Document:

<PAGE>
                                                                     Exhibit 4.2

                   INFINITY PROPERTY AND CASUALTY CORPORATION

                                     Issuer

                                       and

                         U.S. BANK NATIONAL ASSOCIATION
                                     Trustee

                                    INDENTURE

                          Dated as of _______ __, 2003

                                  $180,000,000
                           ___% Senior Notes Due 2013
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
<S>                                                                                                        <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................................     1

     Section 101.     Definitions.......................................................................     1
     Section 102.     Compliance Certificates and Opinions..............................................     8
     Section 103.     Form of Documents Delivered to Trustee............................................     8
     Section 104.     Acts of Holders; Record Date......................................................     9
     Section 105.     Notices, Etc., to Trustee and Company.............................................    10
     Section 106.     Notice to Holders; Waiver.........................................................    10
     Section 107.     Conflict with Trust Indenture Act.................................................    11
     Section 108.     Effect of Headings and Table of Contents..........................................    11
     Section 109.     Successors and Assigns............................................................    11
     Section 110.     Separability Clause...............................................................    11
     Section 111.     Benefits of Indenture.............................................................    11
     Section 112.     Governing Law.....................................................................    11
     Section 113.     Legal Holidays....................................................................    11
     Section 114.     Incorporators, Stockholders, Officers and Directors of the Company
                        Exempt from Individual Liability ...............................................    12

ARTICLE II FORMS OF SECURITIES..........................................................................    12

     Section 201.     Forms Generally...................................................................    12
     Section 202.     Form of Face of Security..........................................................    12
     Section 203.     Form of Reverse of Security.......................................................    14
     Section 204.     Global Securities.................................................................    17
     Section 205.     Form of Trustee's Certificate of Authentication...................................    18
     Section 206.     Form of Assignment................................................................    19

ARTICLE III THE SECURITIES..............................................................................    19

     Section 301.     Title and Terms...................................................................    19
     Section 302.     Denominations.....................................................................    20
     Section 303.     Execution, Authentication, Delivery and Dating....................................    20
     Section 304.     Temporary Securities..............................................................    21
     Section 305.     Registration, Registration of Transfer and Exchange...............................    22
     Section 306.     Mutilated, Destroyed, Lost and Stolen Securities..................................    24
     Section 307.     Payment of Interest; Interest Rights Preserved....................................    25
     Section 308.     Persons Deemed Owners.............................................................    26
     Section 309.     Cancellation......................................................................    26
     Section 310.     Computation of Interest...........................................................    26
     Section 311.     CUSIP Numbers.....................................................................    26

ARTICLE IV SATISFACTION AND DISCHARGE...................................................................    27

     Section 401.     Satisfaction and Discharge of Indenture...........................................    27
</TABLE>

                                       i
<PAGE>
<TABLE>
<S>                                                                                                        <C>
     Section 402.     Application of Trust Money........................................................    28

ARTICLE V EVENTS OF DEFAULT; REMEDIES...................................................................    28

     Section 501.     Events of Default.................................................................    28
     Section 502.     Acceleration of Maturity Date; Rescission and Annulment...........................    29
     Section 503.     Collection of Indebtedness and Suits for Enforcement by Trustee...................    30
     Section 504.     Trustee May File Proofs of Claim..................................................    31
     Section 505.     Trustee May Enforce Claims Without Possession of Securities.......................    32
     Section 506.     Application of Money Collected....................................................    32
     Section 507.     Limitation on Suits...............................................................    32
     Section 508.     Unconditional Right of Holders to Receive Principal, Premium and Interest.........    33
     Section 509.     Restoration of Rights and Remedies................................................    33
     Section 510.     Rights and Remedies Cumulative....................................................    33
     Section 511.     Delay or Omission Not Waiver......................................................    33
     Section 512.     Control by Holders................................................................    34
     Section 513.     Waiver of Past Default............................................................    34
     Section 514.     Undertaking for Costs.............................................................    34
     Section 515.     Waiver of Stay or Extension Laws..................................................    34

ARTICLE VI THE TRUSTEE..................................................................................    35

     Section 601.     Certain Duties and Responsibilities...............................................    35
     Section 602.     Notice of Defaults................................................................    35
     Section 603.     Certain Rights of Trustee.........................................................    35
     Section 604.     Not Responsible for Recitals or Issuance of Securities............................    36
     Section 605.     May Hold Securities...............................................................    36
     Section 606.     Money Held in Trust...............................................................    36
     Section 607.     Compensation and Reimbursement....................................................    36
     Section 608.     Disqualification; Conflicting Interests...........................................    37
     Section 609.     Corporate Trustee Required; Eligibility...........................................    37
     Section 610.     Resignation and Removal; Appointment of Successor.................................    38
     Section 611.     Acceptance of Appointment by Successor............................................    39
     Section 612.     Merger, Conversion, Consolidation or Succession to Business.......................    39
     Section 613.     Preferential Collection of Claims Against Company.................................    40
     Section 614.     Appointment of Authenticating Agent...............................................    40

ARTICLE VII HOLDERS' LISTS AND REPORTS  BY TRUSTEE AND COMPANY..........................................    41

     Section 701.     Company to Furnish Trustee Names and Addresses of Holders.........................    41
     Section 702.     Preservation of Information; Communications to Holders............................    42
     Section 703.     Reports by Trustee................................................................    42
     Section 704.     Reports by Company................................................................    42

ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.......................................    43
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                                                        <C>
     Section 801.     Company May Consolidate, Etc., Only on Certain Terms..............................    43
     Section 802.     Successor Substituted for Company.................................................    43

ARTICLE IX SUPPLEMENTAL INDENTURES......................................................................    43

     Section 901.     Supplemental Indentures Without Consent of Holders................................    43
     Section 902.     Supplemental Indentures with Consent of Holders...................................    44
     Section 903.     Execution of Supplemental Indentures..............................................    45
     Section 904.     Effect of Supplemental Indentures.................................................    45
     Section 905.     Conformity with Trust Indenture Act...............................................    45
     Section 906.     Reference in Securities to Supplemental Indentures................................    45

ARTICLE X COVENANTS ....................................................................................    46

     Section 1001.    Payment of Principal, Premium and Interest........................................    46
     Section 1002.    Maintenance of Office or Agency...................................................    46
     Section 1003.    Money for Security Payments to Be Held in Trust...................................    46
     Section 1004.    Statements of Officers of Company as to Default; Notice of Default................    47
     Section 1005.    Existence.........................................................................    48
     Section 1006.    Maintenance of Properties.........................................................    48
     Section 1007.    Payment of Taxes and Other Claims.................................................    48
     Section 1008.    Further Instruments and Acts......................................................    48
     Section 1009.    Limitation on Liens...............................................................    49
     Section 1010.    Limitations on Disposition of Stock of Significant Subsidiaries...................    49
     Section 1011.    Waiver of Certain Covenants.......................................................    49

ARTICLE XI REDEMPTION OF SECURITIES.....................................................................    50

     Section 1101.    Right of Redemption...............................................................    50
     Section 1102.    Applicability of Article..........................................................    50
     Section 1103.    Election to Redeem; Notice to Trustee.............................................    50
     Section 1104.    Selection by Trustee of Securities to be Redeemed.................................    50
     Section 1105.    Notice of Redemption..............................................................    50
     Section 1106.    Deposit of Redemption Price.......................................................    51
     Section 1107.    Securities Payable on Redemption Date.............................................    51
     Section 1108.    Securities Redeemed in Part.......................................................    52

ARTICLE XII DEFEASANCE AND COVENANT DEFEASANCE..........................................................    52

     Section 1201.    Company's Option to Effect Defeasance or Covenant Defeasance......................    52
     Section 1202.    Defeasance and Discharge..........................................................    52
     Section 1203.    Covenant Defeasance...............................................................    53
     Section 1204.    Conditions to Defeasance or Covenant Defeasance...................................    53
     Section 1205.    Deposited Money and U. S. Government Obligations to Be
                        Held in Trust; Other Miscellaneous Provisions ..................................    55
     Section 1206.    Reinstatement.....................................................................    55
</TABLE>

                                      iii
<PAGE>
                  INDENTURE, dated as of _______ __, 2003, between Infinity,
Property and Casualty Corporation, a corporation duly organized and existing
under the laws of the State of Ohio (herein called the "Company"), having its
principal office at Birmingham, Alabama, and U.S. Bank National Association, a
national banking association duly organized and existing under the laws of the
United States of America, as Trustee (herein called the "Trustee").

                              W I T N E S S E T H :

                  WHEREAS, the Company has duly authorized the creation of an
issue of its __% Senior Notes Due 2013 (herein called the "Securities") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture; and

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

                                 NOW, THEREFORE:

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

                                   ARTICLE I

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

                  Section 101. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:

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

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

                  (3) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with generally accepted
         accounting principles;

                  (4) the words "herein," "hereof" and "hereunder" and other
         words of similar import refer to this Indenture as a whole and not to
         any particular Article, Section or other subdivision; and
<PAGE>
                  (5) the words "Article" and "Section" refer to an Article and
         Section, respectively, of this Indenture.

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

                  "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 specified 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).

                  "Authenticating Agent" means any Person authorized pursuant to
Section 614 on behalf of the Trustee to authenticate Securities.

                  "Bankruptcy Law" means Title 11, United States Code, or any
applicable bankruptcy, insolvency, reorganization, rehabilitation or other
similar Federal or state law.

                  "Board of Directors" means the board of directors of the
Company or any duly authorized committee of that board.

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

                  "Business Day," when used with respect to any Place of Payment
or other location, means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in that Place of Payment or
other location, as the case may be, are authorized or obligated by law or
executive order to close.

                  "Capital Lease Obligation" means an obligation of the Company
or any Subsidiary to pay rent or other amounts under a lease of (or another
Indebtedness arrangement conveying the right to use) real or personal property
thereof that is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet thereof in accordance with
generally accepted accounting principles. For purposes of this Indenture, the
amount of such obligation shall be the capitalized amount thereof and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease (or such other arrangement) prior to the first date
upon which such lease (or such other arrangement) may be terminated by the
lessee (or obligor) without payment of a penalty.

                  "Capital Stock" of any Person means any and all shares,
interests, units, participations or other equivalents (however designated) of
corporate stock or other equity of such Person.

                                       2
<PAGE>
                  "Commission" means the Securities and Exchange Commission, as
from time to time constituted and created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.

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

                  "Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chief Executive Officer,
President, Chief Financial Officer or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.

                  "Corporate Trust Office" means the office of the Trustee in
the City of Cincinnati, Ohio, at which at any particular time its corporate
trust business shall be administered, which, as of the date of this Indenture,
is located at 425 Walnut Street, Cincinnati, Ohio 45202.

                  "Corporation" means a corporation, association, company,
joint-stock company or business trust.

                  "Covenant Defeasance" has the meaning specified in Section
1203.

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

                  "Defeasance" has the meaning specified in Section 1202.

                  "Definitive Security" means a Security other than a Global
Security or a temporary Security.

                  "Depositary" means the Person designated as Depositary by the
Company in Section 301 until a successor Depositary shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Depositary" shall mean or include each Person who is then a Depositary
hereunder.

                  "Event of Default" has the meaning specified in Section 501.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any statutory successor thereto.

                  "Global Security" means a Security evidencing all or part of
the Securities, issued to the Depositary in accordance with Section 303 and
bearing the legend described in Section 204.

                                       3
<PAGE>
                  "Guaranty" by any Person means any Obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including,
without limitation, every Obligation of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Indebtedness of the
payment of such Indebtedness or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness (and the
terms "Guaranteed," "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guaranty by any
Person shall not include endorsements by such Person for collection or deposit,
in either case in the ordinary course of business.

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

                  "Indebtedness" of any Person means, without duplication, (i)
every obligation of such Person for money borrowed; (ii) every obligation of
such Person evidenced by bonds, debentures, notes or similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every obligation of such Person under conditional
sale or other title retention agreements relating to assets or property
purchased by such Person or issued or assumed as the deferred purchase price of
property, assets or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business that are not overdue by
more than 90 days or are being contested by such Person in good faith); (iv)
every Capital Lease Obligation of such Person; (v) every obligation of such
Person with respect to any Sale and Leaseback Transaction to which such Person
is a party (vi) if such Person is engaged in the insurance business, all Surplus
Debt of such Person; (vii) every obligation of the type referred to in clauses
(i) through (vi) and (viii) of another Person the payment of which such Person
has Guaranteed or is otherwise responsible for or liable for, directly or
indirectly, as obligor, Guarantor or otherwise; and (viii) every amendment,
modification, renewal and extension of an obligation of the type referred to in
clauses (i) through (vii).

                  "Indenture" means this instrument as originally executed, as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.

                  "Insurance Regulator" means any Person having (i) authority to
administer or enforce any statute, regulation or other law of the United States,
any State or the District of Columbia or any instrumentality or political
subdivision thereof (or any order or decree of any court thereof) governing the
conduct of an insurance business, and (ii) jurisdiction over the matter in
question.

                                       4
<PAGE>
                  "Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.

                  "Maturity Date," when used with respect to any Security, means
the date on which the principal of such Security becomes due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption on a Redemption Date or otherwise.

                  "Notice of Default" has the meaning specified in Section 501.

                  "Obligation" of any Person means any obligation of such Person
to pay principal, premium, interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to such
Person whether or not a claim for such post-petition interest is allowed in such
proceeding), penalties, reimbursement or indemnification amounts, fees, expenses
or other amounts.

                  "Officers' Certificate" means a certificate signed by the
Chief Executive Officer, the President, Chief Financial Officer or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee.

                  "Opinion of Counsel" means a written opinion of legal counsel,
who may be an employee of or counsel for the Company, and who shall be
reasonably acceptable to the Trustee.

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

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

                  (2) Securities for which payment or redemption money in the
         necessary amount has been theretofore deposited with the Trustee or any
         Paying Agent (other than the Company) in trust or set aside and
         segregated in trust by the Company (if the Company shall act as its own
         Paying Agent) for the Holders of such Securities; provided that, if
         such Securities are to be redeemed, notice of such redemption has been
         duly given pursuant to this Indenture or provision therefor
         satisfactory to the Trustee has been made; and

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

                                       5
<PAGE>
provided, however, that, in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.

                  "Paying Agent" means any Person authorized by the Company to
pay the principal of and premium, if any, or interest on any Securities on
behalf of the Company.

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

                  "Place of Payment," when used with respect to the Securities,
means the place or places where, subject to the provisions of Section 1002, the
principal of and premium, if any, and interest on the Securities are payable as
specified and as contemplated by Section 301.

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

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

                  "Redemption Price," when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture, including as applicable without duplication, any accrued interest due
upon such redemption pursuant to the terms of this Indenture.

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

                  "Sale and Leaseback Transaction" means any arrangement with
any bank, insurance company or other lender or investor (other than the Company
or a Subsidiary), or to which such lender or investor is a party, providing for
the leasing by the Company or any Subsidiary of any property or asset of the
Company or any Subsidiary that has

                                       6
<PAGE>
been or is to be sold or transferred by the Company or any Subsidiary to such
lender or investor or to any Person (other than the Company or a Subsidiary) to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset.

                  "Securities" has the meaning specified in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.

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

                  "Significant Subsidiary" means a Subsidiary, including its
Subsidiaries, which meets the definition of "significant subsidiary" in Rule
1-02(w) of Regulation S-X promulgated under the Securities Act of 1933, as
amended.

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

                  "Stated Maturity," when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.

                  "Subsidiary" means any corporation, partnership or other
entity of which at the time of determination more than 50% of the outstanding
Voting Stock is owned, directly or indirectly, by the Company, one or more of
the Company's Subsidiaries or the Company and one or more of the Company's
Subsidiaries.

                  "Surplus Debt" of any Person engaged in the insurance business
means any liability of such Person to another Person for repayment of a sum of
money to such other Person under a written agreement approved by an Insurance
Regulator providing for such liability to be paid only out of surplus of such
Person in excess of a minimum amount of surplus specified in such agreement.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed, except as
provided in Section 905; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.

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

                  "U.S. Government Obligations" has the meaning specified in
Section 1204.

                                       7
<PAGE>
                  "Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether designated by a number or a word or
words added before or after the title "vice president."

                  "Voting Stock" means stock of any class or classes or other
ownership interest having general voting power under ordinary circumstances to
elect a majority of the board of directors, managers, trustees or persons with
similar functions of the entity in question, provided that, for the purposes of
this definition, stock which carries only the right to vote conditionally on the
happening of an event will not be considered Voting Stock whether or not that
event has happened.

                  "Wholly Owned Subsidiary" means, at any time, a Subsidiary all
of the outstanding Capital Stock of which (other than directors' qualifying
shares) shall at such time be owned, directly or indirectly, by the Company, one
or more Wholly Owned Subsidiaries or the Company and one or more Wholly Owned
Subsidiaries.

Section 102. Compliance Certificates and Opinions. Upon any application or
request by the Company to the Trustee to take any action under any provision of
this Indenture, the Company shall furnish to the Trustee such certificates and
opinions as may be required under the Trust Indenture Act. Each such certificate
or opinion shall be in the form of an Officers' Certificate if to be given by an
officer of the Company, or an Opinion of Counsel, if to be given by counsel, and
shall comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.

                  Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (except for certificates
provided for in Section 1004) shall include:

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

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

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

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

                  Section 103. Form of Documents Delivered to Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one

                                       8
<PAGE>
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.

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

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

                  Section 104. Acts of Holders; Record Date(a) . (a) Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by one or more agents duly appointed
in writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.

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

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

                                       9
<PAGE>
                  (d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.

                  (e) The Company may, in the circumstances permitted by the
Trust Indenture Act, set any day as the record date for the purpose of
determining the Holders of Outstanding Securities entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other Act
provided or permitted by this Indenture to be given or taken by Holders of
Securities. With regard to any record date set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to give or take the relevant
action, whether or not such Persons remain Holders after such record date.

                  Section 105. Notices, Etc., to Trustee and Company. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,

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

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

                  Section 106. Notice to Holders; Waiver. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

                                       10
<PAGE>
                  In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.

                  Section 107. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or excluded, as the case may be.

                  Section 108. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                  Section 109. Successors and Assigns. All covenants and
agreements in this Indenture by the Company shall bind its respective successors
and assigns, whether so expressed or not.

                  Section 110. Separability Clause. In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

                  Section 111. Benefits of Indenture. Nothing in this Indenture
or in the Securities, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder and the Holders of Securities,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.

                  Section 112. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

                  Section 113. Legal Holidays. In any case where any Interest
Payment Date, Redemption Date, Maturity Date or Stated Maturity of any Security
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal (and premium if
any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Maturity Date or Redemption Date, or at the Stated Maturity, except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the Interest Payment Date, Maturity Date or
Redemption date, or at the Stated Maturity; provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date,

                                       11
<PAGE>
Maturity Date or Stated Maturity, as the case may be, if such payment is made or
duly provided for on the next succeeding Business Day.

                  Section 114. Incorporators, Stockholders, Officers and
Directors of the Company Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement of this Indenture or any indenture
supplemental hereto or of any Security, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator, as such,
stockholder, officer or director, past, present or future, of the Company or of
any successor Person, either directly or through the Company or any successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, as such, stockholders,
officers or directors, of the Company or of any successor Person, or any of
them, because of the creation of the indebtedness hereby authorized, or under or
by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Securities or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, as such, stockholder, officer or director,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of such Securities.

                                   ARTICLE II

                               FORMS OF SECURITIES

                  Section 201. Forms Generally. The Securities and the Trustee's
certificates of authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof.

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

                  Section 202. Form of Face of Security. [If a Global Security,
insert legend required by Section 204 of the Indenture] [if applicable, insert
-- UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE

                                       12
<PAGE>
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.]

                   INFINITY PROPERTY AND CASUALTY CORPORATION

                           ___% Senior Notes Due 2013

No.______                                                                $______

                  Infinity Property and Casualty Corporation, an Ohio
corporation (herein called the "Company," which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to _______________, or registered assigns, the principal sum of
________________ on _______ __, 2013, and to pay interest thereon from _______
__, 2003 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, semiannually in arrears on
_______________ and _______________ in each year, commencing _______________,
2003, at the rate per annum of ___%, until the principal hereof is paid or made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the _______________ or _______________
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.

                  [If a Definitive Security, insert -- Payment of the principal
of and premium, if any, and interest on, and the Redemption Price with respect
to, this Security will be made at the office or agency of the Company maintained
for that purpose in the United States, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
payment of interest may be made by check mailed to the

                                       13
<PAGE>
address of the Person entitled thereto as such address shall appear in the
Security Register.]

                  [If a Global Security, insert -- Payment of the principal of
and premium, if any, and any such interest on, and the Redemption Price with
respect to, this Security will be made by transfer of immediately available
funds to a bank account in the Borough of Manhattan, the City of New York
designated by the Holders in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.]

                  Interest on this Security will be calculated on the basis of a
360-day year consisting of twelve 30-day months.

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

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

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

Dated:

                                              INFINITY PROPERTY AND CASUALTY
                                              CORPORATION

                                              By _______________________________
                                                 Name:
                                                 Title:

                  Section 203. Form of Reverse of Security. This Security is one
of a duly authorized issue of Securities of the Company designated as its ___%
Senior Notes Due 20__ (herein called the "Securities"), initially limited in
aggregate principal amount to $180,000,000 issued and to be issued under an
Indenture, dated as of _______ ___, 2003 (herein called the "Indenture"),
between the Company and U.S. Bank National Association, as Trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), to which the Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. The aggregate principal amount of the
Securities may be increased in the future, without the consent of the Holders of
the Securities, on the same terms and with the same CUSIP number as the
Securities.

                                       14
<PAGE>
                  The Securities shall be redeemable, in whole or from time to
time in part, at the option of the Company on any date (a "Redemption Date"), at
a price (the "Redemption Price") equal to the greater of (i) 100% of the
principal amount of the Securities to be redeemed or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
(exclusive of interest accrued to such Redemption Date) discounted to such
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus [___] basis points, plus, in
either case, accrued and unpaid interest on the principal amount being redeemed
to such Redemption Date.

                  "Treasury Rate" means the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Redemption Date.

                  "Comparable Treasury Issue" means the United States Treasury
security selected by the Independent Investment Banker as having a maturity
comparable to the remaining term of the Securities to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities.

                  "Independent Investment Banker" means Credit Suisse First
Boston LLC and any successor firm or, if such firm is unwilling or unable to
select the Comparable Treasury Issue, an independent investment banking
institution of national standing appointed by the Trustee after consultation
with the Company.

                  "Comparable Treasury Price" means with respect to any
Redemption Date for the Securities (i) the average of the Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains
fewer than three such Reference Treasury Dealer Quotations, the average of all
such quotations.

                  "Reference Treasury Dealer" means each of Credit Suisse First
Boston LLC and any two of the following as determined by the Company: Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and
Bear, Sterns & Co. Inc. (each, a "Primary Treasury Dealer"); provided that (i)
if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company
will substitute therefor another Primary Treasury Dealer and (ii) if the Company
fails to select a substitute within a reasonable period of time, then the
substitute will be any other primary treasury dealer selected by the Trustee
after consultation with the Company.

                  "Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such

                                       15
<PAGE>
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.

                  The Company shall notify the Trustee of the Redemption Price
with respect to the foregoing redemption promptly after the calculation thereof.
The Trustee shall not be responsible for calculating said Redemption Price.

                  If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities or portions of Securities to be redeemed by
such method as the Trustee shall deem fair and appropriate. The Trustee may
select for redemption Securities and portions of Securities in amounts of whole
multiples of $1,000.

                  In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.

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

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

                  The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.

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

                  [If a Definitive Security, insert -- As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable in the Security Register, upon surrender of this
Security for registration of transfer at the office

                                       16
<PAGE>
or agency maintained by the Company in the United States for such purpose, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.]

