Document:

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                                                                     EXHIBIT 4.1

                                                                [Conformed Copy]

                          SOUTHERN NATURAL GAS COMPANY

                                       TO

                      MANUFACTURERS HANOVER TRUST COMPANY,
                                                  TRUSTEE

                                    INDENTURE

                            DATED AS OF JUNE 1, 1987

                                        i

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                          SOUTHERN NATURAL GAS COMPANY

                    Trust Indenture Act Cross Reference Sheet

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<Caption>
                               Section of Act                           Section of Indenture
                               --------------                           --------------------

<S>                                                                     <C>
310(a)(1) and (2)...................................................... Secs. 6.05 and 9.09
310(a)(3) and (4)...................................................... Not Applicable
310(b)................................................................. Secs 9.08 and 9.10
310(c)................................................................. Not Applicable
311(a) and (b)......................................................... Sec. 9.13
311(c)................................................................. Not Applicable
312(a)................................................................. Secs. 7.01 and 7.02(a)
312(b)................................................................. Sec. 7.02(b)
312(c)................................................................. Section 7.02(c)
313(a)................................................................. Section 7.04(a)
313(b)(1).............................................................. Not Applicable
313(b)(2).............................................................. Sec. 7.04(b)
313(c)................................................................. Section 7.04(c)
313(d)................................................................. Section 7.04(d)
314(a)................................................................. Sec. 7.03
314(b)................................................................. Not Applicable
314(c)................................................................. Secs. 14.01 and 16.05
314(d)................................................................. Not Applicable
314(e)................................................................. Sec. 16.05
314(f)................................................................. Not Applicable
315(a)................................................................. Sec. 9.01
315(b)................................................................. Sec. 8.07
315(c) and (d)......................................................... Sec. 9.01
315(e)................................................................. Sec. 8. 08
316(a)(1).............................................................. Secs. 8.01, 8.06 and 10.04
316(a)(2).............................................................. Omitted
316(b)................................................................. Secs. 8.04 and 12.02
317(a)................................................................. Sec. 8.02
317(b)................................................................. Sec. 6.06
318(a)................................................................. Sec. 16.07
</Table>

                               TABLE OF CONTENTS*

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Parties  ......................................................................................    1
Recitals ......................................................................................    1
</Table>

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* This table of contents shall not, for any purpose, be deemed to be a part of
the Indenture.

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                                            ARTICLE ONE.
                                            Definitions.

Section 1.01.     Certain terms defined; other terms defined in Trust Indenture Act of
                  1939 or in Securities Act of 1933 to have meanings therein assigned.........     1
                  Authenticating Agent........................................................     1
                  Board of Directors..........................................................     1
                  Business Day................................................................     1
                  Common Stock................................................................     2
                  Company.....................................................................     2
                  Eligible Obligations........................................................     2
                  Event of Default............................................................     2
                  Holder......................................................................     2
                  Indenture...................................................................     2
                  Interest....................................................................     2
                  Lien........................................................................     2
                  Liquefied Natural Gas.......................................................     2
                  Officers' Certificate.......................................................     2
                  Opinion of Counsel..........................................................     3
                  Original Issue Discount Security............................................     3
                  Outstanding.................................................................     3
                  Paying Agent................................................................     3
                  Person......................................................................     4
                  Place of Payment............................................................     4
                  Preferred Stock.............................................................     4
                  Principal Office of the Trustee.............................................     4
                  Redemption Date.............................................................     4
                  Redemption Price............................................................     4
                  Responsible Officer.........................................................     4
                  Restricted Subsidiary.......................................................     4
                  Securities..................................................................     5
                  Subsidiary..................................................................     5
                  Synthetic Fuel..............................................................     5
                  Trustee.....................................................................     5
                  Trust Indenture Act of 1939.................................................     5
                  U.S. Government Obligation..................................................     6
                  Vice President..............................................................     6
                  Yield to Maturity...........................................................     6
Section 1.02.     Meaning of words importing singular number and plural number; words used
                  in conjunctive or disjunctive order; the terms "herein", "hereof" and
                  "hereunder"; and accounting terms...........................................     6

                                            ARTICLE TWO.

                                           Security Forms.

Section 2.01.     Forms Generally.............................................................     6
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Section 2.02.     Form of Trustee's Certificate of Authentication.............................     7

                                           ARTICLE THREE.

                                           The Securities.

Section 3.01.     Amount of Securities Unlimited; Issuable in Series..........................     8
Section 3.02.     Denominations of Securities.................................................     9
Section 3.03.     Authentication and Dating...................................................     9
Section 3.04.     Execution of Securities.....................................................     10
Section 3.05.     Registration, exchange and transfer of Securities...........................     11
                  Charges upon exchange, transfer or registration of Securities...............     11
                  Restriction on transfers or exchanges at time of redemptions and certain
                  interest payments...........................................................     11
Section 3.06.     Temporary Securities........................................................     11
Section 3.07.     Mutilated, destroyed, lost or stolen Securities.............................     12
Section 3.08.     Payment of interest; interest rights reserved...............................     13
Section 3.09.     Cancellation of surrendered Securities......................................     13
Section 3.10.     Computation of Interest.....................................................     13

                                            ARTICLE FOUR.

                                      Redemption of Securities.

Section 4.01.     Applicability of Article....................................................     14
Section 4.02.     Notice of Redemption; Selection of Securities...............................     14
Section 4.03.     Payment of Securities Called for Redemption.................................     14

                                            ARTICLE FIVE.

                                           Sinking Funds.

Section 5.01.     Applicability of Article....................................................    15
Section 5.02.     Mandatory Sinking Fund Payments.............................................    15
Section 5.03.     Credits Against Mandatory Sinking Fund......................................    16
Section 5.04.     Certificates................................................................    16
Section 5.05.     Manner of Redeeming Securities for Sinking Fund.............................    17

                                            ARTICLE SIX.

                                Particular Covenants of the Company.

Section 6.01      Payment of principal of (and premium, if any) and interest on Securities....     17
Section 6.02.     Maintenance of office or agency for payment of Securities...................     17
Section 6.03.     Corporate existence.........................................................     18
</Table>

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Section 6.04.     Company to secure Securities ratably with certain mortgages, pledges or
                  other liens or encumbrances.................................................     23
Section 6.05.     Appointment to fill a vacancy in the office of Trustee......................     23
Section 6.06.     (a) Duties of Paying Agent..................................................     24
                  (b) Company as Paying Agent.................................................     24
                  (c) Turnover to Trustee by Paying Agent or Company..........................     24
                  (d) and (e) Holding sums in trust...........................................     24
Section 6.07.     Annual certificate..........................................................     24
Section 6.08.     Waiver of certain covenants.................................................     25

                                           ARTICLE SEVEN.

                     Holders' Lists and Reports by the Company and the Trustee.

Section 7.01      Company to furnish Trustee information as to names and
                  addresses of Holders........................................................    25
Section 7.02.     (a) Trustee to preserve information as to names and addresses of Holders....    25
                  Trustee may destroy list of Holders on certain conditions...................    25
                  (b) Trustee to make information as to name and addresses of Holders
                      available to "applicants" or mail communications to Holders in
                      certain circumstances...................................................    25
                      Procedure if Trustee elects not to make information available to
                      "applicants"............................................................    26
                  (c) Company and Trustee not accountable for disclosure of information.......    26
Section 7.03.     (a) Annual and other reports to be filed by Company with Trustee............    26
                  (b) Additional information and reports to be filed with Trustee and
                      Securities and Exchange Commission......................................    27
                  (c) Summaries of information and reports to be transmitted by Company
                      to Holders..............................................................    27
Section 7.04.     (a) Trustee to transmit annual report to Holders............................    27
                  (b) Trustee to transmit certain further reports to Holders..................    28
                  (c) To what Holders reports are to be mailed................................    28
                  (d) Copies of reports to be filed with stock exchanges and Securities
                      and Exchange Commission.................................................    28

                                           ARTICLE EIGHT.

                      Remedies of the Trustee and Holders on Event of Default.

Section 8.01.     Events of Default defined...................................................     28
                  Acceleration of maturity upon Event of Default..............................     28
                  Waiver of default and rescission of declaration of acceleration.............     28
                  Restoration of former position and rights upon curing.......................     30
Section 8.02.     Covenant of Company to pay to Trustee whole amount due on Securities
                  on default in payment of interest or principal (or premium, if any).........     30
</Table>

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                  Trustee may recover judgment for whole amount due on Securities on
                  failure of Company to pay...................................................     30
                  Filing of proof of claim by Trustee in bankruptcy, reorganization,
                  arrangement, receivership or other judicial proceeding......................     31
                  Rights of action and of asserting claims may be enforced by Trustee
                  without possession of Securities............................................     32
Section 8.03.     Application of moneys collected by Trustee..................................     32
Section 8.04.     Limitations on suits by Holders.............................................     32
Section 8.05.     Remedies cumulative.........................................................     33
                  Delay or omission in exercise of rights not a waiver of default.............     33
Section 8.06.     Rights of Holders of majority in principal amount of Securities to
                  direct Trustee and to waive defaults........................................     33
Section 8.07      Trustee to give notice of defaults known to it, but may withhold in
                  certain circumstances.......................................................     34
Section 8.08      Requirements of an undertaking to pay costs in certain suits under this
                  Indenture or against the Trustee............................................     34

                                            ARTICLE NINE

                                       Concerning the Trustee

Section 9.01      Upon Event of Default occurring and continuing, Trustee shall exercise
                  powers vested in it, and use same degree of care and skill in their
                  exercise as a prudent man would use.........................................     34
                  Trustee not relieved from liability for negligence or willful misconduct
                  except as provided in this Section..........................................     34
                  (a) Prior to Event of Default and after the curing of all Events of
                      Default which may have occurred.........................................     34
                      (1)  Trustee not liable except for performance of duties
                           specifically set forth.............................................     35
                      (2)  In absence of bad faith, Trustee may conclusively rely on
                           certificates or opinions furnished it hereunder, subject to
                           duty to examine certain thereof....................................     35
                  (b) Trustee not liable for error of judgment made in good faith by
                      Responsible Officer unless Trustee negligent............................     35
                  (c) Trustee not liable for action or nonaction in accordance with direction
                      of Holders of majority in principal amount of Securities................     35
                  Trustee not required to incur unreasonable financial risk...................     35
Section 9.02.     Subject to provisions of Section 9.01.......................................
                  (a) Trustee may rely on documents believed genuine and properly.............     35
                  (b) Sufficient evidence by certain instruments provided for.................     35
                  (c) Trustee may act on Opinion of Counsel...................................     35
                  (d) Trustee may require indemnity from Holders..............................     36
                  (e) Trustee not liable for actions in good faith believed to be
                      authorized..............................................................     36
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                  (f) Trustee not bound to make investigation into facts except under
                      certain circumstances...................................................     36
                  (g) Trustee may act by or through agents or attorneys.......................     36
Section 9.03.     Trustee or Authenticating Agent not liable for recitals herein or in
                  Securities..................................................................     36
                  No representations by Trustee as to validity of Indenture or of
                  Securities..................................................................     36
                  Trustee or Authenticating Agent not accountable for use of Securities or
                  proceeds....................................................................     36
Section 9.04.     Trustee, Authenticating Agent, Paying Agent or Security registrar may
                  own Securities..............................................................     36
Section 9.05.     Moneys received by Trustee to be held in trust without interest.............     36
Section 9.06.     Trustee entitled to compensation reimbursement and indemnity................     37
                  Obligations to Trustee to be secured by lien prior to Securities............     37
Section 9.07.     Right of Trustee to rely on Officers' Certificate where no other
                  evidence specifically prescribed............................................     37
Section 9.08.     (a)   Trustee acquiring conflicting interest to eliminate conflict or
                        resign................................................................     37
                  (b)   Notice to Holders in case of failure to comply with subsection (a)....     37
                  (c)   Definition of conflicting interest....................................     37
                  (d)   Definition of certain terms...........................................     40
                        Calculation of percentages of securities..............................     41
Section 9.09.     Requirements for eligibility of Trustee.....................................     42
Section 9.10.     (a)   Resignation of Trustee................................................     42
                  (b)   Removal of Trustee by Company or by court on Holders' application.....     42
                  (c)   Removal of Trustee by Holders of majority in principal amount of
                        Securities............................................................     43
                  (d)   Time when resignation or removal of Trustee effective.................     43
Section 9.11.     Acceptance by succession of a Trustee.......................................     43
                  Notice of succession of a Trustee...........................................     44
Section 9.12.     Successor to Trustee by merger, consolidation or succession to business.....     44
Section 9.13.     (a)   Limitations on rights of Trustee as a creditor to obtain payment
                        of certain claims within four months prior to default or during
                        default, or to realize on property as such creditors thereafter.......     45
                  (b)   Certain creditor relationships excluded...............................     47
                  (c)   Definition of certain terms...........................................     47
Section 9.14.     Appointment of Authenticating Agent.........................................     48

                                            ARTICLE TEN.

                                       Concerning the Holders

Section 10.01.    Evidence of action by Holders...............................................     49
Section 10.02.    Proof of execution of instruments and of holding of Securities..............     49
Section 10.03.    Who may be deemed owners of Securities......................................     50
</Table>

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Section 10.04.    Securities owned by Company or controlled or controlling companies
                  disregarded for certain purposes............................................     50
Section 10.05.    Instruments executed by Holders bind future Holders.........................     50

                                           ARTICLE ELEVEN.

                                         Holders' Meetings.

Section 11.01.    Purposes for which meetings may be called...................................     51
Section 11.02.    Manner of calling meetings..................................................     51
Section 11.03.    Call of meetings by Company or Holders......................................     51
Section 11.04.    Who may attend and vote at meetings.........................................     51
Section 11.05.    Regulations may be made by Trustee..........................................     51
                  Conduct of the meeting......................................................     52
                  Voting rights - adjournment.................................................     52
Section 11.06.    Manner of voting at meetings and record to be kept..........................     52
Section 11.07.    Exercise of rights of Trustee and Holders not to be hindered or delayed.....     53

                                           ARTICLE TWELVE.

                                      Supplemental Indentures.

Section 12.01.    Purposes for which supplemental indentures may be entered into without
                  consent of Holders..........................................................     53
Section 12.02.    Modification of Indenture with consent of Holders of a majority in
                  principal amount of Securities..............................................     54
Section 12.03.    Effect of supplemental indentures...........................................     55
Section 12.04.    Securities may bear notation of changes by supplemental indentures..........     55
Section 12.05.    Supplemental indentures not to be in conflict with Trust Indenture Act
                  of 1939.....................................................................     55
Section 12.06.    Opinion of Counsel..........................................................     55
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                                          ARTICLE THIRTEEN.

                                   Consolidation, Merger and Sale.

Section 13.01.    Consolidations and mergers of Company and conveyances permitted.............     56
Section 13.02.    Assumption of obligations of Company by successor company or transferee.....     56

                                          ARTICLE FOURTEEN.
                     Satisfaction and Discharge of Indenture; Unclaimed Moneys.

Section 14.01.    Satisfaction and discharge of Indenture.....................................     56
Section 14.02.    Application of trust moneys.................................................     57
Section 14.03.    Repayment of moneys held by Paying Agent....................................     58
Section 14.04.    Repayment of moneys held by Trustee.........................................     58

                                          ARTICLE FIFTEEN.

                                Defeasance and Convenant Defeasance.

Section 15.01     Applicability of Article; Company's option to effect defeasance or
                  convenant defeasance........................................................     58
Section 15.02.    Defeasance and discharge....................................................     58
Section 15.03.    Covenant defeasance.........................................................     58
Section 15.04.    Conditions to defeasance or covenant defeasance.............................     59
Section 15.05.    Deposited money, Eligible Obligations or U.S. Government Obligations to be
                  held in trust...............................................................     60

                                          ARTICLE SIXTEEN.

                                      Miscellaneous Provisions.

Section 16.01.    Successors and assigns of Company bound by Indenture........................     60
Section 16.02.    Acts of board, committee or officer of successor corporation valid..........     60
Section 16.03.    Required notices or demands may be served by mail...........................     60
Section 16.04.    Indenture and Securities to be construed in accordance with the laws of the
                  State of New York...........................................................     61
Section 16.05.    Officers' Certificate and Opinion of Counsel to be furnished upon
                  applications or demands by the Company......................................     61
                  Statements to be included in each certificate or opinion with respect to
                  compliance with a condition or convenant....................................     61
                  Reliance, as to legal matters and factual matters, by officers and counsel,
                  respectively................................................................     61
</Table>

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Section 16.06.    Provisions of the Indenture and Securities for the sole benefit of the
                  parties and the Holders.....................................................     61
Section 16.07.    Provisions required by Trust Indenture Act of 1939 to control...............     62
Section 16.08.    Indenture may be executed in counterparts...................................     62
Section 16.09.    Table of contents and headings for convenience only.........................     62
Section 16.10.    Separability Clause.........................................................     62
Section 16.11.    Legal Holidays..............................................................     62
Section 16.12.    Incorporators, stockholders, officers and directors of Company exempt from
                  individual liability........................................................     62
Acceptance of Trust  .........................................................................     62
Testimonium    ...............................................................................     63
Signatures and Seals..........................................................................     71
Acknowledgments...............................................................................     73
</Table>

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         INDENTURE, dated as of June 1, 1987, between SOUTHERN NATURAL GAS
COMPANY a corporation duly organized and existing under the laws of the State of
Delaware (hereinafter sometimes referred to as the "Company"), and MANUFACTURERS
HANOVER TRUST COMPANY, a corporation organized and existing under the laws of
the State of New York (hereinafter sometimes referred to as the "Trustee").

                             RECITALS OF THE COMPANY

         The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.

         All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.

         NOW THEREFORE, THIS INDENTURE WITNESSETH:

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

                                  ARTICLE ONE.
                                  Definitions.

         SECTION 1.01. The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.01. All other terms used in
this Indenture which are defined in the Trust Indenture Act of 1939 or which are
by reference therein defined in the Securities Act of 1933 (except as herein
otherwise expressly provided or unless the context otherwise requires) shall
have the meaning assigned to such terms in said Trust Indenture Act and in said
Securities Act as they were in force at the date of the execution of this
Indenture.

Authenticating Agent:

         The term "Authenticating Agent" shall mean any person authorized by the
Trustee to act on behalf of the Trustee to authenticate Securities.

Board of Directors:

         The term "Board of Directors", when used with reference to the Company,
shall mean the Board of Directors of the Company or any authorized committee of
such Board.

Business Day:

         The term "Business Day", when used with respect to any Place of
Payment, shall mean a day which is not a day on which banking institutions in
that Place of Payment are authorized or obligated by law to close.

                                       1
<PAGE>

Common Stock:

         The term "Common Stock" shall mean stock which has no preference over
any other class of stock with respect to dividends or assets, which is not
redeemable at the option of the issuer thereof and with respect to which no
sinking, purchase or similar fund is provided.

Company:

         The term "Company" shall mean Southern Natural Gas Company and, subject
to the provisions of Article Thirteen, shall also include its successors and
assigns.

Eligible Obligations:

         The term "Eligible Obligations" shall mean interest bearing obligations
as a result of the deposit of which the Securities are rated in the highest
generic long-term debt rating category assigned to legally defeased debt by one
or more nationally recognized rating agencies.

Event of Default:

         The term "Event of Default" shall have the meaning specified in Section
8.01.

Holder:

         The terms "Holder", "Holder of Securities", "registered Holder" or
other similar term shall mean the person or persons in whose name or names a
particular Security shall be registered on the books of the Company kept for
that purpose in accordance with the terms of this Indenture.

Indenture:

         The term "Indenture" shall mean this instrument as originally executed,
or, if amended or supplemented as herein provided, as so amended or
supplemented, and shall include the form and terms of particular series of
Securities established as contemplated hereunder.

Interest:

         The term "interest", when used with respect to an Original Issue
Discount Security which by its terms bears interest only after maturity, shall
mean interest payable after maturity.

Lien:

         The term "Lien" shall mean any mortgage, pledge, lien, encumbrance or
other security interest which secures the payment or performance of an
obligation.

Liquified Natural Gas:

         The term "Liquified Natural Gas" shall mean natural gas converted to a
liquid form and which subject to regasification.

Officers' Certificate:

         The term "Officers' Certificate" shall mean a certificate signed by the
Chairman of the

                                       2
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Board, the President or any Vice President and by the Treasurer, the Secretary,
an Assistant Treasurer or an Assistant Secretary of the Company. Each such
certificate shall include the statements provided for in Section 16.05, if and
to the extent required by the provisions thereof.

Opinion of Counsel:

         The term "Opinion of Counsel" shall mean an opinion in writing signed
by legal counsel who may be an employee of or of counsel to the Company or who
may be other counsel satisfactory to the Trustee. Each such opinion shall
include the statements provided for in Section 16.05, if and to the extent
required by the provisions thereof.

Original Issue Discount Security:

         The term "Original Issue Discount Security" shall mean any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the maturity thereof pursuant
to Section 8.01.

Outstanding:

         The term "Outstanding", when used with reference to Securities shall
subject to the provisions of Section 10.04, mean as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture
except:

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

                  (b) Securities, or portions thereof, paid or redeemed or for
         the payment or for the redemption of which moneys in the necessary
         amount shall have been deposited in trust with the Trustee or with any
         Paying Agent (other than the Company) or shall have been set aside and
         segregated in trust by the Company (if the Company shall act as its own
         Paying Agent), provided that if such Securities or portions thereof are
         to be redeemed, notice of such redemption shall have been given as in
         Article Four provided, or provision satisfactory to the Trustee shall
         have been made for giving such notice; and

                  (c) Securities in lieu of or in substitution for which other
         Securities shall have been authenticated and delivered pursuant to the
         terms of Section 3.07, 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.

         In determining whether the Holders of the requisite principal amount of
outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding for such purposes shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the maturity
thereof pursuant to Section 8.01.

Paying Agent:

         The term "Paying Agent" shall mean 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.

                                       3
<PAGE>

Person:

         The term "person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

Place of Payment:

         The term "Place of Payment", when used with respect to the Securities
of any series, means the place or places where the principal of and premium if
any, and interest on the Securities of that series are payable as specified as
contemplated by Section 3.01.

Preferred Stock:

         The term "Preferred Stock" shall mean capital stock of any class other
than Common Stock.

Principal Office of the Trustee:

         The term "Principal Office of the Trustee", or other similar term,
shall mean the principal office of the Trustee in the Borough of Manhattan, The
City of New York, at which at any particular time its corporate trust business
shall be administered.

Redemption Date:

         The term "Redemption Date", when used with respect to any Security to
be redeemed, shall mean the date fixed for such redemption pursuant to this
Indenture

Redemption Price:

         The term "Redemption Price", when used with respect to any Security to
be redeemed, shall mean the price at which it is to be redeemed pursuant to this
Indenture

Responsible Officer:

         The term "Responsible Officer", when used with respect to the Trustee,
shall mean the chairman of the board of directors, any vice-chairman of the
board of directors, the president, the chairman of the executive committee, the
chairman of the trust committee, any Vice President, any assistant vice
president, the secretary, any assistant secretary, the treasurer, any trust
officer any assistant trust officer, and any other officer or assistant officer
of the Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively. or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.

Restricted Subsidiary:

         The term "Restricted Subsidiary" shall mean an operating Subsidiary (i)
substantially all of the business of which is carried on, in the continental
United States, (ii) the primary business of which consists of the acquisition,
owning, holding, development or operation of assets or properties (directly, and
not through ownership of capital stock of, or partnership, association or other
participation in, other persons, whether corporations, partnerships,
unincorporated

                                       4
<PAGE>

associations, joint ventures or other separate entities) for the exploration
for, or purchase, development, storage, conservation, processing, production or
transmission of, natural gas, oil or other hydrocarbons or reserves thereof, and
(iii) all of the shares of capital stock of which at the time outstanding, other
than director's qualifying shares, if any, are owned directly or indirectly by
the Company or by one or more of its other Restricted Subsidiaries; provided,
however, that once a Subsidiary shall have become a Restricted Subsidiary, as
such term is defined above, it shall be deemed to remain a Restricted Subsidiary
for all purposes of this Indenture even if less than all such shares of capital
stock are so owned so long as at least a majority of the outstanding shares of
its capital stock having by the terms thereof ordinary voting power to elect a
majority of its Board of Directors (irrespective of whether at the time stock of
any other class or classes of such corporation, association or business trust
shall have, or might have, voting power by reason of the happening of any
contingency) is owned directly or indirectly by the Company of by one of more of
its other Restricted Subsidiaries or by the Company in conjunction with one or
more of its other Restricted Subsidiaries.

Securities:

         The term "Securities" shall have the meaning stated in the first
recital of this Indenture and more particularly shall mean any Securities
authenticated and delivered under this Indenture.

Subsidiary:

         The term "Subsidiary" shall mean a corporation, association or business
trust more than 50% of the outstanding shares of capital stock of which having
by the terms thereof ordinary voting power to elect a majority of its Board of
Directors (irrespective of whether at the time stock of any other class or
classes of such corporation, association or business trust shall have, or might
have, voting power by reason of the happening of any contingency) is owned
directly or indirectly by the Company or by one or more of its other
Subsidiaries or by the Company in conjunction with one or more of its other
Subsidiaries.

Synthetic Fuel:

         The term "Synthetic Fuel" shall mean gas, liquid fuels and related
by-products produced by the conversion of coal, oil, naphtha, oil, shale, or any
other substance, but shall not include gas produced by regasification of
Liquified Natural Gas.

Trustee:

         The term "Trustee" shall mean Manufacturers Hanover Trust Company until
a successor trustee shall have become such pursuant to the provisions of Article
Nine hereof, and thereafter "Trustee" shall mean or include each person who is
then a Trustee hereunder, and if at any time there is more than one such person,
"Trustee" as used with respect to the Securities of any series shall mean the
Trustee with respect to Securities of that series.

Trust Indenture Act of 1939:

         The term "Trust Indenture Act of 1939" shall, subject to the provisions
of Section 12.05, mean the Trust Indenture Act of 1939 as it was in force at the
date of execution of this Indenture.

                                       5
<PAGE>

U.S. Government Obligation:

         The term "U.S. Government Obligation" shall mean (i) a direct
obligation of, or an obligation the principal of and interest on which are fully
guaranteed by, the United States of America (provided that such obligation is
not callable or redeemable at the option of the issuer thereof), or (ii) a
depository receipt issued by a bank or trust company as custodian with respect
to any U.S. Government Obligation described in clause (i) or a specific payment
of interest on or principal of any such U.S. Government Obligation held by such
custodian for the account of the holder of a 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 interest on or principal of the U.S.
Government Obligation evidenced by such depository receipt, or (iii) a security
that is backed by any U.S. Government Obligation described in clause (i) as
collateral under an arrangement by which the principal and interest payments on
the collateral generally flow directly through to the holder of the security.

Vice President:

         The term "Vice President" shall mean any vice president, whether or not
designated by a number or a word or words added before or after the title "vice
president".

Yield to Maturity:

         The term "Yield to Maturity" shall mean the yield to maturity,
calculated at the time of issuance of a series of Securities or, if applicable,
at the most recent redetermination of interest on such series and calculated in
accordance with accepted financial practice.

         SECTION 1.02. Unless herein otherwise provided, or unless the context
shall otherwise require, words importing the singular number shall include the
plural number and vice versa: words or phrases employed in the conjunctive order
shall be construed as employed also in the disjunctive order, and vice versa:
the terms "herein", "hereof" and "hereunder", or other similar terms, refer to
this Indenture as a whole and not only to the particular sentence, paragraph or
Section in which any such terms may be employed: all accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" shall mean such accounting principles as are generally
accepted at the date of the execution of this Indenture.

                                  ARTICLE TWO.
                                 Security Forms

         SECTION 2.01. The Securities of each series shall be in substantially
the form as shall be established by or pursuant to a resolution of the Board of
Directors or in one or more indentures supplemental hereto, in each case 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 any law or with any rules made pursuant
thereto or with any rules of any securities exchange or as may, consistently
herewith, be determined by the officers executing such Securities, as evidenced
by their execution of the Securities.

         The definitive Securities shall be engraved or lithographed or printed
with engraved borders or may be produced in any other manner, all as determined
by the officers executing such

                                       6
<PAGE>

Securities, as evidenced by their execution of such Securities.

         SECTION 2.02. The Trustee's Certificate of Authentication on all
Securities shall be in substantially the following form:

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

                                     MANUFACTURERS HANOVER
                                        TRUST COMPANY
                                                  as Trustee

                                     By
                                       ---------------------------------

                                              Authorized Officer

                                       7
<PAGE>

                                 ARTICLE THREE.

                                 The Securities.

         SECTION 3.01. The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

         The Securities may be issued in one or more series. There shall be
established in or pursuant to a resolution of the Board of Directors or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,

                  (1) the title of the Securities of the series (which shall
         distinguish the Securities of the series from all other Securities):

                  (2) any limit upon the aggregate principal amount of the
         Securities of the series which may be authenticated and delivered under
         this Indenture (except for Securities authenticated and delivered upon
         registration of transfer of, or in exchange for, or in lieu of, other
         Securities of the series pursuant to Section 3.05, 3.06, 3.07, 4.03 or
         12.04);

                  (3) the date or dates on which the principal of and premium,
         if any, on the Securities of the series is payable;

                  (4) the rate or rates (which may be fixed or variable). or the
         method by which such rate or rates shall be determined, at which the
         Securities of the series shall bear interest, if any, the date or dates
         from which such interest shall accrue, or the method by which such date
         or dates shall be determined, the interest payment dates on which such
         interest shall be payable and the record dates for the determination of
         Holders to whom interest is payable;

                  (5) the place or places where the principal of, and premium,
         if any, and any interest on Securities of the series shall be payable:

                  (6) the price or prices at which, the period or periods within
         which and the terms and conditions upon which Securities of the series
         may be redeemed, in whole or in part, at the option of the Company,
         pursuant to any sinking fund or otherwise:

                  (7) the obligation, if any, of the Company to redeem, purchase
         or repay Securities of the series pursuant to any sinking fund or
         analogous to provisions or at the option of a Holder thereof and the
         price or prices at which and the period or periods within which and the
         terms and conditions upon which Securities of the series shall be
         redeemed, purchased or repaid, in whole or in part, pursuant to such
         obligation:

                  (8) if other than denominations of $1,000 and any integral
         thereof, the denominations in which Securities of the series shall be
         issuable;

                  (9) if other than the principal amount thereof, the portion of
         the principal amount of Securities of the series which shall be payable
         upon declaration of acceleration of the maturity thereof pursuant to
         Section 8.01 or provable in bankruptcy pursuant to Section 8.02:

                                       8
<PAGE>

                  (10) if other than the currency of the United States of
         America, the currency or currencies, including composite currencies, in
         which payment of the principal of and premium, if any, and interest on
         the Securities of the series shall be payable;

                  (11) if the amount of payments of principal of and premium, if
         any, or interest on the Securities of the series may be determined with
         reference to an index, the manner in which such amounts shall be
         determined:

                  (12) the application, if any, of either or both of Sections
         15.02 or 15.03 to the Securities of the series;

                  (13) any Events of Default with respect to Securities of the
         series, if not set forth herein;

                  (14) any other covenant or warranty included for the benefit
         of Securities of the series in addition to (and not inconsistent with)
         those included in this Indenture for the benefit of Securities of all
         series, or any other covenant or warranty included for the benefit of
         Securities of the series in lieu of any covenant or warranty included
         in this Indenture for the benefit of Securities of all series, or any
         provision that any covenant or warranty included in this Indenture for
         the benefit of Securities of all series shall not be for the benefit of
         Securities of the series, or any combination of such covenants,
         warranties or provisions; and

                  (15) any other terms of the series (which terms shall not be
         inconsistent with the provisions of this Indenture).

         All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such resolution of the Board of Directors or in any such indenture
supplemental hereto.

         SECTION 3.02. The Securities of each series shall be issuable in
registered form without coupons in such denominations as shall be specified as
contemplated by Section 3.01. In the absence of any such specification with
respect to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof.

         SECTION 3.03. At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication. Except as otherwise
provided in this Article Three, the Trustee shall thereupon authenticate and
deliver said Securities to or upon the written order of the Company, signed by
the Chairman of the Board, the President or any Vice President and by the
Treasurer or any Assistant Treasurer. In authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive at the time of the
initial delivery by the Company of Securities of such series to the Trustee for
authentication, and (subject to Section 9.01) shall be fully protected in
relying upon:

                  (1) a copy of any resolution or resolutions of the Board of
         Directors relating thereto and, if applicable, an appropriate record of
         any action taken pursuant to such resolution, in each case certified by
         the Secretary or an Assistant Secretary of the Company;

                                       9
<PAGE>

                  (2) an executed supplemental indenture, if any;

                  (3) an Officers' Certificate; and

                  (4) an Opinion of Counsel prepared in accordance with Section
         16.05 which shall also state

                           (a) that the form of such Securities has been
                  established by or pursuant to a resolution of the Board of
                  Directors or by a supplemental indenture as permitted by
                  Section 2.01 in conformity with the provisions of this
                  Indenture;

                           (b) that the terms of such Securities have been
                  established by or pursuant to a resolution of the Board of
                  Directors or by a supplemental indenture as permitted by
                  Section 3.01 in conformity with the provisions of this
                  Indenture;

                           (c) that such Securities, when authenticated and
                  delivered by the Trustee and issued by the Company in the
                  manner and subject to any conditions specified in such Opinion
                  of Counsel, will constitute valid and legally binding
                  obligations of the Company, enforceable in accordance with
                  their terms, subject to bankruptcy, insolvency, moratorium,
                  reorganization and other laws of general applicability
                  relating to or affecting the enforcement of creditors' rights,
                  to general equity principles and to such other qualifications
                  as such counsel shall conclude do not materially affect the
                  rights of the Holders of such Securities; and

                           (d) that authentication and delivery of the
                  Securities by the Trustee will not violate the terms of this
                  Indenture.

                           (e) that execution and delivery of the Securities by
                  the Company will not, to the best of such counsel's knowledge,
                  violate any order, rule or regulation applicable to the
                  Company of any country or of any Federal or State regulatory
                  body or administrative agency or other governmental body
                  having jurisdiction over the Company o over its properties
                  (other than in connection or in compliance with the provisions
                  of the securities or Blue Sky laws of any State).

         The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith by its Board of Directors or trustees, executive committee, or a trust
committee of directors or trustees and/or Vice Presidents shall determine that
such action would expose the Trustee to personal liability to existing Holders.

         Each Security shall be dated the date of its authentication.

         SECTION 3.04. The Securities shall be signed on behalf of the Company
by the manual or facsimile signature of its Chairman of the Board, its President
or one of its Vice Presidents under its corporate seal, attested by its
Secretary or one of its Assistant Secretaries by his manual or facsimile
signature. Such signatures may be the manual or facsimile signatures of the
present or any future such officers and may be imprinted or otherwise reproduced
on the Securities. The seal of the Company may be in the form of a facsimile
thereof and may be impressed, affixed, imprinted or otherwise reproduced on the
Securities. Only such Securities as shall bear thereon a certificate of
authentication substantially in the form set forth in Section 2.02, executed by
the

                                       10
<PAGE>

Trustee by manual signature of one of its authorized officers, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
Such certificate by the Trustee upon any Security executed by the Company shall
be conclusive evidence that the Security so authenticated has been duly
authenticated and delivered hereunder and that the Holder is entitled to the
benefits of this Indenture.

