occurs
during the three-month period.

          If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.

          If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

          If the Trustee fails to comply with TIA (S) 310(a) or (S) 310(b) or
with Section 7.10, any Noteholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
<PAGE>

                                      -83-

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.  Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture.  The successor Trustee shall mail a notice of its
succession to Holders of Registered Notes.  The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject to
the lien provided for in Section 7.07.

SECTION 7.09.  Successor Trustee by Merger, Etc.
               --------------------------------

          If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.

SECTION 7.10.  Trustee's Capital and Surplus.
               -----------------------------

          The Trustee at all times shall have a combined capital and surplus of
at least $50,000,000 as set forth in its most recent published report of
financial condition.

SECTION 7.11.  Eligibility; Disqualification.
               -----------------------------

          This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S)(S) 310(a)(1), (2) and (5).  The Trustee (or, in the case
of a Trustee included in a bank holding company system, the related bank holding
company) shall have a combined capital and surplus of at least $50 million as
set forth in its most recent published annual report of condition.  In addition,
if the Trustee is a corporation included in a bank holding company system, the
Trustee, independently of such bank holding company, shall meet the capital
requirements of TIA (S) 310(a)(2).  The Trustee shall comply with TIA (S)
310(b); provided, however, that there shall be excluded from the operation of
TIA (S) 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.  The provisions of TIA (S) 310 shall apply to the Company, as
obligor of the Notes.
<PAGE>

                                      -84-

SECTION 7.12.  Preferential Collection of
               Claims Against Company.
               --------------------------

          The Trustee shall comply with TIA section 311(a), excluding any
creditor relationship listed in TIA section 311(b).  A Trustee who has resigned
or been removed shall be subject to TIA section 311(a) to the extent indicated
therein.

                                 ARTICLE EIGHT

                       DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.01.   Discharge of Liability on Notes;
                Defeasance.
                -------------------------------

          (a)   This Indenture will cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of the Notes, as
expressly provided for in this Indenture) as to all outstanding Notes when:

          (i)   either (A) all the Notes theretofore authenticated and delivered
     (except lost, stolen or destroyed Notes which have been replaced or paid)
     have been delivered to the Trustee for cancellation or (B) all Notes not
     theretofore delivered to the Trustee for cancellation have become due and
     payable or shall become due and payable within one year and the Company has
     irrevocably deposited or caused to be deposited with the Trustee an amount
     in U.S. Legal Tender sufficient to pay and discharge the entire
     indebtedness on the Notes not theretofore delivered to the Trustee for
     cancellation, for the principal of, premium, if any, and interest to the
     date of deposit,

         (ii)   the Company has paid or caused to be paid all other sums payable
     under this Indenture by the Company; and

        (iii)   the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel.

          (b)   Subject to Sections 8.01(c) and 8.02, the Company and the
Subsidiary Guarantors at any time may terminate (i) all their obligations under
the Notes, the Guarantees and this Indenture ("legal defeasance option") or (ii)
                                               -----------------------
their obligations under Sections 4.04, 4.05, 4.08 and 4.10 through 4.22 and the
operation of Sections 6.01(4), (6), (7) and (8) (with respect only to Subsidiary
Guarantors or Significant Subsidiar
<PAGE>

                                      -85-

ies) and (9) and the limitations contained in Sections 5.01(3) and (4)
("covenant defeasance option"). The Company may exercise its legal defeasance
  --------------------------
option notwithstanding its prior exercise of its covenant defeasance option.

          If the Company exercise its legal defeasance option, payment of the
Notes may not be accelerated because of an Event of Default.  If the Company
exercise its covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in Sections 6.01(4), (6),
(7) and (8) (with respect only to Subsidiary Guarantors or Significant
Subsidiaries) and (9), or because of the failure of the Company to comply with
Sections 5.01(3) and (4).  If the Company exercise its legal defeasance option
or its covenant defeasance option, each Subsidiary Guarantor, if any, shall be
released from all its obligations under its Guarantee.

          Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company and the Subsidiary Guarantors terminate.

          (c)  Notwithstanding clauses (a) and (b) above, the obligations of the
Company and the Subsidiary Guarantors in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
7.07, 7.08, 8.05, 8.06 and the Appendix shall survive until the Notes have been
paid in full.  Thereafter, the obligations of the Company and the Subsidiary
Guarantors, if any, in Sections 7.07, 8.05 and 8.06 shall survive.

SECTION 8.02.  Conditions to Defeasance.
               ------------------------

          The following shall be the conditions to the application of Section
8.01 hereof to the outstanding Notes:

             (1) the Company irrevocably deposits in trust with the Trustee U.S.
     Legal Tender or U.S. Government Obligations, or a combination thereof, for
     the payment of principal of, interest and premium, if any, on the
     outstanding Notes on the stated date for payment thereof or on the
     applicable redemption date, as the case may be, and the Company must
     specify whether the Notes are being defeased to maturity or to a particular
     redemption date;

             (2) the Company delivers to the Trustee a certificate from a
     nationally recognized firm of independent public accountants or a
     nationally recognized investment banking firm expressing their opinion that
     the payments of
<PAGE>

                                      -86-

     principal and interest when due on the deposited U.S. Government
     Obligations plus any deposited U.S. Legal Tender will provide cash at such
     times and in such amounts as will be sufficient to pay principal, premium,
     if any, and interest when due on all outstanding Notes to maturity or
      redemption, as the case may be;

             (3) no Default or Event of Default with respect to the Notes shall
     have occurred and be continuing on the date of such deposit (other than a
     Default or Event of Default resulting from the borrowing of funds to be
     applied to such deposit) or insofar as Events of Default from bankruptcy or
     insolvency events are concerned, at any time in the period ending on the
     91st day after the date of deposit;

             (4) the Company delivers to the Trustee an Officers' Certificate
     stating that the deposit was not made by the Company with the intent of
     preferring the Holders over any other creditors of the Company or with the
     intent of defeating, hindering, delaying or defrauding any other creditors
     of the Company;

             (5) neither the deposit nor the defeasance shall result in a
     default or event of default under any other material agreement to which the
     Company is a party or by which the Company is bound;

             (6) the Company delivers to the Trustee an Opinion of Counsel to
     the effect that the trust resulting from the deposit does not constitute,
     or is qualified as, a regulated investment company under the Investment
     Company Act of 1940;

             (7) in the case of the legal defeasance option, the Company shall
     have delivered to the Trustee an Opinion of Counsel stating that (i) the
     Company has received from, or there has been published by, the Internal
     Revenue Service a ruling, or (ii) since the date of this Indenture there
     has been a change in the applicable Federal income tax law, in either case
     to the effect that, and based thereon such Opinion of Counsel shall confirm
     that, the Noteholders will not recognize income, gain or loss for Federal
     income tax purposes as a result of such defeasance and will be subject to
     Federal income tax on the same amounts, in the same manner and at the same
     times as would have been the case if such defeasance had not occurred;
<PAGE>

                                      -87-

             (8) in the case of the covenant defeasance option, the Company
     shall have delivered to the Trustee an Opinion of Counsel to the effect
     that the Noteholders will not recognize income, gain or loss for Federal
     income tax purposes as a result of such covenant defeasance and will be
     subject to Federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such covenant defeasance
     had not occurred; and

             (9) the Company deliver to the Trustee an Officers' Certificate and
     an Opinion of Counsel, each stating that all conditions precedent to the
     defeasance and discharge of the Notes as contemplated by this Article 8
     have been complied with.

SECTION 8.03.    Application of Trust Money.
                 --------------------------

          The Trustee shall hold in trust U.S. Legal Tender or U.S. Government
Obligations deposited with it pursuant to this Article Eight.  It shall apply
the deposited U.S. Legal Tender and the money from U.S. Government Obligations
through the Paying Agent and in accordance with this Indenture to the payment of
principal of and interest on the Notes.

SECTION 8.04.    Repayment to Company.
                 --------------------

          The Trustee and the Paying Agent shall promptly turn over to the
Company (or the appropriate Subsidiary Guarantors), upon delivery of an
Officers' Certificate stating that such payment does not violate the terms of
this Indenture, any excess money or securities held by them at any time.

          Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company and the Subsidiary Guarantors upon this
written request any money held by them for the payment of principal or interest
that remains unclaimed for two years, and, thereafter, Noteholders entitled to
the money must look to the Company and the Subsidiary Guarantors for payment as
general creditors and all liability of the Trustee or Paying Agent with respect
to such money shall thereupon cease.

SECTION 8.05.    Indemnity for Government Obligations.
                 ------------------------------------

          The Company and the Subsidiary Guarantors shall pay and shall
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against deposited U.S. Government
<PAGE>

                                      -88-

Obligations or the principal and interest received on such U.S. Government
Obligations.

SECTION 8.06.  Reinstatement.
               -------------

          If the funds deposited with the Trustee to effect covenant defeasance
are insufficient to pay the principal of, premium and interest on the Notes when
due, then the obligations of the Company and the Subsidiary Guarantors under
this Indenture will be revived and no such defeasance will be deemed to have
occurred.

          If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with this Article Eight by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the  obligations of the Company and the Subsidiary Guarantors
under this Indenture, the Notes and the Guarantees shall be revived and
reinstated as though no deposit had occurred pursuant to this Article Eight
until such time as the Trustee or Paying Agent is permitted to apply all such
U.S. Legal Tender or U.S. Government Obligations in accordance with this Article
Eight; provided, however, that, if the Company or the Subsidiary Guarantors have
made any payment of interest on or principal of any Notes because of the
reinstatement of its obligations, the Company or the Subsidiary Guarantors, as
the case may be, shall be subrogated to the rights of the Holders of such Notes
to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.

                                  ARTICLE NINE

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01.  Without Consent of Holders.
               --------------------------

          The Company and the Subsidiary Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee, together, may amend or supplement
this Indenture or the Notes or the Guarantees without notice to or consent of
any Holder:

          (i)  to cure any ambiguity, omission, defect or inconsistency;
<PAGE>

                                      -89-

         (ii)  to comply with Article Five;

        (iii)  to provide for uncertificated Notes in addition to or in place of
     certificated Notes (provided that the uncertificated Notes are issued in
     registered form for purposes of Section 163(f) of the Code, or in a manner
     such that the uncertificated Notes are described in Section 163(f)(2)(B) of
     the Code);

         (iv)  to comply with any requirements of the SEC in order to effect
     or maintain the qualification of this Indenture under the TIA;

          (v)  to add to the covenants of the Company for the benefit of the
     Holders or to surrender a right or power conferred upon the Company;

         (vi)  to add Guarantees with respect to the Notes;

        (vii)  to secure the Notes; or

       (viii)  to make any other change that does not adversely affect in
     any material respect the rights of any Holders hereunder;

provided that the Company have delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 9.01.

          After an amendment, supplement or waiver under this Section 9.01
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver.  Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.

SECTION 9.02.  With Consent of Holders.
               -----------------------

          Subject to Section 6.07, the Company, the Subsidiary Guarantors when
authorized by a Board Resolution of each of them, and the Trustee, together,
with the written consent of the Holder or Holders of at least a majority in
aggregate principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the Notes), may amend or supplement this Indenture or the
Notes, without notice to any other Holders.  The Holder or Holders of at least a
majority in
<PAGE>

                                      -90-

aggregate principal amount of the then outstanding Notes may waive compliance by
the Company or the Subsidiary Guarantors with any provision of this Indenture or
the Notes without notice to any other Holder. Notwithstanding the above, no
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
shall, without the consent of each Holder of each Note affected thereby:

             (1)  reduce the amount of Notes whose Holders must consent to an
     amendment,

             (2)  reduce the rate of or change the time for payment of interest
     on any Note,

             (3)  reduce the principal of or change the Stated Maturity of any
     Note,

             (4)  reduce the amount payable upon the redemption of any Note or
     change the time at which any Note may be redeemed in accordance with
     Article Three,

             (5)  make any Note payable in money other than that stated in the
     Note,

             (6)  impair the right of any Holder to receive payment of principal
     of and interest on such Holder's Notes on or after the due dates therefor
     or to institute suit for the enforcement of any payment on or with respect
     to such Holder's Notes,

             (7)  affect the ranking of the Notes in any material respect,

             (8)  release any Subsidiary Guarantor that is a Significant
     Subsidiary from any of its obligations under its Subsidiary Guarantee or
     this Indenture other than in accordance with the terms of this Indenture,
     or

             (9)  make any change to paragraph 8 of the Notes which would
     adversely affect the rights of any of the Holders to receive the Mandatory
     Redemption Price; or

             (10) make any change in the amendment provisions which require each
     holder's consent or in the waiver provisions.

             It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form
<PAGE>

                                      -91-

of any proposed amendment, supplement form or waiver, but it shall be sufficient
if such consent approves the substance thereof.

          After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver.  Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.

SECTION 9.03. Compliance with TIA.
              -------------------

          If at the time of an amendment to this Indenture or the Notes, this
Indenture shall be qualified under the TIA, every amendment, waiver or
supplement of this Indenture or the Notes shall comply with the TIA as then in
effect.

SECTION 9.04. Revocation and Effect of Consents.
              ---------------------------------

          Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note.  Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date the amendment,
supplement or waiver becomes effective.

          The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be (i) the later of 30 days prior
to the first solicitation of such consent or the date of the most recent list of
Holders furnished to the Trustee prior to such solicitation pursuant to Section
2.05 above or (ii) such other date as the Company may designate.  If a record
date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date.  No such consent shall be valid or effective for
more than 180 days after such record date.
<PAGE>

                                      -92-

          After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (i)
through (ix) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that, without the consent of a Holder,
any such waiver shall not impair or affect the right of such Holder to receive
payment of principal of and interest on a Note, on or after the respective due
dates expressed in such Note, or to bring suit for the enforcement of any such
payment on or after such respective dates.

SECTION 9.05. Notation on or Exchange of Notes.
              --------------------------------

          If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee.  The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder.  Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue, the Subsidiary
Guarantors shall endorse and the Trustee shall authenticate a new Note that
reflects the changed terms.  Any such notation or exchange shall be made at the
sole cost and expense of the Company.  Failure to make the appropriate notation
or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.

SECTION 9.06. Trustee To Sign Amendments, Etc.
              -------------------------------

          The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture. Such Opinion of Counsel shall not be an expense of the Trustee.
<PAGE>

                                      -93-

                                  ARTICLE TEN

                                  GUARANTEES

SECTION 10.01. Unconditional Guarantee.
               -----------------------

          Each Subsidiary Guarantor shall unconditionally jointly and severally
guarantee to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, that:  (i) the principal of
and interest on the Notes will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise and
interest on the overdue principal, if any, and interest on any interest, to the
extent lawful, of the Notes and all other obligations of the Company to the
Holders or the Trustee under this Indenture or the Notes will be promptly paid
in full or performed, all in accordance with the terms hereof and thereof and
(ii) in case of any extension of time of payment or renewal of any Notes or of
any such other obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration or
otherwise.

          Each Subsidiary Guarantor agrees that, as between such Subsidiary
Guarantor on the one hand, and the Holders and the Trustee on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article Six for the purposes of the Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article Six, such obligations (whether or not
due and payable) shall forthwith become due and payable by such Subsidiary
Guarantor for the purposes of the Guarantee.

          Each Subsidiary Guarantor agrees that its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Subsidiary
Guarantor waives diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against
<PAGE>

                                      -94-

the Company, protest, notice and all demands whatsoever and covenants that the
Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes, this Indenture and in the Guarantee. If any
Noteholder or the Trustee is required by any court or otherwise to return to the
Company, any Subsidiary Guarantor, or any Custodian acting in relation to the
Company or any Subsidiary Guarantor, any amount paid by the Company or such
Subsidiary Guarantor to the Trustee or such Noteholder, the Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that, in the event of default in the payment of
principal (or premium, if any) or interest on such Notes, whether at their
Stated Maturity, by acceleration, upon redemption, purchase or otherwise, legal
proceedings may be instituted by the Trustee on behalf of, or by, the Holder of
such Notes, subject to the terms and conditions set forth in this Indenture,
directly against each of the Subsidiary Guarantors to enforce the Guarantee
without first proceeding against the Company. Each Subsidiary Guarantor agrees
that if, after the occurrence and during the continuance of an Event of Default,
the Trustee or any Holders are prevented by applicable law from exercising their
respective rights to accelerate the maturity of the Notes, to collect interest
on the Notes, or to enforce any other right or remedy with respect to the Notes,
the Subsidiary Guarantors will pay to the Trustee for the account of the
Holders, upon demand therefor, the amount that would otherwise have been due and
payable had such rights and remedies been permitted to be exercised by the
Trustee or any of the Holders. The Subsidiary Guarantors will agree to pay, in
addition to the amount stated above, any and all expenses (including reasonable
counsel fees and expenses) incurred by the Trustee and the Holders in enforcing
any rights under the Subsidiary Guarantees with respect to the Subsidiary
Guarantors.

SECTION 10.02. Severability.
               ------------

          In case any provision of the Guarantee 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 10.03. Release of Subsidiary Guarantor from the Guarantee.
                                                        ----------

          Upon (a) the designation of a Subsidiary Guarantor as an Unrestricted
Subsidiary in accordance with this Indenture or (b) the sale or disposition
(whether by merger, stock purchase,
<PAGE>

                                      -95-

asset sale or otherwise) of all of the Capital Stock of a Subsidiary Guarantor
(or all or substantially all of its assets) to an entity which is not the
Company or a Subsidiary or Affiliate of the Company and which sale or
disposition is otherwise in compliance with the terms of this Indenture, such
Subsidiary Guarantor shall be deemed released from all obligations under this
Article Ten without any further action required on the part of the Trustee or
any Holder; provided, however, that if the lenders under the Credit Facility
release the guarantee of any guarantor under the Credit Facility that is also a
Subsidiary Guarantor, such Subsidiary Guarantor will be automatically released
and relieved of all of its obligations under this Indenture and its Subsidiary
Guarantee and such Subsidiary Guarantee will terminate; provided, further,
however, if at any time after such release such Subsidiary Guarantor again
becomes a guarantor under the Credit Facility, the Company shall cause such
Subsidiary Guarantor to unconditionally guarantee on a senior subordinated basis
all of the Company's obligations under the Notes and this Indenture to the same
extent as it guarantees the Company's obligations under the Credit Facility.

          The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers'
Certificate certifying as to the compliance with this Section 10.03.