                  [If a Global Security, insert -- This Global Security or
portion hereof may not be exchanged for Definitive Securities except in the
limited circumstances provided in the Indenture.]

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

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

                  Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this security is registered as the owner
hereof for all purposes, whether or not any amount due in respect of this
Security be overdue, and none of the Company, the Trustee or any such agent
shall be affected by notice to the contrary.

                  No recourse for the payment of the principal of, premium, if
any, or interest on this Security, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, as such, stockholder, officer or
director, past, present or future, of the Company or of any successor Person,
either directly or through the Company, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the issue hereof, expressly waived and
released.

                  The Indenture and the Securities 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, without regard to
principles of conflicts of laws.

                  All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture. The
foregoing summary of the terms of the Indenture is qualified in all respects by
the terms of the Indenture.

                  Section 204. Global Securities. Every Global Security
authenticated and delivered hereunder shall bear a legend in substantially the
following form:

                                       17
<PAGE>
                  "THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
                  INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
                  NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
                  NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR
                  SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN
                  THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY
                  BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
                  IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED
                  UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN
                  LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO
                  THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. "

                  If Securities are issuable in whole or in part in the form of
one or more Global Securities, as specified and as contemplated by Section 301,
then, notwithstanding the provisions of Section 302 of the Indenture, any Global
Security shall represent such of the Outstanding Securities as shall be
specified therein and may provide that it shall represent the aggregate amount
of Outstanding Securities from time to time endorsed thereon and that the
aggregate amount of Outstanding Securities represented thereby may from time to
time be reduced or increased, as the case may be, to reflect exchanges. Any
endorsement of a Global Security to reflect the amount, or any reduction or
increase in the amount, of Outstanding Securities represented thereby shall be
made in such manner and upon instructions given by such Person or Persons as
shall be specified therein or in a Company Order. Subject to the provisions of
Sections 303, 304 and 305 of the Indenture, the Trustee shall deliver and
redeliver any Global Security in the manner and upon instructions given by the
Person or Persons specified therein or in the applicable Company Order. Any
instructions by the Company with respect to endorsement or delivery or
redelivery of a Global Security shall be in a Company Order (which need not
comply with Section 102 of the Indenture and need not be accompanied by an
Opinion of Counsel).

                  Section 205. Form of Trustee's Certificate of Authentication.

                         Certificate of Authentication.

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

                  Dated:

                                                U.S. BANK NATIONAL ASSOCIATION,
                                                as Trustee

                                                By _____________________________
                                                       Authorized Signatory

                                       18
<PAGE>
                  Section 206. Form of Assignment. To assign this Security, fill
in the form below: I or we assign and transfer this Security to:

                             _______________________

                             _______________________
                             (Insert assignee's soc.
                               sec. or tax ID no.)

                             _______________________

                             _______________________

                             _______________________
                            (Print or type assignee's
                           name, address and zip code)

                             and irrevocably appoint

                             _______________________

                             _______________________

as agent to transfer this security on the books of the Company. The agent may
substitute another to act for him.

________________________________________________________________________________

Date: _______________________  Your Signature:_____________________________*

________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)

* Your signature must be guaranteed by a commercial bank or trust company or by
a member or members' organization of the New York Stock Exchange or American
Stock Exchange.

                                  ARTICLE III

                                 THE SECURITIES

                  Section 301. Title and Terms. The aggregate principal amount
of Securities which may be authenticated and delivered under this Indenture is
initially limited to $180,000,000 except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Sections 304, 305, 306, 906 or 1108; provided
however, that the aggregate principal amount of the Securities may be increased
in the future, without the consent of the Holders of the Securities, on the same
terms and with the same CUSIP number as the Securities.

                                       19
<PAGE>
                  The Securities shall be known and designated as the "___%
Senior Notes Due 2013" of the Company. Their Stated Maturity shall be _______
__, 2013, and they shall bear interest at the rate per annum of __% from
_________, 2003 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, as the case may be, payable semiannually in
arrears on _____________ and ____________ commencing _____________, 2003, until
the principal thereof is paid or made available for payment.

                  Payment of the principal of and premium, if any, and interest
on, and the Redemption Price with respect to, the Securities (other than Global
Securities) will be made at the office or agency of the Company maintained for
such purpose in the United States, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.

                  Payment of the principal of and premium, if any, and any
interest on, and the Redemption Price with respect to, any Global Security will
be made by transfer of immediately available funds to a bank account designated
by the Holder in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.

                  The Securities shall be redeemable as provided in Article XI.

                  The Securities shall be subject to Defeasance and Covenant
Defeasance as provided in Article XII.

                  The initial Depositary for the Securities is The Depository
Trust Company.

                  Section 302. Denominations. The Securities shall be issuable
only in registered form without coupons and only in denominations of $1,000 and
any integral multiple thereof.

                  Section 303. Execution, Authentication, Delivery and Dating(a)
.. (a) The Securities shall be executed on behalf of the Company by its Chief
Executive Officer, President, Chief Financial Officer or one of its Vice
Presidents. The signature of any of these officers on the Securities may be
manual or facsimile.

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

                  At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of

                                       20
<PAGE>
such Securities; and the Trustee in accordance with such Company Order shall
authenticate and deliver such Securities as in this Indenture provided and not
otherwise.

                  Notwithstanding the provisions of the preceding paragraph, if
all Securities are not to be originally issued at one time, it shall not be
necessary to deliver the Company Order otherwise required pursuant to such
preceding paragraph at or prior to the time of authentication of each such
Security if the Company Order is delivered at or prior to the authentication
upon original issuance of the first Security to be issued.

                  Each Security shall be dated the date of its authentication.

                  No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 309, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.

                  Minor typographical and other minor errors in the text of any
Security shall not affect the validity and enforceability of such Security if it
has been duly authenticated and delivered by the Trustee.

                  (b) The Company shall initially execute and the Trustee shall
authenticate and deliver one or more Global Securities that (i) shall represent
an aggregate amount equal to the aggregate principal amount of the initially
issued Securities, (ii) shall be registered in the name of the Depositary or the
nominee of the Depositary, (iii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially in the form required in Section 204.

                  (c) The Depositary must, at all times while it serves as such
Depositary, be a clearing agency registered under the Exchange Act, and any
other applicable statute or regulation.

                  Section 304. Temporary Securities. Pending the preparation of
Definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and make available for delivery, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
Definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.

                                       21
<PAGE>
                  If temporary Securities are issued, the Company will cause
Definitive Securities to be prepared without unreasonable delay. After the
preparation of Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of Definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as Definitive Securities.

                  Section 305. Registration, Registration of Transfer and
Exchange(a) . (a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfer of Securities. The Trustee is
hereby appointed the initial "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided. The Company may at
any time replace such Security Registrar, change such office or agency or act as
its own Security Registrar. The Company will give prompt written notice to the
Trustee of any change of the Security Registrar or of the location of such
office or agency.

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

                  Notwithstanding any other provision of this Section, unless
and until it is exchanged in whole or in part for the individual Securities
represented thereby, a Global Security representing all or a portion of the
Securities may not be transferred except as a whole by the Depositary to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor Depositary or nominee of such successor Depositary.

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

                  (b) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or if at any time the
Depositary shall no

                                       22
<PAGE>
longer be eligible under Section 303(c), the Company shall appoint a successor
Depositary. If a successor Depositary is not appointed by the Company within 90
days after the Company receives such notice or becomes aware of such
ineligibility, the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of individual Definitive
Securities in exchange for the Global Security or Securities, will authenticate
and make available for delivery, individual Definitive Securities in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities, in exchange for such Global Security or Securities.

                  The Company may at any time and in its sole discretion
determine that individual Securities issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or Securities.
In such event the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of individual Definitive
Securities in exchange for the Global Security or Securities, will authenticate
and make available for delivery, individual Definitive Securities in an
aggregate principal amount equal to the principal amount of the Global Security
or Securities, in exchange for such Global Security or Securities.

                  The Depositary may surrender a Global Security in exchange in
whole or in part for individual Definitive Securities on such terms as are
acceptable to the Company and such Depositary. Thereupon, the Company shall
execute, and the Trustee shall authenticate and make available for delivery,
without service charge,

                  (i) to each Person specified by such Depositary a new
         individual Definitive Security or Securities of any authorized
         denomination as requested by such Person in aggregate principal amount
         equal to and in exchange for such Person's beneficial interest in the
         Global Security; and

                  (ii) to such Depositary a new Global Security in a
         denomination equal to the difference, if any, between the principal
         amount of the surrendered Global Security and the aggregate principal
         amount of individual Definitive Securities delivered to Holders
         thereof.

                  Upon the exchange of a Global Security for individual
Definitive Securities in an aggregate principal amount equal to the principal
amount of such Global Security, such Global Security shall be canceled by the
Trustee. Individual Definitive Securities issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall make available for delivery such
individual Definitive Securities to the Persons in whose names such Securities
are so registered.

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

                                       23
<PAGE>
                  Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
reasonably satisfactory to the Company and the Security Registrar duly executed,
by the Holder thereof or his attorney duly authorized in writing.

                  No service charge shall be made for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1108 not involving any transfer.

                  The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemable portion of any Security being redeemed in part.

                  Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and make available for delivery in
exchange therefor a new Security, of like tenor and principal amount and bearing
a number not contemporaneously outstanding.

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

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

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

                  Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be

                                       24
<PAGE>
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities
duly issued hereunder.

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

                  Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.

                  Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date notwithstanding the fact that such Holder
was a Holder on such Regular Record Date, and such Defaulted Interest may be
paid by the Company, at its election, as provided in Clause (1) or (2) below:

                  (1) The Company may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Securities (or their
         respective Predecessor Securities) are registered at the close of
         business on a Special Record Date for the payment of such Defaulted
         Interest, which shall be fixed in the following manner. The Company
         shall notify the Trustee in writing of the amount of Defaulted Interest
         proposed to be paid on each Security and the date of the proposed
         payment, and at the same time the Company shall deposit with the
         Trustee an amount of money equal to the aggregate amount proposed to be
         paid in respect of such Defaulted Interest or shall make arrangements
         reasonably satisfactory to the Trustee for such deposit prior to the
         date of the proposed payment. Such money when deposited shall be held
         in trust for the benefit of the Persons entitled to such Defaulted
         Interest as provided in this Clause. Thereupon the Trustee shall fix a
         Special Record Date for the payment of such Defaulted Interest which
         shall be not more than 15 days and not less than 10 days prior to the
         date of the proposed payment and not less than 10 days after the
         receipt by the Trustee of the notice of the proposed payment. The
         Trustee shall promptly notify the Company of such Special Record Date
         and, in the name and at the expense of the Company, shall cause notice
         of the proposed payment of such Defaulted Interest and the Special
         Record Date therefor to be mailed, first-class postage prepaid, to each
         Holder at his address as it appears in the Security Register, not less
         than 10 days prior to such Special Record Date. Notice of the proposed
         payment of such Defaulted Interest and the Special Record Date therefor
         having been so mailed, such Defaulted Interest shall be paid to the
         Persons in whose names the Securities (or their respective Predecessor
         Securities) are registered at the close of business on such Special
         Record Date and shall no longer be payable pursuant to the following
         Clause (2).

                                       25
<PAGE>
                  (2) The Company may make payment of any Defaulted Interest in
         any other lawful manner not inconsistent with the requirements of any
         securities exchange on which the Securities may then be listed, and
         upon such notice as may be required by such exchange, if, after notice
         given by the Company to the Trustee of the proposed payment pursuant to
         this Clause, such manner of payment shall be deemed reasonably
         practicable by the Trustee.

                  Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.

                  Section 308. Persons Deemed Owners. Prior to due presentment
of a Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and premium, if any, and (subject to Sections
305 and 307) interest on such Security and for all other purposes whatsoever,
whether or not any payment due in respect of such Security be overdue, and none
of the Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.

                  Section 309. Cancellation. All Securities surrendered for
payment, redemption, registration of transfer or exchange shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and may deliver to
the Trustee (or any other Person for delivery to the Trustee) for cancellation
any Securities previously authenticated hereunder which the Company has not
issued and sold, and all Securities so delivered shall be promptly cancelled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall
be disposed of as directed by a Company Order, or, if no such Company Order is
given within 60 days after notice by the Trustee to the Company of cancellation
of such Securities, then the Trustee may destroy such cancelled Security and, in
such case, the Trustee shall thereafter deliver to the Company a certificate
with respect to such destruction.

                  Section 310. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months.

                  Section 311. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such "CUSIP" numbers either as printed on the
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers

                                       26
<PAGE>
printed on the Securities, and any such redemption shall not be affected by any
defect in or omission of such "CUSIP" numbers.

                                   ARTICLE IV

                           SATISFACTION AND DISCHARGE

                  Section 401. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company Request cease to be of further effect (except as to
any registration of transfer or exchange of Securities herein expressly provided
for), and the Trustee, on demand of and at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when

                  (1) either

                           (A) all Securities theretofore authenticated and
                  delivered (other than (i) Securities which have been
                  mutilated, destroyed, lost or stolen and which have been
                  replaced or paid as provided in Section 306 and (ii)
                  Securities for whose payment money has theretofore been
                  deposited in trust or segregated and held in trust by the
                  Company and thereafter repaid to the Company or discharged
                  from such trust, as provided in Section 1003) have been
                  delivered to the Trustee for cancellation; or

                           (B) all such securities not theretofore delivered to
                  the Trustee for cancellation

                                    (i) have become due and payable, or

                                    (ii) will become due and payable at their
                           Stated Maturity within one year, or

                                    (iii) are to be called for redemption within
                           one year under arrangements satisfactory to the
                           Trustee for the giving of notice of redemption by the
                           Trustee in the name, and at the expense, of the
                           Company,

                  and the Company, in the case of clause (i), (ii) or (iii)
                  above, has deposited or caused to be deposited with the
                  Trustee as trust funds in trust for the purpose an amount
                  sufficient to pay and discharge the entire indebtedness on
                  such Securities not theretofore delivered to the Trustee for
                  cancellation for principal (and premium, if any) and interest
                  to the date of such deposit (in the case of Securities which
                  have become due and payable) or to the Stated Maturity or
                  Redemption Date, as the case may be;

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

                                       27
<PAGE>
            (3)   the Company has delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that all conditions
      precedent herein provided for relating to the satisfaction and discharge
      of this Indenture have been complied with.

            Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company in Sections 305, 306, 607, 1001, 1002 and 1003
shall survive until the Securities are no longer outstanding.

            Section 402. Application of Trust Money. Subject to the provisions
of the last paragraph of Section 1003, all money deposited with the Trustee
pursuant to Section 401 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment to the
Persons entitled thereto, either directly or through any Paying Agent (including
the Company acting as its own Paying Agent) as the Trustee may determine, of the
principal (and premium, if any) and interest for whose payment such money has
been deposited with the Trustee.

                                   ARTICLE V

                           EVENTS OF DEFAULT; REMEDIES

            Section 501. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order or any court or
any order, rule or regulation of any administrative or governmental body):

            (1)   default by the Company in the payment of any interest upon any
      Security when it becomes due and payable, and continuance of such default
      for a period of 30 days; or

            (2)   default by the Company in the payment of the principal of or
      premium, if any, on, or the Redemption Price on, any Security when the
      same becomes due and payable at its Maturity Date; or

            (3)   default by the Company in the performance, or breach, of any
      covenant or warranty of the Company in this Indenture (other than a
      covenant or warranty a default in whose performance or whose breach is
      elsewhere in this Section specifically dealt with), and continuance of
      such default or breach for a period of 30 days after there has been given,
      by registered or certified mail, to the Company by the Trustee or to the
      Company and the Trustee by the Holders of at least 25% in principal amount
      of the Outstanding Securities a written notice specifying such default or
      breach and requiring it to be remedied and stating that such notice is a
      "Notice of Default" hereunder; or

            (4)   (A) the failure by the Company or any Subsidiary to pay
      Indebtedness in an aggregate principal amount exceeding $10 million at the
      later of final maturity or upon expiration of any applicable grace period
      with respect to

                                       28
<PAGE>
      such principal amount, or (B) acceleration of the maturity of any
      Indebtedness of the Company or any Subsidiary, in excess of $10 million,
      if such failure to pay is not discharged or such acceleration is not
      annulled within 10 days after due notice; or

            (5)   a decree or order by a court having jurisdiction in the
      premises shall have been entered adjudging the Company or any Significant
      Subsidiary as bankrupt or insolvent, or approving as properly filed a
      petition seeking reorganization or rehabilitation of the Company or any
      Significant Subsidiary under any Bankruptcy Law, and such decree or order
      shall have continued undischarged and unstayed for a period of 60 days; or
      a decree or order of a court having jurisdiction in the premises for the
      appointment of a receiver or rehabilitator or custodian or sequestrator or
      liquidator or trustee or assignee in bankruptcy or insolvency of the
      Company or any Significant Subsidiary or of their respective property or
      other similar official, or for the winding up or liquidation of their
      respective affairs, shall have been entered, and such decree or order
      shall have remained in force undischarged and unstayed for a period of 60
      days; or

            (6)   the Company or any Significant Subsidiary shall institute
      proceedings to be adjudicated a voluntary bankrupt, or shall consent to
      the filing of a bankruptcy proceeding against any of them, or shall file a
      petition or answer or consent seeking reorganization or rehabilitation
      under any Bankruptcy Law, or shall consent to the filing of any such
      petition, or shall consent to the appointment of a receiver or
      rehabilitator or custodian or sequestrator or liquidator or trustee or
      assignee in bankruptcy or insolvency of the Company or any Significant
      Subsidiary or of their respective property or other similar official, or
      shall make an assignment for the benefit of creditors, or shall admit in
      writing its inability to pay their respective debts generally as they
      become due; or

            (7)   the entry against the Company or any Significant Subsidiary of
      one or more judgments, decrees or orders by a court having jurisdiction in
      the premises from which no appeal may be or is taken for the payment of
      money, either individually or in the aggregate, in excess of $10 million
      and the continuance of such judgment, decree or order unsatisfied and in
      effect for any period of 60 consecutive days without a stay of execution
      and there has been given, by registered or certified mail in the manner
      set forth in Section 105, to the Company by the Trustee or to the Company
      and the Trustee by the Holders of not less than 25% in principal amount of
      the Outstanding Securities a written notice specifying such entry and
      continuance of such judgment, decree or order and stating that such notice
      is a "Notice of Default" hereunder.

            Section 502. Acceleration of Maturity Date; Rescission and
Annulment. If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable, by a notice in writing to

                                       29
<PAGE>
the Company (and to the Trustee if given by Holders), and upon receipt by the
Company (and the Trustee if given by Holders) of any such written notice, such
principal shall become immediately due and payable. If an Event of Default
specified in Section 501(5) or 501(6) occurs, all unpaid principal and accrued
interest on the Outstanding Securities shall become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.

            At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article V provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if:

            (1)   the Company has paid or deposited with the Trustee a sum
      sufficient to pay

                  (A)   all overdue interest on all Securities,

                  (B)   the principal of and premium, if any, on any Securities
            which have become due otherwise than by such declaration of
            acceleration and interest thereon at the rate borne by the
            Securities,

                  (C)   to the extent that payment of such interest is lawful,
            interest upon overdue interest at the rate borne by the Securities,
            and

                  (D)   all sums paid or advanced by the Trustee hereunder and
            the reasonable compensation, expenses, disbursements and advances of
            the Trustee, its agents and counsel, and

            (2)   all Events of Default, other than the nonpayment of the
      principal of Securities which have become due solely by such declaration
      of acceleration, have been cured or waived as provided in Section 513.

            No such rescission shall affect any subsequent default or impair any
right consequent thereon.

            Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if

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

            (2)   default is made in the payment of the principal of or premium,
      if any, on any Security at the Maturity Date thereof, including the
      payment of the Redemption Price on any Redemption Date,

                                       30
<PAGE>
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any Defaulted Interest, at the
rate borne by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the reasonable costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.

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

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

            Section 504. Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Company or any other obligor upon the
Securities, their property or their creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have claims of the
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, rehabilitator, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial or regulatory proceeding is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 607.

            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, rehabilitation, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.

                                       31
<PAGE>
            Section 505. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

            Section 506. Application of Money Collected. Any money collected by
the Trustee pursuant to this Article V shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, premium, if any, or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:

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

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

            THIRD: The balance, if any, to the Company.

            Section 507. Limitation on Suits. Except as provided in Section 508,
no Holder of any Security shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless

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

            (2)   the Holders of not less than 25% in principal amount of the
      Outstanding Securities shall have made written request to the Trustee to
      institute proceedings in respect of such Event of Defaults in its own name
      as Trustee hereunder;

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

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

                                       32
<PAGE>
            (5)   no direction inconsistent with such written request has been
      given to the Trustee during such 60-day period by the Holders of a
      majority in principal amount of the Outstanding Securities;

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

            Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
(subject to Section 307) interest on such Security on the respective Stated
Maturities of such payments as expressed in such Security (and in the case of
redemption, the Redemption Price on the applicable Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

            Section 509. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.

            Section 510. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 306, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

            Section 511. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder of any Security to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.

                                       33
<PAGE>
            Section 512. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee,
provided that

            (1)   such direction shall not be in conflict with any rule of law
      or with this Indenture, and

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

            Section 513. Waiver of Past Default. The Holders of not less than a
majority in principal amount of the Outstanding Securities may on behalf of the
Holders of all the Securities waive any past default hereunder and its
consequences, except a default

            (1)   in the payment of the principal of or premium, if any, or
      interest on any Security as specified in clauses (1) and (2) of Section
      501 or

            (2)   in respect of a covenant or provision hereof which under
      Article IX cannot be modified or amended without the consent of the Holder
      of each Outstanding Security affected.

            Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

            Section 514. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture, or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such undertaking or to make such an assessment in any suit instituted by
the Company.

            Section 515. Waiver of Stay or Extension Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

                                       34
<PAGE>
                                   ARTICLE VI

                                   THE TRUSTEE

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

            Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.

            Section 602. Notice of Defaults. If a default occurs hereunder with
respect to the Securities, the Trustee shall give the Holders of the Securities
notice of such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 501(3), no such notice to Holders shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.

            Section 603. Certain Rights of Trustee. Subject to the provisions of
Section 601:

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

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

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

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

                                       35
<PAGE>
            (e)   the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction which shall be reasonably satisfactory to the Trustee;

            (f)   the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit; provided, however, that the
Trustee shall not thereby be deemed to be required to act or be held to any
higher duty of care than existed prior to such inquiry; and

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

            Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility or liability whatsoever for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.

            Section 605. May Hold Securities. The Trustee, any Authenticating
Agent, any Paying Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.

            Section 606. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.

            Section 607. Compensation and Reimbursement. The Company agrees:

            (1)   to pay to the Trustee from time to time such reasonable
      compensation as the Company and the Trustee shall from time to time agree
      upon in writing for all services rendered by it hereunder (which
      compensation shall not

                                       36
<PAGE>
      be limited by any provision of law in regard to the compensation of a
      trustee of an express trust);

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

            (3)   to indemnify each of the Trustee or any predecessor Trustee
      for, and to hold it harmless against, any and all loss, damage, claim,
      liability or expense incurred without negligence, bad faith or willful
      misconduct on its part, arising out of or in connection with the
      acceptance or administration of this trust, including the costs and
      expenses of defending itself against any claim or liability in connection
      with the exercise or performance of any of its powers or duties hereunder,
      except those attributable to its negligence, bad faith or willful
      misconduct. This obligation shall survive the maturity of the Securities.

            The Trustee shall have a claim prior to the Securities as to all
property and funds properly held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.

            When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(5) or Section 501(6), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

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

            Section 608. Disqualification; Conflicting Interests. If the Trustee
has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.