         In case any officer of the Company who shall have signed any of the
Securities shall cease to be such officer before the Securities so signed shall
have been authenticated and delivered by the Trustee, or disposed of by the
Company, such Securities nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Securities had not ceased to be
such officer of the Company; and any Security may be signed, by manual or
facsimile signature, on behalf of the Company by such persons as, at the actual
date of the execution of such Security, shall be the proper officers of the
Company, although at the date of such Security any such person was not such
officer.

         SECTION 3.05. At the option of the Holder, Securities of any series may
be exchanged for a like aggregate principal amount of Securities of the same
series of other authorized denominations. The Securities to be exchanged shall
be surrendered at the office or agency to be maintained by the Company in
accordance with the provisions of Section 6.02 for Securities of such series,
and the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor the Security or Securities which the Holder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.

         The Company shall keep, at the Principal Office of the Trustee (which
is hereby appointed registrar of the Company for such purpose), a register for
each series of Securities issued hereunder in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities as in this Article Three provided.
Upon due presentation for registration of transfer of any Security of any series
at the office or agency to be maintained by the Company in accordance with the
provisions of Section 6.02 for Securities of such series, the Company shall
execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Security or Securities of the same series for an
equal aggregate principal amount, and no transfer of any Security shall be valid
unless made at such office.

         All Securities presented or surrendered for transfer, exchange or
payment shall (if so required by the Company or by the Trustee) be accompanied
by a written instrument or instruments of transfer, in form satisfactory to the
Company and the Trustee, duly executed by the registered Holder or by his
attorney duly authorized in writing.

         No service charge shall be made for any exchange or transfer 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 relation thereto, other
than exchanges pursuant to Section 3.06, 4.03 or 12.04 not involving any
transfer.

         The Company shall not be required to make transfers or exchanges of (a)
any Securities of any series for a period of I5 days next preceding any
selection of Securities of that series to be redeemed or (b) any Securities
selected, called or being called for redemption except, in the case of any
Security to be redeemed in pan, the portion thereof not so to be redeemed.

         SECTION 3.06. Pending the preparation of definitive Securities of any
series, the Company may execute and the Trustee shall authenticate and deliver
temporary Securities

                                       11
<PAGE>

(printed, typewritten, lithographed or otherwise produced) in any authorized
denomination and substantially of the tenor of the definitive Securities in lieu
of which they are issued, but with such omissions, insertions and variations as
may be appropriate for temporary Securities, all as may be approved by the
Chairman of the Board, or a Vice President of the Company authorized by the
Board of Directors to execute the same, such approval to be conclusively
evidenced by his execution thereof. Temporary Securities may contain such
reference to any provisions of the Indenture as may be appropriate. Every such
temporary Security shall be executed by the Company and authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
the same effect, as the definitive Securities. Without unnecessary delay the
Company will execute and deliver to the Trustee definitive Securities of such
series and thereupon any or all temporary Securities of such series may be
surrendered in exchange therefor without expense to the Holders, at the office
or agency of the Company designated pursuant to Section 6.02 for Securities of
such series, and the Trustee shall authenticate and deliver in exchange for such
temporary Securities an equal Aggregate principal amount of definitive
Securities. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities of such series authenticated and delivered hereunder.

         SECTION 3.07. In case any temporary or definitive Security shall become
mutilated or be destroyed, lost or stolen, the Company in the case of any
mutilated Security shall, and in the case of any destroyed, lost or stolen
Security in its discretion may, execute, and upon request by the Company the
Trustee shall authenticate and deliver, a new Security of the same series,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Security, or in lieu of and in substitution for the Security
so destroyed, lost or stolen, or, if any such Security shall have matured or
shall be about to mature, instead of issuing a substituted Security, the Company
may pay the same (without surrender thereof, except in the case of a mutilated
Security). In every case the applicant for a substituted Security or for such
payment shall furnish to the Company and to the Trustee and to any and all
Paying Agents of the Company such Security or indemnity as may be required by
them to save each of them harmless, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or theft of such
Security and of the ownership thereof. The written request or authorization of
the Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company
shall be complete authority to the Trustee for the authentication of any such
substituted Security and for the delivery of the same and to the Trustee and any
Paying Agent of the Company for the making of any such payment. Neither the
Trustee nor any such Paying Agent shall incur any liability to anyone by reason
of anything done or omitted to be done by it in good faith and without
negligence under the provisions of this Section 3.07. Upon the issue of any
substituted Security, 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 connected therewith and in addition a further sum
not exceeding Two Dollars for each Security so issued in substitution.

         Every substituted Security issued pursuant to the provisions of this
Section 3.07 in substitution for any destroyed, lost or stolen Security shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed lost or stolen Security shall be enforceable by anyone at any
time, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.

         All Securities shall be held and owned upon the express condition that
the provisions of this. Section 3.07 are exclusive with respect to the
replacement or payment of mutilated,

                                       12
<PAGE>

destroyed, lost or stolen Securities, and shall preclude (to the extent lawful)
any and all other rights or remedies, notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement or
payment of negotiable instruments or other securities without their surrender.

         SECTION 3.08. The Holder of a Security of any series at the close of
business on any record date with respect to any interest payment date for
Securities of that series shall be entitled to receive the interest payable on
such interest payment date notwithstanding the cancellation of such Security
upon any transfer or exchange subsequent to such record date and prior to such
interest payment date; provided, however, that if and to the extent the Company
shall default in the payment of interest due on such interest payment date, such
defaulted interest shall be paid by the Company, at its election in each case,
as provided in clause (a) or (b) below:

         (a) The Company may make payment of any defaulted interest to the
         Holder on a subsequent record date established by notice given by mail
         by or on behalf of the Company to Holders of Securities of such series
         not less than I5 days preceding such subsequent record date, such
         record date to be not less than ten days preceding the date of payment
         of such defaulted interest

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

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

         SECTION 3.09. All Securities surrendered for the purpose of payment,
redemption, exchange or transfer or delivered in satisfaction in whole or in
part of any sinking fund obligation, shall, if surrendered to the Company or any
Paying Agent, be delivered to the Trustee for cancellation, or if surrendered to
the Trustee, shall be cancelled by it, and no Securities shall be issued in lieu
of any Securities so surrendered or delivered except as expressly permitted by
any of the provisions of this Indenture. 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 all Securities so delivered shall be promptly cancelled by the
Trustee. The Trustee shall destroy cancelled Securities and deliver a
certificate of destruction thereof to the Company. If the Company shall acquire
any of the Securities, such acquisition shall not operate as a satisfaction of
the indebtedness represented by such Securities unless and until the same are
delivered to the Trustee for cancellation.

         SECTION 3.10. Except as otherwise specified as contemplated by Section
3.01 for Securities of any series, interest on the Securities of each series
shall be computed on the basis of a year of twelve 30-day months.

                                       13
<PAGE>

                                  ARTICLE FOUR.
                            Redemption of Securities.

         SECTION 4.01. The provisions of this Article shall be applicable to the
Securities of any series which are redeemable before their maturity except as
otherwise specified as contemplated by Section 3.01 for Securities of such
series.

         SECTION 4.02. In case the Company shall desire to exercise the right to
redeem all or, as the case may be, any part of the Securities of any series in
accordance with their terms, it shall fix a Redemption Date and it, or, at its
request, the Trustee in the name of and at the expense of the Company, shall
mail, or cause to be mailed, a notice of such redemption at least 30 and not
more than 60 days prior to the Redemption Date to the Holders of Securities of
such series so to be redeemed as a whole or in part at their last addresses as
the same appear on the Security register for such series. Such mailing shall be
by first class mail. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.

         Each such notice of redemption shall be given in the name of the
Company and shall specify the Redemption Date, the Redemption Price, the Place
of Payment, that payment will be made upon presentation and surrender of such
Securities, that interest accrued to the Redemption Date will be paid as
specified in said notice, and that on and after the Redemption Date interest
thereon or on the portions thereof to be redeemed will cease to accrue. If less
than all the Securities of a series are to be redeemed, the notice to the
Holders of the Securities of such series to be redeemed shall identify the
Securities to be redeemed. In case any Security of a series is to be redeemed in
part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the Redemption
Date, upon surrender of such Security, a new Security or Securities of that
series in aggregate principal amount equal to the unredeemed portion thereof
will be issued without charge to the Holder.

         On or prior to the Redemption Date specified in the notice of
redemption given as provided in this Section, the Company will 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 6.06) an amount of
money sufficient to redeem on the Redemption Date all the Securities or portions
thereof so called for redemption at the appropriate Redemption Price, together
with accrued interest to the Redemption Date.

         If less than all the Securities of a series are to be redeemed the
Company shall give the Trustee notice, at least 45 days (or such shorter period
acceptable to the Trustee) in advance of the Redemption Date, as to the
aggregate principal amount of Securities of such series to be redeemed and
thereupon the Trustee shall select, by such method as it shall deem fair and
appropriate the Securities of such series or portions thereof (in integral
multiples of $1,000, except as otherwise set forth in the applicable form of
Security) to be redeemed, and shall as promptly as practicable notify the
Company in writing of the numbers of the Securities of such series or portions
thereof so selected.

         SECTION 4.03. If notice of redemption has been given as provided in
Section 4.02 or Section 5.05, the Securities or portions of Securities of the
series with respect to which such

                                       14
<PAGE>

notice has been given shall become due and payable on the date and at the place
stated in such notice at the applicable Redemption Price, together with interest
accrued to the Redemption Date, and on and after such Redemption Date (unless
the Company shall default in the payment of such Securities or portions thereof
at the Redemption Price, together with interest accrued to such Redemption Date)
interest on the Securities or portions of Securities of any series so called for
redemption shall cease to accrue. On presentation and surrender of such
Securities at the Place of Payment in said notice specified, such Securities, or
the specified portions thereof shall be paid and redeemed by the Company at the
applicable Redemption Price, together with interest accrued thereon to the
Redemption Date; provided. however, that installments of interest becoming due
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more previous Securities evidencing all or a portion of
the same debt as that evidenced by such particular Securities, registered as
such at the close of business on the relevant record dates according to their
terms and the provisions of Section 3.08.

         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 prescribed therefor in
the Security.

         Upon presentation and surrender of any Securities redeemed in part
only, the Company shall execute and the Trustee shall authenticate and deliver
to the Holder thereof, at the expense of the Company, a new Security or
Securities of such series, of authorized denominations, in aggregate principal
amount equal to the unredeemed portion of the Security so presented and
surrendered.

                                  ARTICLE FIVE.
                                  Sinking Funds

         SECTION 5.01. The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series except as otherwise
specified as contemplated by Section 3.01 for Securities of such series.

         The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment".

         SECTION 5.02. Neither the Trustee nor any Paying Agent shall redeem or
purchase any Securities of a series with sinking fund moneys or mail any notice
of redemption of such Securities by operation of the sinking fund during the
continuance of any default in payment of interest on such Securities when due or
of any Event of Default with respect to such Securities, except that if the
notice of redemption of any such Securities shall theretofore have been mailed
in accordance with the provisions hereof, the Trustee or any Paying Agent shall
redeem such Securities if cash sufficient for that purpose shall be deposited
with, or segregated by, it for that purpose in accordance with the terms of this
Article. Except as aforesaid, any moneys in the sinking fund for any such series
at the time when any such default or Event of Default shall occur and any moneys
thereafter paid into such sinking fund shall, during the continuance of such
default or Event of Default, be held as security for the payment of Securities
of the applicable series; provided, however, that in case such default or Event
of Default shall have been cured or waived as provided herein, such moneys shall
thereafter be applied not later than the next sinking fund payment date for
Securities of the applicable series on which such moneys may be applied pursuant
to the provisions of this Article.

                                       15
<PAGE>

         Any and all sinking fund moneys with respect to the Securities of any
particular series held by the Trustee or any Paying Agent on the maturity date
with respect to Securities of such series and not held for the payment or
redemption of particular Securities, shall be applied by the Trustee or such
Paying Agent, together with other moneys, if necessary, to be deposited
sufficient for the purpose, to the payment of the principal of the Securities of
that series at maturity; provided, however, that if such moneys held by the
Trustee or held or segregated in trust by such Paying Agent are greater than are
necessary for such purpose, the excess thereof shall be paid promptly to the
Company after such date or need no longer be segregated and held in trust by the
Company, as the case may be.

         SECTION 5.03. In lieu of making all or any part of any mandatory
sinking fund payment with respect to any Securities of a series in cash, the
Company may (a) deliver to the Trustee for cancellation Outstanding Securities
of that series theretofore purchased or otherwise acquired by the Company or (b)
take credit for the principal amount of any Securities of that series or
portions thereof which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities;
provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such mandatory sinking fund payment shall
be reduced accordingly.

         SECTION 5.04. Not less than 45 days prior to each sinking fund payment
date for any series of Securities, the Company shall-deliver to the Trustee:

         1. Certificates (which need not be Officers' Certificates) stating:

                  (i) the manner in which the Company will fulfill its mandatory
                  sinking fund obligation for such series under this Article
                  Five for such period;

                  (ii)the amount of cash, if any, which the Company will pay to
                  the Trustee prior to or not later than the opening of business
                  on the applicable sinking fund payment date for such series;

                  (iii) the principal amount of Securities of that series, if
                  any, which the Company will surrender to the Trustee for
                  cancellation in lieu of the payment of cash, and that such
                  Securities have not theretofore been made the basis for the
                  reduction of a mandatory sinking fund payment;

                  (iv) the principal amount of any Securities for which credit
                  is claimed pursuant to clause (b) of Section 5.03, together
                  with such facts as shall demonstrate that the Company is
                  entitled to such credit; and

                  (v) whether the Company intends to exercise its right to make
                  a permitted optional sinking fund payment with respect to such
                  series and, if so, specifying the amount of such optional
                  sinking fund payment which the Company intends to pay.

         2. The Securities, if any, referred to in clause (iii) above.

         In case of a failure by the Company, on or before the time provided
above, to deliver such

                                       16
<PAGE>

certificates and the Outstanding Securities, if any, the sinking fund payment
due on the next succeeding sinking fund payment date for that series shall be
paid entirely in cash and shall be sufficient to redeem the principal amount of
such Securities subject to a mandatory sinking fund payment, and the Company
shall not be permitted to deliver or credit Securities as provided in Section
5.03 or make any optional sinking fund payment, if any, with respect to such
series.

         SECTION 5.05. The Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner provided in Section 4.02 and
notice thereof shall be given by the Trustee to the Company, and the Company
hereby irrevocably authorizes the Trustee, in the name of and at the expense of
the Company, to give notice on behalf of the Company of the redemption of such
Securities, all in the manner and with the effect provided in Section 4.02,
except that, in addition to the matters required to be included in such notice
by Section 4.02, such notice shall also state that the Securities therein
designated for redemption are to be redeemed through operation of the sinking
fund. Provided the Company shall not default in payment of the sinking fund
obligation, such Securities shall be so redeemed and paid in accordance with
such notice in the manner and with the effect provided in Section 4.03.

         Notwithstanding the foregoing, if at any time the amount of cash to be
paid into the sinking fund on the next succeeding sinking fund payment date with
respect to the Securities of any particular series together with any unused
balance of any preceding sinking fund payment or payments with respect to the
Securities of such series shall not exceed in the aggregate $50,000, the
Trustee, unless requested by the Company, shall not give notice of the
redemption of Securities of such series through the operation of the sinking
fund on the next succeeding sinking fund payment date. Such unused balance of
moneys deposited in the sinking fund shall be added to the sinking fund payment
to be made in cash on the next succeeding sinking fund payment date.

                                  ARTICLE SIX.
                      Particular Covenants of the Company.

         SECTION 6.01. The Company will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on each of the
Securities of any series at the time and place and in the manner provided in
that series of Securities and in this Indenture. The interest on the Securities
shall be payable without presentation of the Securities and (subject to the
provisions of Section 3.08) only to or upon the written order of the registered
Holders thereof. As a condition precedent to the payment of any installment of
interest on a Security, the Company may require the registered Holder of such
Security to furnish such evidence as will enable the Company to determine
whether it is required by law to deduct or to retain any tax or taxes from the
interest so payable.

         SECTION 6.02. So long as any of the Securities of a series remain
Outstanding, the Company will maintain an office or agency in each Place of
Payment for Securities of that series where the Securities of that series may be
presented for transfer and exchange as in this Indenture provided, where notices
and demands to or upon the Company in respect of the Securities of that series
or of this Indenture may be served and where the Securities of that series may
be presented for payment; 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 of that
series. Unless otherwise specified as contemplated by the provisions of Section
3.01 with respect to the Securities of any series, such office or agency shall
be the Principal Office of the Trustee. The Company will give to the Trustee
written notice of the

                                       17
<PAGE>

location of any such office or agency and of any change of the location thereof
in the event that such office or agency shall not be the Principal Office of the
Trustee. In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location thereof or of any change in the
location thereof, presentations and demands may be made and notices may be
served at the Principal Office of the Trustee. Neither any agent of the Company
maintaining such office or agency nor the Trustee shall be under any duty with
respect to any such presentation, demand or notice, except to mail the same,
postage prepaid, to the Company, at such address as may have been furnished to
it by the Company, or if no such address shall have been furnished, to the
Company at P.O. Box 2563, Birmingham, Alabama 35202.

         The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series 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 each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and or any change in the location of any such office
or agency.

         Section 6.03 Except as hereinafter in this Section 6.03 expressly
permitted and as permitted by Section 13.01, so long as any of the Securities of
any series remain Outstanding, the Company will not at any time directly or
indirectly create, assume or suffer to exists, and will not cause, suffer or
permit any Restricted Subsidiary to create, assume or suffer to exist otherwise
than in favor of the Company or another Restricted Subsidiary, any Lien upon any
of its properties or assets, real personal or mixed, whether owned at the date
of this Indenture or thereafter acquired, or of or upon or in any income or
profits therefrom without making effective provision, and the Company covenants
that in any such case it will make or cause to be made effective provision, and
the Company convenants that in any such case it will make or cause us to be made
effective provision, whereby the Securities then Outstanding and any other
indebtedness of the Company then entitled thereto shall be secured by such Lien
equally and ratably with any and all other obligations and indebtedness thereby
secured, so long as any such other obligations or indebtedness shall be so
secured.

         Nothing in this Section 6.03 shall be construed to prevent he Company
or any Restricted Subsidiary from creating assuming or suffering to exist Liens
of the following character, to all of which the provisions of the first
paragraph of this Section 6.03 shall not be applicable:

              (a) Any purchase money mortgage or purchase money security
         interest created to secure all or part of the purchase price of any
         property (or to secure a loan made to enable the Company or any
         Restricted Subsidiary to acquire the property described in such
         mortgage or in any applicable security agreement), provided that such
         mortgage or security interest shall extend only to the property so
         acquired, fixed improvements thereon, replacements thereof and the
         income and profits therefrom;

              (b) Any Lien existing on any property at the time of the
         acquisition thereof, whether or not assumed by the Company or any
         Restricted Subsidiary, provided that such Lien shall extend only to the
         property so acquired, fixed improvements thereon, replacements thereof
         and the income and profits therefrom;

              (c) Any Lien on any property acquired or constructed by the
         Company or a Restricted Subsidiary, and created not later than twelve
         months after (i) such acquisition or completion of such construction or
         (ii) commencement of operation of such property,

                                       18
<PAGE>

         whichever is later; provided that such Lien shall extend only to the
         property so acquired or constructed, fixed improvements thereon,
         replacements thereof and income and profits therefrom;

              (d) Any Lien on the properties or assets, real personal or mixed
         of a Restricted Subsidiary, or of or upon or in any income or profits
         therefrom which is outstanding at the time such Restricted Subsidiary
         becomes a Restricted Subsidiary;

              (e) Any Lien not otherwise permitted under this Section 6.03, of
         or upon or in any of its properties or assets, real, personal or mixed,
         or of or upon or in any income or profits therefrom created by the
         Company or a Restricted Subsidiary for the purpose or securing funded
         indebtedness of the Company and/or such Restricted Subsidiary, provided
         that the aggregate amount of all funded indebtedness of the Company and
         Restricted Subsidiaries secured by Liens permitted by subdivision (d)
         above and this subdivisions (e) shall not exceed an amount equal to 15%
         of the consolidated net tangible assets of the Company and its
         Restricted Subsidiaries.

                  For the purposes of this Section 6.03(e), (a) the term
         "consolidated net tangible assets) shall mean the total assets
         appearing on a consolidated balance sheet of the Company and its
         Restricted Subsidiaries less the following:

                           (1) intangible assets, such as organization costs and
                           franchise costs as recorded in the plant account and
                           unamortized debt discount expense and other
                           intangible deferred debts (excluding, however, an
                           prepaid expenses or deferred charges which would be
                           treated as current assets in accordance with
                           generally accepted accounting principles);

                           (2) all current and accrued liabilities (other than
                           consolidated funded indebtedness) and deferred
                           credits (other than deferred credits resulting from
                           gains on reacquisition of debt and deferred
                           investment tax credits);

                           (3) all reserves (other than reserves for the
                           retirement of intangible assets and reserves for
                           deferred credits (other than deferred credits
                           resulting from gains on reacquisition of debt and
                           deferred investment tax credits);

                           (4) all assets held under any lease the rent under
                           which is capitalized by the Company of any of its
                           Restricted Subsidiaries; and

                           (5) all advance payments for gas which the Federal
                           Energy Regulatory Commission or any successor agency
                           having jurisdiction (the "FERC") has ruled are not
                           recoverable by amortization to cost of service and
                           which are recoverable in cash and prepayments for gas
                           which the FERC has ruled are not includable in the
                           Company's cost of service for rate making purposes
                           and which are not recoverable in gas, cash or other
                           form of equivalent value;

                  (b) the term "indebtedness" shall mean all items of
                  indebtedness which would be included in determining the total
                  liabilities as show on the liability side of a balance sheet
                  as of which indebtedness is to be determined, and shall
                  include indebtedness secured by any Lien on any properties or
                  assets owned and subject thereto whether or not the
                  indebtedness secured thereby shall have been assumed,

                                       19
<PAGE>

                  and shall also include direct guarantees of indebtedness (as
                  defined above) of others, provided that the term
                  "indebtedness" of any person shall not include (i) any
                  indebtedness evidence of which is held in treasury (but the
                  subsequent resale for such indebtedness hall be deemed to
                  constitute the creating such indebtedness) in the necessary
                  amount to pay, redeem or satisfy such indebtedness, or (iii)
                  any amount (whether or not included in determining total
                  liabilities as shown on the liability side of a balance sheet
                  in accordance with generally accepted accounting principles)
                  representing capitalized rent under any lease or (iv) any
                  indirect guarantees or other contingent obligations in respect
                  of indebtedness of other persons, including agreements,
                  contingent or otherwise, with such other persons or with third
                  persons with respect to, or to permit or assure the payment
                  of, obligations of such other persons, including without
                  limitation, agreements to purchase or repurchase obligations
                  of such other persons, including, without limitation,
                  agreements to purchase or repurchase obligations of such other
                  persons, to advance or supply funds to, or to invest in, such
                  other persons, to advance or supply funds to, or to invest in,
                  such other persons, or to pay for property, products or
                  services of such other persons (whether or not conveyed,
                  delivered or rendered); demand charge contracts, through-put,
                  take-or-pay, keep-well, make-whole or maintenance of working
                  capital or similar agreements; or guarantees with respect to
                  rental or other similar periodic payments to be made by such
                  other persons, including, but without limiting the generality
                  of foregoing, agreements such as the Guaranty agreement dated
                  as of June 1, 1968, as amended between Boise Cascade
                  Corporation, the Company and Parish of Beauregard, Louisiana,
                  or any similar arrangement; (c) the term "funded indebtedness"
                  shall mean any indebtedness maturing by its terms more than
                  one year from the date of determination, including any
                  indebtedness renewable or extendible at the option of the
                  obligor to a date later than one year from such date of
                  determination; and (d) the term "consolidated funded
                  indebtedness" shall mean the total funded indebtedness
                  appearing on a consolidated balance sheet of the Company and
                  its Restricted Subsidiaries, provided that there shall be
                  included in consolidated funded indebtedness an amount equal
                  to the par value or voluntary liquidation value, whichever is
                  higher, of outstanding Preferred Stock (not owned by the
                  Company or a Restricted Subsidiary) of any Restricted
                  Subsidiary; all after giving appropriate effect to minority
                  interests and as determined and prepared in accordance with
                  generally accepted accounting principles in effect on the date
                  of the determination thereof.

                             (f) Any Lien created or assumed by the Company or a
                        Restricted Subsidiary on any contract for the sale of
                        any product or service or any rights thereunder or any
                        proceeds therefrom, including accounts and other
                        receivables related to the operation or use of any
                        property acquired or constructed by the Company or a
                        Restricted Subsidiary and created not later than twelve
                        months after (i) such acquisition or completion of such
                        construction or (ii) commencement of full operation of
                        such property, whichever is later;

                             (g) Any Lien created or assumed by the Company or a
                        Restricted Subsidiary on coal, geothermal resources,
                        natural gas, Liquefied Natural Gas or Synthetic Fuel
                        owned by the Company or a Restricted Subsidiary;

                                       20
<PAGE>
                             (h) Any Lien created or assumed by the Company or a
                        Restricted Subsidiary for the purpose of securing
                        indebtedness incurred to finance Liquefied Natural Gas
                        inventories or storage gas;

                             (i) Any Lien created or assumed by the Company or a
                        Restricted Subsidiary in connection with the issuance of
                        debt securities the interest on which is excludable from
                        gross income of the holder of such security pursuant to
                        Section 103 of the Internal Revenue Code of 1986, as
                        amended, or any successor section, for the purpose of
                        financing, in whole or in part, the acquisition or
                        construction of property to be used by the Company or a
                        Restricted Subsidiary;

                             (j) Any Lien created or assumed by the Company or a
                        Restricted Subsidiary on coal, geothermal, oil natural
                        gas or mineral properties owned or leased by the Company
                        or a Restricted Subsidiary to secure loans to the
                        Company or a Restricted Subsidiary for the purpose of
                        developing such properties;

                             (k) Any Lien on any office equipment, data
                        processing equipment (including, without limitation,
                        motor vehicles, tractors, trailers, marine vessels,
                        barges, towboats, rolling stock and aircraft) or
                        drilling, exploration or production equipment
                        (including, without limitation, platforms and rigs) for
                        the exploration or development of or production from
                        oil, gas, hydrocarbon or other mineral properties;

                             (l) Any refunding or extension of maturity, in
                        whole or in part, of any obligation or indebtedness
                        secured by any Lien crated, existing or assumed in
                        accordance with the provisions of subdivisions (a)
                        through (d) above, inclusive, provided that the
                        principal amount of the obligation or indebtedness
                        secured by such refunding or extended Lien shall not
                        exceed the principal amount of the obligation or
                        indebtedness to be refunded or extended outstanding at
                        the time of such refunding or extensions, and that such
                        refunding or extended Lien shall be limited in lien to
                        the same property that secured the obligation or
                        indebtedness refunded or extended, and property
                        substituted therefor and property acquired after the
                        date thereof and subjected to the lien thereof, in
                        accordance with the provisions of such refunding or
                        extension; and that such refunding to extended Lien
                        shall be limited in lien to the same property that
                        secured the obligation or indebtedness refunded or
                        extended, and property substituted therefore and
                        property acquired after the date thereof and subjected
                        to the lien thereof, in accordance with the provisions
                        of such refunding or extensions;

                             (m) Any Lien created or assumed to secure loans
                        maturing within twelve months of the date of creation
                        thereof and not renewable or extendible by the terms
                        thereof at the option of the obligor beyond such twelve
                        months, and made in the ordinary course of business;

                             (n) Mechanic's or materialmen's liens or any Lien
                        arising by reason of pledges or deposits to secure
                        payment of workmen's compensation or other insurance,
                        good faith deposits in connection with tenders or leases
                        of real estate, bids or contracts (other than contracts
                        for the payment of money), deposits to secure public or
                        statutory obligations, deposits to secure or in lieu

                                       21
<PAGE>
                        of surety, stay or appeal bonds and deposits as security
                        for the payment of taxes or assessments or other similar
                        charges;

                             (o) Any Lien arising by reason of deposits with or
                        the giving of any form of security to any governmental
                        agency or any body created or approved by law or
                        governmental regulation for any purpose at any time in
                        connection with the financing of the acquisitions or
                        construction of property to be used in the business of
                        the Company or a Restricted Subsidiary, or as required
                        by law or governmental regulation as a condition to the
                        transaction of any business or the exercise of any
                        privilege or license, or to permit the maintenance of
                        self-insurance or participation in any fund for
                        liability on any insurance risks or connection with
                        workmen's compensation, unemployment insurance, old age
                        pensions or other social security or to share in the
                        privileges or benefits required for companies
                        participating in such arrangements;

                             (p) Any Lien which is payable, both with respect to
                        principal and interest, solely out of the proceeds of
                        natural gas, oil coal, geothermal resources, other
                        hydrocarbons or minerals to be produced form the
                        property subject thereto and to be sold or delivered by
                        the Company or a Restricted Subsidiary;

                             (q) Any rights reserved in others to take or
                        reserve any part of the natural gas, oil, coal,
                        geothermal resources, other hydrocarbons or minerals
                        produced at any time on any property of the Company or a
                        Restricted Subsidiary;

                             (r) Any rights reserved to or vested in any person,
                        firm, corporation or governmental authority by the terms
                        of any franchise, grant, lease, license, easement or
                        permit or by any provision of law with respect to any
                        property of the Company or a Restricted Subsidiary;

                             (s) Any obligations or duties to any municipality
                        or public authority with respect to any franchise,
                        grant, license, permit or similar arrangement;

                             (t) As to any lease, contract easement or
                        right-of-way, any Lien on the underlying interests in
                        the property covered thereby, existing at the time of
                        acquisition of any such lease, contract, easement or
                        right-of-way;

                             (u) The liens of taxes or assessments for the then
                        current year or not at the time due, or the liens of
                        taxes or assessments already due but the validity of
                        which is being contested in good faith;

                             (v) Judgment liens in an aggregate amount not in
                        excess of $5,000,000, or any judgment lien so long as
                        the finality of such judgment is being contested and
                        execution thereon is stayed or which has been appealed
                        and secured, if necessary, by the filing of an appeal
                        bond;

                             (w) Leases (whether pursuant to sale-and-leaseback
                        arrangements or otherwise) now or hereafter existing and
                        any renewals or extensions thereof;

                                       22
<PAGE>
                             (x) Easements or similar encumbrances, the
                        existence of which does not materially impair the use of
                        the property subject thereto for the purposes for which
                        it was acquired;

                             (y) Liens upon rights-of-way for pipeline purposes;

                             (z) The lien reserved in leases for rent and for
                        compliance with the terms of the lease in the case of
                        leasehold estates;

                             (aa) Defects and irregularities in the titles to
                        any property (including rights-of-way) which are not
                        material to the business of the Company and its
                        Restricted Subsidiaries considered as a whole;

                             (bb) Zoning laws and ordinances;

                             (cc) Any Lien created or assumed by the Company or
                        a Restricted Subsidiary in connection with the sale or
                        discount, without recourse, or any notes or accounts
                        receivable; and

                             (dd) Any Lien deemed to be created as a result of
                        the deposit of cash or securities for the purpose of

         If at any time the Company or any restricted Subsidiary shall create or
assume any Lien to which the covenant in the first paragraph of this Section
6.03 is applicable, the Company will promptly deliver to the Trustee an
Officers' Certificate, stating that such covenant has been complied with, and
Opinion of Counsel, stating that in his option such covenant has been complied
with and that nay instruments executed by the Company or any restricted
Subsidiary in the performance of such covenant complied with the requirements
thereof.

         In the event that the Company or any Restricted Subsidiary shall
hereafter secure the Securities equally and ratably with any other obligation or
indebtedness pursuant to the provisions of this Section 6.03, the Trustee is
hereby authorized to enter into an indenture supplemental hereto and to take
such action, if any, as it may deem advisable to enable it to enforce
effectively the rights of the Holders of the Securities so secured, equally and
ratably with such other obligation or indebtedness.

         Subject to the provisions of Section 9.01, the Trustee may accept an
Officers' Certificate and Opinion of Counsel as conclusive evidence that any
such supplemental indenture or steps taken to secure the Securities equally and
ratably comply with the provisions of this Section 6.03.

         SECTION 6.04. Subject to Article Thirteen, the Company will do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and franchises; provided, however, that the Company
shall not be required to preserve any such franchise if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Holders.

         SECTION 6.05. The Company, whenever necessary to avoid or fill a
vacancy in the office of Trustee, will appoint, in the manner provided in
Section 9.10, a Trustee, so that there shall at all times be a Trustee with
respect to each series of Securities hereunder.

                                       23
<PAGE>

         SECTION 6.06. (a) If the Company shall appoint a Paying Agent other
than the Trustee with respect to the Securities of any series, it will cause
such Paying Agent to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
Section 6.06:

                  (1) that it will hold all sums held by it as such Paying Agent
                  for the payment of the principal of and premium, if any, or
                  interest on the Securities of such series (whether such sums
                  have been paid to it by the Company or by any other obligor on
                  the Securities of such series) in trust for the benefit of the
                  Holders of the Securities of such series or the Trustee; and

                  (2) that it will give the Trustee notice of any failure by the
                  Company (or by any other obligor on the Securities of such
                  series) to make any payment of the principal of and premium,
                  if any, or interest on the Securities of such series when the
                  same shall be due and payable.

                  (3) that upon the occurrence and continuance of an Event of
                  Default it will pay to the Trustee all sums held by it as such
                  Paying Agent.

                  (b) If the Company shall act as its own Paying Agent with
         respect to the Securities of any series, it will, on or before each due
         date of the principal of and premium, if any, or interest on any of the
         Securities of such series, set aside, segregate and hold in trust for
         the benefit of the Holders of such Securities a sum sufficient to pay
         such principal or premium or interest so becoming due and will give the
         Trustee written notice of such action or any failure to take such
         action.

                  (c) If the Company shall have appointed one or more Paying
         Agents with respect to the Securities of any series, it will, on or
         before each due date of the principal of and premium, if any, or
         interest on any Securities of such series, deposit with a Paying Agent
         a sum sufficient to pay the principal of and premium, if any, or
         interest so becoming due, such sum to be held in trust for the benefit
         of the Holders of such Securities, and (unless such Paying Agent is the
         Trustee) the Company will promptly notify the Trustee of its action or
         failure so to act.

                  (d) Anything in Section 6.06 to the contrary notwithstanding,
         the Company may, at any time, for the purpose of obtaining a
         satisfaction and discharge of this Indenture, or for any other reason.
         pay or cause to be paid to the Trustee all sums held in trust by it, or
         any Paying Agent hereunder, as required by this Section, such sums to
         be held by the Trustee upon the trusts herein contained.

                  (e) Anything in this Section 6.06 to the contrary
         notwithstanding, the agreement to hold sums in trust as provided in
         this Section 6.06 is subject to the provisions of Sections 14.03 and
         14.04.