SECTION 10.04. Limitation on Amount Guaranteed; Contribution by Subsidiary
                                                --------------------------
               Guarantors.
               ----------

          (a) Anything contained in this Indenture or the Guarantee to the
contrary notwithstanding, if any Fraudulent Transfer Law (as hereinafter
defined) is determined by a court of competent jurisdiction to be applicable to
the obligations of any Subsidiary Guarantor under the Guarantee, such
obligations of such Subsidiary Guarantor under the Guarantee shall be limited to
a maximum aggregate amount equal to the largest amount that would not render its
obligations under the Guarantee subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
                                                                  ----------
Transfer Laws"), in each case after giving effect to all other liabilities of
-------------
such Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
such Subsidiary Guarantor (x) in respect of intercompany Indebtedness to the
Company or other Affiliates of the Company to the extent that such Indebtedness
would be discharged in an amount equal to the amount paid by such Subsidiary
Guarantor
<PAGE>

                                      -96-

under the Guarantee and (y) under any Guarantee of Subordinated Obligations
which Guarantee contains a limitation as to maximum amount similar to that set
forth in this subsection 10.04(a), pursuant to which the liability of such
Subsidiary Guarantor under the Guarantee is included in the liabilities taken
into account in determining such maximum amount) and after giving effect as
assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation, reimbursement,
indemnification or contribution of such Subsidiary Guarantor pursuant to
applicable law or pursuant to the terms of any agreement (including without
limitation any such right of contribution under subsection 10.04(b)).

          (b) The Subsidiary Guarantors together may desire to allocate among
themselves in a fair and equitable manner, their obligations arising under the
Guarantee.  Accordingly, if any payment or distribution is made on any date by
any Subsidiary Guarantor under the Guarantee (a "Funding Subsidiary Guarantor")
                                                 ----------------------------
that exceeds its Fair Share (as defined below) as of such date, that Funding
Subsidiary Guarantor will be entitled to a contribution from each of the other
Subsidiary Guarantors in the amount of such other Subsidiary Guarantor's Fair
Share Shortfall (as defined below) as of such date, with the result that all
such contributions will cause each Subsidiary Guarantor's Aggregate Payments (as
defined below) to equal its Fair Share as of such date.  "Fair Share" means,
                                                          ----------
with respect to a Subsidiary Guarantor as of any date of determination, an
amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Subsidiary Guarantor to (y) the aggregate of the
Adjusted Maximum Amounts with respect to all Subsidiary Guarantors, multiplied
by (ii) the aggregate amount paid or distributed on or before such date by all
Funding Subsidiary Guarantors under the Guarantee in respect of the obligations
guarantied.  "Fair Share Shortfall" means, with respect to a Subsidiary
              --------------------
Guarantor as of any date of determination, the excess, if any, of the Fair Share
of such Subsidiary Guarantor over the Aggregate Payments of such Subsidiary
Guarantor.  "Adjusted Maximum Amount" means, with respect to a Subsidiary
             -----------------------
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Subsidiary Guarantor under the Guarantee, determined as of
such date in accordance with subsection 10.04(a); provided that, solely for
purposes of calculating the Adjusted Maximum Amount with respect to any
Subsidiary Guarantor for purposes of this subsection 10.05(b), any assets or
liabilities of such Subsidiary Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or li-
<PAGE>

                                      -97-

abilities of such Subsidiary Guarantor. "Aggregate Payments" means, with respect
to a Subsidiary Guarantor as of any date of determination, an amount equal to
(i) the aggregate amount of all payments ana distributions made on or before
such date by such Subsidiary Guarantor in respect of the Guarantee (including,
without, limitation, in respect of this subsection 10.04(b) minus (ii) the
aggregate amount of all payments received on or before such date by such
Subsidiary Guarantor from the other Subsidiary Guarantors as contributions under
this subsection 10.05(b)). The amounts payable as contributions hereunder shall
be determined as of the date on which the related payment or distribution is
made by the applicable Funding Subsidiary Guarantor. The allocation among
Subsidiary Guarantors of their obligations as set forth in this subsection
10.04(b) shall not be construed in any way to limit the liability of any
Subsidiary Guarantor under this Indenture or under the Guarantee.

SECTION 10.05. Waiver of Subrogation.
               ---------------------

          Until payment in full is made of the Notes and all other obligations
of the Company to the Holders or the Trustee hereunder and under the Notes, each
Subsidiary Guarantor irrevocably waives any claim or other rights it acquires
against the Company that arise from the existence, payment, performance or
enforcement of such Subsidiary Guarantor's obligations under the Guarantee and
this Indenture, including without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or any
other manner, payment or security on account of such claim or other rights.  If
any amount shall be paid to any Subsidiary Guarantor in violation of the
preceding sentence and the Notes shall not have been paid in full, such amount
shall have been deemed to have been paid to such Subsidiary Guarantor for the
benefit of, and held in trust for the benefit of, the Holders of the Notes, and
shall forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Notes, whether matured or unmatured, in accordance
with the terms of this Indenture.  Each Subsidiary Guarantor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
10.05 is knowingly made in contemplation of such benefits.
<PAGE>

                                      -98-

SECTION 10.06. Execution of Guarantee.
               ----------------------

          To evidence its guarantee to the Noteholders set forth in this Article
Ten, each Subsidiary Guarantor will execute the Guarantee in substantially the
form attached to this Indenture as Exhibit C, which shall be endorsed on each
                                   ---------
Note ordered to be authenticated and delivered by the Trustee.  Each Subsidiary
Guarantor agrees that the Guarantee set forth in this Article Ten shall remain
in full force and effect notwithstanding any failure to endorse on each Note a
notation of the Guarantee.  The Guarantee shall be signed on behalf of each
Subsidiary Guarantor by one Officer of such Subsidiary Guarantor (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions), and the delivery of such Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee on behalf of
such Subsidiary Guarantor.  Such signatures upon the Guarantee may be by manual
or facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Guarantee, and in case any such Officer who shall have signed
the Guarantee shall cease to be such officer before the Note on which the
Guarantee is endorsed shall have been authenticated and delivered by the Trustee
or disposed of by the Company, such Note nevertheless may be authenticated and
delivered or disposed of as though the person who signed the Guarantee had not
ceased to be such Officer of such Subsidiary Guarantor.

SECTION 10.07. Waiver of Stay, Extension or Usury Laws.
               ---------------------------------------

          Each Subsidiary Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive such
Subsidiary Guarantor from performing the Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each Subsidiary Guarantor 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.
<PAGE>

                                      -99-

                                ARTICLE ELEVEN

                             SUBORDINATION OF NOTES

SECTION 11.01. Agreement to Subordinate.
               ------------------------

          The Company agrees, and each Holder of the Notes by accepting a Note
agrees, that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article Eleven, to the
prior payment in full in cash of all Senior Indebtedness of the Company and that
the subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness.  The Notes shall in all respects rank pari passu with all
                                                           ---- -----
other Senior Subordinated Indebtedness of the Company and only Indebtedness
which is Senior Indebtedness shall rank senior to the Notes in accordance with
the provisions set forth herein.  All provisions of this Article Eleven shall be
subject to Section 11.12.

SECTION 11.02. Liquidation, Dissolution, Bankruptcy.
               ------------------------------------

          Upon any payment or distribution of the assets of the Company to
creditors upon a total or partial liquidation or a total or partial dissolution
of the Company or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property:

         (i) holders of Senior Indebtedness of the Company shall be entitled
     to receive payment in full in cash of such Senior Indebtedness of the
     Company before Holders shall be entitled to receive any payment of
     principal of or interest on the Notes; and

        (ii) until such Senior Indebtedness of the Company is paid in full
     in cash, any payment or distribution to which Holders would be entitled but
     for this Article Eleven shall be made to holders of such Senior
     Indebtedness as their interests may appear; and

       (iii) if a distribution is made to holders of the Notes that, due
     to the subordination provisions, should not have been made to them, such
     holders of the Notes are required to hold it in trust for the holders of
     Senior Indebtedness and pay it over to them as their interests may appear.
<PAGE>

                                     -100-

SECTION 11.03. Default on Senior Indebtedness.
               ------------------------------

          The Company may not pay the principal of, premium (if any) or interest
on the Notes or make any deposit pursuant to Section 8.01 and may not
repurchase, redeem or otherwise retire any Notes (collectively, "pay the Notes")
if (i) any Designated Senior Indebtedness of the Company is not paid in full in
cash when due or (ii) any other default on Designated Senior Indebtedness of the
Company occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x) the default
has been cured or waived and any such acceleration has been rescinded or (y)
such Designated Senior Indebtedness has been paid in full in cash; provided,
                                                                   --------
however, that the Company may pay the Notes without regard to the foregoing if
-------
the Company and the Trustee receive written notice approving such payment from
the Representative of such Designated Senior Indebtedness.  During the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Designated Senior Indebtedness of
the Company pursuant to which the maturity thereof may be accelerated either
immediately without further notice (except such notice as may be required to
effect such acceleration) or after the expiration of any applicable grace
periods, the Company may not pay the Notes for a period (a "Payment Blockage
Period") commencing upon the receipt by the Trustee (with a copy to the Company)
of written notice (a "Blockage Notice") of such default from the Representative
of the holders of such Designated Senior Indebtedness of the Company specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is cured,
waived or no longer continuing or (iii) because such Designated Senior
Indebtedness has been discharged or paid in full in cash).  Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this Section 11.03), unless the
holders of such Designated Senior Indebtedness of the Company or the
Representative of such holders have accelerated the maturity of such Designated
Senior Indebtedness of the Company, the Company may resume payments on the Notes
after the end of such Payment Blockage Period, including any missed payments.
The Notes shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of the Company during such period.  No default
or event of default which existed or was
<PAGE>

                                     -101-

continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness of the Company initiating such
Payment Blockage Period (whether or not such default is on the same issue of
Designated Senior Indebtedness) shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Designated Senior Indebtedness of the Company, whether or not within a
period of 360 consecutive days, unless such default or event of default shall
have been cured or waived in writing for a period of not less than 90
consecutive days subsequent to commencement of such initial Payment Blockage
Period.

SECTION 11.04. Acceleration of Payment of Notes.
               --------------------------------

          If payment of the Notes is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness of the Company (or their Representatives) of the
acceleration. The Trustee shall give notice of such acceleration, of which it
has actual knowledge, to all holders of Designated Senior Indebtedness of the
Company. Prior to the Trustee's giving such notice, the Company shall notify the
Trustee of the name and address of any such holder of Designated Senior
Indebtedness of the Company.

SECTION 11.05. When Distribution Must Be Paid Over.
               -----------------------------------

          If a distribution is made to Holders of the Notes that because of this
Article Eleven should not have been made to them, such Holders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness of the
Company and pay it over to them as their interests may appear and the Trustee
shall not be liable to any holders of Senior Indebtedness of the Company with
respect thereto.  With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article Eleven
and no implied covenants or obligations with respect to holders of Senior
Indebtedness of the Company shall be read into this Indenture against the
Trustee.

SECTION 11.06. Subrogation.
               -----------

          After all Senior Indebtedness of the Company is paid in full in cash
and until the Notes are paid in full, Holders of the Notes shall be subrogated
to the rights of holders of such Senior Indebtedness to receive distributions
applicable to
<PAGE>

                                     -102-

such Senior Indebtedness. A distribution made under this Article Eleven to
holders of such Senior Indebtedness of the Company which otherwise would have
been made to Holders of the Notes is not, as between the Company and Holders of
the Notes, a payment by the Company on such Senior Indebtedness of the Company.

SECTION 11.07. Relative Rights.
               ---------------

          This Article Eleven defines the relative rights of Holders of the
Notes and holders of Senior Indebtedness of the Company. Nothing in this
Indenture shall:

          (i) impair, as between the Company and Holders of the Notes, the
     obligation of the Company, which is absolute and unconditional, to pay
     principal of and interest on the Notes in accordance with their terms; or

         (ii) prevent the Trustee or any Holder of the Notes from exercising
     its available remedies upon a Default, subject to the rights of holders of
     Senior Indebtedness of the Company to receive distributions otherwise
     payable to Holders.

SECTION 11.08. Subrogation May Not Be Impaird By The Company.
                                                     -------

          No right of any holder of Senior Indebtedness of the Company to
enforce the subordination of the Indebtedness evidenced by the Notes shall be
impaired by any act or failure to act by the Company or by their failure to
comply with this Indenture.

SECTION 11.09. Rights of Trustee and Paying Agent.
               ----------------------------------

          Notwithstanding Section 11.03, the Trustee or Paying Agent may
continue to make payments on the Notes and shall not be charged with knowledge
of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Trust Officer of the Trustee receives notice satisfactory to it that payments
may not be made under this Article Eleven.  The Company, the Registrar or co-
registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness
of the Company may give the notice; provided, however, that, if an issue of
                                    --------  -------
Senior Indebtedness of the Company has a Representative, only the Representative
may give the notice.
<PAGE>

                                     -103-

          The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee.  The Registrar and co-registrar and the Paying Agent may do the same
with like rights.  The Trustee shall be entitled to all the rights set forth in
this Article Eleven with respect to any Senior Indebtedness of the Company which
may at any time be held by it, to the same extent as any other holder of such
Senior Indebtedness; and nothing in Article Seven shall deprive the Trustee of
any of its rights as such holder.  Nothing in this Article Eleven shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.07.

SECTION 11.10. Distribution or Notice to Representative.
               ----------------------------------------

          Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness of the Company, the distribution may be made and the notice
given to their Representative (if any).

SECTION 11.11. Article Eleven Not To Prevent Events of Default or Limit Right To
                                                       -------------------------
               Accelerate
               ----------

          The failure to make a payment pursuant to the Notes by reason of any
provision in this Article Eleven shall not be construed as preventing the
occurrence of a Default.  Nothing in this Article Eleven shall have any effect
on the right of the Holders or the Trustee to accelerate the maturity of the
Notes.

          The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall in good faith mistakenly pay over or distribute to
Holders of Notes or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness of the Company shall be
entitled by virtue of this Article Eleven or otherwise.

SECTION 11.12. Trust Moneys Not Subordinated.
               -----------------------------

          Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Eight by the Trustee for the payment of principal of and interest on the
Notes shall not be subordinated to the prior payment of any Senior Indebtedness
of the Company or subject to the restrictions set forth in this Article Eleven,
and none of the Holders of the Notes
<PAGE>

                                     -104-

shall be obligated to pay over any such amount to the Company or any holder of
Senior Indebtedness of the Company or any other creditor of the Company.

SECTION 11.13. Trustee Entitled To Rely.
               ------------------------

          Upon any payment or distribution pursuant to this Article Eleven, the
Trustee and the Holders shall be entitled to rely (i) upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 11.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such payment or distribution
to the Trustee or to the Holders or (iii) upon the Representatives for the
holders of Senior Indebtedness for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Eleven.  In the event that the
Trustee determines, in good faith, that evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article Eleven, the
Trustee may request such Person to furnish evidence to the satisfaction of the
Trustee as to the amount of such Senior Indebtedness of the Company held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article Eleven, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.  The provisions of Sections 7.01
and 7.02 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article Eleven.

SECTION 11.14. Trustee To Effectuate Subordination.
               -----------------------------------

          Each Holder by accepting a Note authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Holders and the holders of Senior
Indebtedness of the Company as provided in this Article Eleven and appoints the
Trustee as attorney-in-fact for any and all such purposes.
<PAGE>

                                     -105-

SECTION 11.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.
                                                           ------------

          The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness of the Company and shall not be liable to any
such holders if it shall mistakenly pay over or distribute to Holders or the
Company or any other Person, money or assets to which any holders of Senior
Indebtedness of the Company shall be entitled by virtue of this Article Eleven
or otherwise.

SECTION 11.16. Reliance by Holders of Senior Indebtedness on Subordination.
                                                          ----------------

          Each Holder by accepting a Note acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness of the Company
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Notes, to acquire and continue to hold, or to continue to hold,
such Senior Indebtedness and such holder of such Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such Senior Indebtedness.

                                ARTICLE TWELVE

                          SUBORDINATION OF GUARANTEES

SECTION 12.01. Agreement to Subordinate.
               ------------------------

          Each Subsidiary Guarantor by execution of a Subsidiary Guarantee
jointly and unconditionally will agree, and each Holder by accepting a Note will
agree, that any payment of obligations by each Subsidiary Guarantor in respect
of the Subsidiary Guarantee (its "Subsidiary Guarantee Obligations") is
subordinated in right of payment, to the extent and in the manner provided in
this Article Twelve, to the prior payment in full in cash of all Senior
Indebtedness of such Subsidiary Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Subsidiary Guarantor's Senior
Indebtedness.  The Subsidiary Guarantee Obligations shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of such Subsidiary
---- -----
Guarantors and only Indebtedness which is Senior Indebtedness of such Subsidiary
<PAGE>

                                      106

Guarantors shall rank senior to the Subsidiary Guarantee Obligations in
accordance with the provisions set forth herein.

SECTION 12.02. Liquidation, Dissolution, Bankruptcy.
               ------------------------------------

          Upon any payment or distribution of the assets of any Subsidiary
Guarantor to creditors upon a total or partial liquidation or a total or partial
dissolution of such Subsidiary Guarantor or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to such Subsidiary
Guarantor or its property:

          (1)  holders of such Subsidiary Guarantor's Senior Indebtedness
     shall be entitled to receive payment in full in cash of such Senior
     Indebtedness before Holders shall be entitled to receive any payment with
     respect to the Subsidiary Guarantee;

          (2)  until such Subsidiary Guarantor's Senior Indebtedness is paid
     in full in cash, any payment with respect to the Subsidiary Guarantee to
     which Holders would be entitled but for this Article Twelve shall be made
     to holders of such Senior Indebtedness as their interests may appear; and

          (3)  if a distribution is made to holders of the Notes that, due to
     the subordination provisions, should not have been made to them, such
     holders of the Notes are required to hold it in trust for the holders of
     Senior Indebtedness and pay it over to them as their interests may appear.