            Section 609. Corporate Trustee Required; Eligibility. There shall at
all times be a Trustee hereunder which shall (i) be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, (ii) authorized under such laws to exercise
corporate trust powers, (iii) have a combined capital and surplus of at least
$50,000,000, and (iv) be subject to supervision or examination by Federal or
state authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and

                                       37
<PAGE>
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article VI. The Trustee shall comply
with Section 310(b) of the Trust Indenture Act.

            Section 610. Resignation and Removal; Appointment of Successor(a) .
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 611.

            (b)   The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

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

            (d)   If at any time:

                  (1)   the Trustee shall fail to comply with Section 608 after
            written request therefor by the Company or by any Holder who has
            been a bona fide Holder of a Security for at least six months, or

                  (2)   the Trustee shall cease to be eligible under Section 609
            and shall fail to resign after written request therefor by the
            Company or by any such Holder, or

                  (3)   the Trustee shall become incapable of acting or shall be
            judged a bankrupt or insolvent or a receiver of the Trustee or of
            its property shall be appointed or any public officer shall take
            charge or control of the Trustee or of its property or affairs for
            the purpose of rehabilitation, conservation or liquidation,

then, in any such case, (i) the Company may remove the Trustee with respect to
all Securities, or (ii) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all other similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.

            (e)   If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company shall promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding

                                       38
<PAGE>
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders and
accepted appointment in the manner hereinafter provided, any Holder who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.

            (f)   The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Security Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.

            Section 611. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance shall become vested with all the rights, powers, trusts and duties of
the retiring Trustee; but, on request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges pursuant to Section
607, execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.

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

            Section 612. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article VI,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

                                       39
<PAGE>
            Section 613. Preferential Collection of Claims Against Company. If
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).

            Section 614. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents acceptable to the Company which shall
be authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer, or partial
redemption or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent.

            Each Authenticating Agent shall be reasonably acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.

            Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee, the Company or such
Authenticating Agent.

            An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail

                                       40
<PAGE>
written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Securities, as their names and addresses appear in the Security
Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.

            The Company agrees to pay each Authenticating Agent, as appointed
from time to time, such reasonable fees as may be agreed to in writing with the
Company, for services rendered under this Section 614.

            If an appointment is made pursuant to this Section, the Securities
may have endorsed thereon, in addition to the Trustee's certificates of
authentication, an alternate certificate of authentication in the following
form:

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

            Dated:

                                      U.S. BANK NATIONAL ASSOCIATION,
                                      as Trustee

                                      By:
                                         ---------------------------------------
                                            As Authenticating Agent
                                      By:
                                         ---------------------------------------
                                            Authorized Signatory

                                  ARTICLE VII

                           HOLDERS' LISTS AND REPORTS
                             BY TRUSTEE AND COMPANY

            Section 701. Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee:

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

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

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

                                       41
<PAGE>
            Section 702. Preservation of Information; Communications to
Holders(a) . (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar or Paying Agent. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.

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

            (c)   Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of any of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).

            Section 703. Reports by Trustee. The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.

            A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and the Company.

            Section 704. Reports by Company. The Company shall:

            (1)   file with the Trustee, within 15 days after the Company is
      required to file the same with the Commission, copies of the annual
      reports and of the information, documents and other reports (or copies of
      such portions of any of the foregoing as the Commission may from time to
      time by rules and regulations prescribe) which the Company may be required
      to file with the Commission pursuant to Section 13 or Section 15(d) of the
      Exchange Act; or, if the Company is not required to file information,
      documents or reports pursuant to either of said Sections, then it shall
      file with the Trustee and the Commission, in accordance with rules and
      regulations prescribed from time to time by the Commission, such of the
      supplementary and periodic information, documents and reports which may be
      required pursuant to Section 13 of the Exchange Act in respect of a
      security listed and registered on a national securities exchange as may be
      prescribed from time to time in such rules and regulations;

            (2)   file with the Trustee and the Commission, in accordance with
      rules and regulations prescribed from time to time by the Commission, such
      additional

                                       42
<PAGE>
      information, documents and reports with respect to compliance by the
      Company with the conditions and covenants of this Indenture as may be
      required from time to time by such rules and regulations; and

            (3)   transmit by mail, to all Holders, as their names and addresses
      appear in the Security Register, within 30 days after the filing thereof
      with the Trustee, such summaries of any information, documents and reports
      required to be filed by the Company pursuant to paragraphs (1) and (2) of
      this Section as may be required by rules and regulations prescribed from
      time to time by the Commission.

                                  ARTICLE VIII

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

            Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into another corporation or sell
or lease its assets substantially as an entirety to another corporation, unless:

            (1)   either the Company is the continuing corporation, or the
      successor corporation (if other than the Company) expressly assumes by
      supplemental indenture the obligations evidenced by the Securities (in
      which case, except in the case of such a lease, the Company will be
      discharged therefrom; provided that any successor corporation must be a
      corporation organized and existing under the laws of the United States of
      America, any State thereof or the District of Columbia); and

            (2)   immediately thereafter, the Company or the successor
      corporation (if other than the Company) would not be in default in the
      performance of any covenant or condition contained herein.

            Section 802. Successor Substituted for Company. Upon any
consolidation of the Company with, or merger of the Company into, any other
Person or any conveyance, transfer or lease of the properties and assets of the
Company substantially as an entirety in accordance with Section 801, the
successor Person formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES

            Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company and the Trustee, at any time and
from

                                       43
<PAGE>
time to time, may enter into one or more indentures supplemental hereto, in form
reasonably satisfactory to the Trustee, for any of the following purposes:

            (1)   to evidence the succession of another Person to the Company
      and the assumption by any such successor of the covenants of the Company
      herein and in the Securities in accordance with Article VIII; or

            (2)   to add to the covenants of the Company for the benefit of the
      Holders, or to surrender any right or power herein conferred upon the
      Company; or

            (3)   to secure the Securities; or

            (4)   to evidence and provide for the acceptance of appointment
      hereunder by a successor Trustee with respect to the Securities; or

            (5)   to cure any ambiguity, to correct or supplement any provision
      herein which may be inconsistent with any other provision herein, or to
      make any other provisions with respect to matters or questions arising
      under this Indenture which shall not be inconsistent with the provisions
      of this Indenture, provided such action pursuant to this clause (5) shall
      not adversely affect the interests of the Holders in any material respect.

            Section 902. Supplemental Indentures with Consent of Holders.
Subject to Section 508, with the consent of the Holders of not less than a
majority in principal amount of the outstanding Securities, by Act of said
Holders delivered to the Company and the Trustee, the Company and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture. Notwithstanding any of the above, however, no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:

            (1)   change the Stated Maturity of the principal of, any
      installment of interest on, or dates for redemption of any Security, or
      reduce the principal amount thereof or the rate of interest thereon or any
      premium payable upon the redemption thereof, or change the coin or
      currency in which any Security or any premium or the interest thereon is
      payable, or impair the right to institute suit for the enforcement of any
      such payment on or after the Stated Maturity thereof (or, in the case of
      redemption, on or after the Redemption Date);

            (2)   reduce the percentage in principal amount of the Outstanding
      Securities, the consent of whose Holders is required for any such
      supplemental indenture, or the consent of whose Holders is required for
      any waiver of compliance with certain provisions of this Indenture or
      certain defaults hereunder and their consequences provided for in this
      Indenture; or

                                       44
<PAGE>
            (3)   modify any of the provisions of this Section or Section 513 or
      Section 1011, except to increase any such percentage or to provide that
      certain other provisions of this Indenture cannot be modified or waived
      without the consent of the Holder of each Outstanding Security affected
      thereby.

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

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

            Section 903. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article IX or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and, subject to Section
601, shall be fully protected in relying upon, an Opinion of Counsel of the
Company stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.

            Section 904. Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article IX, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

            Section 905. Conformity with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article IX shall conform to the requirements
of the Trust Indenture Act as then in effect.

            Section 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities
so modified as to conform, in the reasonable opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company, and authenticated and made available for delivery by the Trustee in
exchange for Outstanding Securities.

                                       45
<PAGE>
                                   ARTICLE X

                                    COVENANTS

            Section 1001. Payment of Principal, Premium and Interest. The
Company covenants and agrees that it will duly and punctually pay the principal
of and premium, if any, and interest on the Securities and the Redemption Price
as and when due, in accordance with the terms of the Securities and this
Indenture.

            The Company shall pay interest on overdue amounts at the rate set
forth in paragraph 1 of the Securities, and it shall pay interest on overdue
interest at the same rate compounded semiannually (to the extent that the
payment of such interest shall be legally enforceable), which interest on
overdue interest shall accrue from the date such amounts became overdue.

            Section 1002. Maintenance of Office or Agency. The Company will
maintain an office or agency in the United States where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. Such
office or agency will initially be the office of the Trustee located at _______.
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.

            The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
United States for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.

            Section 1003. Money for Security Payments to Be Held in Trust. If
the Company shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal of and premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.

            Whenever the Company shall have one or more Paying Agents, it will,
on or prior to each due date of the principal of and premium, if any, or
interest on any Securities, deposit with the Paying Agent or Paying Agents a sum
sufficient to pay the

                                       46
<PAGE>
principal, premium, if any, or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium, if
any, or interest, and, unless such Paying Agent is the Trustee, the Company will
promptly notify the Trustee of its action or failure so to act.

            The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:

            (1)   hold all sums held by it for the payment of the principal of
      and premium, if any, or interest on Securities in trust for the benefit of
      the Persons entitled thereto until such sums shall be paid to such Persons
      or otherwise disposed of as herein provided;

            (2)   give the Trustee notice of any default by the Company (or any
      other obligor upon the Securities) in the making of any payment of
      principal and premium, if any, or interest; and

            (3)   at any time during the continuance of any such default, upon
      the written request of the Trustee, forthwith pay to the Trustee all sums
      so held in trust by such Paying Agent.

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

            Any money deposited with the Trustee or any Paying Agent, or then
held by the Company in trust for the payment of the principal of and premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable shall
be paid to the Company on Company Request, or, if then held by the Company,
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be disseminated once, in a press release through
Dow Jones & Company, Inc. or Bloomberg Business News (or any successor or
similar organization), notice that such money remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to the Company.

                                       47
<PAGE>
            Section 1004. Statements of Officers of Company as to Default;
Notice of Default(a) . (a) The Company will deliver to the Trustee, within 120
days after the end of each fiscal year of the Company ending after the date
hereof, a certificate, signed by the principal executive officer, principal
financial officer, or principal accounting officer, stating whether or not to
the best knowledge of the signers thereof the Company is in default (without
regard to periods of grace or requirements of notice) in the performance and
observance of any of the terms, provisions and conditions hereof, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.

            (b)   The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within five Business Days of its
becoming aware of any such default or Event of Default.

            Section 1005. Existence. Subject to Article VIII, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its existence, rights (charter and statutory) and franchises and
those of each of its Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right or franchise if its Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company or the business of any Subsidiary and
that the loss thereof is not disadvantageous in any material respect to the
Holders.

            Section 1006. Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the reasonable judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties if such discontinuance is, in the reasonable judgment of the
Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.

            Section 1007. Payment of Taxes and Other Claims. The Company shall
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to taxes) levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all material lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves have been made.

                                       48
<PAGE>
            Section 1008. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and
perform such further acts as may be reasonably necessary or proper to carry out
more effectively the purposes of this Indenture.

            Section 1009. Limitation on Liens(a) . (a) The Company will not, and
will not permit any Subsidiary to, incur, issue, assume or Guaranty any
Indebtedness if such Indebtedness is secured by a pledge of, lien on, or
security interest in any shares of Voting Stock of any Significant Subsidiary,
whether such Voting Stock is now owned or shall hereafter be acquired, without
providing that the Securities (together with, if the Company shall so determine,
any other Indebtedness or Obligations of the Company or any Subsidiary ranking
equally with such Securities and then existing or thereafter created) shall be
secured equally and ratably with such Indebtedness. For the purposes of the
foregoing, pledging, placing a lien on or creating a security interest in any
shares of Voting Stock of a Significant Subsidiary in order to secure then
outstanding Indebtedness of the Company or any Subsidiary shall be deemed to be
the incurrence, issuance, assumption or Guaranty (as the case may be) of such
Indebtedness.

            (b)   The foregoing limitation shall not apply to (i) up to $250
million of Indebtedness incurred under revolving credit, term loan or other bank
facilities, including any refinancings, extensions, amendments or other
modification of such Indebtedness, (ii) Indebtedness secured by a pledge of,
lien on or security interest in any shares of Voting Stock of any corporation if
such pledge, lien or security interest is made or granted prior to or at the
time such corporation becomes a Significant Subsidiary, (iii) liens or security
interests securing Indebtedness of a Significant Subsidiary to the Company or
another Significant Subsidiary or (iv) the extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole or in part, of any
lien or security interest referred to in the foregoing clauses (ii) and (iii)
but only if the principal amount of Indebtedness secured by the liens or
security interests immediately prior to the extension, renewal or replacement is
not increased and the lien or security interest is not extended to other
property.

            Section 1010. Limitations on Disposition of Stock of Significant
Subsidiaries. The Company will not, and will not permit any Subsidiary to, sell,
transfer or otherwise dispose of any shares of Capital Stock of any Significant
Subsidiary (or of any Subsidiary having direct or indirect control of any
Significant Subsidiary) except for, subject to the covenant relating to mergers
and sales of assets described in Section 801, (i) a sale, transfer or other
disposition of any Capital Stock of any Significant Subsidiary (or of any
Subsidiary having direct or indirect control of any Significant Subsidiary) to a
Wholly Owned Subsidiary of the Company or (ii) a sale, transfer or other
disposition for at least fair value (as determined by the Board of Directors
acting in good faith) of any of the Capital Stock of any Significant Subsidiary
(or of any Subsidiary having direct or indirect control of any Significant
Subsidiary) held by the Company and its Subsidiaries.

            Section 1011. Waiver of Certain Covenants. The Company may omit in
any particular instance to comply with any term, provision or condition set
forth in this Article X (other than Sections 1001 through 1004, inclusive), if
before the time for such

                                       49
<PAGE>
compliance the Holders of at least a majority (or such greater amount as may be
specified in any such term, provision or condition) in principal amount of the
Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.

                                   ARTICLE XI

                            REDEMPTION OF SECURITIES

            Section 1101. Right of Redemption. The Securities may be redeemed,
in whole or from time to time in part, at the election of the Company on any
date, at the Redemption Price specified in the form of Security hereinbefore set
forth, together with accrued interest to the Redemption Date.

            Section 1102. Applicability of Article. Redemption of Securities at
the election of the Company, as permitted by any provision of the Securities or
this Indenture, shall be made in accordance with such provision and this Article
XI.

            Section 1103. Election to Redeem; Notice to Trustee. The election of
the Company to redeem any Securities pursuant to Section 1101 shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities, the Company shall, at least 30 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed.

            Section 1104. Selection by Trustee of Securities to be Redeemed. If
less than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not more than 30 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to $1,000
or any integral multiple thereof) of the principal amount of Securities of a
denomination larger than $1,000.

            The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.

            For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.

                                       50
<PAGE>
            Section 1105. Notice of Redemption. Notice of redemption shall be
given in the manner provided by Section 106, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.

            All notices of redemption shall state:

            (1)   the Redemption Date,

            (2)   the formula or manner of calculation pursuant to which the
      Redemption Price will be determined,

            (3)   if less than all the Outstanding Securities are to be
      redeemed, the identification (and, in the case of partial redemption, the
      principal amounts) of the particular Securities to be redeemed,

            (4)   that on the Redemption Date the Redemption Price will become
      due and payable upon each such Security to be redeemed and that interest
      thereon will cease to accrue on and after that date,

            (5)   the place or places where such Securities are to be
      surrendered for payment of the Redemption Price, and

            (6)   the CUSIP number of the Securities to be redeemed.

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

            Section 1106. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 1003) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are to be redeemed
on that date.

            Section 1107. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 307.

                                       51
<PAGE>
            If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.

            Section 1108. Securities Redeemed in Part. Any Security which is to
be redeemed only in part shall be surrendered at an office or agency of the
Company designated for that purpose pursuant to Section 1002 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form reasonably satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Security without service charge, a new
Security or Securities of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered; except that
if a Global Security is so surrendered, the Company shall execute, and the
Trustee shall authenticate and make available for delivery to the Depositary for
such Global Security, without service charge, a new Global Security in a
denomination equal to and in exchange for the unredeemed portion of the
principal of the Global Security so surrendered.

                                  ARTICLE XII

                       DEFEASANCE AND COVENANT DEFEASANCE

            Section 1201. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may at its option by Board Resolution, at any time,
elect to have either Section 1202 or Section 1203 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
XII.

            Section 1202. Defeasance and Discharge. Upon the Company's exercise
of the option provided in Section 1201 applicable to this Section, the Company
shall be deemed to have been discharged from its obligations with respect to the
Outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "Defeasance"). For this purpose, such Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Outstanding Securities and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities to receive, solely from the trust fund
described in Section 1204 and as more fully set forth in such Section, payments
in respect of the principal of and premium, if any, and interest on such
Securities when such payments are due, (B) the Company's obligations with
respect to such Securities under Sections 305, 306, 307, 308, 607, 1002 and
1003, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and (D) this Article XII.

                                       52
<PAGE>
            Subject to compliance with this Article XII, the Company may
exercise its option under this Section 1202 notwithstanding the prior exercise
of its option under Section 1203.

            Section 1203. Covenant Defeasance. Upon the Company's exercise of
the option provided in Section 1201 applicable to this Section, (i) the Company
shall be released from its obligations under any covenant contained in Article
VIII and in Sections 1006 through 1010 and (ii) the occurrence of an event
specified in Section 501(4) (with respect to any of Article VIII and Sections
1006 through 1010) shall not constitute an Event of Default, and such Sections
and Article shall no longer apply with respect to or for the benefit of the
Company, the Securities and the Holders of Securities on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance").
For this purpose, such Covenant Defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Sections or Article whether directly or
indirectly by reason of any reference elsewhere herein to any such Sections or
Article or by reason of any reference in any such Sections or Article to any
other provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.

            Section 1204. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 1202 or
Section 1203 to the Outstanding Securities:

            (1)   The Company shall irrevocably have deposited or caused to be
      deposited with the Trustee (or another trustee satisfying the requirements
      of Section 609 who shall agree to comply with the provisions of this
      Article XII applicable to it) as trust funds in trust for the purpose of
      making the following payments, specifically pledged as security for, and
      dedicated solely to, the benefit of the Holders of such Securities, (A)
      money in an amount, or (B) U. S. Government Obligations which through the
      scheduled payment of principal and interest in respect thereof in
      accordance with their terms will provide, not later than one day before
      the due date of any payment, money in an amount, or (C) a combination
      thereof, sufficient, in the opinion of a nationally recognized firm of
      independent public accountants expressed in a written certification
      thereof delivered to the Trustee, to pay and discharge, and which shall be
      applied by the Trustee or other qualifying trustee to pay and discharge,
      the principal of and premium, if any, and each installment of interest on
      the Securities on the Stated Maturity of such principal or installment of
      interest in accordance with the terms of this Indenture and of such
      Securities. For this purpose, "U.S. Government Obligations" means
      securities that are (x) direct obligations of the United States of America
      for the payment of which its full faith and credit is pledged or (y)
      obligations of a Person controlled or supervised by and acting as an
      agency or instrumentality of the United States of America the payment of
      which is unconditionally guaranteed as a full faith and credit obligation
      by the United States of America, which, in either case, are not callable
      or redeemable at the option of the issuer thereof, and shall also include
      a depository receipt issued by a bank (as defined in Section 3(a)(2) of
      the Securities Act of 1933, as amended) as

                                       53
<PAGE>
            custodian with respect to any such U.S. Government Obligation or a
            specific payment of principal of or interest on any such U.S.
            Government Obligation held by such custodian for the account of the
            holder of such depository receipt; provided that (except as required
            by law) such custodian is not authorized to make any deduction from
            the amount payable to the holder of such depository receipt from any
            amount received by the custodian in respect of the U.S. Government
            Obligation or the specific payment of principal of or interest on
            the U.S. Government Obligation evidenced by such depository receipt.

            (2)   In the case of an election under Section 1202, the Company
            shall have delivered to the Trustee an Opinion of Counsel stating
            that (x) the Company has received from, or there has been published
            by, the Internal Revenue Service a ruling or (y) 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 shall confirm that, the Holders of the Outstanding
            Securities will not recognize income, gain or loss for federal
            income tax purposes as a result of such deposit, Defeasance and
            discharge 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.

            (3)   In the case of an election under Section 1203, the Company
            shall have delivered to the Trustee an Opinion of Counsel to the
            effect that the Holders of the Outstanding Securities will not
            recognize 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 deposit and Covenant Defeasance had
            not occurred.

            (4)   The Company shall have delivered to the Trustee an Officers'
            Certificate to the effect that the Securities, if then listed on any
            securities exchange, will not be delisted as a result of such
            deposit, in the case of an election under Section 1202 or 1203.

            (5)   No Event of Default or event which with notice or lapse of
            time or both would become an Event of Default shall have occurred
            and be continuing on the date of such deposit or, insofar as
            Sections 501(5) and (6) are concerned, at any time during the period
            ending on the 90th day after the date of such deposit (it being
            understood that this condition shall not be deemed satisfied until
            the expiration of such period).

            (6)   Such Defeasance or Covenant Defeasance shall not cause the
            Trustee to have a conflicting interest as defined in Section 608 and
            for purposes of the Trust Indenture Act with respect to any
            securities of the Company.

            (7)   Such Defeasance or Covenant Defeasance shall not result in a
            breach or violation of, or constitute a default under, any other
            agreement or instrument to which the Company is a party or by which
            it is bound.

                                       54
<PAGE>
            (8)   The Company shall have delivered to the Trustee an Officers'
            Certificate and an Opinion of Counsel, each stating that all
            conditions precedent provided for relating to either the Defeasance
            under Section 1202 or the Covenant Defeasance under Section 1203 (as
            the case may be) have been complied with.

            (9)   Such Defeasance or Covenant Defeasance shall not result in the
            trust arising from such deposit to constitute, unless it is
            qualified as, a regulated investment company under the Investment
            Company Act of 1940, as amended.

            Section 1205. Deposited Money and U. S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
last paragraph of Section 1003, all money and U. S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee collectively, for purposes of this Section 1205, the "Trustee") pursuant
to Section 1204 shall be held in trust and applied by the Trustee, in accordance
with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of the Securities, of
all sums due and to become due thereon, in respect of principal and premium, if
any, and interest, but such money need not be segregated from other funds except
to the extent required by law.

            The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.

            Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1204 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount hereof which would then be
required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance.

            Section 1206. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money in accordance with Section 1202 or 1203 by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to this Article XII until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 1202 or 1203; provided, however, that if the Company makes any
payment of principal of or premium, if any, or interest on any Security
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money held by the Trustee or Paying Agent.

                                       55
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.

                                       INFINITY PROPERTY AND CASUALTY
                                       CORPORATION

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

Attest:

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

                                       U.S. BANK NATIONAL ASSOCIATION,
                                           as Trustee

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

Attest:

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

                                       56
<PAGE>
STATE OF                              )
         -----------------------------
                                      )           ss.:
COUNTY OF                             )
            --------------------------

            On the _____ day of _____, 2003 before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that s/he is the __________ _________________________________ of Infinity
Property and Casualty Corporation, the corporation

described in and which executed the foregoing instrument; and that s/he signed
his/her name thereto by authority of the Board of Directors of such corporation.

                                               ---------------------------------
                                                          Notary Public

[NOTARIAL SEAL APPEARS HERE]

                                       57
<PAGE>
STATE OF                              )
         -----------------------------
                                      )           ss.:
COUNTY OF                             )
            --------------------------

            On the ____ day of __________, 2003 before me personally came
___________________ to me known, who, being by me duly sworn, did depose and say
that s/he is an _______________ of [__________________], a corporation described
in and which executed the foregoing

instrument; and that s/he signed his/her name thereto by authority of the Board
of Directors of such corporation.