         SECTION 6.07. Annually, within 120 days after the close of each fiscal
year beginning with the fiscal year ending December 31, 1987, the Company will
deliver to the Trustee a certificate (which shall not be deemed to be an
Officers' Certificate within the meaning of this Indenture and need not conform
with any of the provisions of Section 16.05) of the Chairman of the Board or the
President or a Vice President and the Secretary or the Treasurer or an Assistant
Sectary or an Assistant Treasurer of the Company, stating that a review of the
activities of the

                                       24
<PAGE>

Company during such year has been made under their supervision with a view to
determining whether the Company has kept, observed, performed and fulfilled all
its covenants, agreements and obligations under this Indenture, and that to the
best of their knowledge the Company has kept, observed, performed and fulfilled
each and every covenant, agreement and obligation on its pan in this Indenture
contained and that to the best of their knowledge neither the Company nor any
Paying Agent of the Company is in default in the performance, observance or
fulfillment of any of the terms, provisions and conditions hereof, and that no
default (as defined in Section 8.07 for the purposes thereof) exists or, if the
Company or any Paying Agent shall be so in default or if any default, as so
defined, exists, specifying all such defaults, and the nature thereof, of which
they may have knowledge.

         SECTION 6.08. The Company may omit in any particular instance to comply
with any term, provision or condition set forth in Section 6.03 with respect to
the Securities of any series, if before the time for such compliance the Holders
of at least a majority in principal amount of the Outstanding Securities of such
series 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 SEVEN.

           Holder's Lists and Reports By the Company And the Trustee.

         SECTION 7.01. The Company covenants and agrees that it will furnish or
cause to be furnished to (the Trustee with respect to the Securities of each
series not later than each interest payment date for such series (and on dates
to be determined pursuant to Section 3.01 for any series of Original Issue
Discount Securities which by their terms bear interest only after maturity), but
in no case less frequently than semi-annually, and at such other times as the
Trustee may request in writing, within thirty days after receipt by the Company
of any such request. a list. in such form as the Trustee may reasonably require
of the names and addresses of the Holders as of a date not more than fifteen
days prior to the time such information is furnished but, so long as the Trustee
shall be the Security registrar, no such list shall be required to be furnished.

         SECTION 7.02. (a) The Trustee shall preserve, in as current a form as
is reasonably practicable, all information as to the names and addresses of the
Holders contained in the most recent list furnished to it as provided in Section
7.01 or received by it as Security registrar or Paying Agent (if so acting). The
Trustee may destroy any list furnished to it as provided in Section 7.01 upon
receipt of a new list so furnished.

         (b) In case three or more Holders of Securities of the same series
         (hereinafter referred to as "applicants") apply in writing to the
         Trustee, and furnish to the Trustee reasonable proof that each such
         applicant has owned a Security of such series for a period of at least
         six months preceding the date of such application, and such application
         states that the applicants desire to communicate with other Holders of
         Securities of such series with respect to their rights under this
         Indenture or under such Securities and is accompanied by a copy of the
         form of proxy or other communication which such applicants propose to
         transmit then the Trustee shall, within five Business Days after the
         receipt of such application, at its election, either

                  (1) afford such applicants access to the information preserved
                  at the time by the

                                       25
<PAGE>

                  Trustee in accordance with the provisions of subsection (a) of
                  this Section 7.02, or

                  (2) inform such applicants as to the approximate number of
                  Holders of Securities of such series whose names and addresses
                  appear in the information preserved at the time by the Trustee
                  in accordance with the provisions of subsection (a) of this
                  Section 7.02, and as to the approximate cost of mailing to
                  such Holders the form of proxy or other communication, if any,
                  specified in such application.

         If the Trustee shall elect not to afford such applicants access to such
         information, the Trustee shall, upon the written request of such
         applicants, mail to each Holder of a Security of such series whose name
         and address appear in the information preserved at the time by the
         Trustee in accordance with the provisions in subsection (a) of this
         Section 7.02, a copy of the form of proxy or other communication which
         is specified in such request, with reasonable promptness after a tender
         to the Trustee of the material to be mailed and of payment, or
         provision for the payment, of the reasonable expenses of mailing,
         unless within five days after such tender, the Trustee shall mad to
         such applicants and file with the Securities and Exchange Commission
         together with a copy of the material to be mailed, a written statement
         to the effect that, in the opinion of the Trustee, such mailing would
         be contrary to the best interests of the Holders of Securities of such
         series or would be in violation of applicable law. Such written
         statement shall specify the basis of such opinion. If said Commission,
         after opportunity for a hearing upon the objections specified in the
         written statement so filed, shall enter an order refusing to sustain
         any of such objections, or if, after the entry of an order sustaining
         one or more of such objections, said Commission shall find after notice
         and opportunity for hearing that all the objections so sustained have
         been met and shall enter an order so declaring the Trustee shall mail
         copies of such material to all such Holders with reasonable promptness
         after the entry of such order and the renewal of such tender; otherwise
         the Trustee shall be relieved of any obligation or duty to such
         applicants respecting their application.

         (c) Each and every Holder of the Securities, by receiving and holding
         the same, agrees with the Company and the Trustee that neither the
         Company nor the Trustee nor any Paying Agent 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 the provisions of
         subsection (b) of this Section 7.02, 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 said subsection (b)

         SECTION 7.03. (a) The Company covenants and agrees to file with the
Trustee, within fifteen days after the Company is required to file the same
with the Securities and Exchange 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 said Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with said
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934; or, if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then the Company will file with
the Trustee and said Commission, in accordance with rules and regulations
prescribed from time to time by said Commission, such of the supplementary and
period information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 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

                                       26
<PAGE>

regulations.

         (b) The Company covenants and agrees to file with the Trustee and the
         Securities and Exchange Commission, in accordance with the rules and
         regulations prescribed from time to time by said Commission, such
         additional information, documents and reports with respect to
         compliance by the Company with the conditions and covenants provided
         for in this Indenture as may be required from time to time by such
         rules and regulations.

         (c) The Company covenants and agrees to transmit by mail to all
         Holders, at the addresses of such Holders as they appear upon the
         registry books of the Company, within thirty 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 subsections
         (a) and (b) of this Section 7.03 as may be required by rules and
         regulations prescribed from time to time by the Securities and Exchange
         Commission.

         SECTION 7.04. (a) On or before July 15 each year, commencing in 1988,
so long as any Securities are Outstanding hereunder, the Trustee shall transmit
to the Holders of Securities of all series for which it is Trustee hereunder as
hereinafter in this Section 7.04 provided, a brief report dated as of May I5 of
the year in which such report is made with respect to:

                  (1) its eligibility under Section 9.09, and its qualifications
                  under Section 9.08, or in lieu thereof, if to the best of its
                  knowledge it has continued to be eligible and qualified under
                  such Sections, a written statement to such effect;

                  (2) the character and amount of any advances (and if the
                  Trustee elects so to state, the circumstances surrounding the
                  making thereof) made by the Trustee (as such) which remain
                  unpaid on the date of such report, and for the reimbursement
                  of which it claims or may claim a lien or charge, prior to
                  that of such Securities, on any property or funds held or
                  collected by it as Trustee, except that the Trustee shall not
                  be required (but may elect) to state such advances if such
                  advances so remaining unpaid aggregate not more than one-half
                  of one per cent of the principal amount of such Securities
                  Outstanding on the date of such report;

                  (3) the amount, interest rate and maturity date of all other
                  indebtedness owing by the Company (or by any other obligor on
                  the Securities) to the Trustee in its individual capacity, on
                  the date of such report, with a brief description of any
                  property held as collateral security thereon except an
                  indebtedness based upon a creditor relationship arising in any
                  manner described in paragraphs (2), (3), (4), or (6) of
                  subsection (b) of Section 9.13;

                  (4) the property and funds, if any, physically in the
                  possession of the Trustee (as such) on the date of such
                  report;

                  (5) any additional issue of Securities for which it is the
                  Trustee hereunder which the Trustee has not previously
                  reported; and

                  (6) any action taken by the Trustee in the performance of its
                  duties under this Indenture which it has not previously
                  reported and which in its opinion materially affects such
                  Securities, except action in respect of a default, notice of
                  which has been or is to be withheld by it in accordance with
                  the provisions of Section 8.07.

                                       27
<PAGE>

         (b)  The Trustee shall transmit to the Holders of Securities of all
              series for which it is the Trustee hereunder, as hereinafter
              provided, a brief report with respect to the character and amount
              of any advances (and if the Trustee elects so to state, the
              circumstances surrounding the making thereof) made by the Trustee
              (as such) since the date of the last report transmitted pursuant
              to the provisions of subsection (a) of this Section 7.04 (or if no
              such report has yet been so transmitted, since the date of
              execution of this Indenture), for the reimbursement of which it
              claims or may claim a lien or charge prior to that of such
              Securities on property or funds held or collected by it as
              Trustee, and which it has not, previously reported pursuant to
              this subsection (b) except that the Trustee shall not be required
              (but may elect) to report such advances if such advances remaining
              unpaid at any time aggregate ten per cent or less of the principal
              amount of such Securities Outstanding at such time. such report to
              be transmitted within ninety days after such time.

         (c)  Reports pursuant to this Section 7.04 shall be transmitted by mail
              to the Holders specified in subsections (a) and (b) of this
              Section 7.04 at the addresses of such Holders as they appear upon
              the registry books of the Company.

         (d) 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 and also with the Securities and Exchange
         Commission. The Company agrees to notify the Trustee when and as the
         Securities of any series become listed on any stock exchange.

                                 ARTICLE EIGHT.

             Remedies Of the Trustee And Holders On Event of Default

         SECTION 8.01 In case one or more of the following Events of Default
with respect to Securities of any series shall have occurred and be continuing
that is to say:

         (a) default in the payment of any installment of interest upon any
         Security of that series, as and when the same shall become due and
         payable, and continuance of such default for a period of thirty days:
         or

         (b) default in the payment of the principal of or premium, if any, on
         any Security of that series as and when the same shall become due and
         payable either at maturity, upon redemption. or by declaration: or

         (c) default in the payment or satisfaction of any sinking fund
         obligation, as and when such sinking fund obligation shall become due
         and payable by the terms of the Securities of that series, and
         continuance of such default for a period of thirty days: or

         (d) failure on the part of the Company duly to observe or perform any
         other of the covenants or agreements on the part of the Company in this
         Indenture (other than a covenant or agreement which has been included
         in this Indenture for the benefit of Securities of any series other
         than that series) for a period of ninety days (or thirty days in the
         case of any of the covenants and agreements contained in Section 6.03)
         after the date on which written notice of such failure, requiring the
         same to be remedied, and stating that such notice is a "Notice of
         Default" hereunder, shall have 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 twenty-five per cent in principal amount of
         the Securities of that series

                                       28
<PAGE>

         at the time Outstanding; or

         (e) default by the Company or any Restricted Subsidiary (i) in the
         payment of any instalment of principal of or interest upon any funded
         indebtedness (as defined in Section 6.03(e)) having a then outstanding
         principal amount in excess of $10,000,000, the effect of which default
         is to cause or permit the trustee or holders of such funded
         indebtedness to cause such funded indebtedness to become due and
         payable prior to its stated maturity; or (ii) in any other manner as
         defined in any instrument evidencing funded indebtedness having a then
         outstanding principal amount in excess of $10,000,000, which default
         has resulted in the acceleration of such funded indebtedness so that
         the same shall have become due and payable prior to its stated
         maturity; provided however, that if any default as provided in clause
         (i) or (ii) above shall be remedied or cured by the Company or a
         Restricted Subsidiary or waived by the trustee or holders of such
         funded indebtedness, en each case in accordance with the terms of the
         instruments pursuant to which such funded indebtedness shall have been
         issued, then the default hereunder by reason thereof shall be deemed
         likewise to have been thereupon remedied, cured, or waived without
         further action upon part of either the Trustee or any of the Holders;
         and provided, further, that subject to the provisions of Section 9.01,
         the Trustee shall not be charged with knowledge of any such default
         unless either (i) a Responsible Officer of the Trustee assigned to its
         corporate trust department shall, as such officer, have actual
         knowledge of such default, or (ii) written notice thereof shall have
         been given to the Trustee by the Company, by the trustee or holders of
         any such funded indebtedness, or by the Holders of not less than five
         percent in aggregate principal amount of the Securities of that series
         at the time Outstanding; or

         (f) a decree or order by a court having jurisdiction in the premises
         shall have been entered adjudging the Company or any Restricted
         Subsidiary a bankrupt or insolvent, or approving as properly filed a
         petition seeking reorganization, arrangement, adjustment, composition,
         liquidation, dissolution or winding-up of the Company or any Restricted
         Subsidiary or any similar relief under any present or future federal or
         state law or regulation, and such decree or order shall have continued
         undischarged or unstayed for a period of ninety consecutive days: or a
         decree or order of a court having jurisdiction in the premises for the
         appointment of a receiver or trustee or assignee in bankruptcy or
         insolvency or other similar official of the Company or any Restricted
         Subsidiary or of its property, or for the winding-up or liquidation of
         its affairs, shall have been entered, and such decree or order shall
         have remained in force undischarged and unstayed for a period of ninety
         consecutive days; or

         (g) the Company or any Restricted Subsidiary shall institute
         proceedings to be adjudicated a voluntary bankrupt, or shall consent to
         the institution of a bankruptcy proceeding against it, or shall file a
         petition or answer or consent seeking reorganization, arrangement.
         adjustment, composition, liquidation, dissolution, winding-up or any
         similar relief under any present or future federal or state law or
         regulation, or shall consent to the filing of any such petition, or
         shall consent to the appointment of or the taking possession by a
         receiver or trustee or assignee in bankruptcy or insolvency or other
         similar official of it or of its property, or shall make ap assignment
         for the benefit of creditors, or shall admit in writing its inability
         to pay its debts generally as they become due: or

         (h) any other Event of Default provided pursuant to Section 3.01 as
         part of the terms of and as applicable with respect to Securities of
         that series:

                                       29
<PAGE>

then and in each and every such case, unless the principal of all the Securities
of such series shall have already become due and payable, either the Trustee or
the Holders of not less than twenty-five per cent m aggregate principal amount
of the Securities of such series then Outstanding here-under, by notice in
writing to the Company (and to the Trustee if given by Holders), may declare the
principal amount (or, if the Securities of that series are Original issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that Series) of all the Securities of such series and the interest
accrued thereon to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable, anything in this
Indenture or in the Securities of such series contained to the contrary
notwithstanding. This provision, however, is subject to the condition that if,
at any time after the principal amount (or, if the Securities of that series are
Original Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of that series) of and accrued interest on the
Securities of any series shall have been so declared due and payable, and before
any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured instalments of
interest upon all of the Securities of such series and the principal df and
premium, if any, on any and all Securities of such series which shall have
become due otherwise than by such declaration (with interest on overdue
instalments of interest to the extent that payment of such interest is
enforceable under applicable law and on such principal and premium, if any, at
the same rate per annum or Yield to Maturity (in the case of Original Issue
Discount Securities) as is borne by the Securities of such series to the date of
such payment or deposit) and the amount payable to the Trustee under Section
9.06, and any and all defaults under the Indenture with respect to the
Securities of such series, other than the nonpayment of principal of and accrued
interest on Securities of such series which shall have become due by such
declaration, shall have been remedied or waived-then and in every such case the
Holders of a majority in aggregate principal amount of the Securities of such
series then Outstanding, by written notice to the Company and to the Trustee,
may consent to the waiver of all defaults with respect to that series and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default,
or shall impair any fight consequent thereon.

         In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceeding shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Trustee and the Holders shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies and powers of
the Company, the Trustee and the Holders shall continue as though no such
proceeding had been taken.

         SECTION 8.02. The Company covenants that (1) in case default shall be
made in the payment of any instalment of interest on any of the Securities of
any series, as and when the same shall become due and payable, and such default
shall have continued for a period of thirty days, or (2) in case default shall
be made in the payment of the principal of and premium, if any, on any of the
Securities of any series as and when the same shall have become due and payable,
whether upon maturity of the Securities of that series or upon redemption or by
declaration-then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the Holders of the Securities of that series, the
whole amount that then shall have become due and payable on all such Securities
of that series for principal and premium, if any, or interest, or both, as the
case may be, with interest at the same rate per annum or Yield to Maturity (in
the case of Original Issue Discount Securities) as is borne by the Securities of
that series upon the overdue principal and premium, if any, and (to the extent
that payment of such interest is enforceable under applicable law) on overdue
instalments of interest; and, in addition thereto, such further sums as

                                       30
<PAGE>

shall be sufficient to cover the costs and expenses of collection and the amount
payable to the Trustee under Section 9.06.

         In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on such
Securities and collect in the manner provided by law out of the property of the
Company or any other obligor on such Securities wherever situated the moneys
adjudged or decreed to be payable.

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

         No recovery of any such judgment by the Trustee and no levy of any
execution upon any such judgment upon any of the property of the Company shall
in any manner or to any extent, except as otherwise required by law, affect any
rights, powers or remedies of the Trustee hereunder or any rights, powers or
remedies of the Holders. but such rights, powers and remedies of the Trustee and
of the Holders shall continue unimpaired as before.

         In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Securities of any
series under Federal bankruptcy laws or any other applicable law or in
connection with the insolvency of the Company or any such other obligor or m
case a receiver or trustee shall have been appointed for its property, or any
other judicial proceedings relative to the Company or any such other obligor,
its creditors or its property, the Trustee, irrespective of whether the
principal of the Securities of any series shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section
8.02, shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of
principal, premium, if any, and interest (or, if the Securities of that series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of that series) owing and unpaid in respect of the
Securities of such series, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and of the
Holders allowed in any judicial proceeding relative to the Company or any other
obligor on the Securities of such series, its creditors, or its property, and to
collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute the same after the deduction of the amount
payable to the Trustee under Section 9.06; and each Holder hereby appoints the
Trustee the attorney-in-fact for such Holder for such purpose, whether or not
such Holder has filed a separate proof of claim in any such proceeding, and any
receiver, assignee or trustee in bankruptcy or reorganization or other similar
official is hereby authorized by each of the Holders to make such payments to
the Trustee (and each of the Holders hereby waives any right to receive such
payments except from the Trustee), and to pay to the Trustee any amount due it
under Section 9.06. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
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.

                                       31
<PAGE>

         All rights of action and of asserting claims under this Indenture, or
under any of the Securities may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery or judgment (except for any amounts payable to the Trustee pursuant
to the provisions of Section 9.06) shall be for the ratable benefit of the
Holders of the Securities in respect of which such action was taken.

         SECTION 8.03. Any moneys collected by the Trustee pursuant to Section
8.02, together with any other sums held by the Trustee hereunder (other than
sums held for the payment of a particular Security), shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such moneys, and as regards the payments provided for in SECOND and THIRD
below upon presentation of the Securities in respect of which moneys have been
collected, and the notation thereon of the payment if only partially paid, and
upon surrender thereof if fully paid:

         FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.06;

         SECOND: In case the principal and premium, if any, of the Outstanding
Securities in respect of which or for the benefit of which such moneys have been
collected shall not have become due and be unpaid, to the payment of interest in
default on such Securities, in the order of the maturity of the instalments of
such interest, with interest upon the overdue instalments of interest at the
same rate per annum or Yield to Maturity (in the case of Original Issue Discount
Securities) as is borne by the Securities of that series (to the extent that
such interest on overdue instalments of interest shall have been collected and
to the extent that payment of such interest is enforceable under applicable
law), such payments to be made ratably to the persons entitled thereto, without
discrimination or preference;

         THIRD: In case the principal of the Outstanding Securities in respect
of which or for the benefit of which moneys have been collected shall have
become due, by declaration or otherwise, to the payment of the whole amount then
owing and unpaid upon such Securities for principal and premium, if any, and
interest, with interest at the same rate per annum or Yield to Maturity (in the
case of Original Issue Discount Securities) as is borne by such Securities on
the overdue principal and premium, if any, and on overdue instalments of
interest (to the extent that such interest on overdue instalments of interest
shall have been collected and to the extent that payment of such interest is
enforceable under applicable law); and in the case such moneys shall be
insufficient to pay in full the whole amount so due and unpaid upon such
Securities, then to the payment of such principal and premium, if any, and
interest without preference or priority of principal and premium, if any, over
interest, or of interest over principal and premium, if any, or of any
instalment of interest over any other instalment of interest, or of any Security
of any series over any other Security of that series or any other series for
which it is Trustee, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest; and

         FOURTH: To the payment of the remainder, if any, to the Company, its
successor or assigns, or to whoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.

         SECTION 8.04. No Holder of any Security of any series shall have any
right by virtue or by availing of any provision of this Indenture to institute
any suit, action or proceeding in equity

                                       32
<PAGE>

or at law upon or under or with respect to this Indenture or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless such Holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than twenty-five per cent in aggregate principal amount of the
Securities of that series then Outstanding shall have made written request upon
the Trustee to institute such action suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for sixty days after its receipt of
such notice, request and offer of indemnity shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by the taker and Holder of every Security with
every other taker and Holder and the Trustee, that no one or more Holders of
Securities shall have any right in any manner whatever by virtue or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
such Holders.

         Notwithstanding any other provisions in this Indenture, however, the
right of any Holder of any Security to receive payment of the principal of and
premium, if any, and interest on such Security, on or after the respective due
dates expressed in such Security, or to institute suit for the enforcement of
any such payment on or after the date on which such payment becomes due, shall
not, be impaired or affected without the consent of such Holder.

         SECTION 8.05. All rights, powers and remedies given by this Article
Eight to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other rights,
powers and remedies available to the Trustee or the Holders, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any Holder to exercise any right, power or remedy accruing
upon any default occurring and continuing as aforesaid shall impair any such
right, power or remedy, or shall be construed to be a waiver of any such default
or an acquiescence therein; and, subject to the provisions of Section 8.04,
every right, power and remedy given by this Article Eight or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Holders.

         SECTION 8.06. The Holders of a majority in aggregate principal amount
of the Securities of any series at the time Outstanding 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 with respect to the Securities of such series; provided however, that
subject to the provisions of Section 9.01 hereof, the Trustee shall have the
right to decline to follow any such direction if the Trustee after consulting
with counsel determines that the action so directed may not lawfully be taken,
or conflicts with the terms of this Indenture or the Securities of any series,
and the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction. Prior to the declaration of the maturity
of the Securities of any series as provided in Section 8.01 hereof, the Holder
of a majority in aggregate principal amount of the Securities of that series at
the time Outstanding may on behalf of the Holders of an of the Securities of
that series consent to the waiver of any past default hereunder and its
consequences, except a default in the payment of interest, or premium, if any,
on, or the principal of, the Securities of such series. In the case of any such
waiver the Company, the Trustee and the Holders of the Securities of that series
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or

                                       33
<PAGE>

other default or impair any right consequent thereon.

SECTION 8.07. The Trustee shall, within ninety (90) days after the occurrence of
a default with respect to the Securities of any series, mail to all Holders of
Securities of that series, at the addresses of such Holders as they appear upon
the registry books of the Company for such series, notice of all defaults with
respect to Securities of that series known to the Trustee, unless such defaults
shall have been cured before the giving of such notice (the term "defaults" for
the purposes of this Section 8.07 being hereby defined to be the events
specified in clauses (a), (b), (c), (d), (e), (f) and (g) of Section 8.01, not
including any periods of grace provided therein and irrespective of the giving
of written notice as specified in clause (d) of Section 8.0 1 or any notice
pursuant to clause (d) of Section 8.01); provided that, in the case of any
default of the character specified in said clause (d) of Section 8.01, no such
notice shall be given until at least sixty (60) days after the occurrence
thereof, and provided that, except in the case of default in the payment of the
principal of or premium, if any, or interest on any of the Securities of such
series or in the making of any sinking fund payment with respect to such series,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Holder of the Securities
of such series.

         SECTION 8.08. All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 8.08 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder of the Securities of any series,
or group of such Holders, holding in the aggregate more than ten per cent in
principal amount of the Outstanding Securities of that series, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
and premium, if any, or interest on any Security, on or after the due date
expressed in such Security (or, in the case of redemption, on or after the
Redemption Date).

                                  ARTICLE NINE.
                             CONCERNING THE TRUSTEE.

         SECTION 9.01. With respect to the Holders of any series of Securities
issued hereunder, the Trustee, prior to the occurrence of an Event of Default
with respect to the Securities of that series and after the curing of all Events
of Default which may have occurred with respect to that series, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default with respect to the Securities of a
series has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture with
respect to such series, and use the same degree of care and skill in their
exercise, as a prudent man exercise, as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.

         No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own wilful misconduct, except that

         (a) prior to the occurrence of an Event of Default with respect to the
Securities of a

                                       34
<PAGE>

series and after the curing of all Events of Default with respect to such series
which may have occurred:

                           (1) the duties and obligations of the Trustee with
                  respect to the Securities of such series shall be determined
                  solely by the express provisions of this Indenture, and the
                  Trustee shall not be liable except for the performance of such
                  duties and obligations with respect to such series as are
                  specifically set forth in this Indenture, and no implied
                  covenants or obligations with respect to such series shall be
                  read into this Indenture against the Trustee; and

                           (2) in the absence of bad faith on the part of the
                  Trustee, the Trustee may conclusively rely, as to the truth of
                  the statements and the correctness of the opinions expressed
                  therein, upon any certificates or opinions furnished to the
                  Trustee and conforming to the requirements of this Indenture;
                  but in the case of any certificates or opinions specifically
                  required to be furnished to the Trustee, the Trustee shall be
                  under a duty to examine the same to determine whether or not
                  they conform to the requirements of this Indenture;

         (b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts:
and

         (c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in principal amount of the Securities of any
series at the time Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture.

         None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Indenture.

         SECTION 9.02. Subject to the provisions of Section 9.01:

                  (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, consent, order, bond,
         debenture 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 or notice by
         the Company mentioned herein shall be sufficiently evidenced by an
         instrument signed in the name of the Company by the Chairman of the
         Board, the President or any Vice-President and by the Treasurer, any
         Assistant Treasurer, the Secretary or any Assistant Secretary (unless
         other evidence in respect thereof be herein specifically prescribed);
         and any resolution of the Board of Directors of the Company may be
         evidenced to the Trustee by a copy thereof certified by the Secretary
         or an Assistant Secretary of the Company;

                  (c) the Trustee may consult with counsel and any advice of
         such counsel or

                                       35
<PAGE>

         any Opinion of Counsel shall be full and complete authorization and
         protection in respect of any action taken or omitted by it hereunder in
         good faith and in accordance with such advice or Opinion of Counsel;

                  (d) the Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Indenture at the request,
         order or direction of any of the Holders, pursuant to the provisions of
         this Indenture, in the absence of an offer by such Holders to the
         Trustee of reasonable security or indemnity against the costs, expenses
         and liabilities which may be incurred therein or thereby;

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

                  (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, consent,
         order, bond, debenture, or other paper or document, unless requested in
         writing so to do by the Holders of twenty-five per cent in aggregate
         principal amount of the Securities of any series affected then
         Outstanding; provided, however, that if the payment within a reasonable
         time to the Trustee of the costs, expenses or liabilities likely to be
         incurred by it in the making of such investigation is, in the opinion
         of the Trustee, not reasonably assured to the Trustee by the security
         conferred upon it by the terms of this Indenture, the Trustee may
         require reasonable indemnity against such costs, expenses or
         liabilities as a condition to so proceeding; the reasonable expense for
         such investigation shall be paid by the Company or, if paid by the
         Trustee, shall be repaid by the Company upon demand; and

                  (g) the Trustee may execute any of the trusts or powers 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 by it with
         due care hereunder.

         SECTION 9.03. The recitals contained herein and in the Securities
(other than the certificate of authentication on the Securities) shall be taken
as the statements of the Company and the Trustee or any Authenticating Agent
assumes no responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee or any Authenticating Agent shall not be accountable for
the use or application by the Company of any of the Securities or of the
proceeds of such Securities.

         SECTION 9.04. The Trustee, any Authenticating Agent, Paying Agent or
Security registrar, in its individual or any other capacity, may become the
owner or pledgee of Securities with the rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent or Security registrar.

         SECTION 9.05. Subject to the provisions of Section 14.04 hereof, all
moneys received by the Trustee shall, until used or applied as herein provided,
be held in trust for the purposes for which they were received, but 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 moneys received by it hereunder
except such as it may agree with the Company to pay thereon. So long as no Event
of Default shall have occurred and be continuing, all interest allowed on any
such moneys shall be paid from time to tune upon the written order of the
Company.

                                       36
<PAGE>

         SECTION 9.06. The Company covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in connection with
any action taken by it under any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements of its counsel
and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Company also covenants to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on the part of the Trustee and 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 of liability in the premises. The obligations
of the Company under this Section 9.06 to compensate and indemnify and hold
harmless the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular
Securities.

         SECTION 9.07. Subject to the provisions of Section 9.01, whenever in
the administration of the provisions of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate, delivered to the Trustee, which, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.

         SECTION 9.08. (a) If the Trustee has or shall acquire any conflicting
interest, as defined in this Section 9.0 8 with respect to the Securities of any
series, it shall, within ninety days after ascertaining that it has such
conflicting interest, either eliminate such conflicting interest or resign with
respect to the Securities of that series in the manner and with the effect
specified in Section 9.10.

                  (b) In the event that the Trustee shall fail to comply with
         the provisions of subsection (a) of this Section 9.08 with respect to
         the Securities of any series, the Trustee shall, within ten days after
         the expiration of such ninety-day period, transmit notice by mail of
         such failure to the Holders of Securities of that series, at the
         addresses of such Holders as they appear upon the registry books of the
         Company for such series.

                  (c) For the purposes of this Section 9.08 the Trustee shall be
         deemed to have a conflicting interest with respect to the Securities of
         any series if

                  (1) the Trustee is trustee under this Indenture with respect
         to the Outstanding Securities of any series other than that series, or
         is trustee under another indenture under which any other securities, or
         certificates of interest or participation in any other securities, of
         the Company are outstanding, unless such other indenture is a
         collateral trust indenture under which the only collateral consists of
         Securities issued under this Indenture, provided that there shall be
         excluded from the operation of this paragraph (a) this Indenture with
         respect to the Securities of any series other than that series and (b)
         so

                                       37
<PAGE>

         long as the Securities shall not have become secured pursuant to
         Section 6.03 of this Indenture, in the indenture dated as of April 1,
         1971 between the Company and Manufacturers Hanover Trust Company,
         Trustee, under which the Company's 7.70% Sinking Fund Debentures due
         April 1, 1991 are outstanding (but only so long as such 7.70% Sinking
         Fund Debentures due April 1, 1991 shall not have become secured
         pursuant to Section 4.03 or Section 11.01 of the indenture under which
         they were issued), the indenture dated as of December 1, 1981 between
         the Company and Manufacturers Hanover Trust Company, Trustee, under
         which the company's 15% Sinking Fund Debentures due December 1, 1991
         shall not have become secured pursuant to Section 4.03 or Section 11.01
         of the indenture under which they were issued), the indenture dated as
         of September 1, 1982 between the Company and Manufacturers Hanover
         Trust Company, Trustee, under which the Company's 11 3/8% Sinking Fund
         Debentures due November 15, 1994 and the Company's 10% Notes due
         December 31, 1995 are outstanding (but only so long as such 11 3/8%
         Sinking Fund Debentures due November 15, 1994 or such 10% Notes due
         December 31, 1995 shall not have become secured pursuant to Section
         6.03 or Section 13.01 of the indenture under which they were issued),
         and the indenture dated as of September 15, 1981 between Bear Creek
         Capital Corporation (an affiliate of the Company) and Manufacturers
         Hanover Trust Company and T.C. Crane, Trustees, under which Bear Creek
         Capital Corporation's 9 7/8% Secured Noes, Series A due November 1,
         2000 and 14 7/8% Secured Notes, Series B due November 1, 2000 are
         outstanding and (c) any other indenture or indentures under which other
         securities, or certificates of interest or participation in other
         securities, of the Company are outstanding if *I) this Indenture and
         such other indenture or indentures are wholly unsecured and such other
         indenture or indentures are hereafter qualified under the Trust
         Indenture Act of 1939, unless the Securities and Exchange commission
         shall have found and declared by order pursuant to subsection (b) of
         Section 305 or subsection (c) of Section 307 of the Trust Indenture Act
         of 1939 that differences exist between the provisions of this Indenture
         with respect to Securities of that series and one or more other series
         or the provisions of such other indenture or indentures which are so
         likely to involve a material conflict of interest as to make it
         necessary in the public interest or for the protection of investors to
         disqualify the Trustee from acting as such under this Indenture with
         respect to the Securities of that series and such other series or under
         one of such indentures, or (ii) the Company shall have sustained the
         burden of proving. on application to the Securities and Exchange
         Commission and after opportunity for hearing thereon, that the
         trusteeship under this Indenture with respect to the Securities of that
         series and such other series or such other indenture or indentures is
         not so likely to involve a material conflict of interest as to make it
         necessary in the public interest or for the protection of investors to
         disqualify the Trustee from acting as such under this Indenture with
         respect to the Securities of that series and such other series or under
         one of such indentures;

                  (2) the Trustee or any of its directors or executive officers
         is an obligor upon the Securities of any series or an underwriter for
         the Company;

                  (3) the Trustee directly or indirectly controls or is directly
         or indirectly controlled by or is under direct or indirect common
         control with the Company or an underwriter for the Company;

                  (4) the Trustee or any of its directors or executive officers
         is a director, officer, partner, employee, appointee, or representative
         of the Company, or of an underwriter (other than the Trustee itself)
         for the Company who is currently engaged in the business

                                       38
<PAGE>

         of underwriting, except that (A) one individual may be a director
         and/or an executive officer of the Trustee and a director and/or an
         executive officer of the Company, but may not be at the same time an
         executive officer of both the Trustee and the Company; (B) if and so
         long as the number of directors of the Trustee in office is more than
         nine, one additional individual may be a director and/or an executive
         officer of the Trustee and a director of the Company; and (C) the
         Trustee may be designated by the Company or by an underwriter for the
         Company to act in the capacity of transfer agent. Registrar, custodian,
         paying agent, fiscal agent, escrow agent, or depositary, or in any
         other similar capacity, on subject to the provisions of paragraph (I)
         of this subsection (c), to act as trustee whether under an indenture or
         otherwise;

                  (5) ten per cent or more of the voting securities of the
         Trustee is beneficially owned either by the Company or by any director,
         partner or executive officer thereof, or twenty per cent or more of
         such voting securities is beneficially owned, collectively, by any two
         or more of such persons; or ten per cent or more of the voting
         securities of the Trustee is beneficially owned either by an
         underwriter for the Company or by any director, partner or executive
         officer thereof, or is beneficially owned, collectively, by any two or
         more such persons;

                   (6) the Trustee is the beneficial owner of, or holds as
         collateral security for an obligation which is in default, (A) five per
         cent or more of the voting securities, or ten per cent or more of any
         other class of security, of the Company, not including the Securities
         issued under this Indenture and securities issued under any other
         indenture under which the Trustee is also trustee, or (B) ten per cent
         or more of any class of security of an underwriter for the Company;

                  (7) the Trustee is the beneficial owner of, or holds as
         collateral security for an obligation which is in default, five per
         cent or more of the voting securities of any person who, to the
         knowledge of the Trustee, owns ten per cent or more of the voting
         securities of, or controls directly or indirectly or is under direct or
         indirect common control with the Company;

                  (8) the Trustee is the beneficial owner of, or holds as
         collateral security for an obligation which is in default, ten per cent
         or more of any class of security of any person who, to the knowledge of
         the Trustee, owns fifty per cent or more of the voting securities of
         the Company; or

                  (9) the Trustee owns on May I5 in any calendar year, in the
         capacity of executor, administrator, testamentary or inter vivos
         trustee, guardian, committee or conservator, or in any other similar
         capacity, an aggregate of twenty-five per cent or more of the voting
         securities, or of any class of security, of any person, the beneficial
         ownership of a specified percentage of which would have constituted a
         conflicting interest under paragraph (6), (7), or (8) of this
         subsection. As to any such securities of which the Trustee acquired
         ownership through becoming executor, administrator, or testamentary
         trustee of an estate which included them, the provisions of the
         preceding sentence shall not apply, for a period of two years from the
         date of such acquisition, to the extent that such securities included
         in such estate do not exceed twenty-five per cent of such voting
         securities or twenty-five per cent of any such class of security.
         Promptly after May 15, in each calendar year, the Trustee shall make a
         check of its holdings of such securities in any of the above-mentioned
         capacities as of such May 15. If the Company fails to make payment in
         full of principal of or interest on any of the Securities

                                       39
<PAGE>

         when and as the same becomes due and payable and such failure continues
         for thirty days thereafter the Trustee shall make a prompt check of its
         holdings or such securities in any of the above-mentioned capacities as
         of the date of the expiration of such thirty-day period, and after such
         date, notwithstanding the foregoing provisions of this paragraph (9),
         all such securities so held by the Trustee, with sole or joint control
         over such securities vested in it, shall, but only so long as such
         failure shall continue, be considered as though beneficially owned by
         the Trustee for the purposes of paragraphs (6), (7), and (8) of this
         subsection (C).