SECTION 12.03. Default on Senior Indebtedness.
               ------------------------------

          A Subsidiary Guarantor may not make any payment with respect to its
Subsidiary Guarantee Obligations or make any deposit pursuant to Section 8.01
(collectively, "pay the Subsidiary Guarantee") if (i) any of such Subsidiary
Guarantor's or the Company's Designated Senior Indebtedness is not paid in full
in cash when due or (ii) any other default on such Subsidiary Guarantor's or the
Company's Designated Senior Indebtedness occurs and the maturity of such
Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Designated Senior Indebtedness has
been paid in full in cash; provided, however, that the Subsidiary Guarantor may
                           --------  -------
pay the Subsidiary Guarantee without regard to the foregoing if the Trustee
re-
<PAGE>

                                      107

ceives written notice approving such payment from the Representative of such
Designated Senior Indebtedness guaranteed by such Subsidiary Guarantor. During
the continuance of any default (other than a default described in clause (i) or
(ii) of the preceding sentence) with respect to any Subsidiary Guarantor's or
Company's Designated Senior Indebtedness pursuant to which the maturity thereof
may be accelerated either immediately without further notice (except such notice
as may be required to effect such acceleration) or after the expiration of any
applicable grace periods, the Subsidiary Guarantor may not pay the Subsidiary
Guarantee for a period (a "Payment Blockage Period") commencing upon the receipt
by the Trustee (with a copy to such Subsidiary Guarantor) of written notice (a
"Blockage Notice") of such default from the Representative of such Designated
Senior Indebtedness of such Subsidiary Guarantor or the Company guaranteed by
such Subsidiary Guarantor specifying an election to effect a Payment Blockage
Period and ending 179 days thereafter (or earlier if such Payment Blockage
Period is terminated (i) by written notice to the Trustee and such Subsidiary
Guarantor from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is cured, waived or otherwise no
longer continuing or (iii) because such Designated Senior Indebtedness of such
Subsidiary Guarantor and the related Designated Senior Indebtedness of the
Company has been discharged or paid in full). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section 12.03), unless the holders of
such Subsidiary Guarantor's or the Company's Designated Senior Indebtedness or
the Representative of such holders shall have accelerated the maturity of such
Subsidiary Guarantor's or the Company's Designated Senior Indebtedness, the
Subsidiary Guarantor may resume payments on the Subsidiary Guarantee after
termination of such Payment Blockage Period, including any missed payments. The
Subsidiary Guarantee will not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to such Designated Senior Indebtedness during such period. No
default or event of default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Subsidiary
Guarantor's or the Company' Designated Senior Indebtedness initiating such
Payment Blockage Period (whether or not such default is on the same issue of
Designated Senior Indebtedness) shall be, or be made, the basis of the
commencement of a subsequent Payment Blockage Period by the Representative of
such Subsidiary Guarantor's or the Company' Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such default or
<PAGE>

                                      108

event of default shall have been cured or waived for a period of not less than
90 consecutive days subsequent to commencement of such initial Payment Blockage
Period.

SECTION 12.04. Acceleration of Payment of Notes.
               --------------------------------

          If payment of a Subsidiary Guarantee is accelerated because of an
Event of Default, such Subsidiary Guarantor or the Trustee shall promptly notify
the holders of such Subsidiary Guarantor's or the Company' Designated Senior
Indebtedness (or their Representatives) of the acceleration. The Trustee shall
give notice of such acceleration, of which it has actual knowledge, to all
holders of such Subsidiary Guarantor's or the Company' Designated Senior
Indebtedness. Prior to the Trustee's giving such notice, the Company shall
notify the Trustee of the name and address of any such holder of such Designated
Senior Indebtedness.

SECTION 12.05. When Distribution Must Be Paid Over.
               -----------------------------------

          If a distribution is made to holders that because of this Article
Twelve should not have been made to them, the Holders who receive the
distribution shall hold it in trust for holders of such Subsidiary Guarantor's
Senior Indebtedness and pay it over to them as their interests may appear, and
the Trustee shall not be liable to any holders of such Subsidiary Guarantor's
Senior Indebtedness.  With respect to the holders of such Subsidiary Guarantor's
Senior Indebtedness, the Trustee undertakes to perform or to observe only such
of its covenants or obligations as are specifically set forth in this Article
Twelve and no implied covenants or obligations with respect to holders of such
Subsidiary Guarantor's Senior Indebtedness shall be read into this Indenture
against the Trustee.

SECTION 12.06. Subrogation.
               -----------

          After a Subsidiary Guarantor's Senior Indebtedness is paid in full in
cash and until the Subsidiary  Guarantees are paid in full, Holders
shall be subrogated to the rights of holders of such Senior Indebtedness to
receive distributions applicable to such Subsidiary Guarantor's Senior
Indebtedness. A distribution made under this Article Twelve to holders of such
Subsidiary Guarantor's Senior Indebtedness which otherwise would have been made
to Holders is not, as between such Subsidiary Guarantor and Holders, a payment
by such Subsidiary Guarantor on such Senior Indebtedness.
<PAGE>

                                      109

SECTION 12.07. Relative Rights.
               ---------------

          This Article Twelve defines the relative rights of Holders and holders
of a Subsidiary Guarantor's Senior Indebtedness. Nothing in this Indenture
shall:

          (i)  impair, as between such Subsidiary Guarantor and Holders, the
     obligation of such Subsidiary Guarantor, which is absolute and
     unconditional, to pay the Subsidiary Guarantee Obligations in accordance
     with their terms; or

          (ii) prevent the Trustee or any Holder from exercising its available
     remedies upon a Default, subject to the rights of holders of a Subsidiary
     Guarantor's Senior Indebtedness to receive distributions otherwise payable
     to Holders.

SECTION 12.08. Subordination May Not Be Impaired by a Subsidiary Guarantor.
                                                      --------------------

          No right of any holder of a Subsidiary Guarantor's Senior Indebtedness
to enforce the subordination of the Indebtedness evidenced by the Subsidiary
Guarantees shall be impaired by any act or failure to act by such Subsidiary
Guarantor or by its failure to comply with this Indenture.

SECTION 12.09. Rights of Trustee and Paying Agent.
               ----------------------------------

          Notwithstanding Section 12.03, the Trustee or Paying Agent may
continue to make payments in respect of a Subsidiary Guarantee and shall not be
charged with knowledge of the existence of facts that would prohibit the making
of any such payments unless, not less than two Business Days prior to the date
of such payment, a Trust Officer of the Trustee receives notice satisfactory to
it that payments may not be made under this Article Twelve. Such Subsidiary
Guarantor, the Registrar or co-registrar, the Paying Agent, a Representative or
a holder of such Subsidiary Guarantor's Senior Indebtedness may give the notice;
provided, however, that, if an issue of a Subsidiary Guarantor's Senior
--------  -------
Indebtedness has a Representative, only the Representative may give the notice.

          The Trustee in its individual or any other capacity may hold a
Subsidiary Guarantor's Senior Indebtedness with the same rights it would have if
it were not Trustee.  The Registrar and co-registrar, the Paying Agent and any
agent of any Subsidiary Guarantor may do the same with like rights.  The Trustee
shall be entitled to all the rights set forth in this
<PAGE>

                                      110

Article Twelve with respect to any Subsidiary Guarantor's Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
such Subsidiary Guarantor's Senior Indebtedness; and nothing in Article Seven
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article Twelve shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.

SECTION 12.10. Distribution or Notice to Representative.
               ----------------------------------------

          Whenever a distribution is to be made or a notice given to holders of
a Subsidiary Guarantor's Senior Indebtedness, the distribution may be made and
the notice given to their Representative (if any).

SECTION 12.11. Article Twelve Not To Prevent Events of Default or Limit Right To
                                                       -------------------------
               Accelerate
               ----------

          The failure to make a payment relating to the Subsidiary Guarantee
Obligations by reason of any provision in this Article Twelve shall not be
construed as preventing the occurrence of a Default. Nothing in this Article
Twelve shall have any effect on the right of the Holders or the Trustee to
accelerate the maturity of the Notes.

SECTION 12.12. Trust Moneys Not Subordinated.
               -----------------------------

          Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Eight by the Trustee for the payment of principal of and interest on the
Notes shall not be subordinated to the prior payment of any Subsidiary
Guarantor's Senior Indebtedness or subject to the restrictions set forth in this
Article Twelve, and none of the Holders shall be obligated to pay over any such
amount to such Subsidiary Guarantor or any holder of such Subsidiary Guarantor's
Senior Indebtedness or any other creditor of such Subsidiary Guarantor.

SECTION 12.13. Trustee Entitled To Rely.
               ------------------------

          Upon any payment or distribution pursuant to this Article Twelve, the
Trustee and the Holders shall be entitled to rely (i) upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 12.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such payment or distribution
to the Trustee or to the Holders or (iii)
<PAGE>

                                      111

upon the Representatives for the holders of each Subsidiary Guarantor's Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of such Subsidiary Guarantor Senior
Indebtedness and other Indebtedness of any Subsidiary Guarantor's, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Twelve. In the event
that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of a Subsidiary Guarantor's
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the satisfaction of the Trustee as to the amount of such Subsidiary Guarantor's
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such Person under this Article Twelve, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article Twelve.

SECTION 12.14. Trustee To Effectuate Subordination.
               -----------------------------------

          Each Holder by accepting a Note authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Holders and the holders of any
Subsidiary Guarantor's Senior Indebtedness as provided in this Article Twelve
and appoints the Trustee as attorney-in-fact for any and all such purposes.

SECTION 12.15.  Trustee Not Fiduciary for Holders of Senior Indebtedness of
                                                            ---------------
               Subsidiary Guarantors.
               ----------------------

          The Trustee shall not be deemed to owe any fiduciary duty to the
holders of any Subsidiary Guarantor's Senior Indebtedness and shall not be
liable to any such holders if it shall mistakenly pay over or distribute to
Holders or any Subsidiary Guarantor or any other Person, money or assets to
which any holders of such Subsidiary Guarantor's Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise.
<PAGE>

                                      112

SECTION 12.16.  Reliance by Holders of Senior Indebtedness of Subsidiary
                                                           -------------
               Guarantors on Subordination Provisions.
               ---------------------------------------

          Each Holder by accepting a Note acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Subsidiary Guarantor's Senior
Indebtedness whether such Senior Indebtedness was created or acquired before or
after the issuance of the Notes, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness and such holder of such Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness.

                               ARTICLE THIRTEEN

                                 MISCELLANEOUS

SECTION 13.01. TIA Controls.
               ------------

          This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable, be
governed by such provisions.  If any provision of this Indenture modifies any
TIA provision that may be so modified, such TIA provision shall be deemed to
apply to this Indenture as so modified.  If any provision of this Indenture
excludes any TIA provisions that may be so excluded, such TIA provision shall be
excluded from this Indenture.

          The provision of TIA (S)(S) 310 through 317 that imposes duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are part of and govern this Indenture, whether or
not physically contained therein.

SECTION 13.02. Notices.
               -------

          Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by commercial courier service, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
<PAGE>

                                      113

          if to the Company or any Subsidiary Guarantor:

               Applied Power Inc.
               6100 North Baker Road
               Glendale, Wisconsin 53209
               Facsimile No.: (414) 247-5550
               Telephone:  (414) 352-4160
               Attn: Chief Financial Officer

          with a copy to:

               Quarles & Brady LLP
               411 East Wisconsin Avenue
               Milwaukee, Wisconsin 53202-4497
               Facsimile No.: (414) 271-3552
               Telephone: (414) 277-5000
               Attn: Anthony W. Asmuth, III, Esq.

          if to the Trustee:

               Bank One Trust Company, N.A.
               One N. State Street, 9th Floor
               Chicago, Illinois 60670-0126
               Facsimile No.:  (312) 407-1708
               Telephone No.:  (312) 407-1682
               Attn:  Corporate Trust Department

          Each of the Company, the Subsidiary Guarantors and the Trustee by
written notice to each other such Person may designate additional or different
addresses for notices to such Person. Any notice or communication to the
Company, the Subsidiary Guarantors and the Trustee shall be deemed to have been
given or made as of the date so delivered if personally delivered; when receipt
is confirmed if delivered by commercial courier service; when receipt is
acknowledged, if faxed; and five (5) calendar days after mailing if sent by
registered or certified mail, postage prepaid.

          Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar and shall be sufficiently given to him
if so mailed within the time prescribed.

          Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.  If a notice
or communication is mailed
<PAGE>

                                      114

in the manner provided above, it is duly given, whether or not the addressee
receives it.

SECTION 13.03.  Communications by Holders with Other Holders.
                --------------------------------------------

          Holders may communicate pursuant to the TIA section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes.  The
Company, the Subsidiary Guarantors, the Trustee, the Registrar and any other
Person shall have the protection of the TIA section 312(c).

SECTION 13.04. Certificate and Opinion as to Conditions Precedent.
               --------------------------------------------------

          Upon any request or application by the Company or any Subsidiary
Guarantor to the Trustee to take or refrain from taking any action under this
Indenture, the Company or such Subsidiary Guarantor shall furnish to the
Trustee:

          (i)  an Officers' Certificate, in form and substance satisfactory to
     the Trustee, stating that, in the opinion of the signers, all conditions
     precedent to be performed by the Company, if any, provided for in this
     Indenture relating to the proposed action have been complied with; and

          (ii) an Opinion of Counsel stating that, in the opinion of such
     counsel, all such conditions precedent to be performed by the Company, if
     any, provided for in this Indenture relating to the proposed action have
     been complied with.

SECTION 13.05. Statements Required in Certificate or Opinion.
               ---------------------------------------------

          Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:

          (i)   a statement that the Person making such certificate or opinion
     has read such covenant or condition and the definitions relating thereto;

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

                                      115

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

          (iv)  a statement as to whether or not, in the opinion of each such
     Person, such condition or covenant has been complied with;

provided, that with respect to matters of fact, an Opinion of Counsel may rely
on an Officers' Certificate or a certificate of an appropriate public official.

SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.
               -----------------------------------------

          The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders.  The Paying Agent
or Registrar may make reasonable rules for their respective functions.

SECTION 13.07. Legal Holidays.
               --------------

          If a payment date is a Legal Holiday, payment may be made at such
place on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.

SECTION 13.08. Governing Law.
               -------------

          THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.  EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE.

SECTION 13.09. No Adverse Interpretation of Other Agreements.
                                                  ----------

          This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company, any Subsidiary Guarantor or any of their
Subsidiaries or of any other Person. Any such indenture, loan or debt agreement
may not be used to interpret this Indenture.
<PAGE>

                                      116

SECTION 13.10. No Recourse Against Others.
               --------------------------

          No past, present or future member of the Board of Directors, officer,
employee, equityholder or incorporator, as such, of the Company, any Subsidiary
Guarantor or of the Trustee shall have any liability for any obligations of the
Company or any Subsidiary Guarantor under the Notes, any Guarantee or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.

SECTION 13.11. Successors.
               ----------

          All agreements of the Company and the Subsidiary Guarantors in this
Indenture and the Notes shall bind their respective successors.  All agreements
of the Trustee in this Indenture shall bind its successors.

SECTION 13.12. Multiple Originals.
               ------------------

          All parties may sign any number of copies of this Indenture.  Each
signed copy shall be an original, but all of them together shall represent the
same agreement.

SECTION 13.13. Severability.
               ------------

          In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.

SECTION 13.14. Table of Contents, Cross Reference Table and Headings.
               -----------------------------------------------------

          The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms of provisions hereof.

                           [Signature Pages Follow]
<PAGE>

                                      S-1

                                   SIGNATURES
                                   ----------

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.

                                   APPLIED POWER INC.

                                   By:  /s/
                                       -------------------------------------
                                       Name:
                                       Title:

                                   APW TOOLS & SUPPLIES, INC.

                                   By:  /s/
                                       -------------------------------------
                                      Name:
                                      Title:

                                   VERSA TECHNOLOGIES, INC.

                                   By:  /s/
                                       -------------------------------------
                                      Name:
                                      Title:

                                   APPLIED POWER INVESTMENTS II, INC.

                                   By:  /s/
                                       -------------------------------------
                                      Name:
                                      Title:

                                   COLUMBUS MANUFACTURING LLC

                                   By:  APPLIED POWER INC.

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

                                      -2-

                                   Trustee:

                                   BANK ONE TRUST COMPANY, N.A.,
                                     as Trustee

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

                                                 RULE 144A/REGULATION S APPENDIX
                                                 -------------------------------

                   FOR OFFERINGS TO QUALIFIED INSTITUTIONAL
                      BUYERS PURSUANT TO RULE 144A AND TO
                          CERTAIN PERSONS IN OFFSHORE
                           TRANSACTIONS IN RELIANCE
                                ON REGULATION S

                     PROVISIONS RELATING TO INITIAL NOTES,
                            PRIVATE EXCHANGE NOTES,
                              AND EXCHANGE NOTES

          1.   Definitions.

          1.1  Certain Definitions.
               -------------------

          For the purposes of this Appendix the following terms shall have the
meanings indicated below, provided that all capitalized terms used but not
defined shall have the meanings given such terms in the Indenture:

          "Depositary" means The Depository Trust Company, its nominees and
           ----------
their respective successors and assigns.

          "Exchange Notes" means the 13% Series B Senior Subordinated Notes due
           --------------
2009 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer pursuant to a Registration Rights Agreement.

          "Initial Purchasers" means Credit Suisse First Boston Corporation and
           ------------------
Goldman, Sachs & Co.

          "Initial Notes" means $200,000,000 principal amount of 13% Series A
           -------------
Senior Subordinated Notes due 2009, issued on August 1, 2000 in a transaction
exempt from the registration requirements of the Securities Act.

          "Private Exchange" means the offer by the Company, pursuant to a
           ----------------
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
the Initial Purchasers, in exchange for the Initial Notes held by the Initial
Purchasers as part of their initial distribution, a like aggregate principal
amount of Private Exchange Notes.

          "Private Exchange Notes" means the 13% Senior Subordinated Private
           ----------------------
Exchange Notes due 2009, if any, to be issued
<PAGE>

                                    APP.-2

pursuant to this Indenture to the Initial Purchasers in a Private Exchange.

          "Purchase Agreement" means, with respect to the Initial Notes issued
           ------------------
on August 1, 2000, the Purchase Agreement dated July 21, 2000, among the
Company, the Subsidiary Guarantors and the Initial Purchasers.

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

          "Registered Exchange Offer" means the offer by the Company, pursuant
           -------------------------
to a Registration Rights Agreement, to certain Holders of Initial Notes, to
issue and deliver to such Holders, in exchange for such Initial Notes, a like
aggregate principal amount of Exchange Notes registered under the Securities
Act.

          "Registration Rights Agreement" means, with respect to the Initial
           -----------------------------
Notes issued on August 1, 2000, the Registration Rights Agreement dated August
1, 2000 among the Company, the Subsidiary Guarantors and the Initial Purchasers.

          "Securities" means the Initial Notes, the Exchange Notes and the
           ----------
Private Exchange Notes, treated as a single class.

          "Securities Act" means the Securities Act of 1933, as amended.
           --------------

          "Securities Custodian" means the custodian with respect to a Global
           --------------------
Security (as appointed by the Depositary), or any successor person thereto and
shall initially be the Trustee.

          "Shelf Registration Statement" means the shelf registration statement
           ----------------------------
issued by the Company, in connection with the offer and sale of Initial Notes,
Exchange Notes or Private Exchange Notes, pursuant to a Registration Rights
Agreement.

          "Transfer Restricted Securities" means Securities that bear or are
           ------------------------------
required to bear the legend set forth in Section 2.3(b) hereto.
<PAGE>

                                    App.-3

          1.2  Other Definitions.
               -----------------

                                                         Defined
                  Term                                 in Section:
                  ----                                 ----------

"Agent Members".........................                  2.1(b)
 -------------
"Global Security".......................                  2.1(a)
 ---------------
"Regulation S"..........................                  2.1(a)
 ------------
"Rule 144A".............................                  2.1(a)
 ---------

          2.   The Securities.
               --------------

          2.1  Form and Dating.
               ---------------

          On the Issue Date, $200,000,000 of the Initial Notes are being offered
and sold by the Company pursuant to the Purchase Agreement.