                                               ---------------------------------
                                                          Notary Public

[NOTARIAL SEAL APPEARS HERE]

                                       58
<PAGE>
                   Infinity Property and Casualty Corporation
                 Certain Sections of this Indenture relating to
                   Sections 310 through 318, inclusive, of the
                          Trust Indenture Act of 1939:

<TABLE>
<CAPTION>
Trust Indenture
Act Section                                                  Indenture Section
-----------                                                  -----------------
<S>                                                          <C>

(S) 310 (a) (1)                                              609
        (a) (2)                                              609
        (a) (3)                                              Not Applicable
        (a) (4)                                              Not Applicable
        (b)                                                  608
                                                             610
(S) 311 (a)                                                  613
        (b)                                                  613
(S) 312 (a)                                                  701
                                                             702
        (b)                                                  702
        (c)                                                  702
(S) 313 (a)                                                  703
        (b)                                                  703
        (c)                                                  703
        (d)                                                  703
(S) 314 (a)                                                  704
        (a) (4)                                              101
                                                             1004
        (b)                                                  Not Applicable
        (c) (1)                                              102
        (c) (2)                                              102
        (c) (3)                                              Not Applicable
        (d)                                                  Not Applicable
        (e)                                                  102
(S) 315 (a)                                                  601
        (b)                                                  602
        (c)                                                  601
        (d)                                                  601
        (e)                                                  514
(S) 316 (a)                                                  101
        (a) (1) (A)                                          502
                                                             512
        (a) (1) (B)                                          513
        (a) (2)                                              Not Applicable
        (b)                                                  508
        (c)                                                  104
(S) 317 (a) (1)                                              503
        (a) (2)                                              504
        (b)                                                  1003
(S) 318 (a)                                                  +107
</TABLE>

NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
      part of the Indenture.

                                       59<PAGE>

                                                                    EXHIBIT 4(a)

                           LOAN AND SECURITY AGREEMENT

        GMAC BUSINESS CREDIT, LLC ("Lender"), a Delaware limited liability
company, with offices at 3000 Town Center, Suite 280, Southfield, Michigan 48075
and TRANSCAT, INC. an Ohio Corporation ("Parent"), and TRANSMATION (CANADA),
INC., a Canadian corporation ("Subsidiary" or together with Parent, the
"Borrowers" or a "Borrower", as applicable) with a principal place of business
at 35 Vantage Point Drive, Rochester, New York 14624, enter into this Loan and
Security Agreement on November 12, 2002 (the "Agreement").

                            1. GENERAL LENDING TERMS

        The following are the general terms of the loans to be made under this
Agreement:

                A.      A revolving line of credit (the "Revolving Loans") up to
        the lesser of the Borrowing Base (defined below) or $10,000,000.00 (the
        "Revolving Advance Limit"). The "Borrowing Base" is initially (a) 85% of
        the aggregate outstanding amount of Eligible Accounts plus (b) the
        lesser of (i) 48% of the aggregate value of Eligible Inventory, or (ii)
        $3,000,000.00; minus (c) the Reserves. The advance rate against Eligible
        Accounts will reduce by one percentage point for each percentage point
        (or fraction thereof) that Dilution exceeds 5% (for so long as Dilution
        exceeds 5%) and the advance rate against Eligible Inventory will change
        based upon the from time-to-time OLV of Borrowers' Inventory.

                B.      A $1,500,000 term loan (the "Term Loan").

                C.      Subject to Section 3.6 below, the applicable interest
        rate (prior to an Event of Default) on all Obligations other than the
        Term Loan is either (at Borrowers' option) the Prime Rate, or two and
        three quarters percent (2.75%) per annum in excess of the LIBOR Rate and
        on the Term Loan is either (at Borrowers' option) one-half of one
        percent (0.5%) in excess of the Prime rate or three and one-quarter
        percent (3.25%) in excess of the LIBOR Rate (the foregoing interest
        rates are referred to as the "Base Rates", a "Base Rate," a "Prime Base
        Rate" or a "LIBOR Base Rate", as applicable).

                D.      This Agreement expires on November 11, 2005 (the
        "Term").

                E.      Borrowers shall pay Lender a collateral servicing fee of
        $6,000.00 per month in advance, beginning on the first day of the first
        full month after execution of this Agreement.

                F.      Borrowers shall pay Lender, on the first of each month,
        an "Unused Line Fee" of one-half of one percent (0.5%) per annum times
        the average daily unused portion of the Revolving Advance Limit during
        the preceding month.

                G.      While all Revolving Loans will be made in U.S. Dollars,
        Revolving Loans made against Inventory located in Ontario, Canada or
        Accounts

<PAGE>

        denominated in Canadian Dollars will be based upon the applicable values
        of such Collateral, using the Equivalent U.S. Dollar Amount. Unless
        otherwise noted, all references in this Agreement to "$" or "U.S.
        Dollars" means lawful money of the United States of America.

                                 2. DEFINITIONS.

                        In addition to the terms defined in this Agreement, the
        following terms have the given definitions:

                        "ACCOUNT DEBTOR" means any obligor under, with respect
        to, or on account of an Account.

                        "ACCOUNTS" means all presently existing and hereafter
        arising accounts receivable, contract rights, and all other forms of
        obligations owing to a Borrower arising out of the sale or lease of
        goods or the rendition of services by a Borrower, whether or not earned
        by performance, all credit insurance, guaranties, supporting
        obligations, and other security therefor, as well as all goods returned
        to or reclaimed by a Borrower, and a Borrower's Business Records
        relating to any of the foregoing.

                        "ADVANCE LIMIT" means the Revolving Advance Limit plus
        the from time-to-time outstanding principal balance owing on the Note.

                        "BIA" means the Bankruptcy and Insolvency Act (Canada),
        as amended.

                        "BIG CAT" means Borrowers' all inclusive marketing
        catalogue for distributed products for use during (and the cost of which
        is amortized over) a period greater than 12 months.

                        "BORROWING BASE CERTIFICATE" has the meaning given in
        Section 8.3.

                        "BUSINESS DAY" means a day on which national banks are
        open for business in Detroit, Michigan.

                        "BUSINESS RECORDS" means all of a Borrower's books and
        records including all of the following: ledgers, records indicating,
        summarizing or evidencing a Borrower's assets (including the Collateral)
        or liabilities; all information relating to a Borrower's business
        operations or financial condition; and all computer programs, disk or
        tape files, printouts, runs or other computer prepared information, and
        the equipment containing such information.

                        "CANADIAN DOLLARS" means lawful money of Canada.

                        "CANADIAN LOAN DOCUMENTS" means the General Security
        Agreement of even date between Lender and Subsidiary and any
        registration or financing statements filed on Lender's behalf in
        Ontario, Canada.

                                       2
<PAGE>

                        "CAPITAL EXPENDITURES" means, with respect to Borrowers
        for any period, the sum of the aggregate of all expenditures (whether
        paid in cash, capitalized as an asset or accrued as a liability) by
        Borrowers during such period which, in accordance with GAAP, are or
        should be included in "capital expenditures" or similar items reflected
        on the statements of cash flows of the respective Borrower. For purposes
        of this Agreement, Capital Expenditures shall not include Big Cat
        expenditures.

                        "CLAIMS" means any demand, claim, action or cause of
        action, damage, liability, loss, cost, debt, expense, obligation, tax,
        assessment, charge, lawsuit, contract, agreement, undertaking or
        deficiency, of any kind or nature, whether known or unknown, fixed,
        actual, accrued or contingent, liquidated or unliquidated (including
        interest, penalties, attorneys' fees and other costs and expenses
        incident to proceedings or investigations relating to any of the
        foregoing or the defense of any of the foregoing), whether or not
        litigation has commenced.

                        "COLLATERAL" means all of the following: the Accounts;
        the Equipment; the General Intangibles; the Inventory; the Negotiable
        Collateral; the Real Estate; the Business Records; investment property;
        securities; any money or other assets of each Borrower which hereafter
        come into the possession, custody or control of Lender; and all proceeds
        and products, whether tangible or intangible, of any of the foregoing,
        including proceeds of insurance covering any or all of the Collateral,
        and any and all Accounts, Equipment, General Intangibles, Inventory,
        Negotiable Collateral, Business Records, money, deposit accounts or
        other tangible or intangible property resulting from the sale or other
        disposition of the Collateral or any portion thereof or interest
        therein, and the proceeds thereof.

                        "DEPRECIATION EXPENSE" means, for any period,
        depreciation, amortization (including Big Cat amortization), depletion
        and other like reductions to income for such period not involving any
        outlay of cash, determined on a consolidated basis in accordance with
        GAAP.

                        "DILUTION" means the aggregate amount of credits,
        returned goods, adjustments, deductions, setoffs and recoupments granted
        by either Borrower or taken by all Account Debtors in any calendar month
        divided by the aggregate amount of Borrowers' sales during the calendar
        month.

                        "EBITDA" means, for any stated period, Borrowers' Net
        Income for such period with the following adjustments (all determined
        according to GAAP):

        (a)     Plus the sum of (without duplication)

                (i)     Interest Expense for such period;

                (ii)    Income Tax Expense for such period;

                (iii)   Depreciation Expense for such period; and

                (iv)    non-recurring, extraordinary, one-time losses.

                                       3
<PAGE>

        (b)     Minus (i) non-recurring, extraordinary, one-time gains for such
period, and (ii) income tax benefits.

                "ELIGIBLE ACCOUNTS" means for each Borrower, the Borrower's
Accounts listed on Borrowing Base Certificates delivered to Lender which Lender,
in its discretion, determines to be an Eligible Account. Without limiting the
generality of the immediately preceding sentence, no Account will be a Eligible
Account unless it meets all of the following minimum requirements:

                (1)     The Account is valued at its face amount and represents
                        a complete, bona fide transaction for Eligible Inventory
                        sold, delivered, and accepted by the Account Debtor or
                        for services rendered (but excluding any amounts in the
                        nature of a service charge added to the amount due on an
                        invoice because the invoice has not been paid when due)
                        that requires no further act under any circumstances on
                        the part of the Borrower or any other person or entity
                        to make such Account payable by the Account Debtor, and
                        the Account arises from an arm's-length transaction in
                        the ordinary course of Borrower's business between
                        Borrower and an Account Debtor that is not an affiliate,
                        partner, officer, or employee of Borrower, or a member
                        of the family of any partner, officer, or employee of
                        Borrower.

                (2)     The Account is not unpaid more than 90 days from the
                        earlier of (A) the date on which the original invoice
                        rendered in connection with such Account was issued, and
                        (B) the date on which the Eligible Inventory was shipped
                        to, or the services were performed for, the Account
                        Debtor.

                (3)     The goods the sale of which gave rise to the Account
                        were shipped or delivered or provided to the Account
                        Debtor on a final sale basis and not on a bill and hold
                        sale basis, a consignment sale basis, a guaranteed sale
                        basis, a sale or return basis, a trial basis, or on the
                        basis of any other similar understanding, and no part of
                        such goods have been returned or rejected.

                (4)     The Account is not evidenced by chattel paper or an
                        instrument of any kind.

                (5)     The Account Debtor with respect to the Account (A) is
                        not insolvent, (B) is not the subject of any bankruptcy
                        or insolvency proceedings of any kind or of any other
                        proceeding or action, threatened or pending, which might
                        have a materially adverse effect on its business, and
                        (C) is not, in Lender's reasonable discretion deemed
                        ineligible for credit for other reasons (including,
                        without limitation, unsatisfactory past experience of
                        Borrower or Lender with the Account Debtor or
                        unsatisfactory reputation of the Account Debtor).

                                       4
<PAGE>

                (6)     The Account Debtor is located within United States of
                        America or a Permitted Canadian Province.

                (7)     If the Account Debtor is not located in the United
                        States of America or a Permitted Canadian Province, the
                        Account Debtor has provided credit insurance reasonably
                        acceptable to Lender or a guaranty or other assurance
                        reasonably acceptable to Lender from a domestic
                        affiliate.

                (8)     (A) The Account Debtor is not the government of the
                        United States of America or Canada, or any department,
                        agency or instrumentality thereof (or of any State or
                        Province therein), or (B) if the Account Debtor is an
                        entity mentioned in the preceding clause, the Federal
                        Assignment of Claims Act (or applicable similar
                        legislation in Canada) has been fully complied with so
                        as to validly perfect Lender's first-priority security
                        interest to Lender's satisfaction.

                (9)     The Account is a valid, legally enforceable obligation
                        of the Account Debtor with respect thereto and is not
                        subject to any dispute, condition, contingency, setoff,
                        recoupment, reduction, claim for credit, allowance,
                        adjustment, counterclaim or defense on the part of such
                        Account Debtor (collectively, a "Setoff"), and no fact
                        exists that may provide a basis for any of the foregoing
                        in the present or future; provided that except as
                        otherwise provided in this Agreement, the Account will
                        be ineligible only to the extent of the Setoff.

                (10)    The Account is subject to a first-priority security
                        interest in Lender's favor and is not subject to any
                        other lien, claim, encumbrance, or security interest
                        whatsoever other than any Permitted Lien.

                (11)    The Account is evidenced by an invoice or other
                        documentation in form acceptable to Lender and arises
                        from a contract, purchase order, or release that is
                        satisfactory in form and substance to Lender.

                (12)    No representation or warranty contained in this
                        Agreement or any other agreement between Borrower and
                        Lender, or in any Borrowing Base Certificate with
                        respect to such Account has been breached.

                (13)    The Account is not subject to any provision prohibiting
                        its assignment.

                (14)    The Account does not represent any manufacturer's or
                        supplier's credits, discounts, incentive plans, or other
                        similar arrangements entitling the Borrower to discounts
                        on future purchases.

                                       5
<PAGE>

                (15)    The Eligible Inventory giving rise to the Account was
                        not, at the time of sale thereof, subject to any lien or
                        encumbrance except in Lender's favor.

                (16)    The Account is payable in freely transferable U.S.
                        Dollars or Canadian Dollars.

                In addition to the foregoing requirements, Accounts of any
Account Debtor that are otherwise qualified will be reduced to the extent of (1)
any accounts payable (including, without limitation, Lender's good faith
estimate of any contingent liabilities) by Borrower to such Account Debtor
("Contras") and (2) that portion of an Account representing a retainage or
holdback by the Account Debtor; provided that Lender, in its sole discretion may
determine that none of such Accounts are Eligible Accounts if Contras and/or
Setoffs represent 10% or more of the amount owing to Borrower from such Account
Debtor. Finally, all Accounts owing by a given Account Debtor will be ineligible
if more than 50% of the total Accounts owing by such Account Debtor are
otherwise ineligible.

                Any Account that is at any time an Eligible Account and that
subsequently fails to meet any of the requirements set forth above will
immediately cease to be an Eligible Account and must be removed from the
Borrowing Base immediately.

                "ELIGIBLE INVENTORY" means for each Borrower, that portion of
Borrower's Inventory consisting of new, unused, finished goods Inventory in
respect of which no further manufacturing, processing, or other work has to be
done (other than packaging or crating for shipment or distribution), held for
sale in the ordinary course of Borrower's business that is listed on a Borrowing
Base Certificate delivered to Lender in accordance with this Agreement that
Lender determines to be Eligible Inventory. Without limiting the generality of
the immediately preceding sentence, no Inventory will be Eligible Inventory
unless it meets all the following minimum requirements:

                (1)     The Inventory has not been shipped, delivered, provided
                        to, purchased or sold by Borrower on a bill and hold,
                        consignment sale, guaranteed sale, trial or sale or
                        return basis, or any other similar basis or
                        understanding.

                (2)     No Account has arisen with respect to such Inventory.

                (3)     The Inventory has not been billed to a customer on a
                        "progress billing" or similar basis prior to shipment to
                        the customer.

                (4)     The Inventory is valued at the lower of cost or market,
                        on a first-in-first-out basis.

                (5)     The Inventory is in Borrower's possession (or the
                        possession of Borrower's salesmen to the extent that the
                        value of such Inventory included in Borrower's Borrowing
                        Base does not exceed $200,000 in the aggregate), or if
                        the Inventory is located on premises not

                                       6
<PAGE>

                        owned by the Borrower, the landlord or owner of such
                        premises must have waived its distraint, lien, and
                        similar rights with respect to such Inventory and must
                        have agreed in a written agreement satisfactory to
                        Lender (A) that Lender has a valid, perfected first
                        priority security interest in the Inventory, (B) to give
                        Lender notice of any default by Borrower and the option
                        to cure such default, (C) to permit Lender to enter such
                        premises to repossess or remove the Inventory at any
                        time, and (D) to grant Lender such other rights as
                        Lender may reasonably request.

                (6)     The Inventory is not subject to any royalty, copyright,
                        trademark, trade name, or licensing arrangement, or any
                        law, rule, or regulation that could limit or impair
                        Lender's ability to exercise its rights with respect to
                        such Inventory.

                (7)     The Inventory is held for resale and is not packaging,
                        labels, manuals, supplies or repair parts.

                (8)     The Inventory meets all standards imposed by any
                        governmental agency, department, or division having
                        regulatory authority over such Inventory or its use or
                        sale including, without limitation, standards set forth
                        in the Fair Labor Standards Act.

                (9)     No representation or warranty in this Agreement, any
                        other agreement between Borrower and Lender, or any
                        Borrowing Base Certificate has been breached with
                        respect to such Inventory.

                (10)    The Inventory is not obsolete, is of good and
                        merchantable quality, and is readily salable.

                (11)    The Inventory is subject to a first-priority security
                        interest in Lender's favor and is not subject to any
                        other lien or encumbrance.

                (12)    The Inventory is new and unused and has not been used on
                        a trial or demonstration basis.

                Any Inventory that is at any time Eligible Inventory and that
                subsequently fails to meet any of the requirements set forth
                above will cease to be Eligible Inventory immediately and must
                be removed from the Borrowing Base immediately.

                "ENVIRONMENTAL LAWS" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act of 1976, the Hazardous Materials Transportation
Act, the Toxic Substances Control Act, the regulations pertaining to such
statutes, and any other safety, health or environmental statutes, laws,
regulations or ordinances of the United States or of any state, county or
municipality in which Borrower conducts its business or the Collateral is
located.

                                       7
<PAGE>

                "EQUIPMENT" means all of Borrower's present and hereafter
acquired equipment, machinery, machine tools, motors, furniture, furnishings,
fixtures, motor vehicles, rolling stock, processors, tools, parts, dies, jigs,
goods (other than consumer goods, farm products or Inventory), wherever located,
and any interest of Borrower in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions and improvements
to any of the foregoing, wherever located.

                "EQUIVALENT U.S. DOLLAR AMOUNT" means, on any Business Day with
respect to any amount of Canadian Dollars, the amount of U.S. Dollars which
would be required to buy such amount of Canadian Dollars using the rate reported
in the Wall Street Journal as the New York exchange mid-range rate to trading
among banks in amounts of U.S. $1 million or more, as quoted at 4 p.m. Eastern
time on the prior Business Day by Rueters and other sources (or another
comparable rate as announced from time-to-time by Lender).

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

                "ERISA AFFILIATE" means each trade or business (whether or not
incorporated and whether or not foreign) which is or may hereafter become a
member of a group of which Borrower is a member and which is treated as a single
employer under ERISA Section 4001(b)(1), or IRC Section 414.

                "EUROCURRENCY RESERVE REQUIREMENT" is defined as part of the
definition of LIBOR Rate.

                "EXCESS CASH FLOW" means 20% of the following (calculated each
fiscal year according to GAAP): EBITDA less the sum of (i) principal payments on
long term debt; (ii) Interest Expense; (iii) Big Cat expenditures; (iv) taxes
paid during the fiscal year and (v) Capital Expenditures exclusive of leased or
debt financed Capital Expenditures; provided, however, that in no event shall
Excess Cash Flow exceed $200,000 per fiscal year.

                "EXPENSES" means all reasonable fees and out-of-pocket
disbursements incurred by Lender, including fees of counsel and court costs, in
any way arising from or in connection with this Agreement, any Loan Documents,
any of the Collateral, any of the Obligations or the business relationship
between Lender and either Borrower, including, without limitation, (a) audit
fees at the per day rate provided for in Section 8.6 below; (b) all reasonable
fees and expenses (including recording fees and insurance policy fees) of Lender
and counsel for Lender for the preparation, examination, approval, negotiation,
execution and delivery of, or the closing of any of the transactions
contemplated by, this Agreement and any Loan Documents; (c) all reasonable fees
and out-of-pocket disbursements incurred by Lender, including reasonable
attorneys' fees, in any way arising from or in connection with any action taken
by Lender to monitor, advise, administer, enforce or collect any of the
Obligations under this Agreement, any Loan Documents or any other obligations of
either Borrower, whether joint, joint and several, or several, under this
Agreement (or any Loan Documents), or any other existing or future document or
agreement, or arising from or relating to the business

                                       8
<PAGE>

relationship between Lender and either Borrower, or otherwise securing any of
the Obligations, including any actions to lift the automatic stay or to
otherwise in any way monitor or participate in any Insolvency Proceeding of
either Borrower; (d) all reasonable expenses and fees (including reasonable
attorneys' fees) incurred in relation to, in connection with, in defense of
and/or in prosecution of any litigation instituted by any one or more of the
Borrowers, Lender or any third party against or involving Lender arising from,
relating to, or in connection with any of the Obligations or either Borrower's
other obligations, this Agreement (or any Loan Documents), any of the
Collateral, or the business relationship between Lender and either Borrower,
including any so-called "lender liability" action, any claim and delivery or
other action for possession of, or foreclosure on, any of the Collateral,
post-judgment enforcement of any rights or remedies including enforcement of any
judgments, and prosecution of any appeals (whether discretionary or as of right
and whether in connection with pre-judgment or post-judgment matters); (e) all
reasonable costs, expenses and fees incurred by Lender or its agents in
connection with any appraisals or environmental assessments of all or any of the
Collateral (and Borrowers shall fully cooperate with such appraisers and make
their property available for appraisal in connection with as many appraisals or
environmental assessments as Lender may request); (f) all reasonable fees
described in Section 1 above, and (g) all reasonable costs, expenses and fees
incurred by Lender and/or its counsel in connection with consultants, expert
witnesses or other professionals retained by Lender and/or its counsel in order
to assist, advise and/or give testimony with respect to any matter relating to
this Agreement or any Loan Documents, the Collateral or the business
relationship between Lender and either Borrower (and Borrowers shall fully
cooperate with such consultant, expert witness or other professional and shall
make their premises, books and records, accounting systems, computer systems and
other media for the recordation of information available to such persons).

                "GAAP" means generally accepted United States accounting
principles, consistently applied.

                "GENERAL INTANGIBLES" means all of each Borrower's present and
future general intangibles and other personal property (including commercial
tort claims, health care receivables, contract rights, rights arising under
common law, statutes or regulations, choses or things in action, goodwill, going
concern value, "blue sky", patents, trade names, trademarks, service marks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, monies due under any royalty or licensing
agreements, route lists, infringement claims, software, computer discs, computer
tapes, literature, reports, catalogs, deposit accounts, insurance premium
rebates, business interruption insurance claims and proceeds and proceeds of
insurance, other than casualty insurance, tax refunds and tax refund claims)
other than goods and Accounts, and each Borrower's Business Records relating to
any of the foregoing.

                "GSA" means the General Security Agreement of even date executed
by Subsidiary in favor of Lender.

                                       9
<PAGE>

                "HAZARDOUS MATERIAL" means any substance, material, emission or
waste which is or hereafter becomes regulated or classified as a hazardous
substance, hazardous material, toxic substance or solid waste under any
Environmental Law, asbestos, petroleum products, urea formaldehyde,
polychlorinated biphenyls (PCBs), radon and any other hazardous or toxic
substance, material, emission or waste.

                "INCOME TAX EXPENSE" means for any period, the aggregate of all
taxes on income for such period, whether current or deferred, determined in
accordance with GAAP.