         The specification of percentages in paragraphs (5) to (9), inclusive,
of this subsection (c) shall not be construed as indicating that the ownership
of such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).

         For the purposes of paragraphs (6), (7), (8), and (9) of this
subsection (c) only, (A) the terms "security" and "securities" shall include
only such securities as are generally known as corporate securities, but shall
not include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (B) an obligation shall be deemed to
be in default when a default in payment of principal shall have continued for
thirty days or more and shall not have been cured; and (C) the Trustee shall not
be deemed to be the owner or holder of (i) any security which it holds as
collateral security (as trustee or otherwise) for an obligation which is not in
default as defined in clause (B) above; or (ii) any security which it holds as
collateral security under this Indenture irrespective of any default hereunder,
or (iii) any security which it holds as agent for collection, or as custodian,
escrow agent, or depositary, or in any similar representative capacity.

         Except as above provided, the word "security" or "securities" as used
in this Indenture shall mean any note, stock. treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral trust certificate, pre-organization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, or, in general, any
interest or instrument commonly known as a "security", or any certificate of
interest or participation in a temporary or interim certificate for, receipt
for, guarantee of, or warrant or right to subscribe to or purchase, any of the
foregoing.

         (d)  For the purposes of this Section 9.08

                  (1) The term "underwriter" when used with reference to the
         Company shall mean every person, who, within three years prior, to the
         time as of which the determination is made, has purchased from the
         Company with a view to, or has offered or sold for the Company in
         connection with, the distribution of any security of the Company
         outstanding at such time, or has participated or has had a direct or
         indirect participation in any such undertaking, or has participated or
         has had a participation in the direct or indirect underwriting of any
         such undertaking, but such term shall not include a person whose
         interest was limited to a commission from tin underwriter or dealer not
         in excess of the usual and customary distributors' or sellers'
         commission.

                  (2) The term "director" shall mean any director of a
         corporation or any individual performing similar functions with respect
         to any organization whether incorporated or unincorporated.

                                       40
<PAGE>

                  (3) The term "person" shall mean an individual, a corporation,
         a partnership, an association, a joint-stock company, a trust, an
         unincorporated organization, or a government or political subdivision
         thereof. As used in this paragraph, the term "trust' shall include only
         a trust where the interest or interests of the beneficiary or
         beneficiaries are evidenced by a security.

                  (4) The term "voting security" shall mean any security
         presently entitling the owner or holder thereof to vote in the
         direction pr management of the affairs of a person, or any security
         issued under or pursuant to any trust, agreement or arrangement whereby
         a trustee or trustees or agent or agents for the owner or holder of
         such security are presently entitled to vote in the direction or
         management of the affairs of a person.

                  (5) The term "Company" shall mean any obligor upon the
         Securities.

                  (6) The term "executive officer" shall mean the president,
         every vice-president, every trust officer, the cashier, the secretary,
         and the treasurer of a corporation and any individual customarily
         performing similar functions with respect to any organization whether
         incorporated or unincorporated, but shall not include the chairman of
         the board of directors.

         The percentages of voting securities and other securities specified in
this Section 9.08 shall be calculated in accordance with the following
provisions:

         (A) A specified percentage of the voting securities of the Trustee the
Company or any other person referred to in this Section 9.08 (each of whom is
referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entities the holder or holders
thereof to cast such specified percentage of the aggregate votes which the
holders of all the outstanding voting securities of such person are entitled to
cast in the direction or management or the affairs of such person.

         (B) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class outstanding.

         (C) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of shares
if relating to capital shares, and the number of units if relating to any other
kind of security.

         (D) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed outstanding
within the meaning of this definition:

         (i) securities of an issuer held in a sinking fund relating to
         securities of the issuer of the same class;

         (ii) securities of an issuer held in a sinking fund relating to another
         class of securities of the issuer, if the obligation evidenced by such
         other class of securities is not in default as to principal or interest
         or otherwise;

         (iii) securities pledged by the issuer thereof as security for an
         obligation of the issuer not in default as to principal or interest or
         otherwise; and

                                       41
<PAGE>

         (iv) securities held in escrow if placed in escrow by the issuer
         thereof;

         provided, however, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled to exercise
the voting rights thereof.

         (E) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in the
case of secured evidences of indebtedness, all of which are issued under a
single indenture, differences in the interest rates or maturity dates of various
series thereof shall not be deemed sufficient to constitute such series
different classes; and provided, further, that, in the case of unsecured
evidences of indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities of
different classes, whether or not they are issued under a single indenture.

         SECTION 9.09. The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States or any State or
Territory thereof or of the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least Twenty Million Dollars ($20,000,000), subject to supervision or
examination by Federal, State, Territorial, or District of Columbia authority
and having its principal office and place of business in The City of New York,
if there be such a corporation having its principal office and place of business
in said City willing and able to act as Trustee on reasonable and customary
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.09, the combined capital and
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. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 9.09, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.10.

SECTION 9.10. (a) The Trustee, or any trustee or trustees hereafter appointed,
may at any time resign with respect to one or more or all series of Securities
by giving written notice of such resignation to the Company and by mailing
notice thereof to the Holders of Securities of such series at their addresses as
they shall appear on the registry books of the Company for such series. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee with respect to the Securities of such series by written
instrument, in duplicate, executed by order of the Board of Directors of the
Company, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee with
respect to the Securities of such series shall have been so appointed and have
accepted appointment within thirty days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Holder who has
been a bona tide Holder of a Security or Securities of such series for at least
six months may, subject to the provisions of Section 8.08, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.

         (b)  In case at any time any of the following shall occur:

         (1) the Trustee shall fail to comply with the provisions of subsection
         (a) of Section 9.08 after written request therefor by the Company or
         any Holder who has been a bona tide

                                       42
<PAGE>

         Holder of a Security or Securities for at least six months, or

         (2) the Trustee shall cease to be eligible in accordance with the
         provisions of Section 9.09 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 adjudged
          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, the Company may remove the Trustee with respect
to all Securities and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors of the Company, one copy
of which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee, or, subject to the provisions of Section 8.08, any Holder
who has been a bona fide Holder of a Security or Securities for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee with respect to
all Securities and the appointment of a successor trustee. Such court may
thereupon alter such notice. if any, as it may deem proper and prescribe, remove
the Trustee and appoint a successor trustee.

         (c) The Holders of a majority in aggregate principal amount of the
Securities of any series at the time Outstanding may at any time remove the
Trustee with respect to such series and appoint a successor trustee with respect
to such series by the delivery to the Trustee so removed, to the successor
trustee and to the Company of the evidence provided for in Section 10.01 of the
action in that regard taken by the Holders.

         (d) Any resignation or removal of the Trustee and any appointment of a
successor trustee pursuant to any of the provisions of this Article Nine shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.11.

         SECTION 9.11. (a) Any successor trustee appointed as provided in
Section 9.10 with respect to the Securities of all series shall execute,
acknowledge and deliver to the Company and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act. deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless, on
the written request of the Company or the successor trustee, the trustee ceasing
to act shall, upon payment of any amounts then due it pursuant to the provisions
of Section 9.06, execute and deliver an instrument transferring to such
successor trustee all the rights and powers of the trustee so ceasing to act.

         (b) In case of the appointment hereunder of a successor trustee with
respect to the Securities of one or more (but not all) series, the Company, the
predecessor trustee and each successor trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary desirable to transfer and confirm
to, and to vest in. each successor trustee all the rights, powers, trusts and
duties of the predecessor trustee with respect to the Securities of that or
those series to which the appointment of such successor trustee relates, (2) if
the predecessor trustee is not retiring with respect to the Securities of all
series for which it is the trustee hereunder, shall contain such provisions as
shall be deemed

                                       43
<PAGE>

necessary or desirable to confirm that all the rights, powers, trusts and duties
of the predecessor trustee with respect to the Securities of that or those
series as to which the predecessor trustee is not retiring shall continue to be
vested in the predecessor trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such trustees co-trustees of the same trust and that each such
trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the predecessor trustee shall become effective to the extent provided
therein and each such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the predecessor trustee with respect to the Securities of that or those
series to which the appointment of such successor trustee relates: but, on the
request of the Company or any successor trustee, such predecessor trustee shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such predecessor trustee hereunder with respect to the Securities
of that or those series to which the appointment of such successor trustee
relates.

         (c) Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor trustee all such rights, powers and trusts
referred to in subsection (a) or (b) of this Section 9.11, as the case may be.
Any trustee ceasing to act shall, nevertheless retain the lien, if any, provided
for in Section 9.06 upon all property or funds held or collected by such
trustee.

         No successor trustee shall accept appointment as provided in this
Section 9.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 9.08 and eligible under the
provisions of Section 9.09.

         Upon acceptance of appointment by a successor trustee as provided in
this Section 9.11, the Company shall mail notice of the succession of such
trustee hereunder to the Holders of the Securities of any applicable series at
their addresses as they shall appear on the registry books of the Company for
such series. If the Company fails so to mail such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be so mailed at the expense of the Company.

         SECTION 9.12. Any corporation into which the Trustee may be merged or
convened 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 the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder without the execution or filing
of any paper or any further act on the pan of any of the parties hereto. In any
such case such successor, unless it is the same corporation, shall forthwith
make a report to Holders of the character required by paragraph (1) of
subsection (a) of Section 7.04, in the manner provided in said Section 7.04.

         In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series with
respect to which the appointment of such successor trustee relates shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee, and deliver
such Securities so authenticated; and in case at that time any of the Securities
of any series with respect to which the appointment of such successor trustee
relates shall not have been authenticated, such successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of such successor to the Trustee; and in all such cases such
certificates

                                       44
<PAGE>

shall have the full force which it is anywhere in the Securities of such series
or in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Securities of any series in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.

         SECTION 9.13. (a) Subject to the provisions of subsection (b) of this
Section 9.13, if the Trustee shall be or shall become a creditor, directly or
indirectly, secured or unsecured, of the Company or any other obligation on the
Securities within four months prior to a default, as defined in subsection (c)
of this Section 9.13, or subsequent to such default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders or the
Securities and the holders of other indenture securities (as defined in
subsection (c) of this Section 9.13).

         (1) an amount equal to any and all reductions in the amount due and
owing upon any claim of the Trustee as such creditor in respect of principal or
interest, effected after the beginning of such four months' period and valid as
against the Company and its other creditors, except any such reduction resulting
from the receipt or disposition of any property described in paragraph (2) of
this subsection (a), or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been filed by or
against the Company upon the date of such default; and

         (2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or composition
thereof, or otherwise, after the beginning of such four months' period, or an
amount equal to the proceeds of any such property, if disposed of; subject,
however, to the rights, if any, of the Company and its other creditors in such
property or such proceeds.

         Nothing herein contained, however, shall affect the right of the
Trustee

         (A) to retain for its own account (i) payments made on account of any
such claim by any person (other than the Company) who is liable thereon, and
(ii) the proceeds of the bona fide sale of any such claim by the Trustee to a
third person, and (iii) distributions made in cash. securities, or other
property in respect of claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws or applicable State law;

         (B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the beginning
of such four months' period;

         (C) to realize, for its own account. but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for any
such claim, if such claim was created after the beginning of such four months'
period and such property was received as security therefor simultaneously with
the creation thereof, and if the Trustee shall sustain the burden of proving
that at the time such property was so received the Trustee had no reasonable
cause to believe that a default, as defined in subsection (c) of this Section
9.13, would occur within four months; or

         (D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in such paragraph (B) or (C),

                                       45
<PAGE>

as the case may be, to the extent of the fair value of such property.

         For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such four months' period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released. have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any preexisting claim of the Trustee as such creditor, such claim shall have the
same status as such preexisting claim.

         If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee, the Holders and the holders of other indenture securities
in such manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
bankruptcy laws or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee, the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal bankruptcy laws or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account As used in this
paragraph with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal bankruptcy laws or
applicable State law, whether such distribution is made in cash, securities, or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership, or proceeding for reorganization is pending shall have
jurisdiction (i) to apportion between the Trustee, the Holders, and the holders
of other indenture securities in accordance with the provisions of this
paragraph, the funds and property held in such special account and the proceeds
thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to
the provisions of this paragraph due consideration in determining the fairness
of the distributions to be made to the Trustee, the Holders and the holders of
other indenture securities with respect to their respective claims; in which
event it shall not be necessary to liquidate or to appraise the value of any
securities or other property held in such special account or as security for any
such claim, or to make a specific allocation of such distributions as between
the secured and unsecured portions of such claims, or otherwise to apply the
provisions of this paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such four
months' period shall be subject to the provisions of this subsection (a) as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such four months' period, it shall be
subject to the provisions of this subsection (a) if and only if the following
conditions exist:

         (i) the receipt of property or reduction of claim which would have
         given rise to the obligation to account, if such Trustee had continued
         as Trustee, occurred after the beginning of such four months' period;
         and

         (ii) such receipt of property or reduction of claim occurred within
         four months after such resignation or removal.

                                       46
<PAGE>

         (b) There shall be excluded from the operation of subsection (a) of
this Section 9.13 a creditor relationship arising from

         (1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or more
at the time of acquisition by the Trustee;

         (2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of preserving any
property which shall at any time be subject to the lien of this Indenture or of
discharging tax liens or other prior liens or encumbrances thereon, if notice of
such advance and of the circumstances surrounding the making thereof is given to
the Holders at the time and in the manner provided in Section 7.04;

         (3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar, custodian,
paying agent, fiscal agent or depositary, or other similar capacity;

         (4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or securities
sold in a cash transaction as defined in subsection (c) of this Section 9.13;

         (5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25( a) of the Federal Reserve Act, as
amended, which is directly or indirectly a creditor of the Company; or

         (6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper as defined in subsection (c) of this
Section 9.13.

(c)      As used in this Section 9.13:

         (1) The term "default" shall mean any failure to make payment in full
of the principal of or interest upon any of the Securities or upon the other
indenture securities when and as such principal or interest becomes due and
payable;

         (2) The term "other indenture securities" shall mean securities upon
which the Company is an obligor (as defined in the Trust Indenture Act of 1939)
outstanding under any other indenture (A) under which the Trustee is also
trustee, (B) which contains provisions substantially similar to the provisions
of this Section 9.13; and (C) under which a default exists at the time of the
apportionment of the funds and property held in said special account;

         (3) The term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other orders
drawn upon banks or bankers and payable upon demand;

         (4) The term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or incurred
by the Company for the purpose of financing the purchase, processing,
manufacture, shipment, storage or sale of goods, wares or merchandise and which
is secured by documents evidencing title to, possession of or a lien upon, the
goods, wares or merchandise or the receivables or proceeds arising from the sale
of the goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with the
creation of the creditor relationship with the Company arising

                                       47
<PAGE>

from the making, drawing, negotiating or incurring of the draft, bill of
exchange, acceptance or obligation; and

         (5) The term "Company" shall mean any obligor upon the Securities.

         SECTION 9.14. At any time when any of the Securities remain Outstanding
the Trustee may appoint an Authenticating Agent or Agents with respect to one or
more series of Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities of such series issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.07, 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 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 $20,000,000 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
asset 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 the corporate agency or
corporate trust business of an 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 or the 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 written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the register for such Securities.
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 Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be

                                       48
<PAGE>

reimbursed for such payments pursuant to the provisions of Section 9.06.

          If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:

         If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:

         This is one of the Securities of the series designated herein referred
to in the within mentioned Indenture.

                                    MANUFACTURERS HANOVER TRUST COMPANY
                                                             As Trustee

                                    By
                                        ----------------------------------------
                                                         As Authenticating Agent

                                    By
                                        ----------------------------------------
                                                              Authorized Officer

                                  ARTICLE TEN.
                             CONCERNING THE HOLDERS.

         SECTION 10.01. Whenever in this Indenture it is provided that the
Holders of a specified percentage or a majority in aggregate principal amount of
the Securities of any series may take any action (including the making of any
demand or request, the giving of any direction, notice, consent or waiver or the
taking of any other action) the fact that at the time of taking any such action
the Holders of such specified percentage or majority have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by such Holders in person or by agent or proxy appointed in writing, or
(b) by the record of such Holders voting in favor thereof at any meeting of such
Holders duly called and held in accordance with the provisions of Article
Eleven, or (c) by a combination of such instrument or instruments and any such
record of such a meeting of such Holders.

         SECTION 10.02. Subject to the provisions of Sections 9.01, 9.02 and
11.05, proof of the execution of any instrument by a Holder or his agent or
proxy and proof of the holding by any person of any of the Securities shall be
sufficient if made in the following manner:

         (a) The fact and date of the execution by any such person of any
instrument may be proved by the certificate of any notary public or other
officer authorized to take acknowledgments of deeds to be recorded in the
jurisdiction in which he acts, that the person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such officer. The fact
and date of the execution of any such instrument may also be proved in any other
reasonable manner which the Trustee may deem sufficient. Such certificate or
affidavit shall also constitute sufficient proof of the authority of the person
executing any instrument in cases where Securities are not held by individuals.

                                       49
<PAGE>

         (b) The holding of Securities shall be proved by the registry books of
the Company or by a certificate of the registrar thereof.

         The Trustee may require such additional proof of any matter referred to
in this Section 10.02 as it shall deem necessary.

         The record of any Holders' meeting shall be proved in the manner
provided in Section 11.06.

         SECTION 10.03. Prior to due presentment for registration of transfer of
any Security the Company, the Trustee, any Paying Agent and any Security
registrar may deem and treat the person in whose name any Security shall be
registered upon the registry books of the Company as the absolute owner of such
Security (whether or not such Security shall be overdue and notwithstanding any
notation of ownership or other writing thereon made by anyone other than the
Company or any Security registrar) for the purpose of receiving payment of or on
account of the principal of and premium, if any, and, subject to Section 3.08,
interest on such Security and for all other purposes; and neither the Company
nor the Trustee nor any Paying Agent nor any Security registrar shall be
affected by any notice to the contrary. All such payments so made to any such
registered Holder for the time being, or upon his order, shall be valid, and. to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.

         SECTION 10.04. In determining whether the Holders of the requisite
aggregate principal amount of Securities of any series have concurred in any
demand, direction, request, notice, consent, waiver or other action under this
Indenture, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be Outstanding for the
purpose of any such determination, provided that for the purpose of determining
whether the Trustee shall be protected in relying on any such demand, direction,
request, notice, consent, waiver or other action, only Securities which the
Trustee knows are so owned shall be disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding for the purposes of
this Section 10.04, if the pledgee shall establish to the satisfaction of the
Trustee the pledgee's right to vote such Securities and that the pledgee is not
the Company nor any other obligor on the Securities or a person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon and in accordance with the
advice of counsel shall be full protection to the Trustee.

         SECTION 10.05. At any time prior to (but not after) the evidencing to
the Trustee, as provided in Section 10.01, of the taking of any action by the
Holders of a majority or the percentage in aggregate principal amount of the
Securities of a series specified in this Indenture in connection with such
action, any Holder of a Security which is shown by the evidence to be included
in the Securities the Holders of which have consented to such action may, by
filing written notice with the Trustee at its Principal Office and upon proof of
holding as provided in Section 10.02, revoke such action so far as concerns such
Security. Except as aforesaid any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Security issued in exchange
therefor or in lieu thereof, irrespective of whether or not any notation in
regard thereto is made upon such Security. Any action taken by the Holders of a
majority or the percentage in aggregate principal amount of the Securities of a
series specified in this Indenture in connection with such

                                       50
<PAGE>

action shall be conclusively binding upon the Holders of all the Securities of
such series.

                                 ARTICLE ELEVEN.
                               HOLDERS' MEETINGS.

         SECTION 11.01 A meeting of Holders of Securities of any series may be
called at any time and from time to time pursuant to the provisions of this
Article Eleven for any of the following purposes:

         (1) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to consent to the waiving of any default hereunder
and its consequences, or to take any other action authorized to be taken by
Holders pursuant to any of the provisions of Article Eight:

         (2) to remove the Trustee and appoint a successor trustee pursuant to
the provisions of Article Nine;

         (3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 12.02: or

         (4) to take any other action authorized to be taken by or on behalf of
the Holders of a majority or any specified aggregate principal amount of the
Securities of such series under any other provisions of this Indenture or under
applicable law.

         SECTION 11.02. The Trustee may at any time call a meeting of Holders of
Securities of any series to take any action specified in Section 11.01 to be
held at such time and at such place in the Borough of Manhattan, The City of New
York, as the Trustee shall determine. Notice of every meeting of the Holders of
Securities of any series, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
mailed to the Holders of such Securities at their addresses as they shall appear
on the registry books of the Company for such series. Such notice shall be
mailed not less than twenty nor more than one hundred and eighty days prior to
the date fixed for the meeting.

SECTION 11.03. In case at any time the Company, pursuant to a resolution of its
Board of Directors, or the Holders of at least ten per cent in aggregate
principal amount of the Securities of any series then Outstanding shall have
requested the Trustee to call a meeting of Holders of such series by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have mailed such notice within twenty
days after receipt of such request, then the Company or such Holders of
Securities in the amount above specified may determine the time and the place in
said Borough of Manhattan for such meeting and may call such meeting to take any
action authorized in Section 11.01. by giving notice thereof as provided in
Section 11.02.

         SECTION 11.04. To be entitled to vote at any meeting or Holders a
person shall be (a) a Holder of one or more Securities with respect to which
such meeting is being held or (b) a person appointed by an instrument in writing
as proxy for such a Holder. The only persons who shall be entitled to be present
or to speak at any meeting of Holders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.

         SECTION 11.05. Notwithstanding any other provisions of this Indenture,
the Trustee

                                       51
<PAGE>

may make such reasonable regulations as it may deem advisable for any meeting of
Holders, in regard to proof of the holding of Securities and of the appointment
of proxies, and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meeting
as it shall think fit. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 10.02 and the appointment of any proxy shall be proved in the manner
specified in said Section 10.02 or by having the signature of the person
executing the proxy witnessed or guaranteed by any trust company, bank or
bankers or member firm of the New York Stock Exchange satisfactory to the
Trustee.

         The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders as provided in Section 11.03, in which case the Company or
the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by a majority vote of the meeting, irrespective of
the principal amount of their respective holdings.

         Subject to the provisions of Section 10.04, at any meeting each Holder
of Securities with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000 (or such other amount as may be
established pursuant to Section 3.01 as the minimum authorized denomination for
Securities of such series) principal amount (in the case of Original Issue
Discount Securities, such principal amount to be determined as provided in the
definition of "Outstanding") of Securities held by him or represented by him at
the meeting; provided, however, that no vote shall be cast or counted at any
meeting in respect of any Security challenged as not Outstanding and ruled by
the chairman of the meeting to be not Outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the person to vote
on behalf of other such Holders. Any meeting of Holders duly called pursuant to
the provisions of Section 11.02 or 11.03 may be adjourned from time to time, and
the meeting may be held as so adjourned without further notice.

         At any meeting of Holders, the presence of persons holding or
representing Securities in an aggregate principal amount sufficient to take
action on the business for the transaction of which such meeting was called
shall constitute a quorum, but, if less than a quorum be present, the persons
holding or representing a majority in aggregate principal amount of such
Securities represented at the meeting may adjourn such meeting with the same
effect, for all intents and purposes, as though a quorum had been present.

         SECTION 11.06. The vote upon any resolution submitted to any meeting of
Holders of Securities with respect to which such meeting is being held shall be
by written ballots on which shall be subscribed the signatures of such Holders
or of their representatives by proxy and the serial number or numbers of the
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Holders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 11.02; provided,
however, that in case at any such meeting the Holders shall have voted

                                       52
<PAGE>

to remove the Trustee and to appoint a successor pursuant to the provisions of
Section 9.10(c), the record of the proceedings of such meeting shall be prepared
in triplicate. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one copy of the record shall
be delivered to the Company and another copy thereof to the Trustee (to be
preserved by the Trustee); and if at such meeting a successor trustee shall have
been appointed by vote of the Holders, a third copy of the record shall be
delivered to such successor trustee.

         Any record so signed and verified shall be conclusive evidence of the
matters therein stated.

         SECTION 11.07. Nothing in this Article Eleven contained shall be deemed
or construed to authorize or permit, by reason of any call of a meeting of
Holders or any rights expressly or impliedly conferred hereunder to make such
call, any hindrance or delay in the exercise of any right or rights conferred
upon or reserved to the Trustee or to the Holders under any of the provisions of
this Indenture or of the Securities.

                                 ARTICLE TWELVE.
                            SUPPLEMENTAL INDENTURES.

         SECTION 12.01. In addition to such indenture or indentures supplemental
hereto for which provision is made elsewhere in this Indenture, the Company,
when authorized by a resolution of its Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:

         (a) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to Article
Thirteen;

         (b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the Holders of all or any
series of Securities (and if such covenants are to be for the benefit of less
than all series of Securities stating that such covenants are expressly being
included solely for the benefit of such series) as its Board of Directors and
the Trustee shall consider to be for the protection of the Holders of Securities
and to make the occurrence, or the occurrence and continuation of a default in
any of such additional covenants restrictions or conditions a default or an
Event of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth: provided, however, that
in respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of days after default
(which period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or may
limit the remedies available to the Trustee upon such default;

         (c) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons;

         (d) to change or eliminate any of the provisions of this Indenture,
provided that any change or elimination shall become effective only when there
is no Security Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the

                                       53
<PAGE>

benefit of such provisions;

         (e) to evidence and provide for the acceptance of appointment hereunder
by a successor trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one trustee pursuant to the requirements of Section
9.11(b);

         (f) to secure the Securities of any series pursuant to the requirements
of Section 6.04 or otherwise;

         (g) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 3.01;

         (h) to modify, amend or supplement this Indenture in such a manner as
to permit the qualification of any indenture supplemental hereto under the Trust
Indenture Act of 1939 as then in effect except that nothing herein contained
shall permit or authorize the inclusion in any indenture supplemental hereto of
the provisions referred to in Section 316(a)(2) of such Act; and

         (i) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture which shall not be inconsistent with the provisions
of this Indenture and which shall not adversely affect in any material respect
the interests of any Holders of the Securities.

                    The Trustee is hereby authorized to join with the Company in
the execution of any supplemental indenture for which provision is made above or
elsewhere in this Indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee 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.

         Any supplemental indenture authorized by the provisions of this Section
12.01 may be executed by the Company and the Trustee without the consent of the
Holders of any of the Securities at the time Outstanding, notwithstanding any of
the provisions of Section 12.02.

         SECTION 12.02. With the consent (evidenced as provided in Section
10.01) of the Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of each series affected by such supplemental
indenture, the Company, when authorized by a resolution of its Board of
Directors, and the Trustee may from time to time and at any time 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 any supplemental indenture or modifying in any manner the
rights of the Holders of the Securities of each such series; provided, however,
that no such supplemental indenture shall (i) change the stated maturity date of
any Security, or reduce the rate or change the time of payment of interest
thereon, or reduce the principal amount thereof or any premium thereon, or make
the principal thereof or interest or premium thereon payable in any coin or
currency other than that provided in the Securities, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and payable
upon an acceleration of the maturity thereof pursuant to Section 8.01 or the
amount thereof provable in bankruptcy pursuant to Section 8.02, without the
consent of the Holder of such Security, or (ii) reduce the aforesaid percentage
of Securities, the Holders of

                                       54
<PAGE>

which are required to consent to any such supplemental indenture, without the
consent of the Holders of all Securities affected thereby then Outstanding. A
supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has been included solely for the benefit of
one or more particular series of Securities, or which modifies the rights of
Holders of Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.

         Upon the request of the Company, accompanied by a copy of a resolution
of its Board of Directors certified by the Secretary or an Assistant Secretary
of the Company authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Holders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion but shall not be obligated to enter into
such supplemental indenture.

         It shall not be necessary for the consent of the Holders under this
Section 12.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.

         Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 12.02, the
Company shall mail a notice, setting forth in general terms the substance of
such supplemental indenture, to the Holders of each Security of each series
affected thereby at their addresses as they shall appear on the registry books
of the Company. Any failure of the Company so to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.

      SECTION 12.03. Upon the execution of any supplemental indenture pursuant
to the provisions of this Article Twelve this Indenture shall be and be deemed
to be modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the Holders shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.

         SECTION 12.04. Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Twelve may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors of the
Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Securities of such series then
Outstanding without charge to the Holders thereof. The Company or the Trustee
may require the Outstanding Securities of such series to be presented for
notation or exchange as aforesaid, if either of them shall see fit to do so.

         SECTION 12.05. Any indenture supplemental hereto entered into pursuant
to any provision of this Indenture shall conform with the Trust Indenture Act of
1939 as then in effect.

         SECTION 12.06. Subject to the provisions of Section 9.01, the Trustee
may receive an

                                       55
<PAGE>

Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to the provisions of this Indenture complies with the
requirements of this Indenture.

                                ARTICLE THIRTEEN.
                         CONSOLIDATION, MERGER AND SALE.

SECTION 13.01. Nothing contained in this Indenture or the Securities shall
prevent any consolidation or merger of the Company with or into any corporation
or corporations (including any Subsidiary), or any consolidation or merger of
any other corporation (including any Subsidiary) with or into the Company, or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties or shall prevent any sale or conveyance
of the properties and assets of the Company as an entirety or substantially as
an entirety to any other person (including, any Subsidiary), or the acquisition
by the Company by purchase or otherwise of all or any part of the properties and
assets of any other person (including any Subsidiary), provided that in the case
of any consolidation of the Company with, or merger of the Company into, any
corporation or corporations. or any sale or conveyance of the properties and
assets of the Company as an entirety or substantially as an entirety:

         (1) the corporation formed by such consolidation or into which the
Company is merged or the person which acquires by conveyance or transfer the
properties and assets of the Company as an entirety or substantially as an
entirety shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the
performance of the Securities and every covenant of this Indenture on the part
of the Company to be performed or observed;

         (2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both would become
an Event of Default, shall have happened and be continuing: and

         (3) the Company shall have delivered to the Trustee an Officers
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale or conveyance and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.

         SECTION 13.02. Upon any consolidation or merger, or any conveyance or
transfer of the properties and assets of the Company as an entirety or
substantially as an entirety, in accordance with the proviso in Section 13.01,
the successor corporation formed by such consolidation or into which the Company
is merged or the person to which such conveyance or transfer 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
corporation or person had been named as the Company, and thereafter, the
predecessor shall be relieved of all obligations and covenants under this
Indenture or the Securities, as the case may be.

                                ARTICLE FOURTEEN.
           SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS.

         SECTION 14.01. This Indenture shall, upon written order of the Company
signed by the Chairman of the Board, the President or any Vice President and by
the Treasurer or any Assistant

                                       56
<PAGE>

Treasurer of the Company, cease to be of further effect (except as to any
surviving rights of registration of transfer or. exchange of Securities herein
expressly provided for), and the Trustee, 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 destroyed lost or stolen and which have
         been replaced or paid as provided in Section 3.07 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
         6.06(d)) 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 (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

         (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 to the Trustee under Section 9.06, the obligations of
the Trustee to any Authenticating Agent under Section 9.14 and if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Sections 14.02 and 14.04
shall survive.

         SECTION 14.02. Subject to the provisions of Section 14.04, all money
deposited with the Trustee pursuant to Section 14.01 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal, premium, if any
and interest for whose payment such money has been deposited with the Trustee.

                                       57
<PAGE>

      SECTION 14.03. Upon the satisfaction and discharge of this Indenture all
moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be repaid to it and thereupon such Paying
Agent shall be released from all further liability with respect to such moneys.

      SECTION 14.04. Any moneys deposited with the Trustee not applied but
remaining unclaimed by the Holders of the Securities of any series for two years
after the date upon which the principal of and premium, if any, or interest on
such Securities shall have become due and payable shall be repaid to the Company
by the Trustee on demand: and the Holder of any such Securities entitled to
receive such payment shall thereafter look only to the Company for the payment
thereof: provided, however, that the Trustee, before being required to make any
such repayment, may at the expense of the Company mail first-class postage
prepaid to each Holder of such Securities or cause to be published once a week
for two successive weeks (in each case on any day of the week) in a newspaper
printed in the English language and customarily published on each business day
and of general circulation in each Place of Payment with respect to such
Securities, a notice that said moneys have not been so applied and that after a
date named therein (which shall be not less than 30 days after such mailing or
the first such publication, as the case may be) any unclaimed balance of said
moneys then remaining will be returned to the Company.

                                ARTICLE FIFTEEN.
                       DEFEASANCE AND COVENANT DEFEASANCE.

      SECTION 15.01. If pursuant to Section 3.01 provision is made for either or
both of (a) defeasance of the Securities of a series under Section 15.02 or (b)
covenant defeasance of the Securities of a series under Section 15.03, then the
provisions of such Section or Sections, as the case may be, together with the
other provisions of this Article Fifteen, shall be applicable to the Securities
of such series, and the Company may at its option by resolution of its Board of
Directors, at any time, with respect to the Securities of such series, elect to
have either Section 15.02 (if applicable) or Section 15.03 (if applicable) be
applied to the Outstanding Securities of such series upon compliance with the
conditions set forth below in this Article.

      SECTION 15.02. Upon the Company's exercise of the above option applicable
to this Section, the Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Securities of such series 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 of such series 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 of such series to receive, solely from the trust fund
described in Section 15.04 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 3.05, 3.06, 3.07, 6.02 and 6.06(b),
and 9.06(C) the rights, powers, trusts, duties, and immunities of the Trustee
hereunder and (D) this Article. Subject to compliance with this Article, the
Company may exercise its option under Section 15.02 notwithstanding the prior
exercise of its option under Section 15.03 with respect to the Securities of
such series.