          (a)  Global Securities.  Initial Notes offered and sold to a QIB in
               -----------------
reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on
                                                 ---------
Regulation S under the Securities Act ("Regulation S"), in each case as provided
                                        ------------
in the Purchase Agreement, shall be issued initially in the form of one or more
permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and, in the case of Initial
Notes, the restricted securities legend set forth in Exhibit 1 hereto (each, a
                                                     ---------
"Global Security"), which shall be deposited on behalf of the purchasers of the
----------------
Initial Notes represented thereby with the Trustee as custodian for the
Depositary (or with such other custodian as the Depositary may direct), and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided.  The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee as hereinafter provided.

          (b)  Book-Entry Provisions.  This Section 2.1(b) shall apply only to a
               ---------------------
Global Security deposited with or on behalf of the Depositary.

          The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (b)
shall be delivered by the Trustee to such Depositary or pursu-
<PAGE>

                                    App.-4

ant to such Depositary's instructions or held by the Trustee as custodian for
the Depositary.

          Members of, or participants in, the Depositary ("Agent Members") shall
                                                           -------------
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Subsidiary Guarantors, the Trustee and any agent of the
Company, the Subsidiary Guarantors or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever.  Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Subsidiary Guarantors, the Trustee
or any agent of the Company, the Subsidiary Guarantors or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its Agent
Members, the operation of customary practices of such Depositary governing the
exercise of the rights of a holder of a beneficial interest in any Global
Security.

          (c)  Certificated Securities.  Except as provided in this Section 2.1
               -----------------------
or Section 2.3 or 2.4 of this Appendix, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities.

          2.2  Authentication.  The Trustee shall authenticate and deliver: (1)
               --------------
On the Issue Date, $200.0 million 13% Series A Senior Subordinated Notes due
2009 and (2) Exchange Notes or Private Exchange Notes for issue in a Registered
Exchange Offer or a Private Exchange, respectively, in exchange for a like
principal amount of Initial Notes, in each case upon a written order of the
Company. Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Notes is to be
authenticated and whether the Securities are to be Initial Notes, Exchange Notes
or Private Exchange Notes.

          2.3  Transfer and Exchange.
               ---------------------

          (a)  Transfer and Exchange of Global Securities.
               ------------------------------------------

          (i)  The transfer and exchange of Global Securities or beneficial
     interests therein shall be effected through the Depositary, in accordance
     with this Indenture (including applicable restrictions on transfer set
     forth herein, if any) and the procedures of the Depositary therefor.  A
     transferor of a beneficial interest in a Global Security
<PAGE>

                                    App.-5

     shall deliver to the Registrar a written order given in accordance with the
     Depositary's procedures containing information regarding the participant
     account of the Depositary to be credited with a beneficial interest in the
     Global Security. The Registrar shall, in accordance with such instructions
     instruct the Depositary to credit to the account of the Person specified in
     such instructions a beneficial interest in the Global Security and to debit
     the account of the Person making the transfer the beneficial interest in
     the Global Security being transferred.

          (ii)  Notwithstanding any other provisions of this Appendix (other
     than the provisions set forth in Section 2.4 of this Appendix), a Global
     Security may not be transferred as a whole except by the Depositary to a
     nominee of the Depositary or by a nominee of the Depositary to the
     Depositary or another nominee of the Depositary or by the Depositary or any
     such nominee to a successor Depositary or a nominee of such successor
     Depositary.

          (iii) In the event that a Global Security is exchanged for
     Securities in definitive registered form pursuant to Section 2.4 of this
     Appendix or Section 2.09 of the Indenture, prior to the consummation of a
     Registered Exchange Offer or the effectiveness of a Shelf Registration
     Statement with respect to such Securities, such Securities may be exchanged
     only in accordance with such procedures as are substantially consistent
     with the provisions of this Section 2.3 (including the certification
     requirements set forth on the reverse of the Initial Notes intended to
     ensure that such transfers comply with Rule 144A or Regulation S, as the
     case may be) and such other procedures as may from time to time be adopted
     by the Company.

          (b)   Legend.
                ------

          (i)   Except as permitted by the following paragraphs (ii), (iii) and
     (iv), each Security certificate evidencing Initial Notes and Private
     Exchange Notes (and all Securities issued in exchange therefor or in
     substitution thereof, other than Exchange Notes) shall bear a legend in
     substantially the following form:

          "THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
          EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
          1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD,
          PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
<PAGE>

                                    App.-6

          SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER
          OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
          RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
          SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

          THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF APPLIED POWER INC.
          THAT (A) THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
          TRANSFERED ONLY (i) INSIDE THE UNITED STATES TO A PERSON WHOM THE
          SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
          DEFINED IN RULE 144A UNDER THE SECURITIES) IN A TRANSACTION MEETING
          THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE UNITED STATES IN A
          TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
          (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
          ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO
          AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH
          OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
          LAWS OF ANY STATE OF THE UNITED STATES; AND (B) THE HOLDER WILL, AND
          EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
          NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."

          (ii)  Upon any sale or transfer of a Transfer Restricted Security
     (including any Transfer Restricted Security represented by a Global
     Security) pursuant to Rule 144 under the Securities Act, the Registrar
     shall permit the Holder thereof to exchange such Transfer Restricted
     Security for a certificated Security that does not bear the legend set
     forth above and rescind any restriction on the transfer of such Transfer
     Restricted Security, if the Holder certifies in writing to the Registrar
     that its request for such exchange was made in reliance on Rule 144 (such
     certification to be in the form set forth on the reverse of the Security).

          (iii) After a transfer of any Initial Notes or Private Exchange
     Notes pursuant to, and during the period of the effectiveness of, a Shelf
     Registration Statement with respect to such Initial Notes or Private
     Exchange Notes, as the case may be, all requirements pertaining to legends
     on such Initial Notes or such Private Exchange Notes will cease to apply,
     but the requirements requiring such Initial Notes or such Private Exchange
     Notes issued to certain Holders be issued in global form will continue to
     ap-
<PAGE>

                                    App.-7

     ply, and Initial Notes or Private Exchange Notes in global form without
     legends will be available to the transferee of the Holder of such Initial
     Notes or Private Exchange Notes upon exchange of such transferring Holder's
     Initial Notes or Private Exchange Notes or directions to transfer such
     Holder's interest in the Global Security, as applicable.

          (iv)  Upon the consummation of a Registered Exchange Offer with
     respect to the Initial Notes pursuant to which Holders of such Initial
     Notes are offered Exchange Notes in exchange for their Initial Notes, all
     requirements pertaining to such Initial Notes that Initial Notes issued to
     certain Holders be issued in global form will continue to apply and Initial
     Notes in global form with the restricted securities legend set forth in
     Exhibit 1 hereto will be available to Holders of such Initial Notes that do
     ---------
     not exchange their Initial Notes, and Exchange Notes in global form without
     the restricted securities legend set forth in Exhibit 1 hereto will be
                                                   ---------
     available to Holders that exchange such Initial Notes in such Registered
     Exchange Offer.

          (v)   Upon the consummation of a Private Exchange with respect to the
     Initial Notes pursuant to which Holders of such Initial Notes are offered
     Private Exchange Notes in exchange for their Initial Notes, all
     requirements pertaining to such Initial Notes that Initial Notes issued to
     certain Holders be issued in global form will still apply, and Private
     Exchange Notes in global form with the restricted securities legend set
     forth in Exhibit 1 hereto will be available to Holders that exchange such
              ---------
     Initial Notes in such Private Exchange.

          (c)   Cancellation or Adjustment of Global Security.  At such time as
                ---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
certificated Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to the Depositary for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for certificated Securities, redeemed,
repurchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.
<PAGE>

                                    App.-8

          (d)   Obligations with Respect to Transfers and Exchanges of
                ------------------------------------------------------
Securities.
     -----

          (i)   To permit registrations of transfers and exchanges, the Company
     shall execute and the Trustee shall authenticate certificated Securities
     and Global Securities at the Registrar's or any co-registrar's request.

          (ii)  No service charge shall be made for any registration of
     transfer or exchange, but the Company may require payment of a sum
     sufficient to cover any transfer tax, assessments, or similar governmental
     charge payable in connection therewith (other than any such transfer taxes,
     assessments or similar governmental charge payable upon exchange or
     transfer pursuant to Sections 2.09, 3.06, 4.14, 4.15 and Section 9.05 of
     the Indenture).

          (iii) The Registrar or any co-registrar shall not be required to
     register the transfer of or exchange of (a) any certificated Security
     selected for redemption in whole or in part pursuant to Article III of the
     Indenture, except the unredeemed portion of any certificated Security being
     redeemed in part, or (b) any Security for a period beginning 15 days before
     the mailing of a notice of an offer to repurchase or redeem Securities or
     15 days before an Interest Payment Date.

          (iv)  Prior to the due presentation for registration of transfer of
     any Security, the Company, the Trustee, the Paying Agent, the Registrar or
     any co-registrar may deem and treat the person in whose name a Security is
     registered as the absolute owner of such Security for the purpose of
     receiving payment of principal of and interest on such Security and for all
     other purposes whatsoever, whether or not such Security is overdue, and
     none of the Company, the Trustee, the Paying Agent, the Registrar or any
     co-registrar shall be affected by notice to the contrary.

          (v)  All Securities issued upon any transfer or exchange pursuant to
     the terms of the Indenture shall evidence the same debt and shall be
     entitled to the same benefits under the Indenture as the Securities
     surrendered upon such transfer or exchange.
<PAGE>

                                    App.-9

          (e)  No Obligation of the Trustee.
               ----------------------------

          (i)  The Trustee shall have no responsibility or obligation to any
     beneficial owner of a Global Security, a member of, or a participant in the
     Depositary or other Person with respect to the accuracy of the records of
     the Depositary or its nominee or of any participant or member thereof, with
     respect to any ownership interest in the Securities or with respect to the
     delivery to any participant, member, beneficial owner or other Person
     (other than the Depositary) of any notice (including any notice of
     redemption) or the payment of any amount, under or with respect to such
     Securities. All notices and communications to be given to the Holders and
     all payments to be made to Holders under the Securities shall be given or
     made only to or upon the order of the registered Holders (which shall be
     the Depositary or its nominee in the case of a Global Security). The rights
     of beneficial owners in any Global Security shall be exercised only through
     the Depositary subject to the applicable rules and procedures of the
     Depositary. The Trustee may rely and shall be fully protected in relying
     upon information furnished by the Depositary with respect to its members,
     participants and any beneficial owners.

          (ii) The Trustee shall have no obligation or duty to monitor,
     determine or inquire as to compliance with any restrictions on transfer
     imposed under the Indenture or under applicable law with respect to any
     transfer of any interest in any Security (including any transfers between
     or among Depositary participants, members or beneficial owners in any
     Global Security) other than to require delivery of such certificates and
     other documentation or evidence as are expressly required by, and to do so
     if and when expressly required by, the terms of the Indenture and the
     Securities, and to examine the same to determine substantial compliance as
     to form with the express requirements hereof.

          2.4  Certificated Securities.
               -----------------------

          (a)  A Global Security deposited with the Depositary or with the
Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depositary noti-
<PAGE>

                                    App.-10

fies the Company that it is unwilling or unable to continue as Depositary for
such Global Security or if at any time such Depositary ceases to be a "clearing
agency" registered under the Exchange Act and a successor depositary is not
appointed by the Company within 90 days of such notice, (ii) the Company, in its
sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of certificated Securities under the Indenture or (iii) if there shall
have occurred and be continuing an Event of Default with respect to the
Securities.

          (b)  Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Trustee, to be so transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon such transfer of
each portion of such Global Security, an equal aggregate principal amount of
certificated Securities of authorized denominations. Any portion of a Global
Security transferred pursuant to this Section shall be executed, authenticated
and delivered only in denominations of $1,000 and any integral multiple thereof
and registered in such names as the Depositary shall direct. Any certificated
Initial Note delivered in exchange for an interest in the Global Security shall,
except as otherwise provided by Section 2.3(b), bear the restricted securities
legend set forth in Exhibit 1 hereto.
                    ---------

          (c)  Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under the
Indenture or the Securities.

          (d)  In the event of the occurrence of any of the events specified in
Section 2.4(a) above, the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
<PAGE>

                                                                       EXHIBIT 1
                                                                       ---------
                                                       TO RULE 144A/REGULATION S
                                                       -------------------------
                                                                        APPENDIX
                                                                        --------

                          [Global Securities Legend]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN,

          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                        [Restricted Securities Legend]

          THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

          THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
THIS NOTE MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i) INSIDE
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (iii) PURSUANT TO AN
<PAGE>

                                      -2-

EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH (iv) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE.
<PAGE>

                                      -3-

                     [TO BE ATTACHED TO GLOBAL SECURITIES]

             SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

          The following increases or decreases in this Global Security have been
made:

<TABLE>
<CAPTION>
                                                                                   Principal
                      Signature of         Amount of           Amount of           Amount of
                       authorized         Decrease in         Increase in         this Global
                        officer            Principal           Principal            Security
                     of Trustee or         Amount of           Amount of           following
     Date of           Securities         this Global         this Global        such decrease
    Exchange           Custodian            Security            Security          or increase
 --------------    ----------------    ---------------    -----------------   -----------------
 <S>               <C>                 <C>                <C>                 <C>
</TABLE>
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                            [FORM OF INITIAL NOTE]

                                                           CUSIP No.:

                              APPLIED POWER INC.

                13% SERIES A SENIOR SUBORDINATED NOTE DUE 2009

No.                                              $

          APPLIED POWER INC., a Wisconsin corporation (the "Company", which term
                                                            -------
includes any successor entity), for value received, promises to pay to
__________ or registered assigns, the principal sum of ________________, on May
1, 2009.

          Interest Payment Dates:  May 1 and November 1

          Record Dates:  April 15 and October 15

          Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.

                                      A-1
<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.

                              APPLIED POWER INC.

                              By: _______________________________
                                  Name:
                                  Title:

                              By: _______________________________
                                  Name:
                                  Title:

Dated:  [                 ], [     ]

                         Certificate of Authentication
                         -----------------------------

          This is one of the 13% Series A Senior Subordinated Notes due 2009
referred to in the within-mentioned Indenture.

                              BANK ONE TRUST COMPANY, N.A.
                                as Trustee

Dated:  [         ], [     ]  By: _______________________________
                                  Authorized Signatory

                                      A-2
<PAGE>

                             (REVERSE OF SECURITY)

                13% SERIES A SENIOR SUBORDINATED NOTE DUE 2009

          1.   Interest. APPLIED POWER INC., a Wisconsin corporation (the
               --------
"Company"), promises to pay interest on the principal amount of this Note at the
 -------
rate per annum shown above; provided, however, that if a Registration Default
(as defined in the Registration Rights Agreement) occurs, additional interest
will accrue on this Note at a rate of 0.50% per annum for the first 90-day
period immediately following the occurrence of such Registration Default
regardless of the number of such Registration Defaults (such rate increasing by
an additional 0.50% per annum with respect to each subsequent 90-day period) up
to a maximum additional interest rate of 2.0% per annum, from and including the
date on which any such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured, calculated on the
principal amount of this Note as of the date on which such interest is payable.
Such interest is payable in addition to any other interest payable from time to
time with respect to this Note. The Trustee will not be deemed to have notice of
a Registration Default until it shall have received actual notice of such
Registration Default. Interest on the Notes will accrue from the most recent
date on which interest has been paid or, if no interest has been paid, from
August 1, 2000. The Company will pay interest semi-annually in arrears on each
Interest Payment Date, commencing November 1, 2000. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.

          The Company shall pay interest on overdue principal at the rate borne
by the Notes plus 1% per annum and on overdue installments of interest (without
regard to any applicable grace periods) at such higher rate to the extent
lawful.

          2.   Method of Payment. The Company shall pay interest on the Notes
               -----------------
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
                                                 -----------------
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may

                                      A-3
<PAGE>

deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.

          3.   Paying Agent and Registrar. Initially, Bank One Trust Company,
               --------------------------
N.A. (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders.

          4.   Indenture and Guarantees. The Company issued the Notes under an
               ------------------------
Indenture, dated as of August 1, 2000 (the "Indenture"), among the Company, the
                                            ---------
Subsidiary Guarantors and the Trustee. This Note is one of a duly authorized
issue of Initial Notes of the Company designated as its 13% Series A Senior
Subordinated Notes due 2009. The Initial Notes and any Private Exchange Notes
and Exchange Notes issued pursuant to the Indenture are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
      ---
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and the TIA for a statement of them. The
Notes are general unsecured obligations of the Company. To the extent of any
conflict between the terms of the Notes and the Indenture, the applicable terms
of the Indenture shall govern. The Notes are entitled to the benefits of the
Guarantees by the Subsidiary Guarantors made for the benefit of the Holders.
Reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and obligations thereunder of the Trustee,
the Holders and the Subsidiary Guarantors.

          5.   Redemption.
               ----------

          (a)  Optional Redemption.  Except as set forth below, the Notes will
               -------------------
not be redeemable at the option of the Company prior to May 1, 2007.  On and
after May 1, 2007, the Notes will be redeemable, at the Company's option, in
whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's
registered address, at the following redemption prices (expressed in percentages
of principal amount), plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on May 1 of the years set forth below:

                                      A-4
<PAGE>

                                                     Redemption
     Period                                             Price
     ------                                          ----------

     2007........................................     102.170%
     2008 and thereafter.........................     100.000%

          (b)  Optional Redemption Upon Public Equity Offerings.  In addition,
               ------------------------------------------------
at any time and from time to time prior to May 1, 2003, the Company may redeem
in the aggregate up to 35% of the original principal amount of the Notes with
the net cash proceeds from one or more Public Equity Offerings, at a redemption
price (expressed as a percentage of principal amount) of 113% plus accrued and
unpaid interest to the redemption date (subject to the right of Holders of
record of the relevant record date to receive interest due on the relevant
interest payment date); provided, that (1) at least 65% of the aggregate
principal amount of the Notes originally outstanding must remain outstanding
after the occurrence of each such redemption and (2) each such redemption must
occur within 75 days after the consummation of the related Public Equity
Offering.

          6.   Notice of Redemption.  Notice of redemption will be mailed at
               --------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address.  Notes in
denominations of $1,000 may be redeemed only in whole.  Notes in denominations
larger than $1,000 may be redeemed in part but only in multiples of $1,000.

          Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest, if
any.

          7.   Offers to Purchase.  Sections 4.14, 4.15 and 4.23 of the
               ------------------
Indenture provide that, in the event of certain Asset Dispositions, upon the
occurrence of a Change of Control and in the event the Company has Excess Cash
Flow for any fiscal year commencing with fiscal 2001, and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.