                "INSOLVENCY PROCEEDING" means any proceeding commenced by or
against Borrower or any Guarantor under any provision of the Bankruptcy Code, 11
U.S.C. Section 101 et. seq., the Bankruptcy and Insolvency Act (Canada), the
Creditor's Company Arrangement Act (Canada) or under any other bankruptcy or
insolvency law, including assignments for the benefit of creditors, formal or
informal moratoria, compositions, extensions generally with its creditors or
proceedings seeking reorganization, liquidation, arrangement or other similar
relief.

                "INTEREST EXPENSE" means, for any given period, the aggregate
amount of interest paid and/or accrued on account of any debt, plus imputed
interest paid or accrued on account of any capital leases.

                "INVENTORY" means all present and future inventory in which
either Borrower has any interest, including goods held for sale or lease or to
be furnished under a contract of service, either Borrower's present and future
raw materials, work in process, finished goods and supplies and materials used
in or consumed in either Borrower's business, goods which have been returned to,
repossessed by or stopped in transit by either Borrower, packing and shipping
materials, wherever located, any documents of title representing any of the
above, and Borrower's Business Records relating to any of the foregoing.

                "LIBOR BASED LOANS" means that portion of the Loans on which
interest accrues at the LIBOR Base Rate.

                "LIBOR INTEREST PERIOD" is defined as a calendar month.

                "LIBOR RATE" means an annual rate of interest determined by
Lender as being the rate available at approximately 11:00 a.m. London time in
the London Interbank Market, as referenced by Reuters Screen "LIBOR", in
accordance with the usual practice in such market, for 30 day LIBOR loans in
effect two Business Days prior to the first Business day of each calendar month.
LIBOR Based Loan (including those requested in connection with the conversion of
a Prime Based Loan to a LIBOR Based Loan in accordance with Section 3.6 hereof),
or for a LIBOR Based Loan which Borrower has elected to continue as a LIBOR
Based Loan beyond the expiration of the then current LIBOR Interest Period with
respect thereto, for deposits of dollars in amounts equal (as nearly as may be
estimated) to the amount of the LIBOR Based Loan which shall then be loaned by
the Lender to Borrowers as of the time of such determination, as such rate may
be adjusted by the reserve percentage applicable

                                       10
<PAGE>

during the LIBOR Interest Period in effect (or if more than one such percentage
shall be applicable, the daily average of such percentages for those days in
such LIBOR Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or an successor) for determining the maximum
reserve requirement (including without limitation, any emergency, supplemental
or other marginal reserve requirement) for a national bank with respect to
liabilities or assets consisting of or including "Eurocurrency Liabilities" as
such term is defined in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time, having a term equal to such
LIBOR Interest Period ("Eurocurrency Reserve Requirement"), as reasonably
applied to loans of this type. Such adjustment shall be effectuated by
calculating, and the LIBOR Rate shall be equal to, the quotient of (i) the
offered rate divided by (ii) one minus the Eurocurrency Reserve Requirement.

                "LIBOR RATE OPTION" is defined in Section 3.6 below.

                "LINE OF CREDIT" means the revolving line of credit provided for
in this Agreement.

                "LOAN DOCUMENTS" means, collectively, this Agreement, the Note,
the Canadian Loan Documents, any security agreements, pledge agreements,
assignments, deeds of trust, mortgages or other encumbrances or agreements which
secure or relate to the Obligations or the collateral security for the
Obligations, any guaranties of the Obligations, any lock box or blocked account
agreements and any other agreements entered into between either Borrower and
Lender relating to or in connection with this Agreement.

                "LOANS" means the Revolving Loans together with any other loans
or advances made by Lender to Borrowers, including the Term Loan.

                "MATERIAL ADVERSE EFFECT" means relative to any occurrence of
whatever nature (including any determination in litigation, arbitration or
governmental proceeding or investigation) involving or affecting either Borrower
that Lender reasonably determines will or does have a materially adverse effect
on:

                A.      The assets, business, profits, properties, condition
                        (financial or otherwise), operations or foreseeable
                        financial prospects of a Borrower as a consolidated
                        business; or

                B.      The ability of a Borrower to perform any of their
                        payment or other material obligations under this
                        Agreement, any other Loan Documents or the transactions
                        contemplated thereby.

                "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
ERISA Sections 3(37) or 4001(a)(3) or IRC Section 414(f) which covers employees
of Borrower or any ERISA Affiliate.

                                       11
<PAGE>

                "NEGOTIABLE COLLATERAL" means all of each Borrower's present and
future letters of credit, notes, drafts, instruments, certificated and
uncertificated securities, documents, leases and chattel paper, and each
Borrower's Business Records relating to any of the foregoing.

                "NOTE" means the Promissory Note evidencing the Term Loan.

                "OBLIGATIONS" means all Loans, advances, debts, liabilities
(including all amounts charged to Borrowers' loan account pursuant to any
agreement authorizing Lender to charge Borrowers' loan account), obligations,
fees, lease payments, covenants and duties owing by either Borrower to Lender of
any kind and description for the payment of money or otherwise, (whether
pursuant to or evidenced by the Loan Documents, by the Note or other instrument
or by any other agreement between Lender and either Borrower), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including any debt, liability or obligation owing from either
Borrower to others which Lender may obtain by assignment or otherwise, and all
interest thereon, including any interest that, but for the provisions of laws
applicable to any Insolvency Proceeding, would have accrued, and all Expenses
which either Borrower is required to pay or reimburse pursuant to the Loan
Documents, by law or otherwise.

                "OLV" means the following, determined from time to time by an
appraiser acceptable to Lender in its reasonable discretion: the projected net
cash proceeds to be derived from the sale and disposition of Borrowers'
Inventory after deduction for all associated costs, expenses and fees as part of
a professionally managed liquidation sale taking place over a reasonable time
frame not to exceed 8 weeks.

                "OVERADVANCE" means if at any time and for any reason, the
aggregate amount of the outstanding Revolving Loans exceeds the dollar or
percentage limitations set forth in Section 1 of this Agreement.

                "PERMITTED CANADIAN PROVINCES" means Canadian Provinces and
territories other than Nunavut, Yukon, and the Northwest Territories.

                "PERMITTED LIENS" means:

                (a)     liens for taxes, assessments or governmental charges,
and liens incident to construction, which are either not delinquent or are being
contested in good faith by a Borrower by appropriate proceedings, which will
prevent foreclosure of such liens, and against which adequate reserves have been
provided, and upon demand by Lender, with adequate security being posted with
Lender;

                (b)     liens or deposits in connection with workers'
compensation or other insurance or to secure customs' duties, public or
statutory obligations in lieu of surety, stay or appeal bonds, or to secure
performance of contracts or bids (other than contracts for the payment of money
borrowed), or deposits required by law or governmental regulations or by any
court order, decree, judgment or rule as condition to

                                       12
<PAGE>

the transaction of business or the exercise of any right, privilege or license;
or other liens or deposits of a like nature made in the ordinary course of
business; and

                (c)     security interests or mortgages granted to Lender;

                (d)     liens and security interests identified on Schedule 2;

                (e)     liens arising from taxes, assessments, charges or claims
that are not yet due or that remain payable without penalty;

                (f)     zoning restrictions, easements, minor restrictions on
the use of real property, minor irregularities in title thereto and other minor
liens that do not secure the payment of money or the performance of an
obligation and that do not in the aggregate materially detract from the value of
a property or asset to, or materially impair its use in the business of, the
applicable Borrower;

                (g)     liens evidenced by the Loan Documents;

                (h)     liens imposed by law, such as liens of landlords,
warehouses, mechanics and materialmen arising in the ordinary course of business
for sums not yet due, or which are discharged of record (by payment or bonding,
or otherwise);

                (i)     unless as a matter of applicable law such lien could, in
Lender's counsel's reasonable opinion, have priority over Lender's security
interest, any judgment lien which does not exceed, in any single instance,
$100,000 or, when added to the amounts of any other judgment lien(s) then
outstanding as to both Borrowers, in the aggregate $250,000, unless such
judgment or judgments shall not, within thirty (30) days after the entry thereof
have been discharged or execution thereof stayed pending appeal, or shall not
have been discharged within thirty (30) days after expiration of such stay;

                (j)     lien filings for informational purposes only with
respect to equipment leases entered into in the ordinary course of business; and

                (k)     ordinary deposits made to utility companies,
governmental or quasi-governmental agencies for or in connection with the
provision of services.

Notwithstanding anything to the contrary in the foregoing, "Permitted Liens"
shall in no event include (i) any lien imposed by, or required to be granted
pursuant to, ERISA or any Environmental Laws, (ii) any lien on any inventory of
Borrowers, or (iii) any lien on any distribution licenses or distribution
contracts issued to and held by, or entered into by, Borrowers.

                "PLAN" means any plan described in ERISA Section 3(2) maintained
for employees of Borrower or any ERISA Affiliate, other than a Multiemployer
Plan.

                "PPSA" means the Personal Property Security Act (Ontario), as
amended from time to time.

                                       13
<PAGE>

                "PRIME RATE" means the variable rate of interest, per annum,
which is quoted from time to time in The Wall Street Journal as the base "prime
rate" on corporate loans posted as of such time by at least 75% of the nation's
30 largest banks, adjusted daily. The Prime Rate is nothing more nor less than
an index for determining the interest rate payable under the terms of this
Agreement. The Prime Rate is not necessarily the best rate, or any other
definition of rates, offered by Lender.

                "REAL ESTATE" means all real estate and rights in real estate
(including leasehold interests) owned by either Borrower.

                "REPORTABLE EVENT" means a "reportable event" as that term is
defined and applied in connection with ERISA.

                "RESERVES" means a borrowing base reserves established by Lender
in its reasonable discretion based upon commercial lending practices.

        3.      LINE OF CREDIT, OTHER LOANS, INTEREST AND PAYMENTS

        3.1     REVOLVING LINE OF CREDIT. From time to time during the Term, so
long as an Event of Default has not occurred or if an Event of Default has
occurred, such Event of Default has been timely remedied, Lender will, in its
discretion and subject to the terms and conditions set forth in this Agreement,
make Revolving Loans to Borrowers in such amounts as Borrowers may request,
provided that the aggregate principal amount of all Revolving Loans shall not
exceed the Revolving Advance Limit. The Revolving Loans may be borrowed, repaid
and reborrowed according to the terms of this Agreement.

        Borrowers may request from time to time Revolving Loan advances by
submitting a signed, completed Borrowing Base Certificate to Lender, in each
case given no later than 11:00 a.m. (Detroit, Michigan time) on the Business Day
of the proposed Revolving Loan advance. Subject to the terms and conditions of
this Agreement, Lender will make the proceeds of each such requested Revolving
Loan advance available to Borrowers on the day requested.

        Lender shall not be obligated to make Revolving Loans to Borrowers at
any time; each Revolving Advance which is made under this Agreement will be made
at the option of, and in the discretion of, Lender. The Revolving Loans will not
be evidenced by a promissory note and a copy of Lender's books and records
related to the Revolving Loans shall constitute prima facie evidence of the
outstanding amount of Revolving Loans.

        Should an Overadvance exist, Borrowers shall immediately make principal
reduction payments of such excess to Lender as are required to reduce the
outstanding balance of the Revolving Loans such that no Overadvance exists.

        3.2     INTENTIONALLY OMITTED.

        3.3     TERM LOAN. Simultaneous with the execution of this Agreement,
the Borrowers have obtained from Lender the Term Loan, which shall be evidenced
by the

                                       14
<PAGE>

Note payable to the order of and dated on the date of this Agreement. In
addition to principal payments called for by the Note, Borrowers shall be
obligated to make additional principal payments on account of the Term Loan
equal to Borrowers' Excess Cash Flow, with such principal payments due and
payable within the sooner of (a) 120 after the end of each of Borrower's fiscal
years, or (b) 30 days after Borrowers' receipt of audited annual financial
statements.

        3.4     TERMINATION PREMIUM. If this Agreement is terminated at any time
prior to the expiration of the Term, Borrowers shall be obligated to pay Lender
a termination premium equal to the following (the "Termination Premium"):

                (a)     3% of the Advance Limit if terminated before November
                        11, 2003.

                (b)     1% of the Advance Limit if terminated after November 11,
                        2003 but before November 11, 2005.

The Termination Premium will also be due and payable in connection with any
termination of this Agreement pursuant to Section 9.6 below and in connection
with termination of this Agreement by Lender upon an Event of Default or by or
on behalf of Borrower, whether voluntary or involuntary, including upon an Event
of Default which is not timely cured within any applicable cure period, and
including in connection with termination of this Agreement or payment of the
Obligations by any trustee or debtor-in-possession in any Insolvency Proceeding.
The Termination Premium is presumed to be a reasonable estimate of the amount of
damages sustained by Lender as a result of the early termination of this
Agreement and Borrowers agree that such amount is reasonable under the
circumstances currently existing.

        3.5     CROSS-DEFAULTS AND CROSS-COLLATERALIZATION. A default under any
Loan or Note is a default under any all other Notes and Loans and under all
Obligations. All Collateral secures all Obligations.

        3.6     INTEREST RATES; DEFAULT INTEREST RATES.

                (a)     Generally.

                The aggregate outstanding amount of all Obligations shall bear
interest at the rates set forth in Section 1 above, with the Borrowers having
the option (subject to the terms set forth below) to elect a LIBOR Base Rate for
certain Loans. The aggregate outstanding amounts of the Obligations shall bear
interest, from and after the occurrence of an Event of Default and without
constituting a waiver of any such Event of Default, at the rate of two percent
(2.0%) per annum above the otherwise applicable Base Rate(s). All interest
payable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed, based on the
aggregate amount of the Obligations that are outstanding on each day. Interest
shall continue to accrue until all of the Obligations are paid in full.

                                       15
<PAGE>

                (b)     LIBOR Rate Option.

                        (1)     Provided no Event of Default has occurred and is
                continuing, Borrowers shall have the option to have the unpaid
                principal balance of up to 80% of the Loans bear interest at the
                applicable LIBOR Base Rate ("LIBOR Rate Option"), provided that
                LIBOR Based Loans shall be in $100,000 increments and not less
                than $500,000 in the aggregate.

                        (2)     Borrowers shall elect the LIBOR Rate Option by
                giving Lender written notice (in the form of Schedule 3.8) at
                least three Business Days prior to but no more than five
                Business Days prior to the last Business Day of each calendar
                month of Borrowers' intention to have a portion of its
                outstanding Term Loan or Revolving Loans treated as LIBOR Based
                Loans during the, succeeding calendar month. If Borrowers fail
                to timely elect the LIBOR Rate Option for a Loan, all such Loans
                shall be a Prime Based Loans and shall accrue interest at the
                Prime Base Rate during the succeeding calendar month, but
                Borrowers shall continue to have the right to elect the LIBOR
                Rate Option at the end of such succeeding month by timely giving
                written notice as provide above.

                        (3)     The LIBOR Rate may be automatically adjusted by
                Lender on a prospective monthly basis to take into account the
                additional or increased cost of maintaining any necessary
                reserves for Eurodollar deposits or increased costs due to
                changes in applicable law or regulation or the interpretation
                thereof occurring subsequent to the commencement of the then
                applicable LIBOR Interest Period, including but not limited to
                changes in tax laws (except changes of general applicability in
                corporate income tax laws as they affect financial institutions)
                and changes in any applicable law or regulation that increases
                the cost to Lender of funding LIBOR Based Loans. Lender shall
                promptly give the Borrowers notice of such a determination and
                adjustment, which determination shall be conclusive as to the
                correctness of the fact and the amount of such adjustment,
                absent manifest error. The Borrowers may, by written notice to
                Lender, (A) request Lender to furnish to the Borrowers a
                statement setting forth the basis for adjusting such LIBOR Based
                Rate and the method for determining the amount of such
                adjustment; and/or (B) prepay the LIBOR Based Loan with respect
                to which such adjustment is made, subject to the requirements of
                Section 3.6(f) and 3.4, if applicable.

                        (4)     In the event that the Borrowers shall have
                requested the LIBOR Rate Option in accordance with this
                Agreement and Lender shall have reasonably determined that
                Eurodollar deposits equal to the amount of the principal of the
                requested LIBOR Based Loan and for the LIBOR Interest Period
                specified are unavailable, impractical, or unlawful, or that the
                rate based on the LIBOR Rate will not adequately and fairly
                reflect the cost of funds, of making or maintaining the
                principal amount of the requested LIBOR Based Loan specified by
                the Borrowers, or that by reason of circumstances affecting
                Eurodollar markets, adequate and

                                       16
<PAGE>

                reasonable means do not exist for ascertaining the rate based on
                the applicable LIBOR Rate, Lender shall promptly give notice of
                such determination to the Borrowers that the rate based on the
                LIBOR Rate is not available. A determination by Lender hereunder
                shall be prima facie evidence of the correctness of the fact and
                amount of such additional costs or unavailability. Upon such a
                determination, (A) the right of Borrowers to select, convert to,
                or maintain a LIBOR Based Loan at the rate based on the LIBOR
                Rate shall be suspended until Lender shall have notified the
                Borrower that such conditions shall have ceased to exist, and
                (B) the Loans subject to the requested LIBOR Rate Option shall
                accrue interest as Prime Based Loans.

                (c)     Limitation on LIBOR Based Loans. Upon the occurrence and
        continuance of an Event of Default, Lender, in its sole discretion, may
        eliminate the LIBOR Rate Option and the availability of LIBOR Based
        Loans.

                (d)     Conversion. Following the occurrence of an Event of
        Default, at the option of Lender, all LIBOR Based Loans may be converted
        to Prime Based Loans, which conversion is independent of Lender's other
        rights under this Agreement.

                (e)     Prepayment LIBOR Based Loans. In addition to Borrowers'
        obligations under Section 3.4, if applicable, no portion of any LIBOR
        Based Loan may be prepaid at any time unless Borrowers first satisfy in
        full their obligations under Section 3.6(f) arising from such
        prepayment.

                (f)     Indemnity/Loss of Margin.

                        (1)     Borrowers shall indemnify, defend and hold
                harmless Lender against any and all loss, liability, cost or
                expense which Lender may sustain or incur as a consequence of
                (i) any failure of Borrowers to obtain, convert or extend any
                LIBOR Based Loan after notice thereof has been given to Lender;
                or (ii) any payment, prepayment, termination or conversion of a
                LIBOR Based Loan made for any reason on a date other than the
                last day of the applicable LIBOR Interest Period; Borrowers
                shall pay the full amount thereof to Lender on demand.

                        (2)     In the event that any present or future law,
                rule, regulation, treaty or official directive or the
                interpretation or application thereof by any central bank,
                monetary authority or governmental authority, or the compliance
                with any guideline or request of any central bank, monetary
                authority or governmental authority (whether or not having the
                force of law) imposes, modifies or deems applicable any deposit
                insurance, reserve, special deposit, or other similar
                requirement with respect to deposits in or for the account of,
                or loans or advances or commitment to make loans or advances by,
                or letters of credit issued or commitment to issue letters of
                credit by Lender and the result of any of the foregoing is to
                increase the costs of Lender, reduce the income receivable by or
                return on

                                       17
<PAGE>

                equity of Lender or impose any expense upon Lender with respect
                to any advances or extensions of credit or commitments to make
                advances or extensions of credit under this Agreement upon
                notice from Lender, Borrowers agree to pay such Lender the
                amount of such increase in cost, reduction in income, reduced
                return on equity or capital, or additional expense after
                presentation by Lender of a statement concerning such increase
                in cost, reduction in income, reduced return on equity or
                capital, or additional expense. Such statement shall set forth a
                brief explanation of the amount and Lender's calculation of the
                amount (in determining such amount Lender may use any reasonable
                averaging and attribution methods), which statement shall be
                conclusively deemed correct absent manifest error.

        3.7     PAYMENTS. All payments, including any prepayments, by Borrowers
on account of principal, interest, fees, or other Obligations must be made
without setoff or counterclaim to Lender at the address specified on the first
page of this Agreement in lawful money of the United States of America and in
immediately available funds. If any payment under this Agreement or the Note
becomes due on a day other than a day which is a Business Day, its maturity will
be extended to the next succeeding Business Day, and with respect to payments of
principal and interest thereon, will be payable at the then-applicable rate
during such extension.

        3.8     CREDITING PAYMENTS. For the purpose of calculating Borrowing
Base availability for Revolving Loans, the receipt by Lender of any wire
transfer or electronic funds transfer of funds, check or other item of payment
shall be applied immediately to provisionally reduce the Obligations, but such
receipt shall not be considered a payment on account unless such wire transfer
or electronic funds transfer is of immediately available federal funds and is
made to the appropriate deposit account of Lender or unless and until such check
or other item of payment is honored when presented for payment. For the purpose
of calculating interest, the receipt by Lender of any check or other item of
payment shall be deemed to have occurred two (2) Business Days after the date
Lender actually receives such item of payment and as to any wire transfer or
electronic funds transfer, two (2) Business Days after the date Lender actually
receives such item of payment. In the event any check or other item of payment
is not honored when presented for payment, Borrower shall be deemed not to have
made such payment. Notwithstanding anything to the contrary contained herein,
any wire transfer, electronic funds transfer, check or other item of payment
received by Lender after 1:00 p.m., Detroit, Michigan time shall be deemed to
have been received by Lender as of the opening of business on the immediately
following Business Day.

        3.9     PAYMENT MECHANICS. As an administrative convenience to Borrowers
to ensure the timely payment of amounts owing by Borrowers to Lender under this
Agreement, Borrowers hereby request Lender to advance for the account of
Borrowers an amount each month sufficient to pay interest accrued on the
principal amount of the Obligations during the immediately preceding month and
all monthly principal installments or other payments due under the Note or other
Loan Document and amounts from time to time sufficient to pay all fees and
Expenses owing by Borrowers under this Agreement. Borrowers authorize Lender, in
Lender's sole discretion, to make

                                       18
<PAGE>

a Revolving Loan for Borrowers' account of a sum sufficient each month to pay,
on the due date thereof, all interest accrued on the principal amount of the
Obligations during the immediately preceding month and all monthly principal
installments or other payments due under the Note or other Loan Documents and
sums from time to time sufficient to pay, on the due date thereof, all fees and
Expenses owing by Borrowers under this Agreement, and Lender may apply the
proceeds of each such Revolving Loan to the payment of such interest,
installments, fees and Expenses. Lender will provide Borrowers with an invoice
or receipt for all items charged to the Revolving Loans pursuant to this
paragraph. Each Revolving Loan made pursuant to this Section 3.9 shall
thereafter accrue interest at the rate then applicable under this Agreement.
Lender shall not be obligated to make Revolving Loans under this Section 3.9,
and such Loans shall be made in Lender's discretion.

        3.10    APPOINTMENT OF AGENT. Subsidiary hereby appoints Parent as its
agent for purposes of requesting Loans, signing Borrowing Base Certificates and
providing Lender with any information requested by Lender in connection with
this Agreement, the Loan Documents and to receive any notices from Lender
hereunder or thereunder. Subsidiary ratifies the acts of Parent pursuant to this
section and agrees that Lender shall have the right to rely on certificates,
requests, Borrowing Base Certificates and other documents and information
provided by Parent in its capacity as agent for Subsidiary with the same legal
effect as if the same were signed and/or delivered by Subsidiary. The
appointment of Parent as agent pursuant to this Section 3.10 is coupled with an
interest and shall be irrevocable until all Obligations are fully and finally
paid.

        3.11    ALLOCATION OF EXPENSES. Because of the interrelationship of the
Borrowers and the benefits to each Borrower of being a party to a consolidated
financing arrangement with Lender, Borrowers agree that Lender may charge all
Expenses to the Revolving Loans and any reallocation between the Borrowers shall
have no effect on Lender's rights under this Agreement.