      SECTION 15.03. Upon the Company's exercise of the above option applicable
to this

                                       58
<PAGE>

Section, the Company shall be released from its obligations under Section 6.04
with respect to the Outstanding Securities of such series on and after the date
the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"). For this purpose, such covenant defeasance means that, with
respect to the Outstanding Securities of such series, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in such Section, whether directly or indirectly by reason
of any reference elsewhere herein to such Section or by reason of any reference
in such Section to any other provision herein or in any other document and such
omission to comply shall not constitute an Event of Default under Section
8.01(d), but the remainder of this Indenture and such Securities shall be
unaffected thereby.

        SECTION 15.04. The following shall be the conditions to application of
either Section 15.02 or Section 15.03 to the Outstanding Securities of such
series:

         (1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 9.09 who shall agree to comply with the provisions of this Article
Fifteen 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) Eligible Obligations and/or 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, (i) the principal of (and premium, if any, on)
and each instalment of principal of and premium, if any and interest on the
Outstanding Securities of such series on the stated maturity of such principal
or instalment of principal or interest and (ii) any mandatory sinking fund
payments or analogous payments applicable to the Outstanding Securities of such
series on the day on which such payments are due and payable in accordance with
the terms of this Indenture and or such Securities.

      (2)No Event of Default with respect to the Securities of such series shall
have occurred and be continuing on the date of such deposit.

      (3)Such defeasance or covenant defeasance shall not constitute a default
(after the expiration of any periods of grace or the giving of notice or both)
under this Indenture with respect to Securities of any other series or under any
other agreement or instrument to which the Company is a party or by which it is
bound.

      (4)Such defeasance or covenant defeasance shall be effected in compliance
with any additional terms, conditions or limitations which may be imposed on the
Company in connection therewith pursuant to Section 3.01.

      (5) 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 15.02 or
the covenant defeasance under Section 15.03 (as the case may be) have been
complied with.

      Notwithstanding the foregoing, if an Event of Default specified in
Sections 8.01(f) and 8.01(g), or an event which with lapse of time would become
such an Event of Default, shall occur during the period ending on the 91st day
after the date of the deposit referred to in Section 15.04(I), then, effective
upon such occurrence, the defeasance or covenant defeasance and such

                                       59
<PAGE>

deposit shall be rescinded and annulled, and the Company, the Trustee and the
Holders of the Securities of such series shall be restored to their former
positions.

      SECTION 15.05. Subject to the provisions of Section 14.04, all money and
Eligible Obligations and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee-collectively
for purposes of this Section 15.05, the "Trustee") pursuant to Section 15.04 in
respect of the Outstanding Securities of such series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal and 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 money, Eligible Obligations or
U.S. Government Obligations deposited pursuant to Section 15.04 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 of such series.

      Anything in this Article Fifteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money. Eligible Obligations or U.S. Government Obligations
held by it as provided in Section 15.04 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
defeasance or covenant defeasance.

                                ARTICLE SIXTEEN.
                            MISCELLANEOUS PROVISIONS.

         SECTION 16.01. All the covenants, stipulations, promises and agreements
contained in this Indenture by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.

         SECTION 16.02. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.

         SECTION 16.03. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Securities on the Company may be given or served by being
deposited postage prepaid in a post office of the United States of America or in
a United States post-office letter box addressed (until another address is filed
by the Company with the Trustee), as follows: Southern Natural Gas Company, P.O.
Box 2563, Birmingham, Alabama 35202, Attention: Vice President-Finance. Any
notice, direction request or demand by any Holder to or upon the Trustee shall
be deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the Principal Office of the Trustee. Any notice required to
be mailed to a Holder by the Company or the Trustee pursuant to any of the
provisions of this Indenture shall be deemed to be properly mailed by being
deposited postage prepaid in a post office of the United States of America or in
a United States post-office letter box addressed to such Holder at the address
of such Holder as shown on the

                                       60
<PAGE>

registry books of the Company.

         SECTION 16.04. This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State.

         SECTION 16.05. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent have been complied
with.

      Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition: (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he 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
compiled with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.

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

         Any certificate or opinion of an officer of the Company or of counsel
may be based, in so far as it relates to accounting matters, upon a certificate
or opinion of, or representations by, an accountant or firm of accountants,
unless such officer or counsel, as the case may be, knows, or in the exercise of
reasonable care should know that the certificate or opinion or representations
with respect to the accounting matters upon which his certificate or opinion is
based are erroneous.

         SECTION 16.06 Nothing in this Indenture or in the Securities, expressed
or implied, shall give or be construed to give to any person, firm or
corporation other than the parties hereto, any Paying Agent and the Holders of
the Securities any legal or equitable right remedy or claim under or in respect
of this Indenture or under any covenant, condition or provision herein
contained; all its covenants, conditions and provisions being for the sole
benefit of the parties hereto, any Paying Agent and of the Holders of the
Securities.

                                       61
<PAGE>

         SECTION 16.07. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in this
Indenture which is required to be included in this Indenture by any of Sections
310 to 317, inclusive, of the Trust Indenture Act of 1939, such required
provision shall control.

         SECTION 16.08. This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

         SECTION 16.09. The Table of Contents and the titles and headings of the
Articles of this Indenture have been inserted for convenience of reference only,
are not to be considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.

      SECTION 16.10. 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 16.11. In any case where any interest payment date, Redemption
Date or date of 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 or Redemption Date, or at the
date of maturity, provided that no interest shall accrue for the period from and
after such interest payment date, Redemption Date or date of maturity, as the
case may be.

         SECTION 16.12. No recourse under or upon any obligation, covenant or
agreement of this Indenture, or of any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company;
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,
stockholders, officers or directors, as such, of the Company or of any successor
corporation 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 of, and
any and all such rights and claims against, every such incorporator,
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.

MANUFACTURERS HANOVER TRUST COMPANY hereby accepts the trust in this Indenture
declared and provided upon the terms and conditions hereinabove set forth.

                                       62
<PAGE>

In Witness Whereof, Southern Natural Gas Company has caused this Indenture to be
signed in its name and acknowledged by its Chairman of the Board, its President,
one of its Vice Presidents or its Assistant Treasurer, and its corporate seal to
be affixed hereunto, and the same to be attested by its Secretary or one of its
Assistant Secretaries; and Manufacturers Hanover Trust Company has caused this
Indenture to be signed in its name and acknowledged by one of its Vice
Presidents or Assistant Vice Presidents, and its corporate seal to be affixed
hereunto, and the same to be attested by one of its Assistant Secretaries.

Executed and delivered as of the day and year first written above.

                                       SOUTHERN NATURAL GAS COMPANY

                                       By /s/ John M. Musgrove
                                          -------------------------------------
                                                Treasurer

Attest:  /s/ R. David Hendrickson
        ----------------------------
             Secretary

[SEAL]

                                       MANUFACTURERS HANOVER TRUST COMPANY

                                       By /s/  D.A. Ursitti
                                          -------------------------------------
                                                Vice President

Attest:  /s/ William B. Dodge
        ----------------------------
         Assistant Vice President

[Seal]

                                       63
<PAGE>

                          SOUTHERN NATURAL GAS COMPANY

                                       TO

                            THE CHASE MANHATTAN BANK

                                             AS TRUSTEE

                                   -----------

                          FIRST SUPPLEMENTAL INDENTURE

                         DATED AS OF SEPTEMBER 30, 1997

                                TO THE INDENTURE

                            DATED AS OF JUNE 1, 1987

                                   -----------

<PAGE>

                         FIRST SUPPLEMENT INDENTURE, dated as of September 30,
1997, between Southern Natural Company, a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), and THE CHASE
MANHATTAN BANK, a New York corporation (the "Trustee"), as Trustee.

                  WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture, dated as of June 1, 1987 (the "Indenture"), providing
for the issuance from time to time of the Company's unsecured debentures, notes
and other evidences of indebtedness (herein and therein called the
"Securities"), to be issued in one or more series as in the Indenture provided;

                  WHEREAS, Section 12.01 of the Indenture provides, among other
things, that the Company, when authorized by a resolution of its Board of
Directors, and the Trustee, at any time and from time to time, may without the
consent of any Holders enter into an indenture supplemental to the Indenture (a)
for the purpose of changing or eliminating any provision of the Indenture,
provided that such change or elimination shall become effective only when there
is no Security Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provisions, and
(b) to cure any ambiguity, to correct or supplement any provision therein , or
to make any other provisions with respect to matters of questions arising under
the Indenture which shall not adversely affect in any material respect the
interests of any Holders of the Securities;

                  WHEREAS, the Company pursuant to the foregoing authority,
proposes in and by this First Supplemental Indenture to amend the Indenture in
certain respects with respect to the Securities of any series created on or
after the date hereof; and

                  WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Company, in accordance with its terms, have
been done.

                                       1
<PAGE>
                                    AGREEMENT

                  NOW, THEREFORE, the Company and the Trustee hereby agree as
follows:

             1. The definition of "Depository" is hereby added to Section
1.01 of the Indenture to read in its entirety as follows:

                  "'Depositary' means, with respect to the Securities of any
                  series issuable or issued in whole or in part in the form of
                  one or more permanent global Securities, the Depository Trust
                  Company or such other Person designated as Depositary by the
                  Company pursuant to Section 3.01, which must be a clearing
                  agency registered under the Securities Exchange Act of 1934,
                  as such Person, 'Depositary' as used with respect to the
                  Securities of any such series shall mean the Depositary with
                  respect to the Securities of that series."

                  2. A new Section 2.03 is hereby inserted into the Indenture to
read in its entirety as follows:

                  "SECTION 2.03.  Securities in Permanent Global Form.

                           If the Company shall establish pursuant to Section
                  3.01 that the Securities of a series are to be issued in whole
                  or in part in permanent global form, then notwithstanding
                  Section 3.01(8) and the provisions of Section 3.02, any such
                  Security shall represent such of the Outstanding Securities of
                  such series 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 to reflect exchanges. Any
                  endorsement of a Security in permanent global form to reflect
                  the amount, or any increase or decrease in the amount, of
                  Outstanding Securities represented thereby shall be made by
                  the Trustee or the Security registrar in such manner and upon
                  instructions given by such Person or Persons as shall be
                  specified in such Security in permanent global form or in the
                  order to be delivered to the Trustee pursuant to Section 3.03
                  or Section 3.06. Subject to the provisions of Section 3.03
                  and, if applicable, Section 3.06, the Trustee or the Security
                  registrar shall deliver and redeliver any Security in
                  permanent global form in the manner and upon instructions
                  given by the Person or Persons specified in such Security or
                  in the applicable order of the Company. If an order of the
                  Company pursuant to Section 3.0e or 3.06 has been, or
                  simultaneously is, delivered, any instructions by the Company
                  with respect to endorsement or delivery or redelivery of a
                  global Security shall be in writing but need not be
                  accompanied by an Officers' Certificate or an Opinion of
                  Counsel, provided that the permanent global Security to be
                  endorsed, delivered or redelivered has previously been covered
                  by an Opinion of Counsel.

                           The provisions of the last sentence of Section 3.03
                  shall only apply to any Security represented by a Security in
                  permanent global form if such Security was never issued and
                  sold by the Company and the Company delivers to the Trustee or
                  the Security registrar the Security in permanent global form
                  with written instructions (which need not be accompanied by an
                  Officers' Certificate or an Opinion of Counsel) with regard to
                  the reduction in the principal amount of

                                       2
<PAGE>

                  Securities represented thereby, together with the written
                  statement contemplated by the last sentence of Section 3.03.

                           Except as provided in the Indenture and in any
                  permanent global Security, owners of beneficial interests in
                  any permanent global Security will not be entitled to have
                  Securities registered in their names, will not receive or be
                  entitled to physical delivery of Securities in definitive
                  registered form and will not be considered the Holders thereof
                  for any purpose under the Indenture. None of the Company, the
                  Trustee, any Paying Agent nor any Securities registrar shall
                  have any responsibility or liability for any aspect of records
                  relating to or payments made on account of beneficial
                  ownership interests in any permanent global Security, or for
                  maintaining, supervising r reviewing any records relating to
                  such beneficial ownership interests."

                          3. Section 3.01 of the Indenture is hereby amended by:

                  (i) deleting the second paragraph thereof and adding the
         following paragraph in lieu thereof:

                           "The Securities may be issued in one or more series.
                  There shall be established in or pursuant to a resolution of
                  the Board of Directors and set forth, or determined in the
                  manner provided, in an Officer's Certificate, or established
                  in one or more indentures supplemental hereto, prior to the
                  issuance of Securities of any series,",

                           (ii) adding the following to the end of the
                  parenthetical phrase in clause (2):

                  "and except for any Securities which, pursuant to Section 3.03
of the Indenture, shall have not been issued and sold by the Company and are
therefore deemed never to have been authenticated and delivered hereunder";

                           (iii) adding the following to the beginning of clause
                  (4):

                           "the Person to whom any interest on any Security of
                           the series shall be payable if other than as set
                           forth in Section 3.08,";

                           (iv) renumbering clause (15) as clause (16);

                           (v) adding the following as clause (15);

                                    "(15) whether the Securities of the series
                           are to be issuable in whole or in part in permanent
                           global form, without coupons, and, if so, (i) the
                           circumstances under which beneficial owners of
                           interests in such permanent global Security or
                           Securities may exchange such interests for Securities
                           of such series and of like interest rate and maturity
                           and principal amount in definitive registered form
                           and authorized denominations, if other than as set
                           forth in Section 3.05, and (ii) the Depositary with
                           respect Securities; and

                                       3
<PAGE>

                           (vi) deleting the last paragraph thereof and adding
                  the following paragraph in lieu thereof:

                                    "All Securities of any one series shall be
                           substantially identical except as to denomination and
                           except as may otherwise be provided in or pursuant to
                           the resolution of the Board of Directors referred to
                           above and set forth in the Officers' Certificate
                           referred to above or in any such indenture
                           supplemental hereto."

                           4. Section 3.02 of the Indenture is hereby amended to
                  read in its entirety as follows:

                           "The Securities of each series shall be issuable in
                           registered form without coupons and, except for any
                           Security issuable in permanent global form, in such
                           denominations as shall be specified in accordance
                           with Section 3.01. In the absence of such provisions
                           with respect to the Securities of any series, the
                           Securities of such series shall be issuable in
                           denominations of $1,000 and any integral multiple
                           thereof."

                           5. Section 3.05 of the Indenture is hereby amended by
                           adding the following paragraph to the end of the last
                           paragraph:

                                    "Notwithstanding the foregoing, except as
                           otherwise specified as contemplated by Section 3.01,
                           any permanent global Security shall be exchangeable
                           pursuant to this Section only as provided in this
                           paragraph. The beneficial owners of interests in a
                           permanent global Security are entitled to the
                           exchange of such interests for Securities of such
                           series and of like interest rate and maturity and
                           principal amount in definitive registered from and
                           authorized denomination, as specified in accordance
                           with Section 3.01, if (a) the Depositary notifies the
                           Company that it is unwilling or unable to continue as
                           Depositary for such permanent global Security or if
                           at any time the Depositary ceases to be a clearing
                           agency registered under the Securities Exchange Act
                           of 1934, as amended, (b) if the Company in its sole
                           discretion determines that such permanent global
                           Security shall be exchangeable for definitive
                           registered Securities and executes and delivers to
                           the Security registrar an order of the Company
                           providing that such permanent global Security shall
                           be so exchangeable, or (c) any event shall have
                           occurred and be continuing which, after notice or
                           lapse of time, or both, would become an Event of
                           Default with respect to the securities of the series
                           of which such permanent global Security is a part.
                           Without unnecessary delay but in any event not later
                           than the earliest date on which such interests may be
                           so exchanged, the Company shall deliver to the
                           Trustee or the Security registrar definitive
                           registered Securities, executed by the Company, of
                           that series in aggregate principal amount equal to
                           the principal amount of such permanent global
                           Security to be exchanged. On or may be so exchanged,
                           in accordance with instructions given by the Company
                           to the Trustee, the Security registrar and the
                           Depositary (which instructions shall be in writing
                           but need not be accompanied by an Opinion of
                           Counsel), such permanent global Security to be
                           exchanged. On or after the earliest date

                                       4
<PAGE>

                           on which such interests may be so exchanged, in
                           accordance with instructions shall be in writing but
                           need not be accompanied by an Opinion of Counsel),
                           such permanent global Security shall be surrendered
                           from time to time by the Depositary or such other
                           depositary as shall be specified in the order of the
                           Company with respect thereto to the Trustee, as the
                           Company's agent for such purpose, or to the Security
                           registrar, to be exchanged, in whole or in part, for
                           definitive Securities of the same series, without
                           charge, and the Trustee shall authenticate and
                           deliver in accordance with such instructions, in
                           exchange for each portion of such permanent global
                           Security, a like aggregate principal amount of
                           definitive registered Securities of the same series
                           of authorized denominations and of like tenor as the
                           portion of such permanent global Security to be
                           exchanged; provided, however, that no such exchanges
                           may occur during a period beginning at the opening of
                           business 15 days before any selection of Securities
                           of that series for redemption and ending on the
                           relevant Redemption Date. If a Security is issued in
                           exchange for any portion of a permanent global
                           Security after the close of business at the office or
                           agency where such exchange occurs on (i) any regular
                           record date in respect of such Security and before
                           the opening of business at such office or agency on
                           the relevant interest payment date or (ii) any
                           special record date and before the opening of
                           business at such office or agency on the related
                           proposed date for payment of interest or defaulted
                           interest, as the case may be, such interest payment
                           date or proposed date for payment, as the case ma be,
                           in respect of such Security issued in exchange, but
                           will be payable on such interest payment date or
                           proposed date for payment, as the case may be, only
                           to the Person to whom interest or defaulted interest
                           in respect of such permanent global Security is
                           payable in accordance with the provisions of this
                           Indenture.

                           7. Section 3.09 of the Indenture is hereby amended by
                  deleting the second sentence thereof and adding the following
                  sentence in lieu thereof:

                           "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 to 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."

                           8. Section 4.03 of the Indenture is herby amended by
                  adding the following sentence at the end thereof:

                           "If a Security in permanent global form is so
                           surrendered, the Company shall execute, and the
                           Trustee shall authenticate and deliver to the
                           Depositary for such Security in permanent global
                           form, without service charge, a new Security in
                           permanent global form, in a denomination equal to and
                           in exchange for the unredeemed portion of the
                           principal of the Security in permanent global form so
                           surrendered."

                                       5
<PAGE>

                           9. All provisions of this First Supplemental
                  Indenture shall be deemed to be incorporated in, and made a
                  part of, the Indenture; and the Indenture, as supplemented by
                  this First Supplemental Indenture, shall be read, taken and
                  construed as one and the same instrument.

                           10. The Trustee accepts the trusts created by the
                  Indenture, as supplemented by this First Supplemental
                  Indenture, and agrees to perform the same upon the terms and
                  conditions in the Indenture, as supplemented by this First
                  Supplemental Indenture.

                           11. The recitals contained in the Indenture and the
                  Securities, except the Trustee's certificates of
                  authentication, shall be taken as statements of the Company,
                  and the Trustee assumes no responsibility for their
                  correctness. The Trustee makes no representations as to the
                  validity or sufficiency of the Indenture or the Securities.

                           12. All capitalized terms used and not defined herein
                  shall have the respective meanings assigned to them in the
                  Indenture.

                           13. This First Supplemental Indenture shall be
                  governed by and construed in accordance with the laws of the
                  jurisdiction which govern the Indenture and its construction.

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

                                       6
<PAGE>

                           IN WITNESS WHEREOF, the parties hereto have caused
                  this First Supplemental Indenture to be duly executed, and
                  their respective seals to be hereunto affixed and attested,
                  all as of the date first above written.

                                          SOUTHERN NATURAL GAS COMPANY

                                          By:      /s/ Norman G. Holm
                                               --------------------------------
                                                 Title:  Vice President

[CORPORATE SEAL]

Attest:

/s/ R. Daniel Hendrickson
------------------------------------
Title:  Secretary

                                          THE CHASE MANHATTAN BANK

                                          By:      /s/ Anne G. Brenner
                                               --------------------------------
                                                  Title:  Vice President

[CORPORATE SEAL]

Attest:

 /s/ Illegible
------------------------------------
Title: Senior Trust Officer

                                       7
<PAGE>

STATE OF ALABAMA                    }
                                    }    Section:
COUNTY OF JEFFERSON                 }

                  On the 30 day of September, 1997, before me personally came
Norman G. Holmes, to me known, who, being duly sworn, did depose and say that he
is Vice President of Southern Natural Gas Company, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed to said instrument is such corporate seal; that it
was so affixed by authority of the Board of Directors of said corporation, and
that the signed his name thereto by like authority.

                                                 /s/ Illegible
                                        ---------------------------------------
                                        My Commission Expires May 1, 2001

                                       8
<PAGE>

STATE OF NEW YORK                   }
                                    }    Section:
COUNTY OF NEW YORK                  }

                  On the 30th day of September, 1997, before me personally came
Anne G. Brenner, to me known, who, being duly sworn, did depose and say that he
is Vice President of The Chase Manhattan Bank, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that the
signed his name thereto by like authority.

                                        /s/ Annabelle DeLuca
                                        -----------------------------------
                                            AnnaBelle DeLuca
                                        Notary Public, State of New York
                                           No. 01DE5013759
                                           Qualified in Kings County
                                           Certificate Filed in New York County
                                            Commission Expires July 15, 1999

                                       9
<PAGE>

SOUTHERN NATURAL GAS COMPANY
ISSUER
AND
THE CHASE MANHATTAN BANK
TRUSTEE
----------
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF FEBRUARY 13, 2001
TO
INDENTURE  DATED AS OF JUNE 1, 1987
----------
7.35% NOTES DUE FEBRUARY 15, 2031

<PAGE>

  SECOND SUPPLEMENTAL INDENTURE, DATED AS OF FEBRUARY 13, 2001 (HEREIN CALLED
THE "SECOND SUPPLEMENTAL INDENTURE"), BETWEEN SOUTHERN NATURAL GAS COMPANY, A
DELAWARE CORPORATION (HEREIN CALLED THE "COMPANY"), HAVING ITS PRINCIPAL OFFICE
AT 1001 LOUISIANA STREET, HOUSTON, TEXAS 77002 AND THE CHASE MANHATTAN BANK, A
BANKING CORPORATION DULY ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF
NEW YORK, AS TRUSTEE UNDER THE INDENTURE REFERRED TO BELOW (HEREIN CALLED THE
"TRUSTEE").

                             RECITALS OF THE COMPANY

          WHEREAS, the Company has heretofore executed and delivered to the
Trustee (as successor to Manufacturers Hanover Trust Company) the Indenture,
dated as of June 1, 1987 (such Indenture as amended through the date hereof
being herein called the "Original Indenture"), providing for the issuance from
time to time of one or more series of the Company's unsecured debentures, notes
or other evidences of indebtedness (herein called the "Securities"), the terms
of which are to be determined as set forth in Section 3.01 of the Original
Indenture; and

WHEREAS, Section 12.01 of the Original Indenture provides, among other things,
that the Company and the Trustee may enter into indentures supplemental to the
Original Indenture for, among other things, the purpose of establishing the form
or terms of Securities of any series as permitted by Sections 2.01 and 3.01 of
the Original Indenture; and
          WHEREAS, the Company desires to create a series of the Securities in
an aggregate principal amount of $300,000,000, which series shall be designated
the 7.35% Notes Due February 15, 2031 (the "Notes"), and all action on the part
of the Company necessary to authorize the issuance of the Notes under the
Original Indenture and this Second Supplemental Indenture has been duly taken;
and
          WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and completed, authenticated and delivered by the
Trustee as provided in the Original Indenture and this Second Supplemental
Indenture, the valid and binding obligations of the Company and to constitute
these presents a valid and binding supplemental indenture and agreement
according to its terms, have been done and performed;

         NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
           That in consideration of the premises and the issuance of the Notes,
the Company covenants and agrees with the Trustee, for the equal and
proportionate benefit of all Holders of the Notes, as follows:

                                    ARTICLE I
                TERMS AND ISSUANCE OF 7.35% SENIOR NOTES DUE 2031

         Section 1.01 Issue of Notes. A series of Securities which shall be
designated the "7.35% Notes Due February 15, 2031" shall be executed,
authenticated and delivered in accordance with the provisions of, and shall in
all respects be subject to, the terms, conditions and covenants of the Original
Indenture, including without limitation the terms set forth in this Second
Supplemental Indenture (including the form of Notes referred to in Section 1.02
hereof). The aggregate principal amount of Notes which may be authenticated and
delivered under the Original Indenture shall be $300,000,000, provided, however,
that this series of Notes may be reopened, without the consent of the holders
thereof, for increases in the aggregate principal amount of the Notes and
issuance of additional Notes or for the establishment of additional terms with
respect to the Notes. The entire amount of Notes may forthwith be executed by
the Company and delivered to the

                                       1
<PAGE>

Trustee and shall be authenticated by the Trustee and delivered to or upon the
order of the Company pursuant to Section 3.03 of the Indenture.

         Section 1.02 Forms of Notes and Authentication Certificate. The Notes
initially shall be issuable in the form of one or more Global Securities,
registered in the name of the Depositary or its nominee. The Depository Trust
Company shall be the Depositary for such Global Securities. The forms and terms
of the Notes and the Trustee's certificate of authentication shall be
substantially as set forth on Exhibit A hereto.

                                   ARTICLE II
                                  MISCELLANEOUS

           Section 2.01 Execution as Supplemental Indenture. This Second
Supplemental Indenture is executed and shall be construed as an indenture
supplemental to the Original Indenture and, as provided in the Original
Indenture, this Second Supplemental Indenture forms a part thereof. Except as
herein expressly otherwise defined, the use of the terms and expressions herein
is in accordance with the definitions, uses and constructions contained in the
Original Indenture.

          Section 2.02 Responsibility for Recitals, Etc. The recitals herein and
in the Notes (except in the Trustee's certificate of authentication) shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no representations
as to the validity or sufficiency of this Second Supplemental Indenture or of
the Notes. The Trustee shall not be accountable for the use or application by
the Company of the Notes or of the proceeds thereof.

         Section 2.03 Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements in this Second Supplemental
Indenture contained by the Company shall bind its successors and assigns whether
so expressed or not.

         Section 2.04 New York Contract. THIS SECOND SUPPLEMENTAL INDENTURE AND
EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

         Section 2.05 Execution and Counterpart. This Second Supplemental
Indenture may be executed with counterpart signature pages or in any number of
counterparts, each of which shall be an original but such counterparts shall
together constitute but one and the same instrument.

          Section 2.06 Capitalized Terms. Capitalized terms not otherwise
defined in this Second Supplemental Indenture shall have the respective meanings
assigned to them in the Original Indenture.

                                       2
<PAGE>

         IN WITNESS WHEREOF, said SOUTHERN NATURAL GAS COMPANY has caused this
Second Supplemental Indenture to be executed in its corporate name by its
Chairman of the Board or its President or one of its Vice Presidents, and said
THE CHASE MANHATTAN BANK has caused this Second Supplemental Indenture to be
executed in its corporate name by one of its authorized representatives as of
February 13, 2001.

                                       SOUTHERN NATURAL GAS COMPANY

                                       By: /s/ JEFFREY I. BEASON
                                           -------------------------------------
                                             Name:  Jeffrey I. Beason
                                             Title: Senior Vice President
                                                and Controller

                                       THE CHASE MANHATTAN BANK

                                       By: /s/ Patti Maner
                                           -------------------------------------
                                              Authorized Representative

                                       3
<PAGE>

                                    EXHIBIT A

[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.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, 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 IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]*

                          SOUTHERN NATURAL GAS COMPANY
                        7.35% NOTE DUE FEBRUARY 15, 2031
NO.
      U.S.$300,000,000
CUSIP No. 843452AY9

 SOUTHERN NATURAL GAS COMPANY, a corporation duly incorporated and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of THREE HUNDRED MILLION United States Dollars on February 15,
2031, and to pay interest thereon from February 13, 2001, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on February 15 and August 15 in each year, commencing August
15, 2001, at the rate of 7.35% per annum, until the principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in 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

----------
*Insert in Global Securities only.

                                       A-1

<PAGE>

Regular Record Date for such interest, which shall be the February 1 or August 1
(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 shall forthwith cease to be payable to the Holder on such Regular Record
Date and shall 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 of which shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
such time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in such Indenture.

[Payment of the principal of and premium, if any, and interest on this Security
will be made by transfer of immediately available funds to a bank account in New
York, New York 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.]*

[Payment of the principal of (and premium, if any) and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the Borough of Manhattan, The City of New York, 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, or at such other offices or agencies as the
Company may designate; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the addresses of the Persons
entitled thereto as such addresses shall appear in the Security Register.]**

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.

--------
*        Insert in Global Securities only.
**       Insert in Definitive Securities only.

                                      A-2
<PAGE>

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

Dated:                                  SOUTHERN NATURAL GAS COMPANY

                                        By:
                                        Name:
                                        Title:

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

                                        THE CHASE MANHATTAN BANK,
                                                    AS TRUSTEE
                                        By:
                                              Authorized Representative

                                       A-3

<PAGE>

                          SOUTHERN NATURAL GAS COMPANY
                        7.35% NOTE DUE FEBRUARY 15, 2031

           This Security is one of a duly authorized issue of Securities of the
Company (the "Securities"), issued and to be issued in one or more series under
an Indenture dated as of June 1, 1987, as amended (the "Indenture"), between the
Company and The Chase Manhattan Bank (as successor to Manufacturers Hanover
Trust Company), as Trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, obligations, 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. As
provided in the Indenture, the Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking, purchase or analogous funds, if any, may be subject to different
covenants and Events of Default and may otherwise vary as in the Indenture
provided or permitted. This Security is one of a series of Securities designated
on the face hereof limited in aggregate principal amount to U.S. $300,000,000.

         The Securities of this series are redeemable, upon not less than 30 nor
more than 60 days' notice by mail, as a whole or in part, at the option of the
Company at any time at a Redemption Price equal to the greater of (i) 100% of
the principal amount thereof and (ii) an amount equal to, as determined by an
Independent Investment Banker, the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and
unpaid interest thereon to the date of redemption, but interest installments
whose Stated Maturity is on or prior to such date of redemption will be payable
to the Holders of such Securities, or one or more Predecessor Securities, of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.

         "Adjusted Treasury Rate" means, with respect to any Redemption Date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming 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, plus 0.20%.

         "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that (i) has a maturity comparable
to the remaining term of the Securities of this series to be redeemed and (ii)
would be used, at the time of selection and in accordance with customary
financial practice, to price new issues of corporate debt securities of
comparable maturity to the remaining term of such Securities.

"Comparable Treasury Price" means, with respect to any Redemption Date, (i) the
average of the bid and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) on the third Business Day
preceding such Redemption Date, as set forth in the daily statistical release
(or any successor release) published by the Federal Reserve Bank of New York and
designated "Composite 3:30 p.m. Quotations for U.S. "Government Securities," or
(ii) if such release (or any successor release) is not published or does not
contain such prices on such Business Day, (A) the average of the Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer

                                       A-4
<PAGE>

Quotations, or (B) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.

         "Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.

         "Reference Treasury Dealer" means each of Credit Suisse First Boston
and Salomon Smith Barney and their respective successors; provided, however,
that if any of the foregoing shall not be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer.

         "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 Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such Redemption Date.

         Notwithstanding Section 4.01 of the Indenture, the notice of redemption
with respect to the foregoing redemption need not set forth the Redemption Price
but only the manner of calculation thereof. Promptly after the calculation
thereof, the Company shall give the Trustee written notice of the Redemption
Price for the foregoing redemption.

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

         If an Event of Default with respect to the Securities of this series
shall occur and be continuing, the principal of the Securities of this series
may be declared 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 of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all series to be affected (voting as one class). The
Indenture also contains provisions permitting the Holders of a majority in
aggregate principal amount of the Outstanding Securities of all affected series
(voting as one class), on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture. The Indenture permits, with certain exceptions as therein provided,
the Holders of a majority in aggregate principal amount of Securities of any
series then Outstanding to waive past defaults under the Indenture with respect
to such series 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.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities

                                       A-5
<PAGE>

of this series at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of the Securities of
this series at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof or interest hereon on or after the respective
due dates expressed herein.

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

         [This Global Security or portion hereof may not be exchanged for
Definitive Securities except in the limited circumstances provided in the
Indenture.

         The holders of beneficial interests in this Global Security will not be
entitled to receive physical delivery of Definitive Securities except as
described in the Indenture and will not be considered the Holders hereof for any
purpose under the Indenture.]*

          [As provided in the Indenture and subject to certain limitations set
forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in the Borough of Manhattan, The City of New York or at
such other offices or agencies as the Company may designate, 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
this series and of like tenor, of authorized denominations and for a like
aggregate principal amount, will be issued to the designated transferee or
transferees.]**

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

----------
* Insert in Global Securities only.
** Insert in Definitive Securities only.

                                       A-6

<PAGE>

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

         Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         No recourse under or upon any obligation, covenant or agreement of or
contained in the Indenture or of or contained in any Security, or for any claim
based thereon or otherwise in respect thereof, or in any Security, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, 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, penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released by the acceptance hereof and as a condition of,
and as part of the consideration for, the Securities and the execution of the
Indenture.

         The Indenture provides that the Company (a) will be discharged from any
and all obligations in respect of the Securities (except for certain obligations
described in the Indenture), or (b) need not comply with certain restrictive
covenants of the Indenture, in each case if the Company deposits, in trust, with
the Trustee money or U.S. Government Obligations (or a combination thereof)
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money, in an amount sufficient to pay
all the principal of and interest of the Securities, but such money need not be
segregated from other funds except to the extent required by law.

         THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

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

                                       A-7

<PAGE>

         [FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address of Assignee)

the within instrument of SOUTHERN NATURAL GAS COMPANY and does hereby
irrevocably constitute and appoint ________________________ Attorney to transfer
said instrument on the books of the within-named Company, with full power of
substitution in the premises. Please Insert Social Security or Other Identifying
Number of Assignee:

-------------------------------------  ----------------------------------------
Dated:  -------------------------------  --------------------------------------
                                         (Signature)

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]**

----------
** Insert in Definitive Securities only.