                                      A-5
<PAGE>

          8.   Registration Rights.  Pursuant to the terms, and subject to the
               -------------------
provisions of the Registration Rights Agreement, the Company will be obligated
to consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's 13% Series B Senior
Subordinated Notes due 2009 in the form of Exchange Notes, which shall have been
registered under the Securities Act, or the Company's 13% Senior Subordinated
Private Exchange Notes due 2009 (the "Private Exchange Notes"), in each case in
                                      ----------------------
like principal amount and having terms identical in all material respects to the
Initial Notes.  The Holders of the Initial Notes shall be entitled to receive
certain additional interest payments if such exchange offer is not consummated
and upon certain other conditions, all pursuant to and in accordance with the
terms of the Registration Rights Agreement.  The Company shall notify the
Trustee of the amount of any such payments.

          9.   Subordination.
               -------------

          The Notes are subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full in cash of
all Senior Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed.  Each Holder
by his acceptance hereof agrees to be bound by such provisions and authorizes
and expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.

          10.  Denominations; Transfer; Exchange.  The Notes are in registered
               ---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000.  A Holder shall register the transfer of or exchange of Notes in
accordance with the terms, and subject to the provisions of the Indenture.  The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture.  The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption (except, in the case of Notes
to be redeemed in part, the portion of such Notes not to be redeemed) or any
Note for a period beginning 15 days before the mailing of a notice of an offer
to repurchase or a notice of redemption or 15 days before any Interest Payment
Date.

          11.  Persons Deemed Owners.  The registered Holder of a Note shall be
               ---------------------
treated as the owner of it for all purposes.

                                      A-6
<PAGE>

          12.  Unclaimed Money.  If money for the payment of principal or
               ---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company (subject to any applicable abandoned property
law).  After that, all liability of the Trustee and such Paying Agent with
respect to such money shall cease.

          13.  Discharge Prior to Redemption or Maturity.  If the Company at any
               -----------------------------------------
time deposit with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company and the Subsidiary Guarantors will be discharged from
certain provisions of the Indenture and the Notes and the Guarantees (including
certain covenants, but excluding the Company's obligation to pay the principal
of and interest on the Notes).

          14.  Amendment; Supplement; Waiver.  Subject to certain exceptions,
               -----------------------------
the Indenture or the Notes or the Guarantees may be amended or supplemented with
the written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding.  Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, omission, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.

          15.  Restrictive Covenants.  The Indenture imposes certain limitations
               ---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, enter into transactions with Affiliates, create
dividend or other payment restrictions affecting Restricted Subsidiaries, merge
or consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation.  Such limitations are subject to a number of important
qualifications and exceptions.  The Company must annually report to the Trustee
on compliance with such limitations.

          16.  Successors.  When a successor assumes, in accordance with the
               ----------
Indenture, all the obligations of its predeces-

                                      A-7
<PAGE>

sor under the Notes and the Indenture, the predecessor will be released from
those obligations.

          17.  Defaults and Remedies.  If an Event of Default occurs and is
               ---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Certain events of bankruptcy and insolvency are Events of Default which will
result in the Notes being due and payable immediately upon the occurrence of
such Events of Default.  Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture.  The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it.  The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interest.

          18.  Trustee Dealings with Company.  The Trustee under the Indenture,
               -----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, the Subsidiary Guarantors or
their respective Affiliates as if it were not the Trustee.

          19.  No Recourse Against Others.  No past, present or future
               --------------------------
equityholder, member of the Board of Directors, officer, employee or
incorporator, as such, of the Company or the Subsidiary Guarantors shall have
any liability for any obligation of the Company or the Subsidiary Guarantors
under the Notes or the Indenture or the Guarantees or for any claim based on, in
respect of or by reason of, such obligations or their creation.  Each Holder of
a Note by accepting a Note waives and releases all such liability.  The waiver
and release are part of the consideration for the issuance of the Notes.

          20.  Authentication.  This Note shall not be valid until the Trustee
               --------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.

          21.  Governing Law.  The Laws of the State of New York shall govern
               -------------
this Note and the Indenture (and the Guarantees relating thereto).

          22.  Abbreviations and Defined Terms.  Customary abbreviations may be
               -------------------------------
used in the name of a Holder of a Note or an

                                      A-8
<PAGE>

assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
          23.  CUSIP Numbers.  Pursuant to a recommendation promulgated by the
               -------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes.  No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.

          24.  Indenture.  Each Holder, by accepting a Note, agrees to be bound
               ---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.

          25.  Holders' Compliance with Registration Rights Agreement.  Each
               ------------------------------------------------------
Holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including, without limitation,
the obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.

          The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture.  Requests may be made to:  Applied
Power Inc., 6100 North Baker Road, Glendale, Wisconsin 53209, Attention: Chief
Financial Officer.

                                      A-9
<PAGE>

                                ASSIGNMENT FORM

          If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
                   (Print or type name, address and zip code
               and social security or tax ID number of assignee)

and irrevocably appoint _______________________________, agent to transfer this
Note on the books of the Company.  The agent may substitute another to act for
him.

Date:_______________ Signed:___________________________________
                            (Sign exactly as your name appears
                            on the other side of this Note)

Signature Guarantee:_______________________

          (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended).

          In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
              --------------
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) two years from date of original issuance, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer and that this Note is being
transferred:

                                     A-10
<PAGE>

                                  [Check One]

(1)__  to the Company or a subsidiary thereof; or

(2)__  pursuant to and in compliance with Rule 144A under the Securities Act; or

(3)__  outside the United States to a "foreign person" in compliance with Rule
       904 of Regulation S under the Securities Act; or

(4)__  pursuant to the exemption from registration provided by Rule 144 under
       the Securities Act; or

(5)__  pursuant to an effective registration statement under the Securities Act;
       or

(6)__  pursuant to another available exemption from the registration
       requirements of the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (6) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.

If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in the Appendix to the Indenture shall have been satisfied.

Date:_______________ Signed:___________________________________
                            (Sign exactly as your name appears
                            on the other side of this Security)

Signature Guarantee:____________________________________________________________

                                     A-11
<PAGE>

             TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

          The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

Date:_______________ Signed:___________________________________
                            NOTICE:  To be executed by
                                     an executive officer

                                     A-12
<PAGE>

                     [OPTION OF HOLDER TO ELECT PURCHASE]

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14, Section 4.15 or Section 4.23 of the Indenture, check
the appropriate box:

                                Section 4.14 [_]
                                Section 4.15 [_]
                                Section 4.23 [_]

          If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14, Section 4.15 or Section 4.23 of the Indenture,
state the amount you elect to have purchased:

$________________________

Dated:  _________________     __________________________________________________
                              NOTICE: The signature on this assignment must
                              correspond with the name as it appears upon the
                              face of the within Note in every particular
                              without alteration or enlargement or any change
                              whatsoever and be guaranteed by the endorser's
                              bank or broker.

Signature Guarantee:__________________________

          (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended).

                                     A-13
<PAGE>

                                                                       EXHIBIT B
                                                                       ---------

               [FORM OF EXCHANGE NOTE AND PRIVATE EXCHANGE NOTE]

                                                       CUSIP No.:

                              APPLIED POWER INC.

                13% SERIES B SENIOR SUBORDINATED NOTE DUE 2009

No.                                                              $

          APPLIED POWER INC., a Wisconsin corporation (the "Company", which term
                                                            -------
includes any successor entity), for value received, promises to pay to
_________. or registered assigns, the principal sum of ________________, on May
1, 2009.

          Interest Payment Dates:  May 1 and November 1

          Record Dates:  April 15 and October 15

          Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.

                                      B-1
<PAGE>

          IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.

                                        APPLIED POWER INC.

                                        By: ____________________________________
                                            Name:
                                            Title:

                                        By: ____________________________________
                                            Name:
                                            Title:

Dated:  [                 ], [     ]

                         Certificate of Authentication
                         -----------------------------

          This is one of the 13% Series B Senior Subordinated Notes due 2009
referred to in the within-mentioned Indenture.

                                        BANK ONE TRUST COMPANY, N.A.,
                                          as Trustee

Dated:  [         ], [     ]            By: ____________________________________
                                            Authorized Signatory

                                      B-2
<PAGE>

                             (REVERSE OF SECURITY)

                13% SERIES B SENIOR SUBORDINATED NOTE DUE 2009

     1.   Interest. APPLIED POWER INC., a Wisconsin corporation (the "Company"),
          --------                                                    -------
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. Interest on the Notes will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from August 1,
2000. The Company will pay interest semi-annually in arrears on each Interest
Payment Date, commencing November 1, 2000. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.

          The Company shall pay interest on overdue principal at the rate borne
by the Notes plus 1% per annum and on overdue installments of interest (without
regard to any applicable grace periods) at such higher rate to the extent
lawful.

     2.   Method of Payment. The Company shall pay interest on the Notes (except
          -----------------
defaulted interest) to the Persons who are the registered Holders at the close
of business on the Record Date immediately preceding the Interest Payment Date
even if the Notes are cancelled on registration of transfer or registration of
exchange after such Record Date. Holders must surrender Notes to a Paying Agent
to collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts ("U.S. Legal Tender"). However, the Company
                                      -----------------
may pay principal and interest by its check payable in such U.S. Legal Tender.
The Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.

     3.   Paying Agent and Registrar. Initially, Bank One Trust Company, N.A.
          --------------------------
(the "Trustee") will act as Paying Agent. The Company may change any Paying
      -------
Agent, Registrar or co-Registrar without notice to the Holders.

     4.   Indenture and Guarantees. The Company issued the Notes under an
          ------------------------
Indenture, dated as of August 1, 2000 (the "Indenture"), among the Company, the
                                            ---------
Subsidiary Guarantors and the Trustee. This Note is one of a duly authorized
issue of Initial Notes of the Company designated as its 13% Series B Senior
Subordinated Notes due 2009. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to

                                      B-3
<PAGE>

the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb) (the "TIA"),
                                                                         ---
as in effect on the date of the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of them. The Notes are
general unsecured obligations of the Company. To the extent of any conflict
between the terms of the Notes and the Indenture, the applicable terms of the
Indenture shall govern. The Notes are entitled to the benefits of the Guarantees
by the Subsidiary Guarantors made for the benefit of the Holders. Reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and obligations thereunder of the Trustees, the
Holders and any Subsidiary Guarantors.

          5.   Redemption.
               ----------

          (a)  Optional Redemption.  Except as set forth below, the Notes will
               -------------------
not be redeemable at the option of the Company prior to May 1, 2007.  On and
after May 1, 2007, the Notes will be redeemable, at the Company's option, in
whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's
registered address, at the following redemption prices (expressed in percentages
of principal amount), plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on May 1 of the years set forth below:

                                                     Redemption
     Period                                             Price
     ------                                          ----------

     2007........................................     102.170%
     2008 and thereafter.........................     100.000%

          (b)  Optional Redemption Upon Public Equity Offerings.  In addition,
               ------------------------------------------------
at any time and from time to time prior to May 1, 2003, the Company may redeem
in the aggregate up to 35% of the original principal amount of the Notes with
the net cash proceeds from one or more Public Equity Offerings, at a redemption
price (expressed as a percentage of principal amount) of 113% plus accrued and
unpaid interest to the redemption date (subject to the right of Holders of
record in the relevant record date to receive interest due on the relevant
interest payment date); provided, that (1) at least 65% of the aggregate
principal amount of the Notes originally outstanding (including the original
principal amount of any Additional Notes) must re-

                                      B-4
<PAGE>

main outstanding after the occurrence of each such redemption and (2) each such
redemption must occur within 75 days after the consummation of the related
Public Equity Offering.

          6.  Notice of Redemption.  Notice of redemption will be mailed at
              --------------------
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address.  Notes in
denominations of $1,000 may be redeemed only in whole.  Notes in denominations
larger than $1,000 may be redeemed in part but only in multiples of $1,000.

          Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued and unpaid interest, if any, the
Notes called for redemption will cease to bear interest from and after such
Redemption Date and the only right of the Holders of such Notes will be to
receive payment of the Redemption Price plus accrued and unpaid interest, if
any.

          7.  Offers to Purchase.  Sections 4.14, 4.15 and 4.23 of the Indenture
              ------------------
provide that, in the event of certain Asset Dispositions, upon the occurrence of
a Change of Control and in the event the Company has Excess Cash Flow for any
fiscal year commencing with fiscal 2001, and subject to further limitations
contained therein, the Company will make an offer to purchase certain amounts of
the Notes in accordance with the procedures set forth in the Indenture.

          8.  Subordination.
              -------------

          The Notes are subordinated in right of payment, in the manner and to
the extent set forth in the Indenture, to the prior payment in full in cash of
all Senior Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed.  Each Holder
by his acceptance hereof agrees to be bound by such provisions and authorizes
and expressly directs the Trustee, on his behalf, to take such action as may be
necessary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.

          9.  Denominations; Transfer; Exchange.  The Notes are in registered
              ---------------------------------
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000.  A Holder shall register the transfer of or exchange of Notes in
accordance with the terms, and subject to the provisions of the Indenture.  The

                                      B-5
<PAGE>

Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture.  The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption (except, in the case of Notes
to be redeemed in part, the portion of such Notes not to be redeemed) or any
Note for a period beginning 15 days before the mailing of a notice of an offer
to repurchase or a notice of redemption or 15 days before any Interest Payment
Date.

          10.  Persons Deemed Owners.  The registered Holder of a Note shall be
               ---------------------
treated as the owner of it for all purposes.

          11.  Unclaimed Money.  If money for the payment of principal or
               ---------------
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company (subject to any applicable abandoned property
law).  After that, all liability of the Trustee and such Paying Agent with
respect to such money shall cease.

          12.  Discharge Prior to Redemption or Maturity.  If the Company at any
               -----------------------------------------
time deposit with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company and the Subsidiary Guarantors will be discharged from
certain provisions of the Indenture, the Notes and the Guarantees (including
certain covenants, but excluding the Company's obligation to pay the principal
of and interest on the Notes).

          13.  Amendment; Supplement; Waiver.  Subject to certain exceptions,
               -----------------------------
the Indenture, the Notes or the Guarantees may be amended or supplemented with
the written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding.  Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, omission, defect or inconsistency, provide for
uncertificated Notes in addition to or in place of certificated Notes, or comply
with Article Five of the Indenture or make any other change that does not
adversely affect in any material respect the rights of any Holder of a Note.

                                      B-6
<PAGE>

          14.  Restrictive Covenants.  The Indenture imposes certain limitations
               ---------------------
on the ability of the Company and its Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock or certain Indebtedness, enter into transactions with Affiliates, create
dividend or other payment restrictions affecting Restricted Subsidiaries, merge
or consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation.  Such limitations are subject to a number of important
qualifications and exceptions.  The Company must annually report to the Trustee
on compliance with such limitations.

          15.  Successors.  When a successor assumes, in accordance with the
               ----------
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.

          16.  Defaults and Remedies.  If an Event of Default occurs and is
               ---------------------
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of Notes then outstanding may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Certain events of bankruptcy and insolvency are Events of Default which will
result in the Notes being due and payable immediately upon the occurrence of
such Events of Default.  Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture.  The Trustee is not obligated to
enforce the Indenture or the Notes unless it has received indemnity reasonably
satisfactory to it.  The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Notes then outstanding to direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interest.

          17.  Trustee Dealings with Company.  The Trustee under the Indenture,
               -----------------------------
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Company, the Subsidiary Guarantors or
their respective Affiliates as if it were not the Trustee.

          18.  No Recourse Against Others.  No past, present or future
               --------------------------
equityholder, member of the Board of Directors, officer, employee or
incorporator, as such, of the Company or the Subsidiary Guarantors shall have
any liability for any obligation of the Company or the Subsidiary Guarantors
under the Notes or the Indenture or the Guarantees or for any claim based on, in

                                      B-7
<PAGE>

respect of or by reason of, such obligations or their creation.  Each Holder of
a Note by accepting a Note waives and releases all such liability.  The waiver
and release are part of the consideration for the issuance of the Notes.

          19.  Authentication.  This Note shall not be valid until the Trustee
               --------------
or Authenticating Agent manually signs the certificate of authentication on this
Note.

          20.  Governing Law.  The Laws of the State of New York shall govern
               -------------
this Note and the Indenture (and the Guarantees relating thereto).

          21.  Abbreviations and Defined Terms.  Customary abbreviations may be
               -------------------------------
used in the name of a Holder of a Note or an assignee, such as:  TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

          22.  CUSIP Numbers.  Pursuant to a recommendation promulgated by the
               -------------
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes.  No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification numbers
printed hereon.

          23.  Indenture.  Each Holder, by accepting a Note, agrees to be bound
               ---------
by all of the terms and provisions of the Indenture, as the same may be amended
from time to time.

          The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture.  Requests may be made to:  Applied
Power Inc., 6100 North Baker Road, Glendale, Wisconsin 53209, Attention: Chief
Financial Officer.

                                      B-8
<PAGE>

                                ASSIGNMENT FORM

          If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
                   (Print or type name, address and zip code
               and social security or tax ID number of assignee)

and irrevocably appoint _______________________________, agent to transfer this
Note on the books of the Company.  The agent may substitute another to act for
him.

Date:_______________ Signed:____________________________________________________
                             (Sign exactly as your name appears
                             on the other side of this Note)

Signature Guarantee:_______________________

          (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended).

          [In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Note (which
              --------------
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) two years from date of original issuance, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer and that this Note is being
transferred:

                                      B-9
<PAGE>

                                  [Check One]

(1)__  to the Company or a subsidiary thereof; or

(2)__  pursuant to and in compliance with Rule 144A under the Securities Act; or

(3)__  outside the United States to a "foreign person" in compliance with Rule
       904 of Regulation S under the Securities Act; or

(4)__  pursuant to the exemption from registration provided by Rule 144 under
       the Securities Act; or

(5)__  pursuant to an effective registration statement under the Securities Act;
       or

(6)__  pursuant to another available exemption from the registration
       requirements of the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (6) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.

If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in the Appendix to the Indenture shall have been satisfied.

Date:_______________ Signed:___________________________________________
                            (Sign exactly as your name appears on
                            the other side of this Security)

Signature Guarantee:____________________________________________________________

                                      B-10
<PAGE>

             TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

          The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.

Date:_______________ Signed:___________________________________
                              NOTICE:  To be executed by
                                       an executive officer]/a/

__________________
/a/  To be included in Private Exchange Notes only.

                                      B-11
<PAGE>

                     [OPTION OF HOLDER TO ELECT PURCHASE]

          If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14, Section 4.15 or Section 4.23 of the Indenture, check
the appropriate box:

                                Section 4.14 [ ]
                                Section 4.15 [ ]
                                Section 4.23 [ ]

          If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14, Section 4.15 or Section 4.23 of the Indenture,
state the amount you elect to have purchased:

$________________________

Dated:  _________________      _________________________________________________
                               NOTICE: The signature on this assignment must
                               correspond with the name as it appears upon the
                               face of the within Note in every particular
                               without alteration or enlargement or any change
                               whatsoever and be guaranteed by the endorser's
                               bank or broker.