                           4. CONDITIONS OF BORROWING

        Notwithstanding any other terms of this Agreement, Lender is not
required to make any Loan to Borrowers under this Agreement unless all of the
following conditions are met at or prior to the time such Loan is made:

        4.1     REPRESENTATIONS TRUE. Borrowers' representations and warranties
in this Agreement (and in all agreements referred to or executed in connection
with this Agreement) are true in all material respects as of the date of each
Loan or advance under this Agreement with the same effect as though such
representations and warranties had been made by the Borrower at such time.

        4.2     NO DEFAULT. No Event of Default under this Agreement exists, nor
does any event exist which, upon the lapse of time, service of notice, or both,
would constitute an Event of Default under this Agreement, and no suit or
proceeding at law or in equity or of any governmental body has been instituted
or, to the knowledge of the Borrowers,

                                       19
<PAGE>

threatened which, in either case, would materially and adversely affect
Borrowers' financial condition or business operations.

        4.3     COUNSEL OPINION. Simultaneous with the execution of this
Agreement, Lender must have received from Borrowers a reasonably satisfactory
legal opinion(s) as to: (a) the due authorization, execution and delivery by
Borrowers of this Agreement, the Note, and all documents and agreements referred
to or executed in connection with this Agreement; (b) the due authorization,
validity and binding effect of the Loans contemplated by this Agreement and of
the Note; (c) Borrowers' due incorporation, existence and qualification as a
foreign corporation where the Borrowers are qualified; and (d) such other
matters as Lender may reasonably require relating to the validity and
enforceability of this Agreement. The Borrowers must also execute and deliver to
Lender or its counsel all documents Lender may request concerning Borrowers'
status and authorization to enter into the transactions contemplated by this
Agreement.

        4.4     INITIAL MINIMUM AVAILABILITY. At the time of the initial Loans
under this Agreement only, Borrowers have at least $500,000 in Borrowing Base
availability after giving effect to a $250,000 liquidation reserve and after
paying all closing and transaction costs, all obligations to Borrowers' existing
senior secured lender have been paid in full and Borrowers pay all accounts
payable (excluding disputed accounts payable) to within 60 days of invoice date
and all taxes are paid current.

        4.5     ADVERSE DEVELOPMENTS. Since the date of the financial statements
most recently furnished to Lender, there has been no material adverse change in
the business, prospects, operations or condition, financial or otherwise, of the
Borrowers or any of the properties or assets of the Borrowers.

                         5. SECURITY FOR THE OBLIGATIONS

        5.1     GRANT OF SECURITY. Borrowers hereby grant Lender a continuing
security interest in all presently existing and hereafter acquired or arising
Collateral to secure prompt repayment of all Obligations and to secure the
prompt performance by Borrowers of each of its covenants and duties in this
Agreement and any other agreements with Lender. Lender's security interest in
the Collateral shall attach to all Collateral without further act on the part of
Lender or Borrowers other than execution of this Agreement and the GSA by the
applicable Borrowers. Borrowers have no authority, express or implied, to
dispose of, sell or transfer any of the Collateral other than (a) sales of
Inventory to buyers in the ordinary course of business, and (b) sales of
obsolete Equipment having a net book value of less than $50,000 per year in the
aggregate.

        5.2     NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower shall, upon the request of Lender, immediately endorse and assign such
Negotiable Collateral to Lender and deliver physical possession of such
Negotiable Collateral to Lender.

        5.3     ADDITIONAL DOCUMENTATION. At the request of Lender, Borrowers
shall execute and deliver to Lender, all financing statements, continuation
financing statements, fixture filings, security agreements, pledges,
assignments, endorsements of

                                       20
<PAGE>

certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that Lender
may reasonably request, in form reasonably satisfactory to Lender, to perfect
and continue perfected Lender's security interest in the Collateral and in order
to fully consummate all of the transactions contemplated hereunder and under the
other Loan Documents.

        5.4     POWER OF ATTORNEY. Each Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and any of Lender's officers, employees
or agents designated by Lender) as Borrower's true and lawful attorney-in-fact.
Pursuant to this power of attorney, Lender, or Lender's agent, may, without
notice to Borrowers and in either a Borrower's or Lender's name, but at the
reasonable cost and expense of Borrowers, at such time or times as Lender in its
reasonable discretion may determine: (a) send notifications to Account Debtors
requiring that payment of all Accounts be sent to Lender or a lockbox designated
by Lender, and upon the occurrence and continuation of an Event of Default,
enforce payment of the Accounts by legal proceedings or otherwise, and generally
exercise all of either Borrower's rights and remedies with respect to the
collection of the Accounts; (b) take control, in any manner, of any item of
payment or proceeds relating to any Collateral; (c) upon the occurrence and
continuation of an Event of Default, prepare, file and sign either Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (d) sign Borrowers' names on
and/or file any of documents described in Section 5.5.3 or on any other similar
documents to be executed, recorded or filed in order to perfect or continue
perfected Lender's security interest in the Collateral; (e) upon the occurrence
and continuation of an Event of Default, sign either Borrowers' name on any
invoices, bills of lading, freight bills, chattel paper, documents, instruments
or similar documents or agreements relating to the Accounts, Inventory or other
Collateral, drafts against Account Debtors, schedules and assignments of
Accounts, verifications of Accounts and notices to Account Debtors; (f) send
requests for verification of Accounts; (g) endorse Borrower's name on any
checks, notes, acceptances, money orders, drafts or other items of payment or
proceeds relating to any Collateral that may come into Lender's possession and
deposit the same to the account of Lender for application to the Obligations;
(h) upon the occurrence and continuation of an Event of Default, do all other
acts and things necessary, in Lender's determination, to fulfill either
Borrower's obligations under this Agreement or any of the other Loan Documents;
(i) upon the occurrence and continuation of an Event of Default, notify the post
office authorities to change the address for delivery of either Borrower's mail
to an address designated by Lender, to receive and open all mail addressed to
either Borrower, and to retain all mail relating to the Collateral and forward
all other mail to Borrowers; (j) upon the occurrence and continuation of an
Event of Default, use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Accounts, Inventory, Equipment and any other Collateral and to which either
Borrower has access; (k) upon the occurrence and continuation of an Event of
Default, make, settle and adjust all claims under either Borrower's policies of
insurance relating to the Collateral, make all determinations and decisions with
respect to such policies of insurance and endorse the name of either Borrower on
any check, draft, instrument or other item of payment for the proceeds of

                                       21
<PAGE>

such policies of insurance; (l) upon the occurrence and continuation of an Event
of Default, sell or assign any of the Accounts and other Collateral upon such
terms, for such amounts and at such time or times as Lender deems advisable; and
(m) upon the occurrence and continuation of an Event of Default, settle, adjust
or compromise disputes and claims respecting the Accounts directly with Account
Debtors, for amounts and upon terms that Lender determines to be reasonable,
and, in furtherance thereof, execute and deliver any documents and releases that
Lender determines to be necessary. The appointment of Lender as each Borrower's
attorney-in-fact and each and every one of Lender's rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and this Agreement has been terminated.

        Notwithstanding anything contained herein to the contrary, any actions
taken by Lender to enforce or realize on its security under this Agreement shall
be subject to all applicable laws, including but not limited to the PPSA and
BIA.

        5.5     RIGHT TO INSPECT. Lender, through any of its officers, employees
or agents, shall have the right at any time or times during the applicable
Borrower's usual business hours, or during the usual business hours of any third
party having control over any of either Borrower's Business Records, to inspect
the Business Records in order to verify the amount or condition of, or any other
matter relating to, the Collateral or either Borrower's financial condition.
Lender also shall have the right at any time or times during the applicable
Borrower's usual business hours to inspect and examine the Inventory and the
Equipment and to check and test the same as to quality, quantity, value and
condition. If an Event of Default has occurred or if Lender reasonably believes
that an Event of Default has occurred, Lender may conduct any of the inspections
referenced in this Section 5.5 at any time without regard to the applicable
Borrower's or any third party's usual business hours.

                       6. REPRESENTATIONS AND WARRANTIES

                In order to induce Lender to make Loans as provided in this
Agreement and to accept any Notes, each Borrower individually represents and
warrants to Lender as follows:

        6.1     ORGANIZATION. Parent is a Corporation duly organized and
existing under the laws of the State of Ohio, and Subsidiary is a corporation
duly organized and existing under the laws of Canada and the execution, delivery
and performance of the Loan Documents, including this Agreement and the issuance
of the Note as provided in this Agreement are within Borrower's corporate
powers, have been duly authorized, are not in contravention of law or the terms
of the Borrower's articles of incorporation, bylaws, charter or other formation
and organizational documents and do not require the consent or approval of any
governmental body, agency or authority. The Borrower is duly licensed or
qualified to do business in all jurisdictions in which the Borrower has
substantial property or business operations, except where any failure to be
licensed or qualified would not have a Material Adverse Effect on Borrower's
assets or business.

                                       22
<PAGE>

        6.2     FINANCIAL STATEMENTS. Borrower's balance sheets and the
statements of profit and loss and surplus furnished to Lender from time to time
will be in all material respects correct and complete and will fairly present
Borrower's financial condition as of the relevant dates and the results of its
operations for the applicable time periods.

        6.3     LIENS. Except for Permitted Liens, the Borrower has good and
marketable title to all its assets, including all Collateral, free and clear of
all liens and encumbrances.

        6.4     ABSENCE OF CONFLICTING OBLIGATIONS. The making and execution of
the Loan Documents and compliance with its terms and the issuance of the Notes
will not result in a breach of any of the terms and conditions of or result in
the imposition of any lien, charge, or encumbrance upon any property of the
Borrower pursuant to, or constituting a default under, any indenture or other
agreement or instrument to which the Borrower is a party or by which it is
bound. Notwithstanding anything to the contrary contained in this Section 6.4 of
this Agreement, Borrower may pay the "Contingency Payment" referred to in
Section 4 of that certain Termination Agreement of approximate date hereof
between Parent and certain of its prior lenders according to the terms of such
agreement.

        6.5     TAXES. Borrower has no outstanding unpaid tax liabilities
(except for taxes which are currently accruing from its current operations and
ownership of property, and which are not delinquent), and no tax deficiencies
have been proposed or assessed against Borrower. There have been no audits of
Borrower's federal income tax returns, which have resulted in or are likely to
result in the assessment of any material tax liability against Borrower and all
taxes shown by any returns have been paid.

        6.6     ABSENCE OF MATERIAL LITIGATION. Except as set forth on Schedule
6.6, the Borrower is not a party to any litigation or administrative proceeding,
nor so far as is known by the Borrower is any litigation or administrative
proceeding threatened against it, which in either case would, if adversely
determined, cause any material adverse change in its properties or the conduct
of its business.

        6.7     ABSENCE OF ENVIRONMENTAL PROBLEMS. Except as disclosed in
writing to Lender, the Borrower is in full and complete compliance with all
Environmental Laws involving Borrower's past or present operations, facilities
and property. Further, Borrower has not been cited for violating any applicable
Environmental Laws and Borrower has, to the best of its knowledge, all necessary
environmental permits and licenses to operate its business, except for any
non-compliance that would not have a Material Adverse Effect on Borrower's
assets or business.

        6.8     LEGAL NAME. Borrower's full legal name is exactly as set forth
on the signature page of this Agreement and Borrower has not used its name since
the date of its organization, nor has it used any assumed name, tradename, or
tradestyle; provided, however, Parent has previously used the name Transmation,
Inc.

        6.9     FINANCING STATEMENTS. Except for financing statements covering
Permitted Liens and Lender's liens, no financing statements covering any
Collateral,

                                       23
<PAGE>

proceeds of Collateral, or any other of Borrower's property are on file in any
public office.

        6.10    ERISA. No Reportable Event has occurred with respect to any
Plan.

        6.11    BROKER'S FEES. Except as set forth on Schedule 6.11, Borrower
has made no commitment, and has taken no action, that could result in a claim
for any brokers', finders', or similar fees or commitments in respect to the
transactions described in this Agreement. Borrower agrees to pay all finders'
fees or similar fees payable to any persons or entities in connection with this
Agreement and to defend and hold Lender harmless against any and all such fees.

        6.12    PRINCIPAL PLACE OF BUSINESS.

                (a)     Borrower's principal place of business, records
        concerning the Collateral and all other Business Records are located at
        or about the address set forth at the beginning of this Agreement; and

                (b)     Borrower will provide Lender with 30 days prior written
        notice of any change with respect to any of the foregoing.

        6.13    FULL DISCLOSURE. This Agreement and all of the Exhibits,
Schedules and other written material delivered by the Borrower to Lender in
connection with the transactions contemplated by this Agreement do not contain
any statement that is false or misleading with respect to any material fact and
do not omit to state a material fact necessary in order to make the statements
therein not false or misleading. There is no additional fact that the Borrower
is aware of that has not been disclosed in writing to Lender that materially
affects adversely or, so far as the Borrower can reasonably foresee, will
materially affect adversely the Borrower's financial condition or business
prospects.

        6.14    NON-AFFILIATION. Borrowers are not affiliated with an Ontario
corporation known as "Transcat Inc.," Ontario Corporation number 1440105,
however Subsidiary is authorized to use "Transcat" as a tradename in Canada.

        6.15    INTELLECTUAL PROPERTY. The Borrower owns or possesses adequate
licenses or other rights to use all patents, processes, trademarks, trade names,
and copyrights necessary to conduct its business as now conducted or presently
intended to be conducted and the Borrower has no reason to believe that any such
rights conflict or will conflict with the rights of others. All of Borrower's
patents, trademarks and copyrights are described in the Collateral Assignment of
Intellectual Property and Security Agreement executed by Borrower in favor of
Lender in connection with this Agreement.

        6.16    COMPLIANCE WITH LAW. Except where failure to comply would not
have a Material Adverse Effect on Borrower's assets or business, Borrower is in
compliance with all laws and regulations applicable to it, its business and
properties. Borrower has all licenses, permits, orders and approvals that are
required under any governmental

                                       24
<PAGE>

law or regulation in connection with the Borrower's business and properties
("Permits"). No notice of any violation has been received with respect of any
Permits and no proceeding is pending or, to the best of the Borrower's
knowledge, threatened to terminate, revoke or limit any Permits.

        6.17    ACCOUNTS. All of Borrower's Accounts constitute bona fide
existing obligations created by the sale and delivery of Inventory or the
rendition of services to Account Debtors in the ordinary course of Borrower's
business, and, in the case of Accounts created by the sale and delivery of
Inventory, the Inventory giving rise to such Accounts has been delivered to the
Account Debtor. At the time of the creation of each Eligible Account or the
assignment thereof to Lender, each such Eligible Account is unconditionally owed
to Borrower without defense, dispute, offset, counterclaim or right of return or
cancellation and Borrower has not received notice of actual or imminent
bankruptcy, insolvency or material impairment of the financial condition of the
Account Debtor regarding such Eligible Account.

        6.18    LABOR MATTERS. No strikes or other labor disputes against
Borrower are pending or, to Borrower's knowledge, threatened. To the best of
Borrowers knowledge, hours worked by and payment made to employees of Borrower
have not been in violation of the Fair Labor Standards Act or any other
applicable federal, state, local or foreign law dealing with such matters. All
payments due from Borrower on account of employee health and welfare insurance
have been paid or accrued as a liability on the books of Borrower. Except as set
forth in Schedule 6.18, Borrower has no obligation under any collective
bargaining agreement, management agreement, consulting agreement or any
employment agreement. There is no organizing activity involving Borrower pending
or, to Borrower's knowledge, threatened by any labor union or group of
employees. Except as set forth in Schedule 6.18, there are no representation
proceedings pending or, to Borrower's knowledge, no group of employees of
Borrower has made a pending demand for recognition. Except as set forth in
Schedule 6.18, there are no complaints or charges against Borrower pending or
threatened to be filed with any federal, state, local or foreign court,
governmental agency or arbitrator based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment by Borrower
of any individual.

        6.19    SUBSIDIARIES. Except as set forth on Schedule 6.19, Borrower has
no subsidiaries (other than Parent which has one subsidiary, namely the
Subsidiary) and is not engaged in any joint venture or partnership with any
other person, or is an affiliate of any other person. Except as set forth on
Schedule 6.19, there are no outstanding rights to purchase options, warrants or
similar rights or agreements pursuant to which Borrower may be required to issue
or sell any of its stock or other equity securities.

        6.20    DEPOSIT ACCOUNTS. Schedule 6.20 lists all banks and other
financial institutions at which Borrower maintains deposits and/or other
accounts, including any disbursement accounts, and Schedule 6.20 correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number.

                                       25

<PAGE>

        6.21    CUSTOMER RELATIONS. There exists no actual or, to Borrower's
knowledge, threatened termination or cancellation of, or any material adverse
modification or change in: (a) the business relationship of Borrower with any
customer or group of customers whose purchases during the preceding twelve (12)
months caused them to be ranked among the ten largest customers of Borrower; or
(b) the business relationship of Borrower with any supplier material to the
operations of Borrower. The ratings ("Customer Ratings") assigned to Borrower by
its customers and any other applicable customer have not been withdrawn,
rescinded or downgraded in the past twelve (12) months, nor has Borrower
received any notice of any adverse action taken or proposed to be taken by any
customer in respect of any Customer Ratings.

        6.22    SUPPLY PROGRAMS. Borrower does not (a) participate in any
resale, "off-load" or other programs under which any of Borrower's customers (or
any affiliates of any customer) sell or supply Inventory to Borrower, including
without limitation, on a bailment, consignment or another basis, and (b)
purchase Inventory on a consignment, trial, or sale or return or similar basis.

        6.23    SPECIAL RETURN PROGRAMS. Other than allowing customers to return
unused Inventory purchased in the past 30 days if such Inventory in the original
packaging, in the ordinary course of business Borrower does not allow customers
to return goods (including used goods) for credit against amounts owing to
Borrower.

        6.24    INTEGRATED OPERATIONS. The Borrowers operate as an integrated
entity and share business operations, functions and services, including sales,
marketing, finance, accounting, management, quality control and shipping.
Likewise, the Borrowers historically have managed all cash on a divisional basis
and presently handle all receipts and disbursements on a divisional basis and it
is not practicable for Borrowers to manage cash on an individual Borrower basis.
As a result of the foregoing, each Borrower will benefit in a direct and
substantial way from Loans and advances made by Lender to the Borrowers together
and, but for Lender making Loans to the other Borrower and such other Borrower
being able to provide business services to the other Borrower, each Borrower's
business operations would be materially and negatively impacted.

                             7. NEGATIVE COVENANTS

        While any of the Obligations remain unpaid, each Borrower must not agree
to and must not (without Lender's prior written consent):

        7.1     RESTRICTION ON LIENS. Except for Permitted Liens, create or
permit to be created or allow to exist any mortgage, pledge, encumbrance, or
other lien upon or security interest in any property or assets now owned or
acquired in the future by the Borrower.

        7.2     RESTRICTION ON INDEBTEDNESS. Create, incur, assume, or have
outstanding any indebtedness for borrowed money except:

                (a)     The Obligations;

                                       26
<PAGE>

                (b)     Indebtedness incurred in the ordinary course of
        Borrower's business for necessary materials, supplies, etc., all of
        which (other than items disputed in good faith) must be due not more
        than 90 days from the date of invoice and none of which may be more than
        60 days past due;

                (c)     Indebtedness for Permitted Liens.

                (d)     Indebtedness consented to by Lender, and if required by
        Lender, subordinated to the Obligations pursuant to subordination
        agreements acceptable to Lender;

                (e)     Subject to the Capital Expenditure limitations in this
        Agreement, indebtedness incurred in connection with the purchase or
        lease of Equipment.

        7.3     MERGERS; CONSOLIDATIONS; DISPOSITION OF ASSETS. Merge with or
into or consolidate with or into any other corporation or entity; or sell,
lease, transfer or otherwise dispose of all or any part of its property, assets
or business (other than by sales of Inventory or Equipment permitted by this
Agreement).

        7.4     SALE AND LEASEBACK. Enter into an agreement under which Borrower
leases or purchases any property that Borrower has sold or is to sell.

        7.5     DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Except for dividends
payable in shares of its stock, pay or declare any dividend, or make any other
distribution on account of any shares of any class of its stock, or redeem,
purchase, or otherwise acquire directly or indirectly, any shares of any class
of its capital stock.

        7.6     INVESTMENTS. Make any loans or advances to, or investments in,
other persons, corporations or entities, except:

                (a)     investments in (i) bank certificates of deposit and
        savings Accounts; (ii) obligations of the United States; and (iii) prime
        commercial paper maturing within 90 days of the date of acquisition by
        the Borrower.

                (b)     loans and advances made to employees and agents in the
        ordinary course of business, such as travel and entertainment advances
        and similar items, not to exceed in the aggregate $25,000 outstanding at
        any time.

        7.7     CONTINGENT LIABILITIES. Guarantee or become a surety or
otherwise contingently liable for any obligations of others, except pursuant to
the deposit and collection of checks and similar items in the ordinary course of
business.

        7.8     SALARIES AND OTHER COMPENSATION. Pay salaries, bonuses, profit
sharing payments, consulting or management fees, or any other compensation
(other than historical base salaries) of any kind to Borrower's members,
shareholders, affiliates, officers or directors which is not consistent with the
compensation plans provided to Lender prior to the date of this Agreement or
increase officers' base salaries by more than 10% in any calendar year.

                                       27
<PAGE>

        7.9     STOCK. Except as set forth on Schedule 7.9, pledge, hypothecate
or otherwise encumber or sell or otherwise transfer any shares of any class of
its capital stock or make any change in Borrower's capital structure.

        7.10    NATURE OF BUSINESS. Make any substantial change in the nature of
its business from that engaged in on the date of this Agreement or engage in any
other businesses other than those engaged in on the date of this Agreement.

        7.11    INSIDER TRANSACTIONS. Except as set forth on Schedule 7.11,
enter into, or permit or suffer to exist, any transaction or arrangement with
any shareholder, member, employee, director, officer, affiliate, or member of
management, except on terms that are reasonably comparable to what Borrower
could obtain in arm's-length transactions, with persons who have no relationship
with Borrower.

        7.12    CAPITAL EXPENDITURES. Exclusive of expenditures for Big Cat,
make or incur liabilities for Capital Expenditures exceeding $300,000 in fiscal
year 2003 (ending March 31, 2003), or $500,000 in subsequent fiscal year 2004
(ending March 31, 2004), $1,500,000 in fiscal year 2005 (ending March 31, 2005)
and $400,000 during the period April 1, 2005 to the end of the Term.

        7.13    CATALOGUE SPENDING. Exclusive of the amortization of any prepaid
expenses related to the development, printing and mailing of Big Cat, spend in
excess of the following amounts for the development, printing and mailing of Big
Cat in the applicable fiscal year:

<TABLE>
<S>                                       <C>
                Fiscal 2003               zero
                Fiscal 2004               $850,000
                Fiscal 2005               zero
</TABLE>

                            8. AFFIRMATIVE COVENANTS

        While any of the Obligations remain unpaid, each Borrower must at all
times:

        8.1     INSURANCE. Maintain adequate fire and extended coverage and
liability insurance covering all of its present and future real and personal
property, including the Collateral, with Lender's loss payable and
noncontributory mortgagee/secured party clauses in Lender's favor, protecting
Lender's interest, as such interest may appear, together with such policies of
business interruption insurance and products liability insurance as Lender may
reasonably request and insurance in accordance with all applicable workers'
compensation laws. Such insurance must be in such form, with such companies, and
in such amounts as is reasonably acceptable to Lender, insuring against
liability for damage to persons or property, and must provide for thirty (30)
days prior written notice to Lender of cancellation or material alteration.
Borrower must provide Lender with the original policies of insurance for all
such coverages, true copies of the policies or other proof of insurance
reasonably acceptable to Lender, showing that Lender's interest has properly
been endorsed on the applicable policy. Lender may, in its sole discretion, on
30 days written notice to the Borrowers, require the

                                       28
<PAGE>

Borrowers to obtain additional or different insurance coverages as Lender may
reasonably request.