                                       A-8<PAGE>

                                                                     Exhibit 4.1
--------------------------------------------------------------------------------

                               ACTERNA CORPORATION
                                   ACTERNA LLC

                              INVESTMENT AGREEMENT

                       $75,000,000 Principal Amount of 12%
                    Senior Secured Convertible Notes Due 2007
                                 of Acterna LLC

                          Dated as of December 27, 2001

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    Article I
      Authorization, Issuance, Purchase and Sale of Notes and Warrants

1.1   Authorization of the Notes............................................   1
1.2   Authorization of Warrants.............................................   1
1.3   Sale and Purchase of Notes............................................   2

                                   Article II
                                   The Closing

2.1   Date, Time and Location of Closing....................................   2
2.2   Delivery of Initial Notes and Purchase Price..........................   2

                                   Article III
      Representations and Warranties of the Parent and the Company

3.1   Corporate Existence; Compliance with Law..............................   2
3.2   Corporate Power; Authorization; Enforceable Obligations...............   3
3.3   Capitalization........................................................   4
3.4   Financial Condition...................................................   4
3.5   Absence of Changes....................................................   5
3.6   No Legal Bar..........................................................   5
3.7   No Material Litigation................................................   5
3.8   No Default............................................................   5
3.9   Ownership of Property; Liens..........................................   5
3.10  Intellectual Property.................................................   5
3.11  No Burdensome Restrictions............................................   6
3.12  Taxes.................................................................   6
3.13  Federal Reserve Regulations...........................................   6
3.14  ERISA.................................................................   7
3.15  Investment Company Act; Other Regulations.............................   7
3.16  Subsidiaries..........................................................   7
3.17  Environmental Matters.................................................   7
3.18  Note Security Documents; Second Lien..................................   9
3.19  Disclosure............................................................   9
3.20  Solvency..............................................................   9
3.21  Senior Indebtedness...................................................  10

                                       i

<PAGE>

                                   Article IV
                 Representations and Warranties of the Investor

4.1   Experience............................................................  10
4.2   Investment Intent.....................................................  10
4.3   Notes, Warrants and Common Stock Not Registered.......................  10

                                   Article V
                              Conditions to Closing

5.1   Conditions to Obligations of Each Party...............................  11
5.2   Conditions to Obligations of the Investor.............................  12

                                   Article VI
                      The Convertible Notes; General Terms

6.1   Interest Accrual......................................................  14
6.2   Payments..............................................................  14
6.3   Conversion............................................................  15
6.4   Optional Redemption...................................................  24
6.5   Mandatory Offer to Repurchase Upon Change of Control..................  25
6.6   Mandatory Offer to Repurchase CD&R Notes Upon Disposition of Assets...  27
6.7   Issuance of Warrants Upon Early Redemption or Repurchase..............  32
6.8   Register of Holders...................................................  32
6.9   Exchange of Notes Upon Transfer.......................................  33
6.10  Mutilated, Destroyed, Lost and Stolen Notes...........................  33

                                   Article VII
                      Affirmative Covenants of the Company

7.1   Financial Statements..................................................  34
7.2   Certificates; Other Information.......................................  35
7.3   Payment of Obligations................................................  36
7.4   Conduct of Business and Maintenance of Existence......................  36
7.5   Maintenance of Property; Insurance....................................  36
7.6   Inspection of Property; Books and Records; Discussions................  37
7.7   Notices...............................................................  37
7.8   Environmental Laws....................................................  39
7.9   Additional Collateral.................................................  39
7.10  Liens.................................................................  42
7.11  Note Guarantors.......................................................  43

                                       ii

<PAGE>

                                  Article VIII
                        Negative Covenants of the Company

<TABLE>
<S>                                                                                    <C>
8.1   Limitation on Indebtedness.....................................................  44
8.2   Limitation on Restricted Payments..............................................  48
8.3   Limitation on Restrictions on Distributions from Restricted Subsidiaries.......  52
8.4   Limitation on Sales of Assets and Subsidiary Stock.............................  54
8.5   Limitation on Transactions with Affiliates.....................................  57
8.6   Limitation on Liens............................................................  58
8.7   Limitation on Optional Payments and Modifications of Debt Instruments and
      other Material Agreements......................................................  59
8.8   Limitation on Negative Pledge Clauses..........................................  60
</TABLE>

                                  Article IX
                               Successor Company

<TABLE>
<S>                                                                                    <C>
9.1   When the Company May Merge, etc................................................  61
9.2   Successor Company Substituted..................................................  62
</TABLE>

                                  Article X
                              Events of Default

<TABLE>
<S>                                                                                    <C>
10.1  Events of Default..............................................................  62
10.2  Acceleration of Maturity; Rescission and Annulment.............................  65
10.3  Unconditional Right of Holders to Receive Principal, Premium and Interest......  66
10.4  Restoration of Rights and Remedies.............................................  66
10.5  Rights and Remedies Cumulative.................................................  66
10.6  Delay or Omission Not Waiver...................................................  66
10.7  Waiver of Past Defaults........................................................  67
10.8  Waiver of Stay, Extension or Usury Laws........................................  67
</TABLE>

                                  Article XI
                                  Termination

<TABLE>
<S>                                                                                    <C>
11.1  Termination....................................................................  67
11.2  Effect of Termination..........................................................  67
</TABLE>

                                      iii

<PAGE>

                               Article XII
                               Definitions

                               Article XIII
                               Miscellaneous

13.1  Notices............................................................... 101
13.2  Governing Law, etc.................................................... 102
13.3  Jurisdiction; Waiver of Jury Trial; Waiver of Punitive Damages........ 102
13.4  Binding Effect........................................................ 103
13.5  Assignment............................................................ 103
13.6  No Third-Party Beneficiaries.......................................... 103
13.7  Amendment; Waivers, etc............................................... 103
13.8  Survival of Representations and Warranties............................ 105
13.9  Payment of Expenses and Taxes......................................... 105
13.10 Judgment Currency..................................................... 107
13.11 Entire Agreement...................................................... 107
13.12 Severability.......................................................... 107
13.13 Headings.............................................................. 108
13.14 Rules of Construction................................................. 108
13.15 Schedules............................................................. 108
13.16 Counterparts.......................................................... 109

Schedule 3.2(a): Consents, Authorizations, Notices and Filings
Schedule 3.3:    Capitalization
Schedule 3.16:   Subsidiaries

Annex A:   Terms of Note Guarantees of Transferred Notes

Exhibit A: Form of Note
Exhibit B: Form of Warrant
Exhibit C: Form of Second Credit Agreement Amendment
Exhibit D: Form of Amendment No. 2 to the Registration Rights Agreement
Exhibit E: Form of Guarantee and Collateral Agreement
Exhibit F: Form of Intercreditor Agreement

                                       iv

<PAGE>

                              INVESTMENT AGREEMENT

     INVESTMENT AGREEMENT, dated as of December 27, 2001, among Acterna
Corporation, a Delaware corporation (together with its successors and assigns,
the "Parent"), Acterna LLC, a Delaware limited liability company wholly owned
     ------
and controlled by the Parent (together with its successors and assigns, the
"Company"), and Clayton, Dubilier & Rice Fund VI Limited Partnership, a Cayman
 -------
Islands exempted limited partnership (together with its successors and assigns,
the "Investor"). Capitalized terms used in this Agreement and not otherwise
     --------
defined are defined in Article XII.

                                    Recitals
                                    --------

     WHEREAS, the Company desires to issue and sell to the Investor, and the
Investor desires to purchase from the Company, $75,000,000 in aggregate
principal amount of 12% Senior Secured Convertible Notes due December 31, 2007
of the Company (the "Initial Notes");
                     -------------

     WHEREAS, the Parent, the Company and the Investor have agreed that the
Notes will be secured, on and subject to the terms of (a) a Guarantee and
                                                       -
Collateral Agreement, dated as of December 27, 2001 (the "Guarantee and
                                                          -------------
Collateral Agreement"), by the Parent, the Company and certain Subsidiaries of
--------------------
the Company for the benefit of the Investor, and (b) an Intercreditor Agreement,
                                                  -
dated as of December 27, 2001 (the "Intercreditor Agreement"), between the Bank
                                    -----------------------
Agent and the Investor, and consented to by the Parent, the Company and certain
Subsidiaries of the Company;

     WHEREAS, the Parent, the Company and the Investor desire to enter into this
Agreement to govern the terms of the CD&R Investment;

     NOW, THEREFORE, in consideration of the mutual premises, covenants,
representations and warranties made in this Agreement and of the mutual benefits
to be derived from this Agreement, the parties hereto agree as follows:

                                   Article I
        Authorization, Issuance, Purchase and Sale of Notes and Warrants
        ----------------------------------------------------------------

     1.1  Authorization of the Notes. The Company has authorized the issuance
          --------------------------
and sale of the Notes on the terms set forth in this Agreement, to be in the
form of Exhibit A hereto, with such changes therefrom, if any, as may be
approved by the Company and the Investor.

     1.2  Authorization of Warrants. The Parent has authorized the issuance,
          -------------------------
upon the redemption or repurchase of the Notes prior to the Maturity Date, of
warrants (each, a "Warrant") to purchase a number of newly-issued shares of
                   -------
Common Stock equal to the number of shares of Common Stock into which the Notes
were convertible immediately

<PAGE>

prior to such redemption or repurchase, at the exercise price per share equal to
the Conversion Price, to be in the form of Exhibit B hereto, with such changes
therefrom, if any, as may be approved by the Parent and the Holder of the Notes
so redeemed or repurchased.

     1.3  Sale and Purchase of Notes. Subject to the terms and conditions of
          --------------------------
this Agreement, at the Closing the Company will issue and sell to the Investor,
and the Investor will purchase from the Company, the Initial Notes for a
purchase price equal to one-hundred percent (100%) of the aggregate Principal
Amount of the Initial Notes (the "Purchase Price").
                                  --------------

                                   Article II
                                   The Closing
                                   -----------

     2.1  Date, Time and Location of Closing. The purchase and sale of the
          ----------------------------------
Initial Notes shall take place at the offices of Debevoise & Plimpton, 919 Third
Avenue, New York, New York 10022, at 10:00 a.m., New York City time, at a
closing (the "Closing") on January 15, 2002, or on such other Business Day
              -------
thereafter as may be agreed upon by the Parent, the Company and the Investor
(the "Closing Date").
      ------------

     2.2  Delivery of Initial Notes and Purchase Price. At the Closing, (a) the
          --------------------------------------------                   -
Company will deliver the Initial Notes to the Investor in the form of a single
promissory note (or such greater number of promissory notes in denominations of
at least $500,000 and integral multiples thereof as the Investor may request),
in the form of Exhibit A hereto, with such changes therefrom, if any, as may be
approved by the Company and the Investor, dated the Closing Date and registered
in the name of the Investor (or its nominee), and (b) the Investor shall deliver
                                                   -
the Purchase Price to the Company by wire transfer of immediately available
funds to an account previously designated in writing by the Company.

                                  Article III
          Representations and Warranties of the Parent and the Company
          ------------------------------------------------------------

     The Parent and the Company hereby represent and warrant as follows:

     3.1  Corporate Existence; Compliance with Law. Each of the Parent, the
          ----------------------------------------
Company and the Subsidiaries of the Company (a) is duly organized, validly
                                             -
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate or other organizational power and authority,
               -
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
except to the extent that the failure to have such legal right would not be
reasonably expected to have a Material Adverse Effect, (c) is duly qualified as
                                                        -
a foreign entity and in good standing under the laws of each jurisdiction

                                       2

<PAGE>

where its ownership, lease or operation of property or the conduct of its
business requires such qualification, other than in such jurisdictions where the
failure to be so qualified and in good standing would not be reasonably expected
to have a Material Adverse Effect and (d) is in compliance with all Requirements
                                       -
of Law except to the extent that the failure to comply therewith would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.

     3.2  Corporate Power; Authorization; Enforceable Obligations.
          -------------------------------------------------------

          (a)  Each of the Parent, the Company and the Subsidiaries of the
Company (i) has the corporate or other organizational power and authority, and
         -
the legal right, to make, deliver and perform under this Agreement and the other
Transaction Agreements to which it is a party and (ii) has taken all necessary
                                                   --
corporate or other organizational action to authorize the execution, delivery
and performance of this Agreement and the other Transaction Agreements to which
it is a party. No consent or authorization of, filing with, notice to or other
similar act by or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of the Parent, the Company or
any Subsidiary in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or the other Transaction Agreements, except for (w) consents, authorizations,
                                                 -
notices and filings described in Schedule 3.2(a), all of which have been
obtained or made, (x) filings to perfect the Liens created by the Note Security
                   -
Documents, (y) filings pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. (S). 3737 et seq.), in respect of accounts of the Parent, the
                             -- ---
Company or any Subsidiary of the Company, the obligor in respect of which is the
United States of America or any department, agency or instrumentality thereof,
and (z) consents, authorizations, notices and filings which the failure to
     -
obtain or make would not reasonably be expected to have a Material Adverse
Effect.

          (b)  This Agreement has been, and each of the other Transaction
Agreements and any other agreement to be entered into pursuant hereto will be,
duly executed and delivered on behalf of the Parent, the Company or any
Subsidiary of the Company, as appropriate. This Agreement constitutes, and each
of the other Transaction Agreements and any other agreement to be entered into
pursuant to this Agreement will, upon their execution and delivery, constitute,
a legal, valid and binding obligation of the Parent, the Company or any
Subsidiary of the Company, as appropriate, enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforcement is sought in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

                                       3

<PAGE>

     3.3  Capitalization. Schedule 3.3 sets forth a complete and correct
          --------------
description of the shares of capital stock of, or other securities or
instruments convertible into or exchangeable for any capital stock of or other
equity interest in, the Parent and the Company that are authorized, or issued
and outstanding as of the date set forth in such Schedule. Except as set forth
in Schedule 3.3, (a) there are no preemptive or similar rights on the part of
                  -
any holders of any class of securities of the Parent or the Company, (b) no
                                                                      -
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating any Person,
contingently or otherwise, to issue or sell, or cause to be issued or sold, any
shares of capital stock of any class of the Parent or the Company, or any
securities or other instruments convertible into or exchangeable for any such
shares, are outstanding and (c) no authorization for any of the foregoing has
                             -
been given. There are no outstanding contractual or other rights or obligations
to or of any Person to repurchase, redeem or otherwise acquire any outstanding
shares or other equity interests in the Parent or the Company.

     3.4  Financial Condition. The audited consolidated balance sheets of the
          -------------------
Parent and its Subsidiaries as at March 31, 2001 and March 31, 2000, and the
related consolidated statements of income and of cash flows for the fiscal years
ended on such dates, as filed by the Parent with the United States Securities
and Exchange Commission (and reported on by and accompanied by an unqualified
report from PricewaterhouseCoopers), present fairly, in all material respects,
the consolidated financial condition of the Parent and its Subsidiaries as at
such respective dates, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of the Parent and its Subsidiaries as at
September 30, 2001, and the related unaudited consolidated statements of income
and cash flows for the six-month period ended on such date, as filed by the
Parent with the United States Securities and Exchange Commission, on the basis
disclosed in the footnotes to such financial statements, present fairly, in all
material respects, the consolidated financial condition of the Parent and its
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the nine-month period then ended (subject to the
omission of certain footnotes and normal year-end audit and other adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the Chief Financial
Officer of the Parent, and disclosed in any such schedules and notes, and except
that such unaudited financial statements do not contain certain footnotes). All
material Guarantee Obligations, material contingent liabilities and liabilities
for taxes, or all material long-term leases or unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, which according to GAAP must be reflected in such financial
statements or the notes thereto, are so reflected.

                                       4

<PAGE>

     3.5  Absence of Changes. Since September 30, 2001, there has been no
          ------------------
development or event relating to or affecting the Parent, the Company or any
Subsidiary of the Company which has had or would reasonably be expected to have
a Material Adverse Effect (after giving effect to the Transactions).

     3.6  No Legal Bar. The execution, delivery and performance of this
          ------------
Agreement and the other Transaction Agreements by the Parent, the Company and
the Subsidiaries of the Company, as appropriate, and the use of the proceeds of
the CD&R Investment by the Company, (a) will not violate any Requirement of Law
                                     -
or any Contractual Obligation applicable to or binding upon the Parent, the
Company and any Subsidiary of the Company or any of their respective properties
or assets in any respect that would reasonably be expected to have a Material
Adverse Effect and (b) will not result in the creation or imposition of any Lien
                    -
on any of the properties or assets of the Parent, the Company or the
Subsidiaries of the Company pursuant to any Requirement of Law or Contractual
Obligation, except for the Liens (i) arising under the Security Documents (as
                                  -
defined in the Credit Agreement) or the Note Security Documents or (ii) that are
                                                                    --
Permitted Liens and are permitted under the Credit Agreement (after giving
effect to the Second Credit Agreement Amendment).

     3.7  No Material Litigation. No litigation by, investigation by, or
          ----------------------
proceeding of or before any arbitrator or any Governmental Authority is pending
or, to the knowledge of the Parent, the Company or any Subsidiary of the
Company, threatened by or against the Parent, the Company or any Subsidiary of
the Company (or any of their respective properties or revenues, after giving
effect to the CD&R Investment) which would reasonably be expected to have a
Material Adverse Effect.

     3.8  No Default.  Neither the Parent, the Company nor any Subsidiary of the
          ----------
Company is in default under or with respect to any Contractual Obligation which
would reasonably be expected to have a Material Adverse Effect. No Bank Default
Event or Senior Subordinated Default Event has occurred and is continuing.

     3.9  Ownership of Property; Liens. Each of the Parent, the Company and the
          ----------------------------
Subsidiaries of the Company has good record and marketable title in fee simple
to, or a valid leasehold interest in, all of its material real property, and
good title to, or a valid leasehold interest in, all of its other material
property, and none of such property is subject to any Lien, except for Liens (a)
                                                                              -
arising under the Security Documents (as defined in the Credit Agreement) or the
Note Security Documents or (b) that are Permitted Liens and are permitted under
                            -
the Credit Agreement (after giving effect to the Second Credit Agreement
Amendment).

     3.10 Intellectual Property. Each of the Parent, the Company and the
          ---------------------
Subsidiaries of the Company owns, or is licensed (or otherwise has the legal
right) to use, all United States trademarks, tradenames, copyrights, technology,
know-how and

                                       5

<PAGE>

processes necessary for the conduct of its business substantially as currently
conducted, except for those United States trademarks, tradenames, copyrights,
technology, know-how and processes, the failure to own or license (or otherwise
have the legal right to use) which would not reasonably be expected to have a
Material Adverse Effect (the "Intellectual Property"). No claim has been
                              ---------------------
asserted and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does the Parent, the Company or any Subsidiary of the Company know
of any valid basis for any such claim and to the knowledge of each of the
Parent, the Company and the Subsidiaries of the Company, the use of the
Intellectual Property by the Parent, the Company and the Subsidiaries of the
Company does not infringe on the rights of any Person, except for such claims
and infringements that, in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.

     3.11 No Burdensome Restrictions.  No Requirement of Law applicable to or
          --------------------------
Contractual Obligation of any of the Parent, the Company and the Subsidiaries of
the Company would reasonably be expected to have a Material Adverse Effect.

     3.12 Taxes. Each of the Parent, the Company and its Subsidiaries has filed
          -----
or caused to be filed all United States federal income tax returns and all other
material tax returns which, to the knowledge of the Company, are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any (i) taxes, fees or other charges with respect to which
the failure to pay, in the aggregate, would not have a Material Adverse Effect
or (ii) taxes, fees or other charges the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Parent, the Company or its Subsidiaries, as the case may be); no
tax Lien has been filed, and, to the knowledge of the Company, no claim is being
asserted, with respect to any such tax, fee or other charge.

     3.13 Federal Reserve Regulations. Neither the Parent, the Company nor any
          ---------------------------
Subsidiary of the Company will, directly or indirectly, use any of the proceeds
of the CD&R Investment for the purpose, whether immediate, incidental or
ultimate, of buying "margin stock" or of maintaining, reducing or retiring any
indebtedness originally incurred to purchase a stock that is currently "margin
stock", or otherwise take or permit to be taken any action which would involve a
violation of any regulation of the Board of Governors of the Federal Reserve
System. No indebtedness being reduced or retired out of the proceeds of the CD&R
Investment was incurred for the purpose of purchasing or carrying any "margin
stock" and neither the Parent, the Company nor any Subsidiary owns or has any
intention of acquiring any "margin stock".

                                       6

<PAGE>

     3.14 ERISA. During the respective five year periods prior to each of the
          -----
date hereof and the Closing Date, with respect to any Plan (or, with respect to
(e) or (h) below, as of the date such representation is made or deemed made),
none of the following events or conditions, either individually or in the
aggregate, has resulted or is reasonably likely to result in a liability to the
Parent, the Company or any Subsidiary of the Company which would be reasonably
expected to have a Material Adverse Effect: (a) a Reportable Event; (b) an
                                             -                       -
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA); (c) any material noncompliance with the applicable
                           -
provisions of ERISA or the Code; (d) a termination of a Single Employer Plan
                                  -
(other than a standard termination pursuant to Section 4041(b) of ERISA); (e) a
                                                                           -
Lien in favor of the PBGC or a Plan; (f) under-funding with respect to any
                                      -
Single Employer Plan; (g) a complete or partial withdrawal from any
                       -
Multiemployer Plan by the Parent, the Company, any Subsidiary of the Company or
any Commonly Controlled Entity; (h) any liability of the Parent, the Company,
                                 -
any Subsidiary of the Company or any Commonly Controlled Entity under ERISA if
the Parent, the Company, any Subsidiary of the Company or any Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the annual valuation date most closely preceding the date on which this
representation is made or deemed made; (i) the Reorganization or Insolvency of
                                        -
any Multiemployer Plan; and (j) an event or condition with respect to which the
                             -
Parent, the Company, any Subsidiary of the Company or any Commonly Controlled
Entity has incurred or could incur any liability in respect of a Former Plan.

     3.15 Investment Company Act; Other Regulations. Neither the Parent, the
          -----------------------------------------
Company nor any Subsidiary of the Company is an "investment company", or a
company "controlled" by an "investment company" required to register as such
under the Investment Company Act of 1940, as amended, within the meaning of such
act. Neither the Parent, the Company nor any Subsidiary is subject to regulation
under any Federal or State statute or regulation (other than Regulation X of the
Board of Governors of the Federal Reserve System) which limits its ability to
incur Indebtedness.

     3.16 Subsidiaries.  On the Closing Date, the Subsidiaries of the Company
          ------------
and their jurisdiction of organization shall be as set forth in Schedule 3.16.

     3.17 Environmental Matters.  Other than exceptions to any of the following
          ---------------------
that would not, individually or in the aggregate, reasonably be expected to
result in the payment of a Material Environmental Amount:

          (a)  the facilities and properties owned, leased or operated by each
of the Parent, the Company and the Subsidiaries of the Company (the
"Properties") do not contain any Materials of Environmental Concern in amounts
 ----------
or concentrations which (i) constitute a violation of, or (ii) would reasonably
be expected to give rise to liability on the part of any of the Parent, the
Company and the Subsidiaries of the Company under, any applicable Environmental
Law.

                                       7

<PAGE>

          (b)  the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all material
respects, with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any applicable Environmental
Law with respect to the Properties or the business operated by the Parent, the
Company and the Subsidiaries of the Company (the "Business") which would
                                                  --------
materially interfere with the continued operation of the Properties.

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

          (d)  Materials of Environmental Concern have not been transported or
disposed of from the Properties, in violation of, or in a manner or to a
location which would reasonably be expected to give rise to liability on the
part of any of the Parent, the Company and the Subsidiaries of the Company
under, any applicable Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of
the Properties, in violation of, or in a manner that would reasonably be
expected to give rise to liability on the part of the Parent, the Company and
the Subsidiaries of the Company under, any applicable Environmental Law.

          (e)  no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of any of the Parent, the Company and the
Subsidiaries of the Company, threatened, under any applicable Environmental Law
to which any of the Parent, the Company and the Subsidiaries of the Company is
or will be named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any applicable Environmental Law with respect to the
Properties or the Business.

          (f)  there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any of the Parent, the Company and the Subsidiaries of the
Company in connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that would reasonably be
expected to give rise to liability on the part of any of the Parent, the Company
and the Subsidiaries of the Company under applicable Environmental Laws.

                                       8

<PAGE>

          (g) none of the Parent, the Company and the Subsidiaries of the
Company has assumed or retained, by contract or, to its knowledge, operation of
law, any known or suspected liabilities of any kind, fixed or contingent, as a
result of any violation or breach of applicable Environmental Law or with
respect to any contamination by any Materials of Environmental Concern.

     3.18 Note Security Documents; Second Lien. Upon execution and delivery
          ------------------------------------
thereof by the parties thereto, the Note Security Documents will be effective to
create (to the extent described therein) in favor of and for the benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein, (a) except as may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing and (b) subject to the
terms of the Intercreditor Agreement. When the actions specified in Schedule 7
to the Guarantee and Collateral Agreement have been duly taken, the security
interests granted pursuant thereto shall constitute (to the extent described
therein) a perfected second priority lien on, and security interest in, all
right, title and interest of each pledgor party thereto in the Collateral
described therein with respect to such pledgor. Neither the Bank Agent nor the
Lenders (as defined in the Credit Agreement) have any security interests in or
Liens on any assets of the Note Financing Parties securing Bank Indebtedness
other than the security interests and Liens created pursuant to the Credit
Documents (as defined in the Credit Agreement as in effect on the date hereof),
and no Bank Indebtedness benefits from any Guarantee of any Subsidiary of the
Company that has not provided a Guarantee under the Guarantee and Collateral
Agreement (except with respect to the Subsidiaries named in and subject to the
provisions of Section 7.9(f)).

     3.19 Disclosure. The factual statements contained in the financial
          ----------
statements referred to in Section 3.4, the Note Financing Documents (including
the schedules thereto, but excluding any statements by the Investor) and any
other certificates or documents furnished by or on behalf of the Company or any
of its Subsidiaries to the Investor in connection with this Agreement, taken as
a whole, do not, and will not as of the Closing Date, to the best knowledge of
the Company, contain any material misstatement of fact or omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances in which the same were made, not materially
misleading in their presentation of the Transactions or the other transactions
contemplated hereby or by the other Transaction Agreements or of the Company and
its Subsidiaries taken as a whole; all except as otherwise qualified herein or
therein, and such knowledge qualification being given only with respect to
factual statements made by Persons other than the Company or any of its
Subsidiaries.

     3.20 Solvency. As of the Closing Date, immediately prior to and after
          --------
giving effect to the CD&R Investment, the other Transactions and the incurrence
of all

                                       9

<PAGE>

Indebtedness and obligations being incurred in connection herewith and
therewith, and after giving effect to the Guarantee Obligations being made
pursuant to the Guarantee and Collateral Agreement, each of the Parent, the
Company and the Subsidiaries of the Company will be Solvent.

     3.21 Senior Indebtedness. The monetary obligations of the Company under
          -------------------
this Agreement and the Notes constitute "Senior Indebtedness" under and as
defined in the Senior Subordinated Note Indenture. The Guarantee Obligation
being made by the Parent pursuant to the Guarantee and Collateral Agreement
constitutes "Parent Senior Indebtedness" under and as defined in the Senior
Subordinated Note Indenture.

                                   Article IV
                 Representations and Warranties of the Investor
                 ----------------------------------------------

     The Investor hereby represents and warrants as follows:

     4.1 Experience. The Investor (a) acknowledges that the CD&R Investment is
         ----------                -
by its nature one of high risk, (b) has such knowledge and experience in
                                 -
financial and business matters as to be capable of evaluating the merits and
risks of the CD&R Investment, (c) has been furnished with and has had access to
                               -
such information as the Investor considers necessary to make a determination as
to the advisability of the CD&R Investment, together with such additional
information as is necessary to verify the accuracy of the information supplied
and (d) financially can afford to bear the economic risk of holding the Notes
     -
and, if issued, the Warrants, for an indefinite period and can afford to suffer
the complete loss of the Purchase Price.

     4.2 Investment Intent. The Investor is acquiring the Notes and, if issued,
         -----------------
the Warrants, as well as the Common Stock issuable upon conversion of the Notes
and the exercise of the Warrants, for investment, for its own account, and not
with a view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act.

     4.3 Notes, Warrants and Common Stock Not Registered.
         -----------------------------------------------

         (a) The Investor acknowledges and understands that the offering of the
Notes and the Warrants issuable upon the early redemption or repurchase of the
Notes pursuant to this Agreement and the Transaction Agreements has not been
registered under the Securities Act or qualified under any state securities
laws.

         (b) The Investor acknowledges and understands that (i) the Notes must
be held until the earlier of their maturity, conversion, redemption or
repurchase, unless, prior to any such maturity, conversion, redemption or
repurchase, the Notes are registered under the Securities Act and qualified
under any applicable state securities laws or an exemption from such
registration and such qualification is available, (ii) the Warrants, if

                                       10

<PAGE>

issued, must be held until the earlier of their exercise or expiration, unless
such Warrants are, prior to such exercise or expiration, registered under the
Securities Act and qualified under any applicable state securities laws or an
exemption from such registration and such qualification is available and (iii)
the shares of Common Stock issuable upon the conversion or exercise, as
appropriate, of the Notes and Warrants must be held indefinitely unless such
shares of Common Stock are registered under the Securities Act and qualified
under any applicable state securities laws or an exemption from such
registration and such qualification is available.

         (c) The Investor has been advised or is aware of the provisions of Rule
144 promulgated under the Securities Act, which permits limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions and that such Rule may not become available for resale of the
Notes and Warrants.

                                   Article V
                              Conditions to Closing
                              ---------------------

     5.1 Conditions to Obligations of Each Party. The obligations of the Parent,
         ---------------------------------------
the Company and the Investor to consummate the transactions contemplated by this
Agreement and the other Transaction Agreements at the Closing shall be subject
to the satisfaction, or waiver by each such party, on or prior to the Closing
Date of the following conditions:

         (a) No Injunction etc. Consummation of the transactions contemplated by
             -----------------
this Agreement and the other Transaction Agreements shall not have been
restrained, enjoined or otherwise prohibited or made illegal by any Requirement
of Law, and no such Requirement of Law that would have such an effect shall have
been promulgated, entered, issued or determined by any court or other
Governmental Authority to be applicable to this Agreement or the other
Transaction Agreements. No action or proceeding shall be pending on the Closing
Date before any court or other Governmental Authority to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated by this
Agreement or the Transaction Agreements, or to recover any material damages or
obtain other material relief as a result of such transactions, or that otherwise
relates to the application of any such Requirement of Law.

         (b) Government Approvals and Consents. All Governmental Approvals and
             ---------------------------------
other Consents required to be made or obtained by any of the Parent, the
Company, the Investor and their respective Affiliates, including all Consents to
be obtained by the Company pursuant to the Credit Agreement, in connection with
the execution and delivery of this Agreement and the Transaction Agreements or
the consummation of the transactions contemplated hereby or thereby, shall have
been made or obtained.

                                       11

<PAGE>

     5.2 Conditions to Obligations of the Investor. The obligations of the
         -----------------------------------------
Investor to consummate the transactions contemplated by this Agreement and the
other Transaction Agreements at the Closing shall be subject to the
satisfaction, or waiver by the Investor, on or prior to the Closing Date of the
following conditions:

         (a) Representations and Warranties. The representations and warranties
             ------------------------------
of each Note Financing Party contained in Article III or any other provision of
this Agreement, or in any other Transaction Agreement, (i) shall be true and
correct in all material respects at and as of the date hereof (in the case of
this Agreement and the Guarantee and Collateral Agreement, giving effect to the
delivery of disclosure schedules in accordance with Sections 5.2(l) and 13.15)
as if such schedules, had formed a part of each such respective Transaction
Agreement on the date hereof) and (ii) shall be repeated and true and correct in
all material respects at and as of the Closing as though made at and as of such
date (except to the extent such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall be
true and correct in all material respects, on and as of such earlier date).

         (b) Performance of Agreements. Each Note Financing Party shall have in
             -------------------------
all material respects duly performed and complied with all agreements, covenants
and conditions required by this Agreement or any other Transaction Agreement to
be performed or complied with by it prior to or on the Closing Date.

         (c) Second Credit Agreement Amendment. The requisite Lenders (as such
             ---------------------------------
term is defined in the Credit Agreement), the Company and Acterna International
GmbH shall have entered into, and certain Subsidiaries of the Company shall have
acknowledged and consented to, the Second Credit Agreement Amendment, which
amendment shall be in the form of Exhibit C hereto, with such changes therefrom,
if any, as are satisfactory to the Investor; the Investor shall have received an
executed copy (certified by an officer of the Company) of the Second Credit
Agreement Amendment; and the Second Credit Agreement Amendment and the Credit
Agreement as amended thereby shall be effective and in full force and effect
both before and after giving effect to the purchase and sale of the Initial
Notes on the Closing Date and the other transactions contemplated hereby to
occur on the Closing Date.

         (d) Amendment No. 2 to Registration Rights Agreement. The Parent and
             ------------------------------------------------
the Investor shall have entered into Amendment No. 2 to the Registration Rights
Agreement, which amendment shall be in the form of Exhibit D hereto, with such
changes therefrom, if any, as are satisfactory to the Investor.

         (e) Guarantee and Collateral Agreement. Each Note Financing Party and
             ----------------------------------
the Investor shall have entered into the Guarantee and Collateral Agreement,
which agreement shall be in the form of Exhibit E hereto, with such changes
therefrom, if any, as are satisfactory to the Investor.

                                       12

<PAGE>

         (f) Intercreditor Agreement. The Bank Agent and the Investor shall have
             -----------------------
entered into, and the Parent, the Company and certain Subsidiaries of the
Company shall have acknowledged and consented to, the Intercreditor Agreement,
which agreement shall be in the form of Exhibit F hereto, with such changes
therefrom, if any, as are satisfactory to the Investor.

         (g) Fee Letter. The Company and CD&R shall have entered into an
             ----------
agreement for the payment of a fee to CD&R, at the Closing, for the financial
and management advisory services rendered by CD&R to the Company in connection
with the negotiation and consummation of the CD&R Investment and Second Credit
Agreement Amendment, in form and substance satisfactory to the Investor.

         (h) Actions to Perfect Liens. The Investor shall have received evidence
             ------------------------
in form and substance reasonably satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation, the
filing of duly executed financing statements on Form UCC-1, necessary or, in the
reasonable opinion of the Investor, reasonably desirable to perfect the Liens
created by the Note Security Documents shall have been completed.

         (i) Lien Searches. The Investor shall have received the results of a
             -------------
recent search by a Person satisfactory to the Investor, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed with
respect to personal property of the Parent, the Company and any Domestic
Subsidiary (including any Foreign Subsidiary Holdco) that is a Credit Party, and
the results of such search shall be reasonably satisfactory to the Investor.

         (j) No Default. No Bank Default Event, no Senior Subordinated Default
             ----------
Event and no Default or Event of Default hereunder shall have occurred and be
continuing as of the Closing Date.

         (k) Officer's Certificate. Each of the Parent and the Company shall
             ---------------------
have delivered to the Investor a certificate, dated the Closing Date and signed
by an officer of the Parent or the Company, as appropriate, in form and
substance reasonably satisfactory to the Investor, to the effect set forth above
in Sections 5.2(a), 5.2(b), and 5.2(j).

         (l) Disclosure Schedules. The Parent and the Company shall have
             --------------------
delivered to the Investor each of the Schedules to this Agreement and the
Guarantee and Collateral Agreement as required hereby and thereby, in form and
substance reasonably satisfactory to the Investor.

         (m) Corporate and Other Proceedings. All corporate and other
             -------------------------------
proceedings of the Parent, the Company and the Subsidiaries of the Company in

                                       13

<PAGE>

connection with the transactions contemplated by this Agreement and the other
Transaction Agreements, and all documents and instruments incident thereto,
shall be satisfactory in form and substance to the Investor and its counsel, and
the Investor and its counsel shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.