Signature Guarantee:__________________________

          (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended).

                                      B-12
<PAGE>

                                                                       EXHIBIT C
                                                                       ---------

                              [FORM OF GUARANTEE]

                                   GUARANTEE

          Each of the undersigned (the "Subsidiary Guarantors"), jointly and
                                        ---------------------
severally unconditionally guarantee on a senior subordinated basis (such
guarantee by each Subsidiary Guarantor being referred to herein as the
"Guarantee") (i) the due and punctual payment of the principal of and interest
 ---------
on the Notes, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Notes, to the extent lawful, and
the due and punctual performance of all other obligations of the Company to the
Holders or the Trustee all in accordance with the terms set forth in Article Ten
of the Indenture and (ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, subject to any applicable grace period,
by acceleration or otherwise.

          The obligations of each Subsidiary Guarantor to the Holders of Notes
and to the Trustee pursuant to the Guarantee and the Indenture are expressly set
forth in Article Ten of the Indenture, and reference is hereby made to such
Indenture for the precise terms of the Guarantee therein made.

          No stockholder, officer, director, employee or incorporator, as such,
past, present or future, of each Subsidiary Guarantor shall have any liability
under the Guarantee by reason of his or its status as such stockholder, officer,
director, employee or incorporator.

                                      C-1
<PAGE>

          The Guarantee shall not be valid or obligatory for any purpose until
this certificate of authentication on the Notes upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.

                               [GUARANTORS]

                               By:_____________________________
                                  Name:
                                  Title:

                                      C-2<PAGE>

                                 $200,000,000

                              APPLIED POWER INC.

                    13% Senior Subordinated Notes Due 2009

                              PURCHASE AGREEMENT
                              ------------------

                                                                   July 21, 2000

Credit Suisse First Boston Corporation
Goldman, Sachs & Co.
As Representatives of the Several Purchasers,
c/o Credit Suisse First Boston Corporation,
  Eleven Madison Avenue,
  New York, N.Y. 10010-3629

Dear Sirs:

     1.  Introductory.  Applied Power Inc. which intends to change its name to
Actuant Corporation (the "Company") proposes, subject to the terms and
conditions stated herein, to issue and sell to the several initial purchasers
named in Schedule A hereto (the "Purchasers") U.S.$200,000,000 principal amount
of its 13% Senior Subordinated Notes Due 2009 ("Notes") to be issued under an
indenture, dated as of August 1, 2000 (the "Indenture"), between the Company and
Bank One Trust Company, N.A., as Trustee.  The Notes will be guaranteed (the
"Guarantees") on a senior subordinated, unsecured basis by each of the Company's
wholly owned domestic subsidiaries listed on the signature pages hereof
(collectively, the "Guarantors").  The Company and the Guarantors are
collectively referred to herein as the "Issuers."  The Notes and the Guarantees
are collectively referred to herein as the "Offered Securities."  The United
States Securities Act of 1933, as amended, is herein referred to as the
"Securities Act."

     The Offered Securities are being sold in connection with (i) the spin-off
(the "Spin-off") of Applied Power Inc.'s integrated electronics enclosures
business from its tools and supplies and engineered solutions businesses and
(ii) the Company's tender offer for, and consent solicitation with respect to,
up to $200,000,000 aggregate principal amount of its outstanding 8.75% Senior
Subordinated Notes due 2009 (the "Tender Offer"), pursuant to the Company's
offer to purchase dated June 30, 2000, as amended or supplemented.  The
Purchasers and direct and indirect transferees of the Offered Securities will be
entitled to the benefits of a Registration Rights Agreement to be dated as of
August 1, 2000 among the parties hereto (the "Registration Rights Agreement"),
pursuant to which the Company has agreed, among other things, to file (a) a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Securities Act
or (b) a shelf registration statement pursuant to Rule 415 under the Securities
Act relating to the resale of the Notes by holders thereof or, if applicable,
relating to the resale of Private Exchange Notes (as defined in the Registration
Rights Agreement) by the Purchasers.

     The Notes, the Exchange Notes, the Guarantees, the Indenture, the
Registration Rights Agreement and this Agreement are herein collectively
referred to as the "Basic Documents."

     The Issuers hereby agree with the several Purchasers as follows:
<PAGE>

     2.   Representations and Warranties of the Company.  The Company represents
and warrants to, and agrees with, the several Purchasers that:

               (a)  A preliminary offering circular and an offering circular
     relating to the Offered Securities to be offered by the Purchasers have
     been prepared by the Company. Such preliminary offering circular (the
     "Preliminary Offering Circular") and offering circular (the "Offering
     Circular"), as supplemented as of the date of this Agreement are
     hereinafter collectively referred to as the "Offering Document." On the
     date of this Agreement, the Offering Document does not include any untrue
     statement of a material fact or omit to state any material fact required to
     be stated therein or necessary in order to make the statements therein, in
     the light of the circumstances under which they were made, not misleading.
     The preceding sentence does not apply to statements in or omissions from
     the Offering Document based upon written information furnished to the
     Company by any Purchaser through Credit Suisse First Boston Corporation
     ("CSFBC") specifically for use therein, it being understood and agreed that
     the only such information is that described as such in Section 7(b) hereof.

               (b)  The Company has been duly organized and is validly existing
     as a corporation in active status under the laws of the State of Wisconsin
     and has corporate power and authority to own, lease and operate its
     properties and to conduct its business as described in the Offering
     Document and to enter into and perform its obligations under this
     Agreement; and the Company is duly qualified as a foreign corporation to
     transact business and is in good standing (or equivalent status) in each
     other jurisdiction in which such qualification is required, whether by
     reason of the ownership or leasing of property or the conduct of business,
     except where the failure so to qualify or to be in good standing (or
     equivalent status) would not result in a Material Adverse Effect.

               (c)  Each significant subsidiary of the Company listed on
     Schedule B hereto (each a "Subsidiary" and, collectively, the
     ----------
     "Subsidiaries") has been duly organized and is validly existing as a
     corporation in good standing (or equivalent status) under the laws of the
     jurisdiction of its incorporation, has corporate power and authority to
     own, lease and operate its properties and to conduct its business as
     described in the Offering Document and is duly qualified as a foreign
     corporation to transact business and is in good standing (or equivalent
     status) in each jurisdiction in which such qualification is required,
     whether by reason of the ownership or leasing of property or the conduct of
     business, except where the failure so to qualify or to be in good standing
     (or equivalent status) would not result in a Material Adverse Effect;
     except as otherwise disclosed in the Offering Document, all of the issued
     and outstanding capital stock of each such Subsidiary has been duly
     authorized and validly issued, is fully paid and non-assessable (except as
     otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business
     Corporation Law, as judicially interpreted) and is owned by the Company,
     directly or through Subsidiaries, free and clear of any security interest,
     mortgage, pledge, lien, encumbrance, claim or equity; none of the
     outstanding shares of capital stock of any Subsidiary was issued in
     violation of the preemptive or similar rights of any securityholder of such
     Subsidiary.

               (d)  Each Guarantor has been duly organized and is validly
     existing as a corporation in good standing (or equivalent status) under the
     laws of the jurisdiction of its incorporation, has corporate power and
     authority to own, lease and operate its properties and to conduct its
     business as described in the Offering Document and is duly qualified as a
     foreign corporation to transact business and is in good standing (or
     equivalent status) in each jurisdiction in which such qualification is
     required, whether by reason of the ownership or leasing of property or the
     conduct of business, except where the failure so to qualify or to be in
     good standing (or equivalent status) would not result in a Material Adverse
     Effect; except as otherwise disclosed in the Offering Document, all of the
     issued and outstanding capital stock of each Guarantor has been duly
     authorized and validly issued, is fully paid and non-assessable (except as
     otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business
     Corporation Law, as judicially interpreted) and is owned by the Company,
     directly or through Subsidiaries, free and clear of any

                                      -2-
<PAGE>

     security interest, mortgage, pledge, lien, encumbrance, claim or equity;
     none of the outstanding shares of capital stock of any Guarantor was issued
     in violation of the preemptive or similar rights of any securityholder of
     such Guarantor.

               (e)  The authorized, issued and outstanding capital stock of the
     Company is as set forth in the Offering Document in the Company's
     consolidated financial statements (except for subsequent issuances, if any,
     pursuant to reservations, agreements or employee benefit plans referred to
     in the Offering Document or pursuant to the exercise of convertible
     securities or options referred to in the Offering Document). The shares of
     issued and outstanding capital stock have been duly authorized and validly
     issued and are fully paid and non-assessable (except as otherwise provided
     in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law, as
     judicially interpreted); none of the outstanding shares of capital stock
     was issued in violation of the preemptive or other similar rights of any
     securityholder of the Company.

               (f)  Each of the Issuers has the requisite corporate power and
     authority to execute, deliver and perform its obligations under the
     Indenture. The Indenture has been duly and validly authorized by the
     Issuers and meets the requirements for qualification under the Trust
     Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes
     have been duly and validly authorized by the Company. When the Notes are
     delivered and paid for pursuant to this Agreement on the Closing Date (as
     defined below), the Indenture will have been duly executed and delivered by
     the Company and, assuming the due authorization, execution and delivery of
     the Indenture by the Trustee, such Notes will have been duly executed,
     authenticated, issued and delivered by the Company and will conform to the
     description thereof contained in the Offering Document and the Indenture
     and such Notes will constitute valid and legally binding obligations of the
     Company enforceable in accordance with their terms, subject to bankruptcy,
     insolvency, fraudulent transfer, reorganization, moratorium and similar
     laws of general applicability relating to or affecting creditors' rights
     and to general equity principles (the "Enforceability Exceptions").

               (g)  No consent, approval, authorization or order of, or filing
     with, any governmental agency or body or any court is required for the
     consummation of the transactions contemplated by this Agreement and the
     Registration Rights Agreement in connection with the issuance and sale of
     the Offered Securities by the Issuers except for filing with the Commission
     and for the order of the Commission declaring the Exchange Offer
     Registration Statement or the Shelf Registration Statement (each as defined
     in the Registration Rights Agreement) effective.

               (h)  The Company has all requisite corporate power and authority
     to execute, deliver and perform its obligations under this Agreement and to
     consummate the transactions contemplated hereby. This Agreement and the
     transactions contemplated hereby have been duly and validly authorized by
     the Company. This Agreement has been duly and validly executed and
     delivered by the Company and constitutes a valid and legally binding
     agreement of the Company, enforceable against the Company in accordance
     with its terms except that the enforcement thereof may be limited by the
     Enforceability Exceptions and except as any rights to indemnity or
     contribution hereunder may be limited by federal and state securities laws
     and public policy considerations.

               (i)  Each of the Issuers has the requisite corporate power and
     authority to execute, deliver and perform its obligations under the
     Registration Rights Agreement. The Registration Rights Agreement has been
     duly and validly authorized by each of the Issuers (assuming the due
     authorization, execution and delivery thereof by the Purchasers), and when
     executed and delivered by each of the Issuers, will constitute a valid and
     legally binding agreement of each of the Issuers, enforceable against each
     of the Issuers in accordance with its terms except that the enforcement
     thereof may be limited by the Enforceability Exceptions and except as any
     rights to indemnity or contribution thereunder may be limited by

                                      -3-
<PAGE>

     federal and state securities laws and public policy considerations. The
     Offered Securities, the Indenture and the Registration Rights Agreement
     conform in all material respects to the descriptions thereof in the
     Offering Circular.

               (j)  The Guarantees have been duly authorized by each of the
     Guarantors; and when issued by the Guarantors in accordance with the terms
     of the Indenture and the Notes are delivered and paid for pursuant to this
     Agreement, the Guarantees will have been duly executed, issued and
     delivered and will be in the form contemplated by, and entitled to the
     benefits of, the Indenture and will constitute valid and legally binding
     obligations of each of the Guarantors, enforceable in accordance with their
     terms, except that the enforcement thereof may be limited by the
     Enforceability Exceptions.

               (k)  The Company has all requisite corporate power and authority
     to perform its obligations under its obligations under the Tender Offer and
     to consummate the transactions contemplated thereby. The Tender Offer and
     the transactions contemplated thereby have been duly and validly authorized
     by the Company.

               (l)  Each of the Issuers and the Subsidiaries possesses good and
     marketable title to all real property owned by it and good title to all
     other properties owned by it, in each case, free and clear of all
     mortgages, pledges, liens, security interests, claims, restrictions or
     encumbrances of any kind except such as (a) are described in the Offering
     Document or (b) do not, individually or in the aggregate, materially affect
     the value of such property and do not interfere with the use made and
     proposed to be made of such property by the Issuers or any of the
     Subsidiaries; and all of the leases and subleases material to the business
     of the Issuers and the Subsidiaries, considered as one enterprise, and
     under which the Issuers or any of the Subsidiaries holds properties
     described in the Offering Document, are in full force and effect, and
     neither the Issuers nor any Subsidiary has any notice of any material claim
     of any sort that has been asserted by anyone adverse to the rights of the
     Issuers or any Subsidiary under any of the leases or subleases mentioned
     above, or affecting or questioning the rights of the Issuers or such
     Subsidiary to the continued possession of the leased or subleased premises
     under any such lease or sublease, except in any such case as could not
     reasonably be expected to result in a Material Adverse Effect.

               (m)  Each of the Issuers and the Subsidiaries possesses such
     permits, licenses, approvals, consents and other authorizations
     (collectively, "Governmental Licenses") issued by the appropriate federal,
     state, local or foreign regulatory agencies or bodies necessary to conduct
     the business now operated by it; each of the Issuers and the Subsidiaries
     is in compliance with the terms and conditions of all such Governmental
     Licenses, except where the failure so to comply would not, individually or
     in the aggregate, have a Material Adverse Effect; all of the Governmental
     Licenses are valid and in full force and effect, except where the
     invalidity of such Governmental Licenses or the failure of such
     Governmental Licenses to be in full force and effect would not have a
     Material Adverse Effect; and none of the Issuers or any of the Subsidiaries
     has received any notice of proceedings relating to the revocation or
     modification of any such Governmental Licenses which, individually or in
     the aggregate, if the subject of an unfavorable decision, ruling or
     finding, would result in a Material Adverse Effect.

               (n)  No labor dispute with the employees of the Issuers and the
     Subsidiaries exists or, to the knowledge of the Issuers is imminent that
     might have a Material Adverse Effect.

               (o)  The Issuers and the Subsidiaries own, possess or can acquire
     on reasonable terms adequate trademarks, trade names and other rights to
     inventions, know-how, patents, copyrights, confidential information and
     other intellectual property (collectively, "intellectual property rights")
     necessary to conduct the business now operated by them, or presently
     employed by them, and have not received any notice of infringement of or
     conflict with asserted rights of others with respect to any intellectual
     prop-

                                      -4-
<PAGE>

     erty rights that, if determined adversely to the Issuers and the
     Subsidiaries, would individually or in the aggregate have a Material
     Adverse Effect.

               (p)  Except as described in the Offering Document and except as
     would not, individually or in the aggregate, result in a Material Adverse
     Effect, (A) none of the Issuers or the Subsidiaries is in violation of any
     federal, state, local or foreign statute, law, rule, regulation, ordinance,
     code, policy or rule of common law or any judicial or administrative
     interpretation thereof, including any judicial or administrative order,
     consent, decree or judgment, relating to pollution or protection of human
     health, the environment (including, without limitation, ambient air,
     surface water, ground-water, land surface or subsurface strata) or
     wildlife, including, without limitation, laws and regulations relating to
     the release or threatened release of chemicals, pollutants, contaminants,
     wastes, toxic substances, hazardous substances, petroleum or petroleum
     products (collectively, "Hazardous Materials") or to the manufacture,
     processing, distribution, use, treatment, storage, disposal, transport or
     handling of Hazardous Materials (collectively, "Environmental Laws"), (B)
     each of the Issuers and the Subsidiaries has all permits, authorizations
     and approvals required under any applicable Environmental Laws and is in
     compliance with their requirements, (C) there are no pending or threatened
     administrative, regulatory or judicial actions, suits, demands, demand
     letters, claims, liens, notices of noncompliance or violation,
     investigations or proceedings relating to any Environmental Law against the
     Issuers and the Subsidiaries and (D) there are no events or circumstances
     that might reasonably be expected to form the basis of an order for clean-
     up or remediation, or an action, suit or proceeding by any private party or
     governmental body or agency, against or affecting any of the Issuers and
     the Subsidiaries relating to Hazardous Materials or any Environmental Laws.

               (q)  There is no action, suit, proceeding, inquiry or
     investigation before or brought by any court or governmental agency or
     body, domestic or foreign, now pending, or, to the knowledge of the
     Company, threatened, against or affecting the Company or any Subsidiary,
     which is required to be disclosed in the Offering Document (other than as
     disclosed therein), or which might reasonably be expected to result in a
     Material Adverse Effect, or which might reasonably be expected to
     materially and adversely affect the properties or assets thereof or the
     consummation of the transactions contemplated in this Agreement or the
     performance by the Company of its obligations hereunder; the aggregate of
     all pending legal or governmental proceedings to which the Company or any
     Subsidiary is a party or of which any of their respective property or
     assets is the subject which are not described in the Offering Document,
     including ordinary routine litigation incidental to the business, could not
     reasonably be expected to result in a Material Adverse Effect.

               (r)  The financial statements included in the Offering Document
     present fairly the financial position of the Company and its consolidated
     subsidiaries as of the dates shown and their results of operations and cash
     flows for the periods shown, and except as otherwise disclosed in the
     Offering Document such financial statements have been prepared in
     conformity with generally accepted accounting principles in the United
     States applied on a consistent basis and the assumptions used in preparing
     the pro forma financial statements and the adjusted financial information
     included in the Offering Document provide a reasonable basis for presenting
     the significant effects directly attributable to the transactions or events
     described therein, the related pro forma and adjusted adjustments give
     appropriate effect to those assumptions, and the pro forma and adjusted
     columns therein reflect the proper application of those adjustments to the
     corresponding historical financial statement amounts.

               (s)  Since the date of the last audited financial statements
     included in the Offering Document, except as otherwise stated therein, (A)
     there has been no material adverse change in the condition, financial or
     otherwise, or in the earnings, business affairs or business prospects of
     the Company and its subsidiaries considered as one enterprise, whether or
     not arising in the ordinary course of business (a "Material Adverse
     Effect"), (B) there have been no transactions entered into by the Company
     or any

                                      -5-
<PAGE>

     of its subsidiaries, other than those in the ordinary course of business,
     which are material with respect to the Company and its subsidiaries
     considered as one enterprise, and (C) except for regular quarterly
     dividends on the Company's common stock in amounts per share that are
     consistent with past practice, there has been no dividend or distribution
     of any kind declared, paid or made by the Company on any class of its
     capital stock.