        8.2     EXISTENCE; PAYMENT OF TAXES AND OTHER LIABILITIES. Maintain its
corporate existence and pay all taxes, assessments and other governmental
charges against it or its property, and all of its other liabilities, before the
same become delinquent and before penalties accrue on these debts and
obligations except to the extent and so long as the same are being contested in
good faith by appropriate proceedings in such manner as not to cause any
material adverse effect upon its financial condition, with adequate reserves
provided for such payments, and, upon demand by Lender, posting with Lender of
adequate security to protect Lender.

        8.3     ACCOUNTING RECORDS; REPORTS. Maintain a standard and modern
system for accounting in accordance with generally accepted accounting
principles consistently applied throughout all accounting periods, and furnish
to Lender:

                (a)     With each request for a Revolving Loan but no less
        frequently than the last Business Day of each week, borrowing base
        certificates (each, a "Borrowing Base Certificate") as of the close of
        business of the preceding day in a form acceptable to Lender.

                (b)     On a daily basis, sales registers (which shall include
        credits issued or taken).

                (c)     Within 20 calendar days after the end of each month, as
        of the last day of the preceding month, aging and summary reports of
        Accounts and accounts payable in such form and detail as Lender may
        request.

                (d)     Within 20 calendar days of each month end, a perpetual
        Inventory listing in such form and detail as Lender may reasonably
        request.

                (e)     Within 30 calendar days after the end of each month of
        each fiscal year, a consolidated balance sheet of the Borrowers as of
        the close of each such month and of the comparable month in the
        preceding fiscal year, and statements of income and surplus of the
        Borrowers for each month and for that part of the fiscal year ending
        with each such month and for the corresponding period of the preceding
        fiscal year, all in reasonable detail and certified as true and correct
        (subject to audit and normal year-end adjustments) by the chief
        financial officer of the Borrowers.

                (f)     As soon as available and in any event within 90 calendar
        days after the close of each fiscal year of Borrowers, a copy of
        Borrowers' consolidated detailed long-form audit report for such year
        and accompanying financial statements, as prepared by independent
        certified public accountants of recognized standing selected by the
        Borrowers and reasonably acceptable to Lender, together with all
        management letters, which report shall be accompanied by an unqualified
        opinion of such accountants, in form satisfactory to Lender, to

                                       29
<PAGE>

        the effect that the financial statements fairly present the financial
        condition of the Borrowers and the results of its operations as of the
        relevant dates.

                (g)     Within 90 calendar days after the end of each fiscal
        year of Borrowers, a schedule showing all insurance policies which the
        Borrowers had in force as of the end of such fiscal year, signed by an
        officer of the Borrowers.

                (h)     (1) As soon as possible and in any event within 30
        calendar days after Borrower knows that any Reportable Event with
        respect to any Plan has occurred, a statement of the chief financial
        officer of the Borrowers setting forth details as to such Reportable
        Event and the action which the Borrowers propose to take with respect to
        the Reportable Event, together with a copy of the notice of such
        Reportable Event given to the Pension Benefit Guaranty Corporation, (2)
        promptly after the filing with the United States Secretary of Labor or
        the Pension Benefit Guaranty Corporation, copies of each annual report
        with respect to each Plan administered by the Borrower, promptly after
        receipt, a copy of any notices the Borrowers may receive from the
        Pension Benefit Guaranty Corporation or the Internal Revenue Service
        with respect to any Plan administered by the Borrowers; provided,
        however, this subpart shall not apply to notices of general application
        promulgated by the Pension Benefit Guaranty Corporation or the Internal
        Revenue Service; and (4) within five Business Days of filing, copies of
        any filings made with the Securities and Exchange Commission, NASDAQ or
        any other regulatory or governmental agency.

                (i)     At least 30 calendar days prior to the end of each
        fiscal year end, preliminary pro forma cash flow, profit and loss and
        balance sheet forecasts for the succeeding 12 month period subject to
        revision by Parents' board of directors within 30 days of the fiscal
        year end).

                (j)     Within each monthly financial statement delivered by
        Borrowers, a letter of "covenant compliance" regarding Borrowers'
        obligations under this Agreement, delivered to Lender and prepared, in
        form and substance acceptable to Lender, signed by an officer of
        Borrowers.

                (k)     Unless sooner requested by Lender, within 90 days of
        each fiscal year end, a listing of the names and addresses of each
        Borrower's customers during the prior 12 months.

                (l)     All other reports, documents and information that Lender
        may reasonably request.

        8.4     INSPECTIONS. Permit Lender's representatives to visit and
inspect any of Borrowers' properties and premises and examine, copy (by
electronic or other means) and abstract any Business Records and Collateral
records at any reasonable time, during business hours, and as often as may be
reasonably desired.

        8.5     LITIGATION. Promptly furnish Lender, in writing, the details of
all material litigation, legal or administrative proceedings, or other actions
of any nature adversely

                                       30
<PAGE>

affecting either Borrower, including, without limitation, any notices of
violation, citation, commencement of administrative proceeding or similar notice
under any applicable Environmental Laws, commenced after the date hereof, in
which more than $50,000.00 is at issue.

        8.6     AUDITS AND EXAMINATIONS. Permit Lender's representatives to
conduct on-site audits and examinations (an "Examination") of Borrowers'
business operations and Business Records as often as Lender desires. Borrowers
will pay $850 per day per auditor plus out-of-pocket expenses incurred by Lender
for each Examination performed by or on behalf of Lender.

        8.7     COMPLIANCE WITH LAWS. Comply in all respects with all material
applicable laws and regulations, in effect from time to time, including without
limitation all applicable environmental laws and regulations.

        8.8     MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties that are necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted, and comply at
all times with the provisions of all leases to which it is a party as lessee or
under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.

        8.9     FURTHER ASSURANCES. At Lender's request, promptly execute or
cause to be executed and delivered to Lender any and all documents, instruments
and agreements deemed necessary or appropriate to facilitate the collection of
any of the Collateral, or otherwise to give effect to or carry out the terms,
conditions or intent of this Agreement (or any agreements or documents referred
to or incorporated herein).

        8.10    DOMINION OF FUNDS. All collections of any nature and kind,
including payments and deposits received by Lender and proceeds subject to the
liens and security interests of Lender, including, without limitation, proceeds
realized from the Collateral, will be turned over to Lender in the form received
or, if applicable, deposited into a lockbox or blocked account designated by
Lender.

        8.11    EBITDA COVENANT. Achieve EBITDA of at least $1.6 million for the
3 fiscal quarters ended December 31, 2002 and $2.5 million at the end of each
fiscal quarter thereafter on a trailing 4 fiscal quarter basis.

                                  9. DEFAULTS

        Without limiting the discretionary nature of Lender's agreement to make
Revolving Loans, if any one or more of the following events (each an "Event of
Default" and collectively, "Events of Default") occurs, then Lender's obligation
to make or accept any Note or any Loan under this Agreement will, at Lender's
option, immediately terminate, and the unpaid principal balance of, and accrued
interest on, all Obligations will be immediately due and payable, without
further notice of any kind, notwithstanding anything contained to the contrary
in this Agreement or in any other agreement, Note or document:

                                       31
<PAGE>

        9.1     DEFAULT IN PAYMENT OF OBLIGATIONS. The Borrowers fail to make a
payment of any principal or interest when and as due on any Note or any other
Obligations, including the Expenses.

        9.2     DEFAULT UNDER LOAN DOCUMENTS. A default in the performance or
observance of any term, condition or covenant in any Loan Document required to
be observed or performed by either Borrower and which if curable (except for the
providing of timely Borrowing Base Certificates or financial reporting called
for by Section 8.3 which shall not be subject to a cure period), is cured within
5 days after Borrowers' receipt of notice of such default.

        9.3     REPRESENTATIONS OR STATEMENTS FALSE. Any representation or
warranty made by either Borrower in this Agreement or any certificate delivered
in accordance with this Agreement, or any financial statement delivered to
Lender proves to have been false in any material respect as of the time when
made or given.

        9.4     DEFAULT ON OTHER DEBT. Either Borrower fails to pay all or any
part of the principal of or interest on any indebtedness of or assumed by the
Borrower for borrowed money as and when due and payable, whether at maturity, by
acceleration or otherwise, and such default is not cured within the period of
grace, if any, specified in the documents(s) evidencing such indebtedness.

        9.5     JUDGMENTS. A judgment is entered against either Borrower which,
together with other outstanding judgments entered against the Borrowers, exceeds
in the aggregate $100,000, and remains outstanding and unsatisfied, unbonded or
unstayed for 10 days after the date of entry of such judgment.

        9.6     BANKRUPTCY; INSOLVENCY. Either Borrower: (a) becomes insolvent;
or (b) is unable, or admits in writing its or their inability to pay debts as
they generally mature; or (c) makes a general assignment for the benefit of
creditors or to an agent authorized to liquidate any substantial amount of its
or their property; or (d) files on its behalf or consents to an Insolvency
Proceeding; or (e) has an Insolvency Proceeding filed or instituted against it
that is not stayed or dismissed within 30 days after it is filed or instituted;
or (f) applies to a court for the appointment of a receiver, trustee or
custodian for any of its or their assets; or (i) has a receiver, trustee or
custodian appointed for any of its or their assets (with or without their
respective consent). Provided, however, this Agreement will be deemed terminated
immediately upon the entry of an order for relief in any proceeding under title
11 of the United States Code without any action by Lender and in the event of an
involuntary proceeding under such statute, Lender will be under no obligation to
continue financing hereunder from and after the involuntary proceeding.

        9.7     REPORTABLE EVENT. If any Reportable Event occurs and continues
for 30 days or any Plan is terminated within the meaning of Title IV of ERISA,
or a trustee is appointed by the appropriate United States District Court to
administer any Plan, or the Pension Benefit Guaranty Corporation institutes
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan.

                                       32
<PAGE>

        9.8     MATERIAL LOSS OR MATERIAL ADVERSE EFFECT. Either Borrower
suffers: (i) a casualty as to any material asset or assets used in the conduct
of such Borrower's business which is not, except for deductibles acceptable to
Lender, fully covered by insurance conforming to the requirements of this
Agreement; or (ii) an event or occurrence that results in a Materially Adverse
Effect.

        9.9     GOVERNMENT LIEN. A notice of lien, levy or assessment is filed
of record with respect to any of Borrower's assets by the United States' or
Canadian government, or any department, agency or instrumentality thereof, or by
any state, province, county, municipal or other governmental agency or any tax
or debt owing at any time hereafter to anyone becomes a lien, whether choate or
otherwise, upon any of either Borrower's assets and the same is not paid on the
payment date thereof and, unless such lien, levy or assessment could in Lender's
counsel's reasonable opinion, take priority over Lender's security interest,
Borrowers do not obtain a release or discharge the same within 30 days after
notice or filing of the same.

        9.10    MATERIAL IMPAIRMENT. There is a material impairment of the value
or priority of Lender's security interests in the Collateral.

        9.11    LEVY OR ATTACHMENT. Any material portion of Borrowers' assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any judicial officer.

        9.12    CANADIAN BLOCKED ACCOUNT. Subsidiary fails to setup a
lockbox/blocked account arrangement reasonably acceptable to Lender by December
15, 2002 to provide for the processing of collections of Canadian Accounts and
the forwarding of proceeds to Lender.

        9.13    WINDDOWN OF SUBSIDIARIES. Borrower fails to cause the winddown
of its three subsidiaries, Transcat FSC, Inc., Transmation Singapore Pte. Ltd.,
and Transmation Australia Pty. Ltd, and the transfer of all available assets to
Borrower by March 15, 2003.

                10. REMEDIES ON OCCURRENCE OF AN EVENT OF DEFAULT

        10.1    RIGHT AND REMEDIES. Upon the occurrence of an Event of Default
(not cured within the time or grace period specifically provided in Section 9)
and subject to any provisions of the PPSA or the Bankruptcy and Insolvency Act
(Canada) applicable to Subsidiary or its assets, Lender has all rights and
remedies provided by law, and all such rights and remedies granted under any
security agreement relating to the Collateral, and under all other existing and
future agreements between Lender and the Borrowers. All such rights and remedies
are cumulative. Upon the occurrence of an Event of Default, Lender may, at its
election, without notice of its election and without demand, do any one or more
of the following, all of which are authorized by Borrowers:

                (a)     Declare all Obligations, whether evidenced by this
        Agreement, a Note, any of the other Loan Documents or otherwise,
        immediately due and payable in full;

                                       33
<PAGE>

                (b)     Cease making Loans or advances under this Agreement, any
        of the other Loan Documents or any other agreement between either
        Borrower and Lender;

                (c)     Terminate this Agreement and any of the other Loan
        Documents as to any future liability or obligation of Lender, but
        without affecting Lender's rights, security interests and mortgages in
        the Collateral and without affecting the Obligations;

                (d) Settle or adjust disputes and claims directly with Account
         Debtors for amounts and upon terms which Lender considers advisable
         and, in such cases, Lender will credit Borrowers' loan account with
         only the net amounts received by Lender in payment of such disputed
         Accounts, after deducting all Expenses incurred or expended in
         connection therewith;

                (e)     Cause Borrowers to hold all returned Inventory in trust
        for Lender, segregate all returned Inventory from all other property of
        Borrowers or in Borrowers' possession and conspicuously label said
        returned Inventory as the property of Lender;

                (f)     Without notice to or demand upon Borrowers, make such
        payments and do such acts as Lender considers necessary or reasonable to
        protect its security interest in the Collateral. Borrowers agree to
        assemble the Collateral if Lender so requires and to deliver or make the
        Collateral available to Lender at a place designated by Lender.
        Borrowers authorize Lender to enter any premises where the Collateral is
        located, to take and maintain possession of the Collateral, or any part
        of it, and to pay, purchase, contest or compromise any encumbrance,
        charge or lien that in Lender's determination appears to be prior or
        superior to its security interest and to pay all expenses incurred in
        connection therewith;

                (g)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, without notice
        to Borrowers (such notice being expressly waived) and without
        constituting a retention of any Collateral in satisfaction of an
        obligation (within the meaning of the Uniform Commercial Code or the
        PPSA, as applicable), hold or set off and apply to the Obligations any
        and all (i) balances and deposits of Borrowers held by Lender (including
        any amounts received in a lockbox or blocked account), or (ii)
        indebtedness at any time owing to or for the credit or the account of
        Borrowers held by Lender;

                (h)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, hold, or set off
        and apply, as cash collateral, any and all balances and deposits of
        either Borrower held by Lender (including any amounts received in a
        lockbox or blocked account) to secure the Obligations;

                (i)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, ship, reclaim,
        recover, store, finish,

                                       34
<PAGE>

        maintain, repair, prepare for sale, advertise for sale and sell the
        Collateral (in the manner provided for herein). Lender is hereby granted
        a license and right to use, without charge, Borrower's respective
        labels, patents, copyrights, rights of use of any name, trade secrets,
        trade names, trademarks, service marks, and advertising matter, or any
        property of a similar nature, as it pertains to the Collateral, in
        completing production of, advertising for sale and selling any
        Collateral. Borrowers' rights under all licenses and all franchise
        agreements shall inure to Lender's benefit;

                (j)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, sell the
        Collateral at either a public or private sale, or both, by way of one or
        more contracts or transactions, for cash or on terms, in such manner and
        at such places (including Borrowers' premises) as Lender determines is
        commercially reasonable. It is not necessary that the Collateral be
        present at any such sale;

                (k)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, Lender shall
        give notice of the disposition of the Collateral as follows:

                        (1)     Lender shall give the Borrowers and each holder
                of a security interest in the Collateral who has filed with
                Lender a written request for notice, a notice in writing of the
                time and place of public sale or, if the sale is a private sale
                or some other disposition other than a public sale is to be
                made, then the time on or after which the private sale or other
                disposition is to be made;

                        (2)     The notice will be personally delivered or
                mailed, postage prepaid, to Borrowers as provided in Section
                12.8, at least ten Business Days before the date fixed for the
                sale, or at least ten Business Days before the date on or after
                which the private sale or other disposition is to be made,
                unless the Collateral is perishable or threatens to decline
                speedily in value. Notice to persons other than Borrowers
                claiming an interest in the Collateral shall be sent to such
                addresses as they have furnished to Lender;

                (l)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, Lender may
        credit bid and purchase at any public sale;

                (m)     Subject to any requirements or limitations under the
        PPSA or the BIA applicable to Subsidiary or its assets, any deficiency
        that exists after disposition of the Collateral as provided above shall
        be paid immediately by Borrowers. Any excess will be remitted without
        interest by Lender to the party or parties legally entitled to such
        excess; and

                                       35
<PAGE>

                (n)     In addition to the foregoing, Lender shall have all
        rights and remedies provided by law and any rights and remedies
        contained in any other Loan Documents. All such rights and remedies
        shall be cumulative.

        10.2    NO WAIVER. No delay on the part of Lender in exercising any
right, power or privilege under this Agreement or any Loan Document shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege under this Agreement or otherwise, preclude other or further
exercise of the right, power or privilege or the exercise of any other right,
power or privilege.

                              11. CROSS-GUARANTY.

        11.1    GUARANTY. Each Borrower hereby acknowledges and agrees that such
Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to Lender and its successors and assigns, the full
and prompt payment (whether at stated maturity, by acceleration or otherwise)
and performance of, all Obligations owed or hereafter owing to Lender by the
other Borrowers. Each Borrower agrees that its guaranty obligation hereunder is
a guaranty of payment and performance and not of collection, and that its
obligations under this Section 11 shall be absolute and unconditional,
irrespective of, and unaffected by,

                (a)     the genuineness, validity, regularity, enforceability or
        any future amendment of, or change in, this Agreement, any other Loan
        Document or any other agreement, document or instrument to which any
        Borrower is or may become a party;

                (b)     the absence of any action to enforce this Agreement
        (including this Section 11) or any other Loan Document or the waiver or
        consent by Lender with respect to any of the provisions thereof; or

                (c)     the existence, value or condition of, or failure to
        perfect its lien or security interest against, any security for the
        Obligations or any action, or the absence of any action, by Lender in
        respect thereof (including, without limitation, the release of any such
        security); or

                (d)     any other action or circumstances which might otherwise
        constitute a legal or equitable discharge or defense of a surety or
        guarantor, it being agreed by each Borrower that its obligations under
        this Section 11 shall not be discharged until the payment and
        performance, in full, of the Obligations has occurred. Each Borrower
        shall be regarded, and shall be in the same position, as principal
        debtor with respect to the Obligations guaranteed hereunder. Each
        Borrower expressly waives all rights it may have now or in the future
        under any statute, or at common law, or at law or in equity, or
        otherwise, to compel Lender to proceed in respect of the Obligations
        guaranteed hereunder against any other Borrower or any other party or
        against any security for the payment and performance of the Obligations
        before proceeding against, or as a condition to proceeding against, such
        Borrower. Each Borrower agrees that any notice or

                                       36
<PAGE>

        directive given at any time to Lender which is inconsistent with the
        waiver in the immediately preceding sentence shall be null and void and
        may be ignored by Lender, and, in addition, may not be pleaded or
        introduced as evidence in any litigation relating to this Agreement
        (including this Section 11) for the reason that such pleading or
        introduction would be at variance with the written terms of this
        Agreement (including this Section 11), unless Lender has specifically
        agreed otherwise in writing. It is agreed among each Borrower and Lender
        that the foregoing waivers are of the essence of the transaction
        contemplated by this Agreement and the other Loan Documents and that,
        but for the provisions of this Section 11 and such waivers, Lender would
        decline to enter into this Agreement.

        11.2    DEMAND BY LENDER. In addition to the terms of the guaranty set
forth in Section 11.1 hereof, and in no manner imposing any limitation on such
terms, it is expressly understood and agreed that, if the then outstanding
principal amount of the Obligations under this Agreement (together with all
accrued interest thereon) is declared to be immediately due and payable, then
each Borrower shall, without demand, pay to the holders of the Obligations the
entire outstanding Obligations due and owing to such holders. Payment by any
Borrower shall be made to Lender, to be credited and applied to the Obligations,
in immediately available Federal funds to an account designated by Lender or at
the address set forth herein for the giving of notice to Lender or at any other
address that may be specified in writing from time to time by Lender.

        11.3    ENFORCEMENT OF GUARANTY. Each Borrower agrees that in no event
shall Lender have any obligation (although it is entitled, at its option) to
proceed against any other Borrower or any other person or any real or personal
property pledged to secure the Obligations before seeking satisfaction from such
Borrower, and Lender may proceed, prior or subsequent to, or simultaneously
with, the enforcement of Lender's rights under this Section 11, to exercise any
right or remedy which it may have against any property, real or personal, as a
result of any lien or security interest it may have as security for all or any
portion of the Obligations.

        11.4    WAIVER. In addition to the waivers contained in Section 11.1
hereof, each Borrower waives, and agrees that it shall not at any time insist
upon, plead or in any manner whatever claim or take the benefit or advantage of,
any appraisal, valuation, stay, extension, marshaling of assets or redemption
laws, or exemption, whether now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance by such Borrower of the
Obligations guaranteed under, or the enforcement by Lender of, this Section 11.
Each Borrower hereby waives diligence, presentment and demand (whether for
non-payment or protest or of acceptance, maturity, extension of time, change in
nature or form of the Obligations, acceptance of further security, release of
further security, composition or agreement arrived at as to the amount of, or
the terms of, the Obligations, notice of adverse change in any other Borrower's
financial condition or any other fact which might materially increase the risk
to such Borrower) with respect to any of the Obligations guaranteed hereunder or
all other demands whatsoever and waives the benefit of all provisions of law
which are or might be in conflict with the terms of this Section 11. Each
Borrower represents, warrants and agrees that, as of the date hereof, its
obligations under this Section 11 are not subject to

                                       37
<PAGE>

any offsets or defenses against Lender or any other Borrower of any kind. Each
Borrower further agrees that its obligations under this Section 11 shall not be
subject to any counterclaims, offsets or defenses against Lender or against any
other Borrower of any kind which may arise in the future.

        11.5    BENEFIT OF GUARANTY. Each Borrower agrees that the provisions of
this Section 11 are for the benefit of Lender and its successors, transferees,
endorsees and assigns, and nothing herein contained shall impair, as between any
other Borrower and Lender, the obligations of any such other Borrower under the
Loan Documents. In the event all or any part of the Obligations are transferred,
endorsed or assigned by Lender to any person or persons, any reference to
"Lender" herein shall be deemed to refer equally to such person or persons.

        11.6    REINSTATEMENT. The provisions of this Section 11 shall remain in
full force and effect and continue to be effective should any petition be filed
by or against any Borrower for liquidation or reorganization, should any
Borrower become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by Lender, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

        11.7    SUBORDINATION OF SUBROGATION, ETC. Notwithstanding anything to
the contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 11.11, each Borrower hereby:

                (a)     expressly and irrevocably subordinates, to the fullest
        extent possible at all times prior to the expiration or termination of
        this Agreement, on behalf of itself and its successors and assigns
        (including any surety) and any other person, any and all rights at law
        or in equity to subrogation, reimbursement, exoneration, contribution,
        indemnification, set off or any other rights that could accrue to a
        surety against a principal, to a guarantor against a principal, to a
        guarantor against a maker or obligor, to an accommodation party against
        the party accommodated, to a holder or transferee against a maker, or to
        the holder of any claim against any person, and which such Borrower may
        have or hereafter acquire against any other Borrower or any person in
        connection with or as a result of such Borrower's performance of this
        Section 11, or any other documents to which such Borrower is a party or
        otherwise;

                (b)     expressly and irrevocably subordinates any "claim" (as
        such term is defined in the United States Bankruptcy Code) of any kind
        against any other Borrower, and further agrees that it shall not have or
        assert any such rights against any person (including any surety), either
        directly or as an attempted set

                                       38
<PAGE>

        off to any action commenced against such Borrower by Lender or any other
        person until the Obligations are fully and finally paid.