                                   Article VI
                      The Convertible Notes; General Terms
                      ------------------------------------

     6.1 Interest Accrual. Interest on each Note shall be computed on the basis
         ----------------
of a three hundred sixty (360) day year of twelve (12) thirty (30) day months,
and shall accrue on the unpaid principal amount of such Note from time to time
outstanding from and including the date thereof at the rate (the "Interest
Rate") of twelve percent (12%) per annum, in arrears, semi-annually on each
March 31st and September 30th (each, an "Interest Payment Date") of each year
(commencing on the later of March 31, 2002 and the Interest Payment Date next
succeeding the date of issuance of such Note) until the Principal Amount of such
Note shall have become due and payable. Any overdue installment of interest or
payment of any Principal Amount (the due date of such installment or payment to
be determined without giving effect to any grace period) shall be payable upon
demand and shall bear interest at a rate per annum equal to the lesser of (a)
the highest rate allowed by applicable law and (b) the Interest Rate plus two
percent (2%).

     6.2 Payments.
         --------

         (a) Interest Payments. The Company shall pay the accrued and unpaid
             -----------------
interest on the Notes on each Interest Payment Date, without any presentment of
the Notes by the Holders thereof and without any notation of such payment being
made thereon. With respect to each Note, payments of accrued and unpaid interest
(each, an "Interest Payment") shall be made by the Company to the Holder of such
           ----------------
Note either (i) in cash or (ii), at the option of the Company, by the issuance
             -              --
of an additional Note (A) in the form Exhibit A hereto, with such changes
                       -
therefrom, if any, as may be approved by the Company and the Holder, (B)
                                                                      -
registered in the name of such Holder, (C) bearing interest at the Interest Rate
                                        -
and (D) having a face value equal to the amount of the Interest Payment
     -
applicable to such Note. In the event that an Interest Payment is made by the
Company through the issuance of an additional Note as provided in the previous
sentence, such Interest Payment shall be deemed paid in full and shall not
constitute an overdue installment of interest.

         (b) Payment of Principal Upon Maturity. With respect to each Note, on
             ----------------------------------
the Maturity Date, the Principal Amount of such Note shall become due and
payable and shall be paid by the Company, together with any accrued and unpaid
interest on such Note, to the Holder thereof in cash.

                                       14

<PAGE>

         (c) Mechanism for Payments in Cash. Any cash payment required to be
             ------------------------------
made by the Company under this Article VI shall be made by wire transfer of
immediately available funds to an account designated in writing by the Holder to
whom such payment is due.

         (d) Payment on Business Day Only. If any payment due on, or with
             ----------------------------
respect to, any Note shall fall due on a day other than a Business Day, then
such payment shall be made on the next succeeding Business Day following the day
on which such payment shall have so fallen due, without including the additional
days elapsed in the computation of the interest payable on such succeeding
Business Day.

     6.3 Conversion.
         ----------

         (a) Subject to and upon compliance with the provisions of this Section
6.3, at the option of the Holder thereof, any Note may be converted into fully
paid and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock at the Conversion Rate, determined as
hereinafter provided, in effect at the time of conversion. Such conversion right
shall commence on the initial issuance date of each Note and expire at the close
of business on the Maturity Date. In case a Note or portion thereof is called
for redemption at the election of the Company or the Holder thereof exercises
his right to require the Company to repurchase the Note following a Change of
Control, such conversion right in respect of the Note, or portion thereof so
called, shall expire at the close of business on the Business Day prior to the
Redemption Date or the Change of Control Payment Date, as the case may be,
unless the Company defaults in making the payment due upon redemption or
repurchase, as the case may be. The rate at which shares of Common Stock shall
be delivered upon conversion (the "Conversion Rate") shall be initially three
                                   ---------------
hundred thirty three and one-third (333.33) shares of Common Stock for each
$1,000 Principal Amount of Notes. The Conversion Rate shall be adjusted in
certain instances as provided in this Section 6.3. (For the purposes of this
Agreement, an "increase" or "decrease" in the Conversion Rate means that the
number of shares of Common stock issuable upon conversion of each $1,000 of
Principal Amount of the Notes shall be increased or decreased, as appropriate.)

         (b) Mechanics of Conversion.
             -----------------------

         (i) No fractional shares of Common Stock shall be issued upon
     conversion of any Note. In lieu of any fractional shares of Common Stock
     (or other property) to which a Holder would otherwise be entitled upon
     conversion of any Note (or specified portion thereof), the Company shall
     pay such Holder cash equal to such fraction multiplied by the Current
     Market Price per share of Common Stock on the day of conversion.

                                       15

<PAGE>

         (ii)  Before any Holder of a Note shall be entitled to convert such
     Note into Common Stock, such Holder shall surrender such Note, duly
     endorsed in blank, to the Company at the principal executive office of the
     Company (or any transfer agent designated by the Company), accompanied by
     written notice to the Company (a copy of which shall also be delivered to
     the Parent) stating therein (A) that such Holder elects to convert all or a
                                  -
     specified percentage (based on the Principal Amount and any accrued but
     unpaid interest thereon) of such Note into shares of Common Stock in
     accordance with this Agreement and (B) the name or names of the Person or
                                         -
     Persons which such Holder wishes the certificate or certificates evidencing
     the Common Stock to be issued. The Company's or Parent's delivery to the
     Holder (or its designee in the notice of conversion) of the number of
     shares of Common Stock (and cash in lieu of fractions thereof) into which a
     Note is convertible will be deemed to satisfy the Company's obligation to
     pay the Principal Amount of (and accrued but unpaid interest on) the Note.
     The Parent and the Company shall, as soon as practicable thereafter, (x)
                                                                           -
     issue and deliver to such Holder (or to his nominee or nominees) a
     certificate or certificates representing the number of shares of Common
     Stock to which such Holder shall be entitled as aforesaid, (y) deliver to
                                                                 -
     such Holder (or to his nominee or nominees) cash in lieu of any fractional
     share and (z), if less than the full Principal Amount (and accrued but
                -
     unpaid interest) evidenced by such surrendered Note is being converted, a
     new Note, duly executed and delivered by the Company, with a Principal
     Amount equal to the Principal Amount of the Note surrendered for
     conversion, plus any accrued but unpaid interest thereon, minus the portion
     of such Principal Amount (and accrued but unpaid interest) converted to
     shares Common Stock. A Note may be converted in part, but only if the
     principal amount of such Note to be converted is any integral multiple of
     $1,000 and the principal amount of such Note to remain outstanding after
     such conversion is equal to $1,000 or any integral multiple of $1,000 in
     excess thereof.

         (iii) Any conversion made under this Agreement shall be deemed to have
     been made immediately prior to the close of business on the date of
     surrender of the Note to be converted, and at such time the rights of the
     Holders of such Notes shall cease, and the Person or Persons entitled to
     receive the Common Stock issuable upon such conversion shall be treated for
     all purposes by the Parent as the record holder or holders of such Common
     Stock as of such date.

         (c)   Anti-Dilution Adjustments. The Conversion Rate shall be subject
               -------------------------
to adjustments from time to time as follows:

         (i)   In case the Parent shall pay or make a dividend or other
     distribution on shares of any class of capital stock payable in shares of
     Common Stock, the Conversion Rate in effect at the opening of business on
     the day following the date fixed for the determination of shareholders
     entitled to receive

                                       16

<PAGE>

     such dividend or other distribution shall be increased by dividing such
     Conversion Rate by a fraction of which (x) the numerator shall be the
                                             -
     number of shares of Common Stock outstanding at the close of business on
     the date fixed for such determination and (y) the denominator shall be the
                                                -
     sum of such number of shares and the total number of shares constituting
     such dividend or other distribution, such increase to become effective
     immediately after the opening of business on the day following the date
     fixed for such determination. If, after any such date fixed for
     determination, any dividend or distribution is not in fact paid, the
     Conversion Rate shall be immediately readjusted, effective as of the date
     the Board of Directors determines not to pay such dividend or distribution,
     to the Conversion Rate that would have been in effect if such determination
     date had not been fixed. For the purposes of this Section 6.3(c)(i), the
     number of shares of Common Stock at any time outstanding shall not include
     shares held in the treasury of the Parent but shall include shares issuable
     in respect of scrip certificates issued in lieu of fractions of shares of
     Common Stock.

         (ii) In case the Parent shall issue rights, options or warrants to all
     or substantially all holders of its Common Stock or to any other Person
     (whether or not other holders of its Common Stock receive any such rights,
     options or warrants) entitling them to subscribe for or purchase shares of
     Common Stock, or securities convertible into shares of Common Stock, at a
     price per share (such price per share, the "New Price Per Share") less than
     either (A) the Current Market Price per share of the Common Stock or (B)
             -                                                             -
     the Conversion Price in effect, on the date fixed for the determination of
     stockholders entitled to receive such rights, options or warrants or, in
     the case of any other issuance (an "Issuance"), on the date of such
                                         --------
     Issuance (other than any rights, options or warrants that by their terms
     will also be issued to any Holder upon conversion of a Note into shares of
     Common Stock without any action required by the Parent or any other
     Person), the Conversion Rate in effect at the opening of business on the
     day following the date fixed for such determination or the date of such
     Issuance, as the case may be, shall be increased by dividing such
     Conversion Rate by a fraction of which (x) the numerator shall be the
                                             -
     number of shares of Common Stock outstanding at the close of business on
     the date fixed for such determination or immediately prior to such
     Issuance, as the case may be, plus the number of shares of Common Stock
     which the aggregate of the offering price of the total number of shares of
     Common Stock so offered for subscription or purchase would purchase at (1)
                                                                             -
     if the New Price Per Share is less than both such Current Market Price and
     such Conversion Price, the higher of such prices or (2) if the New Price
                                                          -
     Per Share is less than either such Current Market Price or such Conversion
     Price but not both, such price that the New Price Per Share is less than,
     (y) the denominator shall be the number of shares of Common Stock
      -
     outstanding at the close of business on the date fixed for such
     determination or immediately prior to such Issuance, as the case may be,
     plus the number of shares of Common Stock so

                                       17

<PAGE>

         offered for subscription or purchase, such increase to become effective
         immediately after the opening of business on the day following the date
         fixed for such determination or of such Issuance, as the case may be.
         If, after any such date fixed for determination or any Issuance, any
         such rights, options or warrants are not in fact issued, or are not
         exercised, prior to the expiration thereof, the Conversion Rate shall
         be immediately readjusted, effective as of the date such rights,
         options or warrants expire, or the date the Board of Directors of the
         Parent determines not to issue such rights, options or warrants, to the
         Conversion Rate that would have been in effect if the unexercised
         rights, options or warrants had never been granted or such
         determination date had not been fixed, as the case may be. For the
         purposes of this Section 6.3(c)(ii), the number of shares of Common
         Stock at any time outstanding shall not include shares held in the
         treasury of the Company but shall include shares issuable in respect of
         scrip certificates issued in lieu of fractions of shares of Common
         Stock.

               (iii) In case outstanding shares of Common Stock shall be
         subdivided into a greater number of shares of Common Stock, the
         Conversion Rate in effect at the opening of business on the day
         following the day upon which such subdivision becomes effective shall
         be proportionately increased, and, conversely, in case outstanding
         shares of Common Stock shall be combined into a smaller number of
         shares of Common Stock, the Conversion Rate in effect at the opening of
         business on the day following the day upon which such subdivision or
         combination becomes effective shall be proportionately reduced, such
         increase or reduction, as the case may be, to become effective
         immediately after the opening of business on the day following the day
         upon which such subdivision or combination becomes effective.

               (iv) In case the Parent shall, by dividend or otherwise,
         distribute to all or substantially all holders of its Common Stock
         evidences of its indebtedness, shares of any class of capital stock or
         other property (including cash or assets or securities, but excluding
         (A) any rights, options or warrants referred to in Section 6.3(c)(ii)
          -
         and any other rights, options or warrants that by their terms will also
         be issued to any Holder upon conversion of a Note into shares of Common
         Stock without any action required by the Parent or any other Person,
         (B) any dividend or distribution referred to in Section 6.3(c)(i) and
          -
         (C) mergers or consolidations to which Section 6.3(i) applies), the
          -
         Conversion Rate shall be adjusted so that the same shall equal the rate
         determined by dividing the Conversion Rate in effect immediately prior
         to the close of business on the date fixed for the determination of
         stockholders entitled to receive such distribution by a fraction of
         which (x) the numerator shall be the Current Market Price per share of
         the Common Stock on the date fixed for such determination less the then
         fair market value (as determined by the Board of Directors of the
         Parent) of the portion of the assets, shares or evidences of
         indebtedness so distributed applicable

                                       18

<PAGE>

         to one share of Common Stock and (y) the denominator shall be such
                                           -
         Current Market Price per share of the Common Stock, such adjustment to
         become effective immediately prior to the opening of business on the
         day following the date fixed for the determination of stockholders
         entitled to receive such distribution. If after any such date fixed for
         determination, any such distribution is not in fact made, the
         Conversion Rate shall be immediately readjusted, effective as of the
         date the Board of Directors of the Parent determines not to make such
         distribution, to the Conversion Rate that would have been in effect if
         such determination date had not been fixed.

               (v) The reclassification of Common Stock into securities other
         than Common Stock (other than any reclassification upon a consolidation
         or merger to which Section 6.3(i) applies) shall be deemed to involve
         (A) a distribution of such securities other than Common Stock to all
          -
         holders of Common Stock (and the effective date of such
         reclassification shall be deemed to be "the date fixed for the
         determination of stockholders entitled to receive such distribution"
         and "the date fixed for such determination" within the meaning of
         Section 6.3(c)(iv)), and (B) a subdivision or combination, as the case
                                   -
         may be, of the number of shares of Common Stock outstanding immediately
         prior to such reclassification into the number of shares of Common
         Stock outstanding immediately thereafter (and the effective date of
         such reclassification shall be deemed to be "the day upon which such
         subdivision becomes effective" or "the day upon which such combination
         becomes effective," as the case may be, and "the day upon which such
         subdivision or combination becomes effective" within the meaning of
         Section 6.3(c)(iii).

               (vi) In the case the Parent shall issue or sell any shares of New
         Common Stock for consideration per share (such price per share, the
         "New Issue Price") less than either (A) the Current Market Price per
          ---------------                     -
         share of Common Stock or (B) the Conversion Price in effect on the date
                                   -
         of and immediately prior to such issuance, then and in such event, the
         Conversion Rate shall be increased by dividing such Conversion Rate by
         a fraction of which (x) the numerator shall be the number of shares of
                              -
         Common Stock outstanding immediately prior to such issuance or sale
         plus the number of shares of Common Stock which the aggregate of the
         purchase price of the total number of shares of Common Stock so issued
         or sold would purchase at (1) if the New Issue Price is less than both
                                    -
         such Current Market Price and such Conversion Price, the higher of such
         prices or (2) if the New Issue Price is less than either such Current
                    -
         Market Price or such Conversion Price but not both, such price that the
         New Issue Price is less than and (y) the denominator shall be the
                                           -
         number of shares of Common Stock outstanding immediately prior to such
         issuance or sale plus the number of shares of Common Stock so issued or
         sold, such increase to become effective immediately after the
         consummation of such issuance or sale.

                                       19

<PAGE>

               (vii)  For purposes of this Agreement, the term "`ex' date," when
         used with respect to any issuance or distribution, means the first date
         on which the Common Stock trades the regular way in the applicable
         securities market or on the applicable securities exchange without the
         right to receive such issuance or distribution.

               (viii) The Parent may make such increases in the Conversion Rate,
         for the remaining term of the Notes or any shorter term, in addition to
         those required by paragraphs (i), (ii), (iii), (iv), (v), and (vi) of
         this Section 6.3(c), as it considers to be advisable in order to avoid
         or diminish any income tax to any holders of shares of Common Stock
         resulting from any dividend or distribution of stock or issuance of
         rights or warrants to purchase or subscribe for stock or from any event
         treated as such for income tax purposes. The Parent shall have the
         power to resolve any ambiguity or correct any error in this paragraph
         (viii) and its actions in so doing shall, absent manifest error, be
         final and conclusive.

               (ix)   Notwithstanding the provisions of Section 6.3(c)(iv), in
         the event that the then fair market value (as so determined) of the
         portion of the shares of capital stock, evidences of indebtedness, cash
         or other assets, including securities so distributed applicable to one
         share of Common Stock is equal to or greater than the Current Market
         Price per share of the Common Stock, then, in lieu of the adjustments
         provided for by Section 6.3(c)(iv), as the case may be, adequate
         provision shall be made so that each Holder shall have the right to
         receive upon conversion of a Note (or any portion thereof) the amount
         of shares of capital stock, evidences of indebtedness, cash or other
         assets, including securities, such Holder would have received had such
         Holder converted such Note (or portion thereof) immediately prior to
         the date fixed for such determination.

               (d)    Notice of Adjustments of Conversion Rate. Whenever the
                      ----------------------------------------
Conversion Rate is adjusted as herein provided the Parent shall compute the
adjusted Conversion Rate in accordance with Section 6.3(c) and shall prepare a
certificate signed by a Responsible Officer setting forth the adjusted
Conversion Rate and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall promptly be provided to the
Holder.

               (e)    Notice of Certain Corporate Action. In case:
                      ----------------------------------

               (i)    the Parent shall declare a dividend (or any other
         distribution) on its Common Stock; or

               (ii)   the Parent shall authorize the granting to all or
         substantially all of the holders of its Common Stock of, or otherwise
         authorize the issuance to any

                                       20

<PAGE>

         other Person, rights, options or warrants to subscribe for or purchase
         any shares of capital stock of any class or of any other rights; or

               (iii) the Parent shall subdivide the outstanding shares of Common
         Stock into a greater number of shares; or

               (iv)  the Parent shall distribute, by dividend or otherwise, to
         all or substantially all of the holders of Common Stock evidences of
         its indebtedness, shares of any class of capital stock or other
         property (including, without limitation, cash, assets or securities),
         subject to the exceptions set forth on Section 6.3(c)(iv); or

               (v)   of any reclassification of the Common Stock, or of any
         consolidation, merger or share exchange to which the Parent is a party
         and for which approval of any stockholders of the Parent is required,
         or of the conveyance, sale, transfer or lease of all or substantially
         all of the assets of the Parent; or

               (vi)  of the voluntary or involuntary dissolution, liquidation or
         winding up of the Parent;

then the Parent shall provide to all Holders, at least twenty (20) days (or ten
(10) days in any case specified in clause (i) or (ii) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice or the notice
referred to in the next sentence nor any defect therein shall affect the
legality or validity of the proceedings described in clauses (i) through (vi) of
this Section 6.3(e). The Parent shall provide to all Holders notice of any
tender offer by the Company or any of its Subsidiaries for all or any portion of
the Common Stock at or about the time that such notice of tender offer is
provided to the public generally.

               (f)   Company to Reserve Common Stock. The Parent shall at all
                     -------------------------------
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock (including treasury stock), for the purpose
of effecting the conversion of

                                       21

<PAGE>

Notes, the full number of shares of Common Stock then issuable upon the
conversion of all then outstanding Notes.

               (g)   Taxes on Conversions. Except as provided in the next
                     --------------------
sentence, the Parent will pay any and all taxes and duties that may be payable
in respect of the issue or delivery of shares of Common Stock on conversion of
Notes pursuant hereto. The Parent shall not, however, be required to pay any tax
or duty which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that of the Holder
of the Note or Notes to be converted, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to the Parent
the amount of any such tax or duty, or has established to the satisfaction of
the Parent that such tax or duty has been paid.

               (h)   Covenants as to Common Stock and Distribution in Respect
                     --------------------------------------------------------
Thereof.
-------

               (i)   The Parent agrees that all shares of Common Stock that may
     be delivered upon conversion of Notes, upon such delivery, will have been
     duly authorized and validly issued and will be fully paid and nonassessable
     and, except as provided in Section 6.3(g), the Parent will pay all taxes,
     liens and charges with respect to the issue thereof.

               (ii)  The Parent will not pay any dividend or make any
     distribution on shares of Common Stock held in the treasury of the Parent.

               (iii) The Parent will not issue any rights, options or warrants
     in respect of shares of Common Stock held in the treasury of the Parent.

               (i)   Provision in Case of Consolidation, Merger or Sale of
                     -----------------------------------------------------
Assets. In case of any consolidation or merger of the Parent with or into any
------
other Person or any merger of another Person with or into the Parent (in either
case, other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Parent) or any conveyance, sale, transfer or lease of all or substantially
all of the assets of the Parent, the Person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to each Holder an agreement providing that the Holder
of each Note then outstanding shall have the right thereafter, during the period
such Note shall be convertible as specified in this Section 6.3, to convert such
Note only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by a holder of the number of shares of Common Stock of the Parent into which
such Note might have been converted immediately prior to such consolidation,
merger, conveyance, sale, transfer or lease, assuming such holder of Common
Stock (x) is not (A) a Person with which the Parent
       -          -

                                       22

<PAGE>

consolidated or merged with or into or which merged into or with the Parent or
to which such conveyance, sale, transfer or lease was made, as the case may be
(a "Constituent Person"), or (B) an Affiliate of a Constituent Person and (y)
    ------------------        -                                            -
failed to exercise his or her rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer, or lease is not the same for
each share of Common Stock held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Share"), then for the purpose of this Section
                 ------------------
6.3(i) the kind and amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance, sale, transfer or lease by the
holders of each Non-electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing Shares). Such agreement
shall provide for adjustments which, for events subsequent to the effective date
of such agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6.3. The above provisions of this
Section 6.3(i) shall similarly apply to successive consolidations, mergers,
conveyances, sales, transfers or leases.

               (j)   Rights Issued in Respect of Common Stock. Rights, options
                     ----------------------------------------
or warrants distributed by the Parent to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase shares of the Parent's capital
stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events (each, a "Trigger
                                                                        -------
Event"):
-----

               (i)   are deemed to be transferred with such shares of Common
Stock,

               (ii)  are not exercisable, and

               (iii) are also issued in respect of future issuances of Common
Stock

shall not be deemed distributed for purposes of this Section 6.3 until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Rate under this
Section 6.3, (A) in the case of any such rights or warrants which shall all have
              -
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(B) in the case of any such rights or
 -

                                       23

<PAGE>

warrants all of which shall have expired without exercise by any holder thereof,
the Conversion Rate shall be readjusted as if such issuance had not occurred.

               (k)   Conversion Rights Subject to Stockholder Vote. If, pursuant
to any Requirement of Law or rule or regulation of any securities exchange or
national securities quotation service, the stockholders of the Parent are
required to approve the issuance of shares of Common Stock issuable upon
conversion of the Notes under this Agreement, no Note may be converted until
such issuance upon conversion has been so approved at the next annual meeting of
the Parent's stockholders following the Closing Date or otherwise. At any time
prior to such approval, upon the written request of Holders of Notes holding, at
any time, eighty percent (80%) of the aggregate Principal Amount of the Notes
outstanding at such time, the Parent, at its own expense and as soon as
practicable following such request, shall obtain the written consent of its
stockholders to such issuance upon conversion of the Notes, prepare and file
with the SEC an information statement relating to such stockholder approval and
take all other actions as are necessary or advisable under any Requirement of
Law or otherwise in respect of the issuance of Common Stock upon conversion of
the Notes.

     6.4       Optional Redemption.
               -------------------

               (a)   The Company may, at its option, redeem (each, an "Optional
                                                                       --------
Redemption") the Notes at any time, in whole or in part, without penalty or
----------
premium, in a minimum aggregate Principal Amount of $1,000,000 (or, if the
aggregate outstanding principal amount of the Notes is less than $1,000,000 at
such time, then such Principal Amount) and in integral multiples of $1,000,000,
in each case for a redemption price equal to the aggregate Principal Amount of
the Notes so redeemed, together with accrued but unpaid interest on such
Principal Amount to the date of redemption (the "Redemption Date"), without
                                                 ---------------
penalty or premium.

               (b)   If the Company undertakes an Optional Redemption in
accordance with this Section 6.4, notice (a "Redemption Notice") shall be given
                                             -----------------
by the Company, at its own expense, to each Holder of Notes to be redeemed. The
Redemption Notice shall be sent by first class mail, postage prepaid, to such
Holder's address appearing in the Note Register, by the Company not less than
thirty (30) nor more than sixty (60) days prior to the expected Redemption Date.
The Redemption Notice shall state:

               (i)   the expected Redemption Date;

               (ii)  that such redemption is an Optional Redemption made
     pursuant to this Section 6.4;

               (iii) the Principal Amount of each Note to be redeemed plus the
     amount of the interest to be paid on each such Note, accrued to the
     Redemption Date (the

                                       24

<PAGE>

     Principal Amount plus accrued but unpaid interest thereon, the "Redemption
                                                                     ----------
     Price");
     -----

          (iv) the place where or manner in which the Notes to be redeemed are
     to be surrendered to the Company for payment; and

          (c)  In the case of any partial Optional Redemption, selection of the
Notes for redemption will be made not more than sixty (60) days prior to the
Redemption Date by the Company on a pro rata basis, by lot or by such other
                                    --- ----
method as the Company in its sole discretion shall deem to be fair and
appropriate, although no Note of $1,000 in Principal Amount or less will be
redeemed in part.

          (d)  If a Redemption Notice has been given in accordance with this
Section 6.4, such Notes (or the portions thereof to be redeemed) shall, on the
Redemption Date, become due and payable at the Redemption Price and from and
after such date (unless the Company defaults in the payment of the Redemption
Price) such Notes (or the portions thereof to be redeemed) shall cease to bear
interest. Upon surrender of such Notes for redemption in accordance with such
Redemption Notice, such Notes (or the portions thereof to be redeemed) shall be
paid by the Company at the Redemption Price. If any Note (or portion thereof)
called for redemption shall not be so paid upon surrender thereof for
redemption, such Note shall, until paid, bear interest from the Redemption Date
at the Interest Rate.

          (e)  If any Note is duly surrendered by its Holder for redemption only
in part, following the consummation of such redemption, the Company shall
execute and deliver to such Holder, without service charge, a new Note or Notes,
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 Amount of the Note so surrendered.

     6.5  Mandatory Offer to Repurchase Upon Change of Control.
          ----------------------------------------------------

          (a)  In the event of the obtaining of actual knowledge of a Change of
Control Notice Event, the Company will, within three (3) Business Days after the
occurrence of such event, give notice of such Change of Control Notice Event to
each Holder of Notes. Each such notice shall (i) be dated the date of the
                                              -
sending of such notice; (ii) refer to this Section 6.5; and (iii) specify, in
                         --                                  ---
reasonable detail, the nature and date of the Change of Control Notice Event.

          (b)  In the event of a Change of Control, the Company will, within
three (3) Business Days after the occurrence of such event (or, in the case of
any Change of Control the consummation or finalization of which would involve
any action of the Company, at least thirty (30) days prior to such Change of
Control), give notice of such Change of Control to each Holder of Notes. Such
notice shall contain an irrevocable

                                       25

<PAGE>

separate offer by the Company to each Holder of Notes to repurchase all, but not
less than all, of the Notes held by such Holder, in each case for a purchase
price equal to the aggregate Principal Amount of Notes so repurchased, together
with accrued but unpaid interest on such Principal Amount to the date of
repurchase, without penalty or premium. Such payment shall occur on a date (the
"Change of Control Payment Date") specified in such notice that is not less than
 ------------------------------
thirty (30) days and not more than forty-five (45) days after the date of such
notice. Each such notice shall:

          (i)   be dated the date of the sending of such notice;

          (ii)  specify, in reasonable detail, the nature and date of the Change
     of Control;

          (iii) specify the Change of Control Payment Date;

          (iv)  specify the Principal Amount of each Note outstanding;

          (v)   specify the interest that will be due on each Note offered to be
     repurchased, accrued to the Change of Control Payment Date;

          (vi)  certify that the conditions of this Section 6.5 have been
     fulfilled; and

          (vii) state that a failure to respond to the notice shall be deemed to
     be an acceptance of such offer.

If the Company shall not have received a written response to such notice from
any Holder of Notes within ten (10) days after the date of posting of such
notice to such Holder of Notes, then the Company shall immediately send a second
notice to each such Holder of Notes.

          (c)   In the event that the Company makes a repurchase offer to the
Holders of the Notes in accordance with subsection (b) of this Section 6.5, but
at the time such offer is made the terms of any Bank Indebtedness restrict or
prohibit such repurchase of Notes, then prior to the mailing of a notice to
Holders in accordance with subsection (b) of this Section 6.5, but in any event
not later than thirty (30) days following the date of any Change of Control
(unless the Company has exercised its right to redeem all the Notes under
Section 6.4 or has repurchased all the Notes under Section 6.6), the Company
shall (i) repay in full all such Bank Indebtedness (if otherwise permitted
       -
hereby) or (ii) if no other action is required by the terms of such Bank
            --
Indebtedness, offer to repay in full all such Bank Indebtedness and repay the
Bank Indebtedness of each holder thereof who has accepted such offer or (ii)
                                                                         --
obtain the requisite consent under the agreements governing such Bank
Indebtedness to permit the repurchase of Notes as provided for in this Section
6.5.

                                       26

<PAGE>

          (d) To accept such repurchase offer, a Holder of Notes shall either
(i) cause a notice of such acceptance to be delivered to the Company not later
than thirty (30) days after the date of receipt by such Holder of the written
offer of such repurchase or (ii) unless such Holder subsequently delivers a
                             --
written notice of rejection to the Company, fail to respond to such written
offer of repurchase within such period of thirty (30) days. To reject such offer
such Holder of Notes shall deliver a written notice of rejection of such offer.
If accepted, such offered repurchase shall be due and payable on the Change of
Control Payment Date.

          (e) The obligation of the Company to purchase Notes pursuant to the
offers required by Section 6.5(b) and accepted in accordance with Section 6.5(d)
is subject to the occurrence of the Change of Control in respect of which such
offers and acceptances shall have been made. In the event that such Change of
Control does not occur prior to the Change of Control Payment Date in respect
thereof, such purchase shall be deferred until and shall be made on the date on
which such Change of Control occurs or, if the Company determines that efforts
to effect such Change of Control have ceased or have been abandoned, then such
offer, acceptances and obligation to purchase shall be deemed to have been
rescinded. The Company shall keep each Holder of Notes reasonably and timely
informed of (i) any such deferral of the date of purchase; (ii) the date on
             -                                              --
which such Change of Control and the purchase are expected to occur; and (iii)
                                                                          ---
any determination by the Company that efforts to effect such Change of Control
have ceased or been abandoned.

          (f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 6.5. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 6.5, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 6.5 by virtue
thereof.

     6.6  Mandatory Offer to Repurchase CD&R Notes Upon Disposition of Assets.
          -------------------------------------------------------------------

          (a) For purposes of this Section 6.6(a), the term "Mandatory 6.6(a)
Repurchase Event" shall mean:

          (i) any sale, transfer or other disposition by the Company or any of
     its Subsidiaries of any real or personal, tangible or intangible, property
     of the Company or such Subsidiary (including, without limitation, any
     Capital Stock of a Subsidiary of the Company) to any Person (other than to
     the Company or any of its Restricted Subsidiaries) that is either (x) not
                                                                        -
     permitted under the Credit Agreement as in effect on the Closing Date
     (giving effect to the Second Credit Agreement Amendment) but has been
     consented to by the requisite lenders under

                                       27

<PAGE>

     the Credit Agreement, or (y) is permitted under, but is subject to any
                               -
     mandatory prepayment requirement of, the Credit Agreement, or

          (ii) the recovery by the Company or any of its Subsidiaries of amounts
     owing to it under property insurance policies if the Company and its
     Subsidiaries have not commenced replacement of the property on account of
     which such amounts were paid within one year of the later of the date of
     the casualty to, or condemnation of, such property or the receipt of such
     Net Proceeds.

If, on any date during the Adjustment Period, the Company or any of its
Subsidiaries shall receive Net Proceeds from any Mandatory 6.6(a) Repurchase
Event, the Company shall give notice thereof to the Investor and any other
member of the CD&R Group that is a Holder. Such notice shall contain an
irrevocable separate offer by the Company to repurchase each such Holder's CD&R
Notes on the applicable Mandatory Repurchase Date (subject to prorating as
described in Section 6.6(d)), for a purchase price equal to the Principal Amount
of Notes so repurchased (plus accrued and unpaid interest on the Principal
Amount thereof so repurchased to the date of repurchase). The aggregate purchase
price to be so applied to repurchase CD&R Notes (excluding accrued and unpaid
interest) shall be equal to (x) the aggregate amount of such Net Proceeds not
                             -
previously applied to permanently prepay Bank Indebtedness under the Credit
Agreement minus (y) the Reinvested Amount related thereto; provided, however,
                 -
that in no event shall the aggregate amount of all Reinvested Amounts subtracted
from such Net Proceeds received in connection with asset dispositions described
in clause (i) of the definition of "Mandatory 6.6(a) Repurchase Event" exceed
$10,000,000 in any fiscal year of the Company.

          (b)  For purposes of this Section 6.6(b), the term "Mandatory 6.6(b)
     Repurchase Event" shall mean:

          (i)  the sale, transfer or other disposition by the Company or any of
     its Subsidiaries of any real or personal, tangible or intangible, property
     of the Company or such Subsidiary (including, without limitation, any
     Capital Stock of a Subsidiary of the Company) to any Person (other than to
     the Company or any of its Restricted Subsidiaries) that is either (x) not
                                                                        -
     permitted under the Credit Agreement as in effect on the date hereof
     (without giving effect to the Second Credit Agreement Amendment) but has
     been consented to by the requisite lenders under the Credit Agreement, or
     (y) is permitted under, but is subject to any mandatory prepayment
      -
     requirement of, the Credit Agreement, or

          (ii) the recovery by the Company or any of its Subsidiaries of amounts
     owing to it under property insurance policies if the Company and its
     Subsidiaries have not commenced replacement of the property on account of
     which such

                                       28

<PAGE>

     amounts were paid within one year of the later of the date of the casualty
     to, or condemnation of, such property or the receipt of such Net Proceeds.

If, on any date other than during the Adjustment Period, the Company or any of
its Subsidiaries shall receive Net Proceeds from any Mandatory 6.6(b) Repurchase
Event, the Company shall give notice thereof to the Investor and any other
member of the CD&R Group that is a Holder. Such notice shall contain an
irrevocable separate offer by the Company to repurchase each such Holder's CD&R
Notes on the applicable Mandatory Repurchase Date (subject to prorating as
described in Section 6.6(d)), for a purchase price equal to the Principal Amount
of Notes so repurchased (plus accrued and unpaid interest on the Principal
Amount thereof so repurchased to the date of repurchase). The aggregate purchase
price to be so applied to repurchase CD&R Notes (excluding accrued and unpaid
interest) shall be equal to (x) the aggregate amount of such Net Proceeds not
                             -
previously applied to permanently prepay Bank Indebtedness under the Credit
Agreement minus (y) the Reinvested Amount related thereto; provided that,
                 -
notwithstanding the foregoing, any such repurchase of CD&R Notes shall only be
required upon any such sale, transfer, other disposition or recovery (A)
described in subsections 14.5(h), (j) or (k) of the Credit Agreement as in
effect on the date hereof (without giving effect to the Second Credit Agreement
Amendment), to the extent the Net Proceeds received therefrom, when aggregated
with the Net Proceeds received from all such sales, transfers, other
dispositions or recoveries in the immediately preceding twelve-month period and
minus all applicable Reinvested Amounts relating to all such Net Proceeds,
exceed $5,000,000 or (B) described in subsection 14.5(f) of the Credit Agreement
as in effect on the date hereof (without giving effect to the Second Credit
Agreement Amendment), to the extent the Net Proceeds received from any one such
sale and minus the applicable Reinvested Amounts relating to such Net Proceeds
exceeds $5,000,000 or to the extent that Net Proceeds received therefrom, when
aggregated with the Net Proceeds received from all such sales and minus all
applicable Reinvested Amounts relating to all such Net Proceeds, exceed
$10,000,000.