               (t)  None of the Issuers or the Subsidiaries is an open-end
     investment company, unit investment trust or face-amount certificate
     company that is or is required to be registered under Section 8 of the
     United States Investment Company Act of 1940 (the "Investment Company
     Act"); and none of the Issuers or the Subsidiaries is or, after giving
     effect to the offering and sale of the Offered Securities and the
     application of the proceeds thereof as described in the Offering Document,
     will be an "investment company" as defined in the Investment Company Act.

               (u)  No securities of the same class (within the meaning of Rule
     144A(d)(3) under the Securities Act) as the Offered Securities are listed
     on any national securities exchange registered under Section 6 of the
     Exchange Act or quoted in a U.S. automated inter-dealer quotation system.

               (v)  The offer and sale of the Offered Securities in the manner
     contemplated by this Agreement will be exempt from the registration
     requirements of the Securities Act by reason of Section 4(2) thereof,
     Regulation D thereunder and Regulation S thereunder and it is not necessary
     to qualify an indenture in respect of the Offered Securities under the
     Trust Indenture Act.

               (w)  None of the Company or any of its affiliates or any person
     acting on its or their behalf (i) has, within the six-month period prior to
     the date hereof, offered or sold in the United States or to any U.S. person
     (as such terms are defined in Regulation S under the Securities Act) the
     Offered Securities or any security of the same class or series as the
     Offered Securities or (ii) has offered or will offer or sell the Offered
     Securities (A) in the United States by means of any form of general
     solicitation or general advertising within the meaning of Rule 502(c) under
     the Securities Act or (B) with respect to any such securities sold in
     reliance on Rule 903 of Regulation S ("Regulation S") under the Securities
     Act, by means of any directed selling efforts within the meaning of Rule
     902(c) of Regulation S. The Company, its affiliates and any person acting
     on its or their behalf have complied and will comply with the offering
     restrictions requirement of Regulation S. The Company has not entered and
     will not enter into any contractual arrangement with respect to the
     distribution of the Offered Securities except for this Agreement.

               (x)  The Company is subject to Section 13 or 15(d) of the
     Securities Exchange Act of 1934 (the "Exchange Act").

               (y)  The documents incorporated by reference in the Offering
     Document, when they were filed with the Commission, complied in all
     material respects with the requirements of the Exchange Act and the rules
     and regulations of the Commission thereunder (the "Exchange Act
     Regulations"), and none of such documents contained an untrue statement of
     a material fact or omitted to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading; and any
     further documents so filed and incorporated by reference in the Offering
     Document or any further amendment or supplement thereto, when such
     documents are filed with the Commission, as the case may be, will conform
     in all material respects to the requirements of the Exchange Act and the
     Exchange Act Regulations and will not contain an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading.

               (z)  None of the Issuers or any of the Subsidiaries is in
     violation of its charter or by-laws or in default in the performance or
     observance of any obligation, agreement, covenant or condition contained

                                      -6-
<PAGE>

     in any contract, indenture, mortgage, deed of trust, loan or credit
     agreement, note, lease or other agreement or instrument to which any of the
     Issuers or the Subsidiaries is a party or by which it or any of them may be
     bound, or to which any of the property or assets of any of the Issuers or
     the Subsidiaries is subject (collectively, "Agreements and Instruments"),
     except for such defaults as would not result in a Material Adverse Effect;
     and the execution, delivery and performance of this Agreement and the
     consummation of the transactions contemplated herein and in the Offering
     Document (including the issuance and sale of the Offered Securities and the
     use of the proceeds from the sale of the Offered Securities as described in
     the Offering Document under the caption "Use of Proceeds") and compliance
     by the Issuers with their obligations hereunder have been duly authorized
     by all necessary corporate action and do not and will not, whether with or
     without the giving of notice or passage of time or both, conflict with or
     constitute a breach of, or default or Repayment Event (as defined below)
     under, or result in the creation or imposition of any lien, charge or
     encumbrance upon any property or assets of any of the Issuers or the
     Subsidiaries pursuant to, the Agreements and Instruments (except for such
     conflicts, breaches, Repayment Events or defaults or liens, charges or
     encumbrances that would not result in a Material Adverse Effect), nor will
     such action result in any violation of the provisions of the charter or by-
     laws of any of the Issuers or the Subsidiaries or any applicable law,
     statute, rule, regulation, judgment, order, writ or decree of any
     government, government instrumentality or court, domestic or foreign,
     having jurisdiction over any of the Issuers or the Subsidiaries or any of
     their assets, properties or operations. As used herein, a "Repayment Event"
     means any event or condition which gives the holder of any note, debenture
     or other evidence of indebtedness (or any person acting on such holder's
     behalf) the right to require the repurchase, redemption or repayment
     (through acceleration or otherwise) of all or a portion of such
     indebtedness by any of the Issuers or the Subsidiaries other than the
     intended repayment of indebtedness described under "Use of Proceeds" in the
     Offering Document.

               (aa) Except for the Registration Rights Agreement, there are no
     contracts, agreements or understandings between the Company and any person
     granting such person the right to require the Company to file a
     registration statement  under the Securities Act with respect to any
     securities of the Company owned or to be owned by such person or to require
     the Company to include such securities in the securities registered
     pursuant to the Registration Rights Agreement or in any securities being
     registered pursuant to any other registration statement filed by the
     Company under the Securities Act.

               (bb) Each of PricewaterhouseCoopers LLP and Deloitte & Touche
     LLP, who have certified certain of the financial statements included in, or
     incorporated by reference in, the Offering Document, is an independent
     public accountant as required by the Securities Act.

     3.   Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at a purchase price of 95.675% of the principal amount
thereof, the respective principal amounts of Offered Securities set forth
opposite the names of the Purchasers in Schedule A hereto.
                                        ----------

     The Company will deliver against payment of the purchase price therefor the
Offered Securities in the form of one or more permanent global Offered
Securities in definitive form (the "Global Securities") deposited with the
Trustee as custodian for The Depository Trust Company ("DTC") and registered in
the name of Cede & Co., as nominee for DTC.  Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Offering Document.  Payment for the
Offered Securities shall be made by the Purchasers in federal (same day) funds
by official bank check or checks or wire transfer to an account at a bank
acceptable to CSFBC at the office of Cahill Gordon & Reindel, 80 Pine Street,
New York, NY  10005, at 10:00 A.M. New York City time, on August 1, 2000, or at
such other time not later than seven full business days thereafter as CSFBC and
the Company determine, such date being herein referred to as the "Closing Date,"
against delivery to the Trustee as custodian for DTC of the Global Securities
repre-

                                      -7-
<PAGE>

senting all of the Offered Securities. The Global Securities will be made
available for checking at the above office of Cahill Gordon & Reindel at least
24 hours prior to the Closing Date.

     4.   Representations by Purchasers; Resale by Purchasers.  (a) Each
Purchaser severally represents and warrants to the Issuers that it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act.

               (b)  Each Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S or pursuant to an
exemption from the registration requirements of the Securities Act. Each
Purchaser severally represents and agrees that it has offered and sold the
Offered Securities, and will offer and sell the Offered Securities (i) as part
of its distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering and the Closing Date, only in accordance
with Rule 903 or Rule 144A under the Securities Act ("Rule 144A"). Accordingly,
neither such Purchaser nor its affiliates, nor any persons acting on its or
their behalf, has engaged or will engage in any directed selling efforts with
respect to the Offered Securities, and such Purchaser, its affiliates and all
persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. Each Purchaser severally
agrees that, at or prior to confirmation of sale of the Offered Securities,
other than a sale pursuant to Rule 144A, such Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Offered Securities from it during the restricted
period a confirmation or notice to substantially the following effect:

     "The Securities covered hereby have not been registered under the
     U.S. Securities Act of 1933 (the "Securities Act") and may not be
     offered or sold within the United States or to, or for the
     account or benefit of, U.S. persons (i) as part of their
     distribution at any time or (ii) otherwise until 40 days after
     the later of the date of the commencement of the offering and the
     closing date, except in either case in accordance with Regulation
     S (or Rule 144A if available) under the Securities Act. Terms
     used above have the meanings given to them by Regulation S."

Terms used in this subsection (b) have the meanings given to them by Regulation
S.

               (c)  Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual arrangement
with respect to the distribution of the Offered Securities except for any such
arrangements with the other Purchasers or affiliates of the other Purchasers or
with the prior written consent of the Company.

               (d)  Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United States by
means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act, including, but not limited to
(i) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.  Each Purchaser severally agrees, with
respect to resales made in reliance on Rule 144A of any of the Offered
Securities, to deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that the resale of
such Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.

               (e)  Each of the Purchasers severally represents and agrees that
(i) it has not offered or sold and prior to the date six months after the date
of issue of the Offered Securities will not offer or sell any Offered Securities
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the

                                      -8-
<PAGE>

United Kingdom within the meaning of the Public Offers of Securities Regulations
1995; (ii) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of the
Offered Securities to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 or is a person to whom such document may otherwise lawfully be issued or
passed on.

     5.   Certain Agreements.  The Issuers agree with the several Purchasers
that:

               (a)  The Issuers will advise CSFBC promptly of any proposal to
     amend or supplement the Offering Document and will not effect such
     amendment or supplementation without CSFBC's consent, which consent shall
     not be unreasonably withheld. If, at any time prior to the completion of
     the resale of the Offered Securities by the Purchasers, any event occurs as
     a result of which the Offering Document as then amended or supplemented
     would include an untrue statement of a material fact or omit to state any
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made, not misleading, the
     Issuers promptly will notify CSFBC of such event and promptly will prepare,
     at their own expense, an amendment or supplement which will correct such
     statement or omission. Neither CSFBC's consent to, nor the Purchasers'
     delivery to offerees or investors of, any such amendment or supplement
     shall constitute a waiver of any of the conditions set forth in Section 6.

               (b)  The Issuers will furnish to CSFBC copies of any Preliminary
     Offering Circular, the Offering Circular and all amendments and supplements
     to such documents, in each case as soon as available and in such quantities
     as CSFBC requests, and the Issuers will furnish to CSFBC on the date hereof
     three copies of the Offering Document signed by a duly authorized officer
     of the Company, one of which will include the independent accountants'
     reports therein manually signed by such independent accountants (except
     that the Issuers do not need to provide an independent accountants' report
     of Deloitte & Touche for the Preliminary Offering Circular). At any time
     when the Company is not subject to Section 13 or 15(d) of the Exchange Act,
     the Company will promptly furnish or cause to be furnished to CSFBC and,
     upon request, to each of the other Purchasers and, upon request of holders
     and prospective purchasers of the Offered Securities, to such holders and
     purchasers, copies of the information required to be delivered to holders
     and prospective purchasers of the Offered Securities pursuant to Rule
     144A(d)(4) under the Securities Act (or any successor provision thereto) in
     order to permit compliance with Rule 144A in connection with resales by
     such holders of the Offered Securities.  The Company will pay the expenses
     of printing and distributing to the Purchasers all such documents.

               (c)  The Issuers will arrange for the qualification of the
     Offered Securities for sale and the determination of their eligibility for
     investment under the laws of such jurisdictions in the United States and
     Canada as CSFBC designates and will continue such qualifications in effect
     so long as required for the resale of the Offered Securities by the
     Purchasers, provided that none of the Issuers will be required to qualify
     as a foreign corporation or to file a general consent to service of process
     in any such state.

               (d)  During the period of ten years hereafter, the Company will
     furnish to CSFBC and, upon request, to each of the other Purchasers, as
     soon as practicable after the end of each fiscal year, a copy of its annual
     report to shareholders for such year; and the Company will furnish to CSFBC
     and, upon request, to each of the other Purchasers (i) as soon as
     available, a copy of each report and any definitive proxy statement of the
     Company filed with the Commission under the Exchange Act or mailed to
     shareholders, and (ii) from time to time, such other information concerning
     the Company as CSFBC may reasonably request.

                                      -9-
<PAGE>

               (e)  During the period of two years after the Closing Date, the
     Issuers will, upon request, furnish to CSFBC, each of the other Purchasers
     and any holder of Offered Securities a copy of the restrictions on transfer
     applicable to the Offered Securities.

               (f)  During the period of two years after the Closing Date, the
     Issuers will not, and will not permit any of its affiliates (as defined in
     Rule 144 under the Securities Act) to, resell any of the Offered Securities
     that have been reacquired by any of them.

               (g)  During the period of two years after the Closing Date, the
     Issuers will not be or become an open-end investment company, unit
     investment trust or face-amount certificate company that is or is required
     to be registered under Section 8 of the Investment Company Act.

               (h)  The Company will pay all expenses incidental to the
     performance of the Issuers' obligations under this Agreement, the Indenture
     and the Registration Rights Agreement, including (i) the fees and expenses
     of the Trustee and its professional advisers, (ii) all expenses in
     connection with the execution, issue, authentication, packaging and initial
     delivery of the Offered Securities and, as applicable, the Exchange
     Securities (as defined in the Registration Rights Agreement), the
     preparation and printing of this Agreement, the Registration Rights
     Agreement, the Indenture, the Offering Document and amendments and
     supplements thereto, and any other document relating to the issuance,
     offer, sale and delivery of the Offered Securities and as applicable, the
     Exchange Securities, (iii) the cost of listing the Offered Securities and
     qualifying the Offered Securities for trading in The Portal/SM/ Market
     ("PORTAL") and any expenses incidental thereto, (iv) the cost of any
     advertising approved by the Company in connection with the issue of the
     Offered Securities (v) any expenses (including fees and disbursements of
     counsel) incurred in connection with qualification of the Offered
     Securities or the Exchange Securities for sale under the laws of such
     jurisdictions in the United States and Canada as CSFBC designates and the
     printing of memoranda relating thereto, (vi) for any fees charged by
     investment rating agencies for the rating of the Offered Securities or the
     Exchange Securities, and (vii) expenses incurred in distributing
     Preliminary Offering Circulars and the Offering Document (including any
     amendments and supplements thereto) to the Purchasers. The Company will
     also pay (to the extent incurred by them) or reimburse the Purchasers for
     all travel expenses of the Company's officers and employees and any other
     expenses of the Issuers in connection with attending or hosting meetings
     with prospective purchasers of the Offered Securities from the Purchasers.

               (i)  In connection with the offering, until CSFBC shall have
     notified the Company and the other Purchasers of the completion of the
     resale of the Offered Securities, none of the Issuers and any of their
     affiliates has or will, either alone or with one or more other persons, bid
     for or purchase for any account in which it or any of its affiliates has a
     beneficial interest any Offered Securities or attempt to induce any person
     to purchase any Offered Securities; and neither it nor any of its
     affiliates will make bids or purchases for the purpose of creating actual,
     or apparent, active trading in, or of raising the price of, the Offered
     Securities.

               (j)  For a period of 180 days after the Closing Date, none of the
     Issuers will offer, sell, contract to sell, pledge or otherwise dispose of,
     directly or indirectly, any U.S. dollar-denominated debt securities issued
     or guaranteed by any of the Issuers and having a maturity of more than one
     year from the date of issue.  None of the Issuers will at any time offer,
     sell, contract to sell, pledge or otherwise dispose of, directly or
     indirectly, any securities under circumstances where such offer, sale,
     pledge, contract or disposition would cause the exemption afforded by
     Section 4(2) of the Securities Act or the safe harbor of Regulation S
     thereunder to cease to be applicable to the offer and sale of the Offered
     Securities.

                                      -10-
<PAGE>

               (k)  The Company shall apply the net proceeds of the sale of the
     Offered Securities as set forth in the Offering Document.

               (l)  The Company will use best efforts to have the Offered
     Securities admitted for trading in PORTAL.

     6.   Conditions of the Obligations of the Purchasers.  The obligations of
the several Purchasers to purchase and pay for the Offered Securities on the
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Issuers herein, to the accuracy of the statements
of officers of each of the Issuers made pursuant to the provisions hereof, to
the performance by each of the Issuers of its obligations hereunder and to the
following additional conditions precedent:

               (a)  The Purchasers shall have received a letter, dated the date
     of this Agreement, of each of PricewaterhouseCoopers LLP and Deloitte &
     Touche LLP in form and substance satisfactory to the Purchasers and
     substantially in the form of Exhibit A.
                                  ---------

               (b)  Subsequent to the execution and delivery of this Agreement,
     there shall not have occurred (i) a change in U.S. or international
     financial, political or economic conditions or currency exchange rates or
     exchange controls as would, in the judgment of CSFBC, be likely to
     prejudice materially the success of the proposed issue, sale or
     distribution of the Offered Securities, whether in the primary market or in
     respect of dealings in the secondary market, or (ii) (A) any change, or any
     development or event involving a prospective change, in the condition
     (financial or other), business, properties or results of operations of the
     Company or its subsidiaries which, in the judgment of a majority in
     interest of the Purchasers including CSFBC, is material and adverse and
     makes it impractical or inadvisable to proceed with completion of the
     offering or the sale of and payment for the Offered Securities; (B) any
     downgrading in the rating of any debt securities of the Company by any
     "nationally recognized statistical rating organization" (as defined for
     purposes of Rule 436(g) under the Securities Act), or any public
     announcement that any such organization has under surveillance or review
     its rating of any debt securities of the Company (other than an
     announcement with positive implications of a possible upgrading, and no
     implication of a possible downgrading, of such rating); (C) any suspension
     or limitation of trading in securities generally on the New York Stock
     Exchange or any setting of minimum prices for trading on such exchange, or
     any suspension of trading of any securities of the Company on any exchange
     or in the over-the-counter market; (D) any banking moratorium declared by
     U.S. Federal or New York authorities; or (E) any outbreak or escalation of
     major hostilities in which the United States is involved, any declaration
     of war by Congress or any other substantial national or international
     calamity or emergency if, in the judgment of a majority in interest of the
     Purchasers including CSFBC, the effect of any such outbreak, escalation,
     declaration, calamity or emergency makes it impractical or inadvisable to
     proceed with completion of the offering or sale of and payment for the
     Offered Securities.