                (c)     acknowledges and agrees (i) that this subordination is
        intended to benefit Lender and shall not limit or otherwise affect such
        Borrower's liability hereunder or the enforceability of this Section 11,
        and (ii) that Lender and its respective successors and assigns are
        intended third party beneficiaries of the waivers and agreements set
        forth in this Section 11.7.

        11.8    ELECTION OF REMEDIES. If Lender, under applicable law, proceeds
to realize its benefits under any of the Loan Documents giving Lender a lien or
security interest upon any Collateral, (whether owned by any Borrower or by any
other person), either by judicial foreclosure or by non-judicial sale or
enforcement, Lender may, at its sole option, determine which of its remedies or
rights it may pursue without affecting any of its rights and remedies under this
Section 11. If, in the exercise of any of its rights and remedies, Lender shall
forfeit any of its rights or remedies, including its right to enter a deficiency
judgment against any Borrower or any other person, whether because of any
applicable laws pertaining to "election of remedies" or the like, each Borrower
hereby consents to such action by Lender and waives any claim based upon such
action, even if such action by Lender shall result in a full or partial loss of
any rights of subrogation which each Borrower might otherwise have had but for
such action by Lender. Any election of remedies which results in the denial or
impairment of the right of Lender to seek a deficiency judgment against any
Borrower shall not impair any other Borrower's obligation to pay the full amount
of the Obligations. In the event Lender shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Loan Documents,
Lender may bid all or less than the amount of the Obligations and the amount of
such bid need not be paid by Lender but shall be credited against the
Obligations. The amount of the successful bid at any such sale, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 11, notwithstanding
that any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which Lender might otherwise
be entitled but for such bidding at any such sale.

        11.9    CONTINUING GUARANTY. Each Borrower agrees that the guaranty set
forth in this Section 11 is a continuing guaranty and shall remain in full force
and effect until the payment and performance in full of the Obligations.

        11.10   LIMITATION. Notwithstanding any provision herein contained to
the contrary, each Borrower's liability under this Section 11 shall be limited
to an amount not to exceed as of any date of determination the greater of:

                (i)     the net amount of all Loans advanced to the other
Borrowers under this Agreement and then re-loaned or otherwise transferred to
such Borrower; or

                                       39
<PAGE>

                (ii)    the amount which could be claimed by the Lender from
such Borrower under this Section 11 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from the other
Borrowers under Section 11.2 hereof.

        11.11   CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS.

                (a)     To the extent that any Borrower shall make a payment
        under this Section 11 of all or any of the Obligations (other than Loans
        made to that Borrower for which it is primarily liable) (a "Guarantor
        Payment") which, taking into account all other Guarantor Payments then
        previously or concurrently made by the other Borrowers, exceeds the
        amount which such Borrower would otherwise have paid if each Borrower
        had paid the aggregate Obligations satisfied by such Guarantor Payment
        in the same proportion that such Borrower's "Allocable Amount" (as
        defined below) (as determined immediately prior to such Guarantor
        Payment) bore to the aggregate Allocable Amounts of each of the
        Borrowers as determined immediately prior to the making of such
        Guarantor Payment, then such Borrower shall be entitled to receive
        contribution and indemnification payments from, and be reimbursed by,
        the other Borrowers for the amount of such excess, pro rata based upon
        their respective Allocable Amounts in effect immediately prior to such
        Guarantor Payment.

                (b)     As of any date of determination, the "Allocable Amount"
        of any Borrower shall be equal to the maximum amount of the claim which
        could then be recovered from such Borrower under this Section 11 without
        rendering such claim voidable or avoidable under Section 548 of Chapter
        11 of the Bankruptcy Code or under any applicable state Uniform
        Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
        statute or common law of the United States, Canada or any political
        subdivision thereof.

                (c)     This Section 11.11 is intended only to define the
        relative rights of Borrowers and nothing set forth in this Section 11.11
        is intended to or shall impair the obligations of Borrowers, jointly and
        severally, to pay any amounts as and when the same shall become due and
        payable in accordance with the terms of this Agreement. Nothing
        contained in this Section 11.11 shall limit the liability of any
        Borrower to pay any Loans made to that Borrower and accrued interest,
        and Expenses with respect thereto for which such Borrower shall be
        primarily liable.

                (d)     The parties hereto acknowledge that the rights of
        contribution and indemnification hereunder shall constitute assets of
        the Borrower to which such contribution and indemnification is owing.

                (e)     The rights of the parties under this Section 11.11 shall
        be exercisable from and after the expiration or termination of this
        Agreement.

                                       40
<PAGE>

        11.12   LIABILITY CUMULATIVE. The liability of Borrowers under this
Section 11 is in addition to and shall be cumulative wiTh all liabilities of
each Borrower to Lender under this Agreement and the other Loan Documents to
which such Borrower is a party or in respect of any Obligations or obligation of
the other Borrowers, without any limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.

                               12. GENERAL TERMS

        12.1    EXPENSES, FEES AND COSTS; INDEMNIFICATION.

        (a)     The Borrowers are responsible for the payment of all Expenses.
The Borrowers also agree to indemnify Lender for any and all Claims that may be
imposed on, incurred by or asserted against Lender in connection with this
Agreement or any Loan Document or transaction contemplated hereby or thereby or
the business relationship between Lender and Borrowers.

        (b)     Borrowers' obligation to pay the Expenses and all of the
reimbursement obligations and indemnification obligations provided for in this
Section 12.1 are part of the Obligations, are secured by all of the Collateral,
and survive the repayment of the Obligations.

        12.2    SUCCESSORS. The provisions of this Agreement shall inure to the
benefit of and be binding upon any successor to any of the parties to this
Agreement and shall extend and be available to any holder of the Note; provided,
however, that persons or entities which succeed to the rights of the Borrowers
under this Agreement shall not be entitled to enforce any rights or remedies of
Borrowers under or by reason of the terms of this Agreement, or any other
agreement referred to or incorporated by reference into this Agreement, unless
they shall have obtained Lender's prior written consent to succeed to such
rights.

        12.3    ASSIGNMENTS AND PARTICIPATIONS. Borrowers consent to Lender's
sale of participations in the Loans and to Lender's assignment of the Loan
Documents or any interest therein to any third party. Borrowers also acknowledge
and agree that any participation will give rise to a direct obligation of
Borrowers to the participant and the participant shall, for purposes of Sections
12.1, be considered to be "Lender."

        12.4    WAIVERS BY BORROWERS. Except as otherwise provided for in this
Agreement or by applicable law, Borrowers waive: (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable, and
hereby ratifies and confirms whatever Lender may do in this regard, (ii) all
rights to notice and a hearing prior to Lender's taking possession or control
of, or to Lender's replevy, attachment or levy upon, the Collateral or any bond
or security which might be required by any court prior to allowing

                                       41
<PAGE>

Lender to exercise any of its remedies, and (iii) the benefit of all valuation,
appraisal and exemption laws.

        12.5    ANTI-WAIVER; AMENDMENTS; AND CUMULATIVE REMEDIES PROVISIONS. No
failure or delay on the part of Lender or the holder of the Note in the exercise
of any power or right, and no course of dealing between the Borrowers and Lender
or the holder of any Note, shall operate as a waiver of such power or right, nor
shall any single or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or right. The
remedies provided for herein are cumulative and not exclusive of any remedies
which may be available to Lender at law or in equity. No notice to or demand on
the Borrowers not required hereunder or under any Note or other agreement shall
in any event entitle the Borrowers to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of Lender or
the holder of any Note to any other or further action in any circumstances
without notice or demand. Any waiver of any provision of this Agreement, the
Note or other agreement, and any consent to any departure by the Borrowers from
the terms of any provision of this Agreement, the Note or other agreement, shall
be effective only in the specific instance and for the specific purpose for
which given. Neither this Agreement nor the Note or other agreement nor any
terms hereof or thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing signed by the
Borrowers and Lender.

        12.6    CONTROLLING LAW. Except to the extent Ontario law governs the
creation, perfection or enforcement of Lender's security interest in or to
Subsidiary's Collateral, this Agreement, the Note and any other agreements
between the parties shall be governed by and construed in accordance with the
internal laws of the State of Michigan applicable to contracts made and
performed within Michigan without regard to conflict of laws provisions.

        12.7    COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if all signatures were upon the same
instrument.

        12.8    NOTICES. All communications or notices that are required or may
be given under this Agreement shall be deemed effective if made in writing
(including telecommunications) and, if to Borrowers, addressed to them at the
address set forth at the beginning of this Agreement, with a copy to James
Jenkins, Harter, Secrest & Emery LLP, 1600 Bausch & Lomb Place, Rochester, New
York 14604-2711, and if to Lender, addressed to it at the address specified at
the beginning of this Agreement, and a copy to Donald F. Baty, Jr., Honigman
Miller Schwartz & Cohn LLP, 2290 First National Building, 660 Woodward Avenue,
Detroit, Michigan 48226, and delivered by any of the following means: (a) hand
delivery, (b) registered or certified mail, postage prepaid, with return receipt
requested, (c) first class or express mail, postage prepaid, (d) Federal
Express, or like overnight courier service, or (e) facsimile, telex or other
wire transmission with request for assurance of receipt in a manner typical with
respect to communications of that type. Notice made in accordance with this
section shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third Business Day after mailing if mailed by first class,
registered or certified mail, or on the

                                       42
<PAGE>

next Business Day after mailing or deposit with an overnight courier service if
delivered by express mail or overnight courier.

        12.9    LOAN AGREEMENT CONTROLS. Excluding the Canadian Security
Documents that shall govern and control Lender's rights and remedies against
Subsidiary's Collateral, notwithstanding anything contained in any other
agreement referred to in this Agreement or in any other agreement now existing
between Lender and the Borrowers to the contrary, in the event of any express
conflict between the terms and provisions of such other agreement and those
contained in this Agreement, the terms of this Agreement shall govern and
control. Notwithstanding the foregoing, this Agreement and the Canadian Security
Documents are intended to be interpreted together such that Lender has a first
priority lien, security interest and charge on and against all of each
Borrower's personal property, wherever located and whenever acquired.

        12.10   PARTIAL INVALIDITY. The unenforceability for any reason of any
provision of this Agreement shall not impair or limit the operation or validity
of any other provisions of this Agreement or any other existing or future
agreements between Lender and Borrowers.

        12.11   LEGAL RATE ADJUSTMENT. This Agreement, the Note and all other
Loan Documents between the Borrowers and Lender are expressly limited so that in
no event whatsoever shall the amount of interest paid or agreed to be paid to
Lender exceed the highest rate of interest permissible under applicable law. If,
from any circumstances, fulfillment of any provision of this Agreement or the
Note at the time performance of such provisions shall be due, shall involve
exceeding the interest limitation validly prescribed by law which a court of
competent jurisdiction may deem applicable to this Agreement and any Loans under
this Agreement, then the obligation to be fulfilled shall be reduced to an
amount computed at the highest rate of interest permissible under applicable
law, and if, for any reason whatsoever, Lender shall ever receive as interest an
amount which would be deemed unlawful under applicable law, such interest shall
be automatically applied to the payment of the principal of the Note, as the
case may be (whether or not then due and payable), and not to the payment of
interest, or shall be refunded to the Borrowers, if such principal has been paid
in full.

        12.12   SETOFF. In addition to any rights and remedies of Lender
provided by law, Lender has the right, without prior written notice to the
Borrowers, any such notice being expressly waived by Borrowers to the extent
permitted by applicable law, upon the occurrence of any Event of Default and so
long as such Event of Default is continuing, to set off and apply against any
Obligations, whether matured or unmatured, of the Borrowers to Lender, any
amount owing by Lender to Borrowers, at or at any time after the happening of
any of the above mentioned events, and such right of setoff may be exercised by
Lender against Borrowers or against any assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of Borrowers, or against
anyone else claiming through or against the Borrowers of such assignee for the
benefit of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of setoff has not been exercised by
Lender prior to the making, filing or issuance or service upon Lender of, or of
notice of, assignment

                                       43
<PAGE>

for the benefit of creditors, appointment or application for the appointment of
a receiver, or issuance of execution, subpoena or order or warrant.

        12.13   NO MARSHALLING. Borrowers, on their own behalf and on behalf of
their respective successors and assigns hereby expressly waive all rights, if
any, to require a marshalling of assets by Lender or to require that Lender
first resort to some or any portion of the Collateral before foreclosing upon,
selling or otherwise realizing on any other portion thereof.

        12.14   JUDGMENT CURRENCY. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due to a Lender in any currency (the
"Original Currency") into another currency (the "Other Currency"), the parties
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which, in accordance with normal banking
procedures, Lender could purchase the Original Currency with the Other Currency
on the Business Day preceding the day on which final judgment is given or, if
permitted by applicable law, on the day on which the judgment is paid or
satisfied. The obligations of the Borrowers in respect of any sum due in the
Original Currency from it to the Lender under any of the Loan Documents shall,
notwithstanding any judgment in any Other Currency, be discharged only to the
extent that on the Business Day following receipt by the Lender of any sum
adjudged to be so due in the Other Currency, the Lender may, in accordance with
normal banking procedures, purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due to the Lender in the Original Currency, the Borrowers agree,
as a separate obligation and notwithstanding the judgment, to indemnify the
Lender, against any loss, and, if the amount of the Original Currency so
purchased exceeds the sum originally due to the Lender in the Original Currency,
the Lender shall remit such excess to the Borrowers.

        12.15   REINSTATEMENT OF OBLIGATIONS AND SECURITY. To the extent that
either Borrower makes any payment to Lender or Lender receives any payment(s) or
proceeds of Accounts or other Collateral for Borrowers' benefit, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state, provincial or federal law, common law or equitable doctrine, then, to the
extent of such payment(s) or proceeds received, the Borrowers' obligations or
part thereof intended to be satisfied thereby shall be reinstated and continue
in full force and effect, and all collateral security therefor shall remain in
full force and effect (or be reinstated), as if such payment(s) or proceeds had
not been received by Lender, and an appropriate adjustment to Borrowers' loan
balance may be recorded, until payment shall have been made to Lender, which
payment shall be due on demand.

        12.16   SURVIVAL; RELIANCE. All agreements, representations and
warranties made in this Agreement (and all agreements referred to or
incorporated herein) shall survive the execution of this Agreement (and all
documents and agreements referred to or incorporated herein) and the making of
the Loans and the execution and delivery of the Notes. Notwithstanding anything
in this Agreement (or any documents or agreements referred to or incorporated
herein) to the contrary, no investigation or

                                       44
<PAGE>

inquiry by any party with respect to any matter which is the subject of any
representation, warranty, covenant or other agreement set forth herein or
therein is intended, nor shall it be interpreted, to limit, diminish or
otherwise affect the full scope and effect of any such representation, warranty,
covenant or other agreement. All terms, covenants, agreements, representations
and warranties of the Borrowers made herein (or in any documents or agreements
referred to or incorporated herein), or in any certificate or other document
delivered pursuant hereto shall be deemed to be material and to have been relied
upon by Lender, notwithstanding any investigation heretofore or hereafter made
by Lender or its agents.

        12.17   INTERPRETATION. This Agreement (and all agreements referred to
or incorporated into this Agreement) are being entered into among competent
persons, who are experienced in business and represented by counsel, and has
been reviewed by the parties and their counsel. Therefore, any ambiguous
language in this Agreement (and all agreements referred to or incorporated
herein) will not necessarily be construed against any particular party as the
drafter of such language.

        12.18   INDEPENDENCE OF COVENANTS. All covenants hereunder are to be
given independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a default or an Event of Default if such
action is taken or such condition exists.

        12.19   COMMUNICATION WITH ACCOUNTANTS. Borrowers authorize Lender to
communicate directly with its independent certified public accountants including
PriceWaterhouseCoopers and authorizes all such accountants to make available to
Lender all financial statements and other supporting financial documents and
schedules with respect to the business, financial condition and other affairs of
Borrowers. At or before the initial Revolving Loans are made, Borrowers shall
deliver a letter addressed to and acknowledged by such accountants instructing
them to make available to Lenders such information and records as Lender may
reasonably request and to otherwise comply with the provisions of this Section
12.19. After the closing date, if Borrowers engages the services of accountants
other than PriceWaterhouseCoopers, Borrowers shall deliver a letter addressed to
and acknowledged by such accountants containing the same terms and provisions as
the letter described above.

        12.20   ILLEGALITY AND IMPOSSIBILITY. In the event that any applicable
law, treaty, rule or regulation (whether domestic or foreign) now or hereafter
in effect and whether or not presently applicable to Lender, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by Lender with
any request or directive of such authority (whether or not having the force of
law), including, without limitation, exchange controls, shall make it unlawful
or impossible for Lender to maintain any loan or transaction under this
Agreement, the Borrowers shall, upon receipt of notice thereof from Lender,
immediately repay in full the then outstanding principal amount of all Loans so
affected, together with all accrued interest thereon to the date of payment.
This provision is for the benefit of Lender and is not intended to increase the
yield to Lender above the rates of interests provided for in this Agreement.
This Section shall apply only as long as

                                       45
<PAGE>

such illegality exists. Lender shall use reasonable, lawful efforts to avoid the
impact of such law, treaty, rule or regulation.

        12.21   CERTAIN RULES OF CONSTRUCTION. For purposes of this Agreement:

                (a)     Certain References. The words "herein," "hereof" and
        "hereunder," and words of similar import, refer to this Agreement as a
        whole and not to any particular provision of this Agreement, and
        references to Sections, Paragraphs and Exhibits, and similar references,
        are to Sections or Paragraphs of, or Exhibits to, this Agreement unless
        otherwise specified.

                (b)     General Rules. Unless the context otherwise requires:
        (i) the singular includes the plural, and vice versa; (ii) all pronouns
        and any variations thereof refer to the masculine, feminine or neuter,
        as the identity of the person or persons may require; (iii) all
        definitions and references to an agreement, instrument or document means
        such agreement, instrument or document together with all exhibits and
        schedules thereto and any and all amendments, restatements, supplements,
        replacements, or modifications thereto as the same may be in effect at
        the time such definition or reference is applicable for any purpose;
        (iv) all references to any party shall include such party's successors
        and permitted assigns; (v) "include", "includes", and "including" are to
        be treated as if followed by "without limitation" whether or not they
        are followed by these words or words with a similar meaning; and (vi)
        attorneys' fees shall include allocated costs of in-house counsel.

                (c)     Accounting Terms and Determinations. Except as otherwise
        provided in this Agreement, all accounting terms used in this Agreement
        must be interpreted, all accounting determinations hereunder must be
        made, and all financial statements required to be delivered hereunder
        must be prepared in accordance with generally accepted accounting
        principles; provided that, if Borrowers adopt a change in accounting
        principles (including any changes in generally accepted accounting
        principles) from those used in preparing the financial statements of
        Borrowers or that affects in any material respect (as determined by
        Lender) the computation of or compliance with any of the provisions of
        this Agreement, then this Agreement shall be amended by the parties in
        good faith to modify such provisions to take account of such change in
        accounting principles for the purpose of computing any financial
        covenants, restrictions or ratios in this Agreement. Unless otherwise
        noted, all accounting terms shall be interpreted and applied on a
        consolidated basis for both Borrowers, according to GAAP.

                (d)     Uniform Commercial Code. All other terms contained in
        this Agreement shall have, when the context so indicates, the meanings
        provided for by the Uniform Commercial Code as adopted in the State of
        Michigan to the extent such terms are used or defined in the statute.

                                       46
<PAGE>

                (e)     Headings. The headings of the various subdivisions
        hereof are for convenience of reference only and shall in no way modify
        or affect the interpretation of any of the terms or provisions hereof.

        12.22   ENTIRE AGREEMENT OF THE PARTIES. This Agreement, including all
agreements referred to or incorporated into this Agreement and all recitals in
this Agreement (which recitals are incorporated as covenants of the parties),
constitute the entire agreement between the parties relating to the subject
matter of this Agreement. This Agreement supersedes all prior agreements,
commitments and understandings between the parties relating to the subject
matter of this Agreement and cannot be changed or terminated orally, and shall
be deemed effective as of the date noted above.

        12.23   ACKNOWLEDGMENT OF BORROWERS. THIS AGREEMENT HAS BEEN FREELY AND
VOLUNTARILY ENTERED INTO WITH THE LENDER BY THE BORROWERS, WITHOUT ANY DURESS OR
COERCION, AND AFTER THE BORROWERS HAVE EITHER CONSULTED WITH COUNSEL OR HAVE
BEEN GIVEN AN OPPORTUNITY TO DO SO, AND THE BORROWERS, ACKNOWLEDGE THAT THEY
CAREFULLY AND COMPLETELY READ AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF
THIS AGREEMENT.

        12.24   SUBMISSION TO JURISDICTION AND VENUE. ANY JUDICIAL PROCEEDING
AGAINST THE BORROWERS BROUGHT BY LENDER WITH RESPECT TO ANY TERM OR CONDITION OF
THIS AGREEMENT, OR ANY OTHER PRESENT OR FUTURE AGREEMENT BETWEEN BORROWERS AND
LENDER MAY BE BROUGHT BY LENDER IN A COURT OF COMPETENT JURISDICTION IN THE
STATE OF MICHIGAN, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWERS
AND LENDER ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR RESPECTIVE
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, OR ANY OTHER PRESENT AND
FUTURE AGREEMENT BETWEEN BORROWER AND LENDER. BORROWERS WAIVE ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND OR SURETY WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF LENDER. NOTHING CONTAINED IN THIS SECTION AFFECTS THE RIGHT OF
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST EITHER BORROWER OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY BORROWERS
AGAINST LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY
ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY PRESENT OR
FUTURE AGREEMENT BETWEEN BORROWERS AND LENDER, MAY BE BROUGHT ONLY IN A FEDERAL
COURT LOCATED IN THE STATE OF MICHIGAN OR IN STATE COURTS IN OAKLAND COUNTY,
MICHIGAN. BORROWERS WAIVE ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED HEREUNDER OR IN CONNECTION HEREWITH AND MAY NOT ASSERT ANY DEFENSE
BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.
BORROWERS OR LENDER MAY FILE AN ORIGINAL

                                       47
<PAGE>

COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE WAIVERS AND CONSENTS CONTAINED HEREIN.

        12.25   WAIVER OF JURY TRIAL. THE BORROWERS AND LENDER ACKNOWLEDGE THAT
THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.
LENDER AND THE BORROWERS, AFTER CONSULTING COUNSEL OF THEIR CHOICE, EACH HEREBY
KNOWINGLY AND VOLUNTARILY, WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY JURY
OF ALL DISPUTES BETWEEN THEM. NEITHER THE BORROWERS NOR LENDER SHALL BE DEEMED
TO HAVE GIVEN UP THIS WAIVER OF JURY TRIAL UNLESS SUCH RELINQUISHMENT IS IN A
WRITTEN INSTRUMENT SIGNED BY THE PARTY TO BE CHARGED.

                                     TRANSCAT, INC.
                                     an Ohio Corporation

                                     By: /s/ Carl E. Sassano
                                        --------------------
                                        Name: Carl E. Sassano
                                              ---------------
                                              Title: President & CEO
                                                     ---------------

                                     TRANSMATION (CANADA) INC.
                                     a Canadian Corporation

                                     By: /s/ Carl E. Sassano
                                        --------------------
                                        Name: Carl E. Sassano
                                              ---------------
                                              Title: President
                                                     ---------

                                     GMAC BUSINESS CREDIT, LLC

                                     By: /s/ Charles D. Stephenson
                                        --------------------------
                                        Name: Charles D. Stephenson
                                              ---------------------
                                              Title: Deputy Chief Credit Officer
                                                     ---------------------------

                                       48

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00047-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00047-of-00352.parquet"}]]