               (c)  The Purchasers shall have received an opinion, dated the
     Closing Date, of Quarles & Brady LLP, counsel for the Issuers, that:

                     (i) The Company has been duly incorporated and is validly
               existing as a corporation in active status under the laws of the
               State of Wisconsin;

                    (ii) The Company has corporate power and authority to own,
               lease and operate its properties and to conduct its business as
               described in the Offering Document and to enter into and perform
               its obligations under this Agreement;

                                      -11-
<PAGE>

                   (iii) Each Subsidiary and Guarantor is validly existing as a
               corporation in good standing (or equivalent status) under the
               laws of the jurisdiction of its incorporation, and has corporate
               power and authority to own, lease and operate its properties and
               to conduct its business as described in the Offering Document;
               except as otherwise disclosed in the Offering Document, all of
               the issued and outstanding capital stock of each Subsidiary and
               Guarantor has been duly authorized and validly issued, is fully
               paid and non-assessable (except as otherwise provided in Section
               180.0622(2)(b) of the Wisconsin Business Corporation Law, as
               judicially interpreted) and, to the best of such counsel's
               knowledge, is owned by the Company, directly or through
               Subsidiaries, free and clear of any security interest, mortgage,
               pledge, lien, encumbrance, claim or equity; none of the
               outstanding shares of capital stock of any Subsidiary and
               Guarantor was issued in violation of the preemptive or similar
               rights of any securityholder of such Subsidiary and Guarantor;

                    (iv) The Indenture shall have been duly authorized, executed
               and delivered by the Company and the Notes under the Indenture
               shall have been duly executed and delivered by the Company and
               assuming the due authorization, execution and delivery thereof by
               the Trustee constitute a valid and binding agreement of the
               Company, enforceable against the Company in accordance with their
               terms, except as the enforcement thereof may be limited by
               bankruptcy, insolvency (including, without limitation, all laws
               relating to fraudulent transfers), reorganization, moratorium or
               similar laws affecting enforcement of creditors' rights generally
               and except as enforcement thereof is subject to general
               principles of equity (regardless of whether enforcement is
               considered in a proceeding in equity or at law);

                     (v) Each of the Issuers is not and, after giving effect to
               the offering and sale of the Offered Securities and the
               application of the proceeds thereof as described in the Offering
               Document, will not be an "investment company" as defined in the
               Investment Company Act;

                    (vi) No consent, approval, authorization or order of, or
               filing with, any governmental agency or body or any court is
               required for the consummation of the transactions contemplated by
               this Agreement and the Registration Rights Agreement in
               connection with the issuance or sale of the Offered Securities by
               the Company, except such as may be required under state
               securities laws and except for the order of the Commission
               declaring the Exchange Offer Registration Statement or the Shelf
               Registration Statement effective;

                   (vii) The execution, delivery and performance of this
               Agreement, the Indenture and the Offered Securities, as
               applicable, and the consummation of the transactions contemplated
               in this Agreement and in the Offering Document (including the
               issuance and sale of the Offered Securities and the use of the
               proceeds from the sale of the Offered Securities as described in
               the Offering Document under the caption "Use of Proceeds") and
               compliance by the Issuers with its obligations under this
               Agreement, the Indenture and the Offered Securities, as
               applicable, do not and will not, whether with or without the
               giving of notice or lapse of time or both, conflict with or
               constitute a breach of, or default or Repayment Event under or
               result in the creation or imposition of any lien, charge or
               encumbrance upon any property or assets of the Issuers or any
               Subsidiary pursuant to any written contract, indenture, mortgage,
               deed of trust, loan or credit agreement, note, lease or any other
               agreement or instrument, known to such counsel, to which the
               Issuers or any Subsidiary is a party or by which it or any of
               them may be bound, or to which any of the property or assets of
               the Issuers or any Subsidiary is subject (except for such
               conflicts, breaches, Repayment Events or defaults or liens,
               charges or encumbrances that would not have a Material Adverse
               Effect), nor will such action result in any violation of the
               provisions of the charter or by-laws of the Issuers or any
               Subsidiary, or any applicable law, statute, rule, regulation,
               judgment, order, writ or decree, known to such

                                      -12-
<PAGE>

               counsel, of any government, government instrumentality or court,
               domestic or foreign, having jurisdiction over the Issuers or any
               Subsidiary or any of their respective properties, assets or
               operations;

                  (viii) Such counsel have no reason to believe that the
               Offering Circular, or any amendment or supplement thereto, or any
               Exchange Act Report as of the date hereof and as of the Closing
               Date, contained any untrue statement of a material fact or
               omitted to state any material fact required to be stated therein
               or necessary to make the statements therein not misleading; the
               descriptions in the Offering Circular and the Exchange Act
               Reports of statutes, legal and governmental proceedings and
               contracts and other documents are accurate and fairly present the
               information required to be shown; it being understood that such
               counsel need express no opinion as to the financial statements or
               other financial data contained in the Offering Circular and the
               Exchange Act Reports;

                    (ix) This Agreement has been duly authorized, executed and
               delivered by the Company;

                     (x) The Registration Rights Agreement has been duly
               authorized, executed and delivered by the Issuers and constitutes
               a valid and binding agreement of the Issuers, enforceable against
               the Issuers in accordance with its terms, except as the
               enforcement thereof may be limited by bankruptcy, insolvency
               (including, without limitation, all laws relating to fraudulent
               transfers), reorganization, moratorium or similar laws affecting
               enforcement of creditors' rights generally and except as
               enforcement thereof is subject to general principles of equity
               (regardless of whether enforcement is considered in a proceeding
               in equity or at law);

                    (xi) It is not necessary in connection with (i) the offer,
               sale and delivery of the Offered Securities by the Company to the
               several Purchasers pursuant to this Agreement or (ii) the resales
               of the Offered Securities by the several Purchasers in the manner
               contemplated by this Agreement to register the Offered Securities
               under the Securities Act or to qualify an indenture in respect
               thereof under the Trust Indenture Act;

                   (xii) The Notes are in the form contemplated by the
               Indenture, have been duly authorized by the Company and, assuming
               that the Notes have been duly authenticated by the Trustee in the
               manner described in its certificate delivered to the Purchasers
               on the Closing Date (which fact such counsel need not determine
               by an inspection of the Notes), the Notes have been duly
               executed, issued and delivered by the Company and constitute
               valid and binding obligations of the Company, enforceable against
               the Company in accordance with their terms, except as the
               enforcement thereof may be limited by bankruptcy, insolvency
               (including, without limitation, all laws relating to fraudulent
               transfers), reorganization, moratorium or similar laws affecting
               enforcement of creditors' rights generally and except as
               enforcement thereof is subject to general principles of equity
               (regardless of whether enforcement is considered in a proceeding
               in equity or at law), and are entitled to the benefits of the
               Indenture. The Notes have been duly authorized by the Company
               and, assuming that the Notes have been duly authenticated by the
               Trustee in the manner described in its certificate delivered to
               the Purchasers on the Closing Date (which fact such counsel need
               not determine by an inspection of the Notes), and upon due
               execution, issuance and delivery by the Company, the Notes will
               constitute valid and binding obligations of the Company,
               enforceable against the Company in accordance with their terms,
               except as the enforcement thereof may be limited by bankruptcy,
               insolvency (including, without limitation, all laws relating to
               fraudulent transfers), reorganization, moratorium or similar laws
               affecting enforcement of creditors' rights generally and except
               as enforcement thereof is subject to general principles of equity
               (regardless of whether en-

                                      -13-
<PAGE>

               forcement is considered in a proceeding in equity or at law), and
               are entitled to the benefits of the Indenture. The Guarantees are
               in the form contemplated by the Indenture, have been duly
               authorized by the Guarantors and, assuming the Guarantees will be
               duly executed, issued and delivered by the Guarantors, the
               Guarantees will constitute valid and binding obligations of the
               Guarantors, enforceable against the Guarantors in accordance with
               their terms, except as the enforcement thereof may be limited by
               bankruptcy, insolvency (including, without limitation, all laws
               relating to fraudulent transfers), reorganization, moratorium or
               similar laws affecting enforcement of creditors' rights generally
               and except as enforcement thereof is subject to general
               principles of equity (regardless of whether enforcement is
               considered in a proceeding in equity or at law), and are entitled
               to the benefits of the Indenture;

                  (xiii) The Basic Documents conform as to legal matters in all
               material respects to the descriptions thereof contained in the
               Offering Circular;

                   (xiv) The documents incorporated by reference in the Offering
               Document (other than the financial statements, including any pro
               forma financial information, and supporting schedules included
               therein or omitted therefrom, as to which such counsel expresses
               no opinion), when they became effective or were filed with the
               Commission, as the case may be, complied as to form in all
               material respects with the requirements of the Securities Act or
               the Exchange Act, as applicable, and the rules and regulations of
               the Commission thereunder;

                    (xv) To the best of such counsel's knowledge, there are no
               statutes or regulations that are required to be described in the
               Offering Document that are not described as required;

                   (xvi) All descriptions in the Offering Circular of written
               contracts and other documents to which the Issuers or the
               Subsidiaries are a party are accurate in all material respects;
               to the best of such counsel's knowledge, there are no franchises,
               contracts, indentures, mortgages, loan agreements, notes, leases
               or other instruments required to be described or referred to in
               the Offering Document other than those described or referred to
               therein or filed or incorporated by reference as exhibits
               thereto, and the descriptions thereof or references thereto are
               correct in all material respects;

                  (xvii) To the best of such counsel's knowledge, none of the
               Issuers or any Subsidiary is in violation of its charter or by-
               laws and no default by the Issuers or any Subsidiary exists in
               the due performance or observance of any material obligation,
               agreement, covenant or condition contained in any contract,
               indenture, mortgage, loan agreement, note, lease or other
               agreement or instrument that is described in the Offering
               Document or incorporated by reference as an exhibit to the
               Offering Document; and

                 (xviii) To the best of such counsel's knowledge, except for the
               Registration Rights Agreement, there are no contracts, agreements
               or understandings between the Company and any person granting
               such person the right to require the Company to file a
               registration statement under the Securities Act with respect to
               any securities of the Company owned or to be owned by such person
               or to require the Company to include such securities in the
               securities registered pursuant to the Registration Statement or
               in any securities being registered pursuant to any other
               registration statement filed by the Company under the Securities
               Act;

               (d)  The Purchasers shall have received from Cahill Gordon &
     Reindel, counsel for the Purchasers, an opinion, dated the Closing Date,
     with respect to the validity of the Offered Securities, the Offering
     Circular, the exemption from registration for the offer and sale of the
     Offered Securities by the Company to the several Purchasers and the resales
     by the several Purchasers as contemplated hereby

                                      -14-
<PAGE>

     and other related matters as CSFBC may require, and the Company and each of
     the Issuers shall have furnished to such counsel such documents as they
     request for the purpose of enabling them to pass upon such matters with
     reference to same in the Offering Circular. In rendering such opinion,
     Cahill Gordon & Reindel may rely as to the incorporation of the Company and
     all other matters governed by Wisconsin law upon the opinion of Quarles &
     Brady LLP referred to above.

               (e)  The Purchasers shall have received certificates, dated the
     Closing Date, of the President or any Vice President and a principal
     financial or accounting officer of the Company in which such officers, to
     the best of their knowledge after reasonable investigation, shall state
     that the representations and warranties of the Company in this Agreement
     are true and correct, that the Company has complied with all agreements and
     satisfied all conditions on its part to be performed or satisfied hereunder
     at or prior to the Closing Date, and that, subsequent to the dates of the
     most recent financial statements in the Offering Document there has been no
     Material Adverse Effect except as set forth in or contemplated by the
     Offering Document or as described in such certificate, and that he or she
     has carefully examined the Offering Document and, in his or her opinion, as
     of the date thereof and as of the Closing Date, the statements contained in
     the Offering Document were true and correct in all material respects, and
     the Offering Document did not omit to state a material fact required to be
     stated therein or necessary in order to make the statements therein not
     misleading, and since the date of the Offering Document, no event has
     occurred which should have been set forth in a supplement to or an
     amendment of the Offering Document which has not been so set forth in such
     supplement or amendment, and that the sale of the Offered Securities has
     not been enjoined (temporarily or permanently).

               (f)  The Purchasers shall have received letters, dated the
     Closing Date, which meet the requirements of subsection (a) of this
     Section, except that the specified date referred to in such subsection will
     be a date not more than three days prior to the Closing Date for the
     purposes of this subsection.

               (g)  The Company shall have furnished to the Purchasers such
     further certificates and documents confirming the representations and
     warranties, covenants and conditions contained herein and related matters
     (including with respect to subsection (i) below) as the Purchasers may
     reasonably have requested.

               (h)  The Offered Securities shall have been designated for
     trading on PORTAL.

               (i)  Each of the Company and the Trustee shall have executed and
     delivered the Indenture in form and substance satisfactory to the
     Purchasers and the Indenture shall be in full force and effect.

               (j)  The Company shall have executed and delivered the
     Registration Rights Agreement in form and substance satisfactory to the
     Purchasers and the Registration Rights Agreement shall be in full force and
     effect.

               (k)  The Spin-off shall be effective substantially as described
     in the Offering Document and there shall be no conditions to closing under
     any of the financing documents related to the Spin-off (including the
     Tender Offer and the Actuant Credit Facility (as such terms are defined in
     the Offering Circular)), substantially as described in the Offering
     Document, that have not been satisfied or waived to the satisfaction of the
     Purchasers.

               (l)  The Company shall apply the net proceeds of the sale of the
     Offered Securities as set forth in the Offering Document.

                                      -15-
<PAGE>

     The Company will furnish the Purchasers with such conformed copies of such
opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder.

     7.   Indemnification and Contribution.  (a)  The Issuers will, jointly and
severally, indemnify and hold harmless each Purchaser, its partners, directors
and officers and each person, if any, who controls such Purchaser within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which the Purchaser may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular or the Exchange Act
Reports or arise out of or are based upon the omission or alleged omission to
state therein a material fact  necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, including any losses, claims, damages or liabilities arising out of
or based upon the failure of any of the Issuers to perform its obligations under
Section 5(a) of this Agreement, and will reimburse each Purchaser for any legal
or other expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Issuers will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information consists of the information
described as such in subsection (b) below; and provided, further, that with
respect to any untrue statement or alleged untrue statement in or omission or
alleged omission from any preliminary offering circular the indemnity agreement
contained in this subsection (a) shall not inure to the benefit of any Purchaser
that sold the Offered Securities concerned to the person asserting any such
losses, claims, damages or liabilities, to the extent that such sale was an
initial resale by such Purchaser and any such loss, claim, damage or liability
of such Purchaser results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Offering Document (exclusive of any
material included therein but not attached thereto) if the Company had
previously furnished copies thereof to such Purchaser.

               (b)  Each Purchaser will severally and not jointly indemnify and
hold harmless each of the Issuers, its directors and officers and each person,
if any, who controls the Issuers within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities to which each
of the Issuers may become subject, under the Securities Act or the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement thereto, or any related preliminary
offering circular, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Issuers in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Purchaser consists of
the following information in the Offering Document furnished on behalf of each
Purchaser: under the caption "Plan of Distribution" paragraphs three, eight and
nine; provided, however, that the Purchasers shall not be liable for any losses,
claims, damages or liabilities arising out of or based upon the Issuers' failure
to perform their obligations under Section 5(a) of this Agreement.

                                      -16-
<PAGE>

               (c)  Promptly after receipt by an indemnified party under this
Section 7(c) of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 7(c) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action and does not include a statement as
to or an admission of fault, culpability or failure to act by or on behalf of
any indemnified party.

               (d)  If the indemnification provided for in this Section 7(d) is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and the Purchasers on the other from the offering of
the Offered Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Issuers on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by each of the Issuers on the one
hand and the Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by each of the Issuers bear to the total discounts and
commissions received by the Purchasers from each of the Issuers under this
Agreement. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each of the Issuers or the Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages such the Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.  The Purchasers' obligations in this subsection (d) to
contribute are several in proportion to their respective purchase obligations
and not joint.

               (e)  The obligations of each of the Issuers under this Section
shall be in addition to any liability which each of the Issuers may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Purchaser within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Purchasers under this Section shall be
in addition to any liability which the respective Purchasers may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls each of the Issuers within the meaning of the Securities Act or the
Exchange Act.

                                      -17-
<PAGE>

     8.   Default of Purchasers.  If any Purchaser or Purchasers default in
their obligations to purchase Offered Securities hereunder and the aggregate
principal amount of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities, CSFBC may make arrangements satisfactory
to the Issuers for the purchase of such Offered Securities by other persons,
including any of the Purchasers, but if no such arrangements are made by the
Closing Date, the non-defaulting Purchasers shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Offered
Securities that such defaulting Purchasers agreed but failed to purchase. If any
Purchaser or Purchasers so default and the aggregate principal amount of Offered
Securities with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Offered Securities and arrangements satisfactory
to CSFBC and the Issuers for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Purchaser and the
Issuers, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.

     9.   Survival of Certain Representations and Obligations.  The respective
indemnities, agreements, representations, warranties and other statements of the
Company or any of their officers and of the several Purchasers set forth in or
made pursuant to this Agreement will remain in full force and effect, regardless
of any investigation, or statement as to the results thereof, made by or on
behalf of any Purchaser and the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities.  If for any reason
the purchase of the Offered Securities by the Purchasers is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Issuers and the
Purchasers pursuant to Section 7 shall remain in effect.  If the purchase of the
Offered Securities by the Purchasers is not consummated for any reason other
than solely because of the occurrence of any event specified in clause (C), (D)
or (E) of Section 6(b)(ii), the Company will reimburse the Purchasers for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.

     10.  Notices.  All communications hereunder will be in writing and, if sent
to the Purchasers will be mailed, delivered or telegraphed and confirmed to the
Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue,
New York, NY  10010-3629, Attention:  Investment Banking Department -
Transactions Advisory Group, or, if sent to the Issuers, will be mailed,
delivered or telegraphed and confirmed to it c/o Applied Power Inc., 6100 North
Baker Road, Glendale, WI  53209, Attention:  Andrew G. Lampereur; provided,
however, that any notice to a Purchaser pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Purchaser.

     11.  Successors.  This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Issuers as if such
holders were parties thereto.

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

     13.  Applicable Law.  This Agreement 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.

                                      -18-
<PAGE>

     The Issuers hereby submit to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

                                      -19-
<PAGE>

     If the foregoing is in accordance with the Purchasers' understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the several
Purchasers in accordance with its terms.

                                        Very truly yours,

                                        Applied Power Inc.

                                        By: /s/
                                           -----------------------------------
                                            Name:
                                            Title:

                                        APW TOOLS & SUPPLIES, INC.

                                        By: /s/
                                           -----------------------------------
                                            Name:
                                            Title:

                                        VERSA TECHNOLOGIES, INC.

                                        By: /s/
                                           -----------------------------------
                                            Name:
                                            Title:

                                        Applied Power Investments II, Inc.

                                        By: /s/
                                           -----------------------------------
                                            Name:
                                            Title:

                                        Columbus Manufacturing LLC

                                        By:  Applied Power Inc.

                                        By: /s/
                                           -----------------------------------
                                            Name:
                                            Title:

                                      -20-
<PAGE>

The foregoing Purchase Agreement
 is hereby confirmed and accepted
 as of the date first above written.

Credit Suisse First Boston Corporation
Goldman, Sachs & Co.

  Acting on behalf of themselves
  and as the Representatives of
  the several Purchasers

By Credit Suisse First Boston Corporation

By:   /s/ Colleen A. Burke
   -----------------------------------
    Name: Colleen A. Burke
    Title: Director

                                      -21-

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