          (c) Any notice of the Company's offer to repurchase CD&R Notes given
pursuant to this Section 6.6 shall be given as promptly as practicable (and in
any event, within three (3) Business Days) following the date of receipt of any
such Net Proceeds (except that if any such Net Proceeds are eligible to be
reinvested in accordance with the definition of "Reinvested Amount" in Section
6.6(e) and the Company has not elected to reinvest such proceeds, such notice
shall be given on the earlier of (i) the date on which the certificate of a
                                  -
Responsible Officer of the Company to such effect is delivered to the Investor
in accordance with such definition and (ii) the last day of the period within
                                        --
which a certificate setting forth such election is required to be delivered in
accordance with such definition). If the Company shall not have received a
written response to such notice from any Holder of CD&R Notes within ten (10)
days after the date of posting of such notice to such Holder, then the Company
shall immediately send a second notice to such Holder.

                                       29

<PAGE>

          (d) To accept a repurchase offer under this Section 6.6, a Holder of
CD&R Notes shall cause a notice of such acceptance to be delivered to the
Company not later than thirty (30) days after the date of receipt by such Holder
of the written offer of such repurchase. If accepted, such offered repurchase
shall be due and payable on the applicable Mandatory Repurchase Date or, if
later, five (5) Business Days after the date of delivery of such notice of
acceptance to the Company. If, upon the expiration of the period for which a
repurchase offer under this Section 6.6 remains open, the aggregate Principal
Amount of the CD&R Notes surrendered by Holders exceeds the amount of Net
Proceeds available for payment, the Company will select the CD&R Notes to be
purchased on a pro rata basis.

          (e) As used in this Section 6.6, the following terms shall have the
following meanings:

     "Adjustment Period" means the period from the date of this Agreement to the
      -----------------
first date on or after June 30, 2003 on which no Bank Default Event has occurred
and is continuing.

     "Mandatory Repurchase Date" means a date specified in a notice given
      -------------------------
pursuant to this Section 6.6 of an offer to repurchase CD&R Notes that is not
later than ten (10) Business Days after the date of such notice (or if no date
is so specified, the date that is ten (10) Business Days after the date such
notice is issued).

     "Net Proceeds" means, with respect to any of the events referred to in this
      ------------
Section 6.6 and the defined terms used therein, (a) the gross cash
                                                 -
consideration, and all cash proceeds (as and when received) of non-cash
consideration (including, without limitation, any such cash proceeds in the
nature of principal and interest payments on account of promissory notes or
similar obligations), received by the Company and its Subsidiaries in connection
with such event, minus (b) the sum, without duplication, of (i) any taxes
                        -                                    -
reasonably estimated to be payable to any federal, state, local or foreign
taxing authority by the Parent and its Subsidiaries as a result thereof, (ii)
                                                                          --
the amount of fees and commissions (including reasonable investment banking
fees, legal, accounting, consulting, survey, title and recording tax expenses
and other costs and expenses) actually incurred in connection with such event
which are paid or payable by the Company and its Subsidiaries, (iii) the amount
                                                                ---
of such net cash proceeds which are attributable to (and payable to) minority
interests, (iv) the amount of any reserve reasonably maintained by the Company
            --
and its Subsidiaries with respect to indemnification obligations owing pursuant
to the definitive documentation pursuant to which such event is consummated
(with any unused portion of such reserve to constitute Net Proceeds on the date
upon which the indemnification obligations terminate or such reserve is reduced
other than in connection with a payment), (v) the amount of Indebtedness (other
                                           -
than intercompany Indebtedness) of any Person, or secured by a Lien permitted
hereunder on or that otherwise relates to any asset, that is the subject of such

                                       30

<PAGE>

event, if any, which is required to be repaid at the time or as a result of such
event out of the proceeds thereof and (vi) with respect to the determination of
                                       --
Net Proceeds from a sale or other disposition of property or assets referred to
in this Section 6.6, appropriate amounts to be provided by the Company or any of
its Subsidiaries to be applied to satisfy any reasonable expenses and
liabilities associated with any such property or assets and retained by the
Company or any such Subsidiary after such sale or other disposition and other
appropriate amounts which shall be used by the Company or any of its
Subsidiaries to discharge or pay on a current basis any other reasonable
expenses and liabilities associated with such property or assets.

     "Reinvested Amount" means, with respect to any sale, transfer or other
      -----------------
disposition of property or assets of the Company or any of its Subsidiaries or
any recovery of amounts under any property insurance policies, that portion of
the Net Proceeds thereof as shall, according to a certificate of a Responsible
Officer of the Company delivered to the Investor within thirty (30) days of such
sale or other disposition, be reinvested in the business of the Company and its
Subsidiaries in a manner consistent with the terms of this Agreement within
three hundred sixty (360) days of the receipt of such Net Proceeds or, if such
reinvestment is in a project authorized by the board of directors or comparable
body of the Company that will take longer than such three hundred sixty (360)
days to complete, the period of time necessary to complete such project (so long
as the Company or the relevant Subsidiary has committed to expend such portion
of the Net Proceeds within, and is diligently pursuing such project during, the
period of three hundred sixty (360) days from the receipt of such Net Proceeds);
provided that if any such certificate of a Responsible Officer is not delivered
to the Investor on the date of such sale or other disposition, any Net Proceeds
of such sale or other disposition shall be promptly (x) deposited in a cash
                                                     -
collateral account established in accordance with the terms of the Credit
Agreement, to the extent then required thereby (it being understood in such case
that the Administrative Agent is acting as bailee for the Secured Parties
pursuant to the terms of the Intercreditor Agreement), or applied to prepay
revolving credit borrowings under the Credit Agreement pending delivery of such
certificate, or (y) deposited in a cash collateral account established at the
                 -
Collateral Account Bank (as defined in the Guaranty and Collateral Agreement) to
be held as collateral in favor of the Secured Parties on terms reasonably
satisfactory to the Secured Parties and shall remain on deposit in such cash
collateral account until such certificate of a Responsible Officer is (or is
required to be) delivered to the Investor or such Net Proceeds are required to
be applied in accordance with this Section 6.6.

          (f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 6.6. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 6.6, the Company will
comply with the applicable securities laws and

                                       31

<PAGE>

regulations and will not be deemed to have breached its obligations under this
Section 6.6 by virtue thereof.

          (g) The provisions of this Section 6.6 are in addition to and not in
limitation of the provisions of Section 8.4.

     6.7  Issuance of Warrants Upon Early Redemption or Repurchase.
          --------------------------------------------------------

          (a) Upon the consummation of any redemption or repurchase of Notes
prior to the Maturity Date (whether pursuant to any provision of this Article
VI, Section 8.4 or otherwise), the Parent shall, at its own expense, execute,
issue and deliver Warrants to the Holders of the Notes so redeemed or
repurchased as provided by this Section 6.7. With respect to each Holder
receiving Warrants under this Section 6.7, the Warrants shall (a) be
                                                               -
substantially in the form of Exhibit B hereto, with such changes as may be
reasonably requested by such Holder and approved by the Parent, (b) expire on
                                                                 -
the Maturity Date, (c) have an initial exercise price, subject to adjustment in
                    -
accordance with the terms of the warrant, equal to the Conversion Price in
effect immediately prior to such repurchase or redemption, and (d) entitle its
                                                                -
Holder to purchase a number of shares of Common Stock (or other property) equal
to the number of shares of Common Stock (or other property) into which such
Holder's Notes were convertible immediately prior to their redemption or
repurchase. Each Holder entitled to receive Warrants under this Section 6.7
shall receive them in the form of a single warrant certificate (or such greater
number of warrant certificates in denominations of at least 500,000 shares as
such Holder may request), delivered by the Parent to the registered address of
such Holder in the Register of Holders maintained by the Company in accordance
with Section 6.8.

          (b) If, pursuant to any Requirement of Law or rule or regulation of
any securities exchange or national securities quotation service, the
stockholders of the Parent are required to approve the issuance of shares of
Common Stock issuable upon exercise of the Warrants, no Warrant may be exercised
until such issuance upon exercise has been so approved in connection with the
stockholder approval of the issuance of Common Stock upon conversion of the
Notes as contemplated by Section 6.3(k). At any time prior to such approval,
upon the written request of holders of the Warrants, the Parent, at its own
expense and as soon as practicable following such request, shall obtain the
written consent of its stockholders to such issuance upon exercise of the
Warrants, prepare and file with the SEC an information statement relating to
such stockholder approval and take all other actions as are necessary or
advisable under any Requirement of Law or otherwise in respect of the issuance
of Common Stock upon exercise of the Warrants.

     6.8  Register of Holders. The Company shall keep, or shall cause to be
          -------------------
kept, by a Transfer Agent for the Notes or otherwise, a register (the "Register
                                                                       --------
of Holders") for the registration and transfer of Notes, in which register the
----------
Company shall record (a) the name, address and facsimile number of each Holder
                      -
(subject to change by such Holder in

                                       32

<PAGE>

accordance with Section 13.1) and (b) the details of each transfer of one or
                                   -
more Notes made in accordance with Section 6.9, including the name and address
of each transferee of one or more Notes. The Person in whose name any Note shall
be properly registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary, other than in accordance with Section 6.9.

     6.9   Exchange of Notes Upon Transfer. Upon surrender of any Note to the
           -------------------------------
Company (or the Transfer Agent for the Notes, if any), duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder or
such Holder's attorney duly authorized in writing, the Company shall execute and
deliver a new Note or Notes in exchange therefor, in an aggregate principal
amount equal to the unpaid Principal Amount of the surrendered Note. Each new
Note shall (i) be registered in the name of such Person as the Holder may
            -
request, (ii) be (A) dated and bear interest from the date to which interest had
          --      -
been paid on the surrendered Note or (B) dated the date of the surrendered Note
                                      -
if no interest shall have been paid thereon and (iii) carry the same rights to
                                                 ---
unpaid interest and interest to accrue that were carried by the surrendered
Note. Notes shall not be transferred in denominations of less than $1,000,000,
provided that a Holder may transfer its entire holding of Notes regardless of
--------
the principal amount of such Notes. Each Holder may transfer any Note (or any
portion thereof) to any Person without the Company's consent, provided that any
                                                              --------
such transfer of Notes by the Investor or any Holder that is a member of the
CD&R Group to any Person not a member of the CD&R Group shall cause the Liens
and Guarantees established with respect to such Transferred Notes in accordance
with the Guarantee and Collateral Agreement or any other Note Security Documents
to be released, discharged and of no further force or effect with respect to
such Transferred Notes. The Company shall pay the cost of executing, issuing and
delivering the new Note or Notes to the home, office or custodian bank of (or
other location designated by) the Holder thereof, insured to the reasonable
satisfaction of such Holder. The Company may require payment of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any transfer
of Notes.

     6.10  Mutilated, Destroyed, Lost and Stolen Notes.
           -------------------------------------------

           (a) If (i) any mutilated Note is surrendered to the Company, or the
                   -
Company receives evidence reasonably satisfactory to it of the destruction, loss
or theft of any Note and (ii), in the case of any destroyed, lost or stolen
                          --
Note, there is delivered to the Company such security or indemnity as may be
required to hold the Company harmless, then, in the absence of notice to the
Company that such Note has been acquired by a bona fide purchaser, the Company
shall execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a new Note of like tenor and principal amount,
bearing a number not contemporaneously outstanding. The Company may require
payment of a sum sufficient to cover its reasonable expenses and any stamp tax
or governmental charge imposed in respect of such issuance of a new Note.

                                       33

<PAGE>

          (b) Every new Note issued pursuant to this Section 6.10 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Agreement and, as appropriate, the
other Transaction Agreements equally and ratably with any and all other duly
issued Notes.

          (c) The provisions of this Section 6.10 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 Notes.

                                  Article VII
                      Affirmative Covenants of the Company
                      ------------------------------------

     The Company hereby agrees that, from and after the date hereof and until
the payment in full of the Principal Amount of the Notes, as well as any other
amount then due and owing under or with respect to the Notes, the Company shall
and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:

     7.1  Financial Statements. Furnish the following financial statements of
          --------------------
the Parent to each Holder, it being understood all such financial statements
shall be complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods (except as approved by a
Responsible Officer of the Parent and disclosed therein, and except, in the case
of financial statements delivered pursuant to subsections (b) and (c), for the
absence of certain notes):

          (a) as soon as available, but in any event within ninety (90) days
after the end of each fiscal year of the Parent, a copy of the consolidated
balance sheet of the Parent and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income, stockholders equity
and cash flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, by PricewaterhouseCoopers or other independent certified public
accountants of nationally recognized standing;

          (b) as soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three quarterly periods of each
fiscal year of the Parent, the unaudited consolidated balance sheet of the
Parent and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income, stockholders equity and
cash flows of the Parent and its consolidated Subsidiaries for such quarter and
the portion of the fiscal year through the

                                       34

<PAGE>

end of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer of the Parent as being
fairly stated in all material respects (subject to normal year-end audit and
other adjustments); and

          (c) as soon as available, but in any event not later than forty-five
(45) days after the end of each calendar month, commencing with the month of
December 2001, financial data for such month summarizing the results of
operations of the Parent and its consolidated Subsidiaries as at the end of such
month, certified by a Responsible Officer as being fairly stated in all material
respects.

     7.2  Certificates; Other Information. Furnish to each Holder:
          -------------------------------

          (a) concurrently with the delivery of the financial statements
referred to in subsection (a) of Section 7.1, a certificate of the independent
certified public accountants reporting on such financial statements stating
that, in making the audit necessary therefor, no knowledge was obtained of any
Default or Event of Default, insofar as the same relates to any financial
accounting matters covered by their audit, except as specified in such
certificate;

          (b) concurrently with the delivery of the financial statements
referred to in subsections (a) and (b) of Section 7.1, a certificate of a
Responsible Officer stating that, to the best of such Responsible Officer's
knowledge, during such period (i) no Subsidiary has been formed or acquired (or,
                               -
if any such Subsidiary has been formed or acquired, the Company has complied
with the requirements of subsection 7.9 with respect thereto), (ii) neither the
                                                                --
Company nor any other Note Financing Party has changed its name, its principal
place of business, its chief executive office or the location of any material
item of tangible Collateral without complying with the requirements of this
Agreement and the Note Security Documents with respect thereto and (iii) to the
                                                                    ---
best of such Responsible Officer's knowledge, each of the Company and the other
Note Financing Parties has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Note Financing Documents to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except, in each case as specified in such certificate;

          (c) not later than sixty (60) days after the beginning of each fiscal
year of the Company, a copy of the projections by the Company of the operating
budget and cash flow budget of the Company and its Subsidiaries for such fiscal
year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such Responsible Officer believes such projections
have been prepared on the basis of reasonable assumptions;

                                       35

<PAGE>

          (d) within five (5) Business Days after the same are sent, copies of
all financial statements and reports which the Parent sends to its public
stockholders, and within five (5) Business Days after the same are filed, copies
of all financial statements and reports which the Parent or the Company may make
to, or file with, the SEC or any successor or analogous Governmental Authority;

          (e) promptly, such additional financial and other information as any
Holder may from time to time reasonably request; and

          (f) promptly, (x) any certificate of a Responsible Officer required
                         -
pursuant to the definition of "Consolidated Net Income" and (y) any additional
                                                             -
financial and other information provided to the Administrative Agent or any
lender or other party under the Credit Agreement, whether pursuant to the terms
of the Credit Agreement or upon the reasonable request of such party thereto.

     7.3  Payment of Obligations. Pay, discharge or otherwise satisfy at or
          ----------------------
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the consolidated books of the Parent.

     7.4  Conduct of Business and Maintenance of Existence. Continue to engage
          ------------------------------------------------
in business of the same general type as the Company and its Subsidiaries now
conduct and preserve, renew and keep in full force and effect the corporate
existence of the Company and its Subsidiaries and take all reasonable action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of the business of the Company and its Subsidiaries taken as a
whole except as otherwise permitted pursuant to Article IX; provided that the
                                                            --------
Company and its Subsidiaries shall not be required to maintain any such rights,
privileges or franchises, or the corporate existence of such Subsidiary, if the
failure to do so would not reasonably be expected to have a Material Adverse
Effect; and comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith would not, in the
aggregate, be reasonably expected to have a Material Adverse Effect.

     7.5  Maintenance of Property; Insurance. Keep all property useful and
          ----------------------------------
necessary in the business of the Company and its Subsidiaries taken as a whole
in good working order and condition; maintain with financially sound and
reputable insurance companies insurance on all its property material to the
business of the Company and its Subsidiaries taken as a whole in at least such
amounts and against at least such risks as are usually insured against in the
same general area by companies engaged in the same or a similar business; and
furnish to each Holder, upon written request, full information as to the
insurance carried.

                                       36

<PAGE>

     7.6  Inspection of Property; Books and Records; Discussions. Keep proper
          ------------------------------------------------------
books of records and account in which full, complete and correct entries in
conformity with all material Requirements of Law shall be made of all dealings
and transactions in relation to the business and activities of the Company and
its Subsidiaries; and permit representatives of any Holder, at any reasonable
time, upon reasonable notice, and as often as may reasonably be desired, to
visit and inspect any of the properties of the Company and its Subsidiaries and
examine and, to the extent reasonable, make abstracts from any of its books and
records and to discuss the business, operations, properties and financial and
other condition of the Company and its Subsidiaries with officers and employees
of the Company and its Subsidiaries and with the independent certified public
accountants of the Parent, in each case at the expense of the Company.

     7.7  Notices. Promptly give notice (it being understood that each notice
          -------
provided pursuant to this Section 7.7 shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto) to
each Holder of:

          (a) as soon as possible after any Responsible Officer knows, or
reasonably should know, of the occurrence of any Default or Event of Default;

          (b) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, (i) any (A) default or event of default under
                                 -       -
any Contractual Obligation of the Company or any Subsidiary of the Company,
other than as previously disclosed to the Holders, or (B) litigation,
                                                       -
investigation or proceeding which may exist at any time between the Parent, the
Company or any Subsidiary of the Company and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may be,
would reasonably be expected to have a Material Adverse Effect, or (ii) any Bank
                                                                    --
Default Event or Senior Subordinated Default Event;

          (c) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, any litigation or proceeding which has a
reasonable possibility of an adverse determination which would result in a
judgment against the Parent, the Company or any Subsidiary of the Company of
$5,000,000 or more and which is not covered by insurance, or in which injunctive
or similar relief is sought that would reasonably be expected to have a Material
Adverse Effect;

          (d) the following events, as soon as possible and in any event within
thirty (30) days after any Responsible Officer knows or reasonably should know
thereof:

          (i) the occurrence or expected occurrence of any Reportable Event with
     respect to any Single Employer Plan (other than a Reportable Event
     described in Section 4043(c)(9) of ERISA), a failure to make any required

                                       37

<PAGE>

     contribution to a Single Employer Plan or Multiemployer Plan, the creation
     of any Lien on the property of the Parent, the Company or any Subsidiary of
     the Company in favor of the PBGC or a Plan or any withdrawal from, or the
     termination, Reorganization or Insolvency of, any Multiemployer Plan, if,
     as a result thereof, the Parent, the Company or any Subsidiary of the
     Company could reasonably be expected to incur any material liability;

          (ii)  the existence of an Underfunding under a Single Employer Plan
     that exceeds ten percent (10%) of the value of the assets of such Single
     Employer Plan, determined as of the most recent annual valuation date of
     such Single Employer Plan on the basis of the actuarial assumptions used to
     determine the funding requirements of such Single Employer Plan as of such
     date;

          (iii) the institution of proceedings or the taking of any other formal
     action by the PBGC or the Parent, the Company, any Subsidiary of the
     Company or any Commonly Controlled Entity or any Multiemployer Plan with
     respect to the withdrawal from, or the termination, Reorganization or
     Insolvency of, any Single Employer Plan or Multiemployer Plan if, as a
     result thereof, the Parent, the Company or any Subsidiary of the Company
     could reasonably be expected to incur any material liability; or

          (iv)  the occurrence or expected occurrence of any event or condition
     under which the Parent, the Company, any Subsidiary of the Company or any
     Commonly Controlled Entity has incurred or could incur any liability in
     respect of a Former Plan;

          (e)   as soon as possible after any Responsible Officer knows, and
except as would not, individually or in the aggregate, reasonably be expected to
result in the payment of a Material Environmental Amount, that:

          (i)   any Governmental Authority has identified the Parent, the
     Company or any Subsidiary of the Company as a potentially responsible party
     under the Comprehensive Environmental Response, Compensation and Liability
     Act or any similar Environmental Law for the cleanup of Materials of
     Environmental Concern at any location, whether or not owned, leased or
     operated by the Parent, the Company or any Subsidiary of the Company;

          (ii)  any Governmental Authority may revoke any permit pursuant to
     Environmental Law held by the Parent, the Company or any Subsidiary of the
     Company, or deny or refuse to renew any such permit sought by the Parent,
     the Company or any Subsidiary of the Company; or

                                       38

<PAGE>

          (iii) any property owned, leased, or operated by the Parent, the
     Company or any Subsidiary of the Company is being listed on, or proposed
     for listing on, the National Priorities List or the Comprehensive
     Environmental Response, Compensation and Liability Information System
     maintained by the United States Environmental Protection Agency or any
     similar list maintained by any Governmental Authority;

          (f) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, any development or event which has had or would
reasonably be expected to have a Material Adverse Effect; and

          (g) as soon as possible after any Responsible Officer knows or
reasonably should know thereof, any "Termination" as defined in Section 11 of
the Intercreditor Agreement.

     7.8  Environmental Laws.
          ------------------

          (a) Comply substantially with all Environmental Laws applicable to the
Company and its Subsidiaries, and obtain, comply substantially with and maintain
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws (collectively, "Environmental
                                                          -------------
Permits"); and
-------

          (b) take all reasonable efforts to ensure that all of its tenants,
subtenants, contractors, subcontractors and invitees comply substantially with
all Environmental Laws, and obtain, comply substantially with and maintain any
and all Environmental Permits applicable to any of them insofar as any failure
to so comply, obtain or maintain reasonably would be expected to adversely
affect the Company or any of its Subsidiaries. For purposes of this Section 7.8,
noncompliance shall be deemed not to constitute a breach of this covenant,
provided that, upon learning of any actual or suspected noncompliance, the
--------
Company or its Subsidiaries, as appropriate, shall in a timely manner undertake
all reasonable efforts to achieve substantial compliance, and provided, further,
                                                              --------
that, in any case, such noncompliance, and any other such noncompliance with any
Environmental Law or Environmental Permit, individually or in the aggregate,
would not reasonably be expected to give rise to the payment of a Material
Environmental Amount.

     7.9  Additional Collateral.
          ---------------------

          (a) With respect to any owned real property or fixtures located on
owned real property, in each case with a purchase price or a fair market value
of at least $1,000,000, in which the Company or any of its Subsidiaries acquires
ownership rights at any time after the date hereof, promptly grant to the
Secured Parties, a Lien of record on all such owned real property and fixtures,
upon terms reasonably satisfactory in form and

                                       39

<PAGE>

substance to such Secured Parties (it being understood that such Lien shall be
subject to the Intercreditor Agreement), and in accordance with any applicable
requirements of any Governmental Authority (including, without limitation, any
appraisals of such property under the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 which any Secured Party reasonably deems to be
required by law), provided that (i) nothing in this Section 7.9(a) shall defer
                  --------       -
or impair the attachment or perfection of any security interest in any
Collateral covered by any of the Note Security Documents which would attach or
be perfected pursuant to the terms thereof without action by the Company, any of
its Subsidiaries or any other Person and (ii) no such Lien shall be required to
                                          --
be granted as contemplated by this Section 7.9(a) on any owned real property or
fixtures the acquisition of which is financed as permitted by Section
8.1(b)(iv), until such Indebtedness is repaid in full (and not refinanced as
permitted by Section 8.1(b)(iv)) or, as the case may be, the Company or its
Subsidiary determines not to proceed with such financing or refinancing. In
connection with any such grant to the Secured Parties of a Lien of record on any
such real property in accordance with this Section 7.9(a), the Company or such
Subsidiary shall deliver or cause to be delivered to the Secured Parties any
surveys, title insurance policies, environmental reports and other documents in
connection with such grant of such Lien obtained by it in connection with the
acquisition of such ownership rights in such real property or as any Secured
Party shall reasonably request (in light of the value of such real property and
the cost and availability of such surveys, title insurance policies,
environmental reports and other documents and whether the delivery of such
surveys, title insurance policies, environmental reports and other documents
would be customary in connection with such grant of such Lien in similar
circumstances).

          (b) With respect to any Person that, subsequent to the date hereof,
becomes a Domestic Subsidiary or Foreign Subsidiary Holdco (other than to the
extent that compliance with this Section 7.9(b) would have an adverse tax
consequence to the Company), promptly upon the request of any Secured Party:

          (i) (A) execute and deliver, or cause to be executed and delivered, to
               -
     the Investor, for the benefit of the Secured Parties, a new pledge
     agreement or such amendments to the Guarantee and Collateral Agreement as
     any Secured Party shall reasonably deem necessary or reasonably advisable
     to grant to the Secured Parties a Lien on the Capital Stock of such
     Subsidiary which is owned by the Company or any of its Domestic
     Subsidiaries (provided that in no event shall more than sixty-five percent
                   --------
     (65%) of the Capital Stock of any Foreign Subsidiary Holdco be required to
     be so pledged; and it being understood that such Lien shall be subject to
     the Intercreditor Agreement) and (B) (subject to the terms of the Guarantee
     and Collateral Agreement) deliver to the Secured Parties the certificates
     (if any) representing such Capital Stock, together with undated stock
     powers executed and delivered in blank by a duly authorized officer of the
     Company or such Subsidiary, as the case may be; and

                                       40

<PAGE>

          (ii) cause any such new Domestic Subsidiary (A) to become a party to
                                                       -
     the Guarantee and Collateral Agreement, in each case pursuant to
     documentation which is in form and substance reasonably satisfactory to the
     Secured Parties, and (B) to take all actions reasonably deemed by any
                           -
     Secured Party to be necessary or reasonably advisable to cause the Lien
     created by the Guarantee and Collateral Agreement to be duly perfected in
     accordance with all applicable Requirements of Law, including, without
     limitation, the filing of financing statements in such jurisdictions as may
     be reasonably requested by any Secured Party.

          (c) With respect to any Person that, subsequent to the date hereof,
becomes a Foreign Subsidiary (other than a Foreign Subsidiary Holdco) and which
has Capital Stock that is owned directly by the Company or a Domestic Subsidiary
(other than WWG) and with respect to any Foreign Subsidiary of WWG that,
subsequent to the date hereof, becomes a direct Subsidiary of the Company or of
a Domestic Subsidiary (other than WWG), promptly, upon the request of any
Secured Party, (i) execute and deliver to the Secured Parties a new Foreign
Pledge Agreement or such amendments to the relevant Foreign Pledge Agreement or
the Guarantee and Collateral Agreement as any Secured Party shall reasonably
deem necessary or reasonably advisable to grant to the Secured Parties a Lien on
the Capital Stock of such Foreign Subsidiary that is owned directly by the
Company or any of its Domestic Subsidiaries (other than WWG) (provided that in
                                                              --------
no event shall more than sixty-five percent (65%) of the Capital Stock of any
such Subsidiary be required to be so pledged; and it being understood that such
Lien shall be subject to the Intercreditor Agreement) and (ii) to the extent
deemed advisable by any Secured Party (subject to the terms of the Guarantee and
Collateral Agreement) deliver to the Secured Parties the certificates (if any)
representing such Capital Stock, together with undated stock powers executed and
delivered in blank by a duly authorized officer of the Company or such
Subsidiary, as the case may be.

          (d) Notwithstanding anything to the contrary contained herein, (i) no
                                                                          -
Subsidiary of the Company that had consolidated assets as of the most recently
completed fiscal quarter or consolidated gross revenues as of the most recently
completed period of four consecutive fiscal quarters, of less than $10,000,000
shall be required to comply with the provisions of this Section 7.9 (nor shall
the Company or any of its Subsidiaries be required to comply with the provisions
of this Section 7.9 with respect to any such Subsidiary) until the date that is
45 days after the earlier to occur of the Closing Date and the date on which the
Second Credit Agreement Amendment shall become effective in accordance with its
terms and (ii) the Company and its Subsidiaries shall not be required to (x)
           --                                                             -
make the representations and warranties set forth in Section 4 of the Guarantee
and Collateral Agreement or Sections 3.2, 3.6 or 3.18 of this Agreement or (y)
                                                                            -
comply with the covenants set forth in Sections 5.2.1, 5.2.2, 5.2.4, 5.2.6,
5.2.7, 5.2.8, 5.2.9(b), 5.2.10, 5.2.11, 5.3.1, 5.3.2(iii), 5.3.3 or 6.7 of the
Guarantee and Collateral Agreement with respect to any Inactive Subsidiary or
any property or assets thereof so long as such Subsidiary is an Inactive

                                       41

<PAGE>

Subsidiary, and the exclusions of Inactive Subsidiaries from representations and
warranties and covenants described in this clause (ii) shall be given effect by
appropriate modifications (which shall be reasonably acceptable to each Secured
Party and the Company) to the Assumption Agreement entered into by the Inactive
Subsidiaries pursuant to Section 8.15 of the Guarantee and Collateral Agreement.

          (e) Comply with subsection 14.15 of the Credit Agreement (entitled
Limitation on Inactive Subsidiaries) as amended by the Second Credit Agreement
Amendment and in effect on the Closing Date.

          (f) In the event that any of WWG, Wandel & Goltermann Inc., a North
Carolina corporation, or Wavetek U.S. Inc., a Delaware corporation (collectively
the "Excluded Subsidiaries"), shall remain in existence as a Domestic Subsidiary
     ---------------------
on the Closing Date, promptly upon the request of any Secured Party:

          (i) (A) execute and deliver, or cause to be executed and delivered, to
               -
     the Investor, for the benefit of the Secured Parties, a new pledge
     agreement or such amendments to the Guarantee and Collateral Agreement as
     any Secured Party shall reasonably deem necessary or reasonably advisable
     to grant to the Secured Parties a Lien on the Capital Stock of such
     Subsidiary which is owned by the Company or any of its Domestic
     Subsidiaries and has been pledged to secure Indebtedness under the Credit
     Agreement (it being understood that such Lien shall be subject to the
     Intercreditor Agreement) and (B) (subject to the terms of the Guarantee and
                                   -
     Collateral Agreement) deliver to the Secured Parties the certificates (if
     any) representing such Capital Stock, together with undated stock powers
     executed and delivered in blank by a duly authorized officer of the Company
     or such Subsidiary, as the case may be; and

          (ii) cause any such Domestic Subsidiary (A) to become a party to the
                                                   -
     Guarantee and Collateral Agreement, in each case pursuant to documentation
     which is in form and substance reasonably satisfactory to the Secured
     Parties, and (B) to take all actions reasonably deemed by any Secured Party
                   -
     to be necessary or reasonably advisable to cause the Lien created by the
     Guarantee and Collateral Agreement to be duly perfected in accordance with
     all applicable Requirements of Law, including, without limitation, the
     filing of financing statements in such jurisdictions as may be reasonably
     requested by any Secured Party.

The Excluded Subsidiaries shall not be required to comply with Sections 7.10 and
7.11 prior to the Closing Date.

     7.10 Liens. If after the date hereof, the Company or any of its
          -----
Subsidiaries creates or suffers to exist a Lien on any of their respective
properties or assets securing any Bank Indebtedness (other than the CD&R Notes),
then the Company shall, and shall

                                       42

<PAGE>

cause each such Subsidiary to, create a Lien on such property or assets securing
the CD&R Notes pursuant to the Guarantee and Collateral Agreement (or, if
requested by any Secured Party, one or more other Note Security Documents in
form and substance reasonably satisfactory to the Secured Parties and
substantially equivalent to one or more security documents in respect of such
Bank Indebtedness), which Lien securing the CD&R Notes shall be on terms no less
favorable to the Holders thereof than the terms of such Lien securing such Bank
Indebtedness shall be to the holders of such Bank Indebtedness (it being
understood that such Lien securing the CD&R Notes shall be subject to the
Intercreditor Agreement).

     7.11 Note Guarantors.
          ---------------

          (a) From and after the date hereof, the Company will cause each
Subsidiary that Guarantees payment of any Bank Indebtedness (other than the CD&R
Notes) to execute and deliver to each Holder of CD&R Notes an instrument
pursuant to which such Subsidiary will Guarantee payment of the CD&R Notes
pursuant to the Guarantee and Collateral Agreement (or, if requested by any
Secured Party, one or more other Note Security Documents in form and substance
reasonably satisfactory to the Secured Parties), whereupon such Subsidiary will
become a Note Guarantor for all purposes under this Agreement.

          (b) From and after the date hereof, the Parent shall Guarantee payment
of the Transferred Notes in accordance with the terms of Annex A hereto. From
and after the date hereof, the Company will cause each Domestic Subsidiary that
is a Significant Subsidiary and that Guarantees Indebtedness of the Company
(other than Bank Indebtedness), to execute and deliver to each Holder of
Transferred Notes an instrument pursuant to which such Subsidiary will Guarantee
payment of the Transferred Notes in accordance with the terms of Annex A hereto,
whereupon such Subsidiary will become a Note Guarantor in respect of the
Transferred Notes for all purposes under this Agreement, provided, however, each
                                                         --------
such Guarantee in respect of a Transferred Note (a "Springing Guarantee") by a
                                                    -------------------
Domestic Significant Subsidiary (a "Significant Subsidiary Guarantor") will be
                                    --------------------------------
subject to termination and discharge under the following circumstances: Each
Significant Subsidiary Guarantor will automatically and unconditionally be
released from all obligations under its Springing Guarantee, and such Springing
Guarantee shall thereupon terminate and be discharged and of no further force or
effect, (i) concurrently with any sale or disposition (by merger or otherwise)
         -
in accordance with the terms of this Agreement of any Significant Subsidiary
Guarantor or any interest therein by the Company or a Restricted Subsidiary,
following which such Significant Subsidiary Guarantor is no longer a Restricted
Subsidiary of the Company for the purposes of this Agreement and with respect to
the Notes, (ii) pursuant to the terms of its Springing Guarantee, (iii) at any
            --                                                     ---
time that such Significant Subsidiary Guarantor is released from all of its
obligations under all of its Springing Guarantees of payment of Indebtedness
(other than Bank Indebtedness) of the Company, (iv) upon the merger or
                                                --

                                       43

<PAGE>

consolidation of any Significant Subsidiary Guarantor with and into the Company
or another Significant Subsidiary Guarantor that is the surviving Person in such
merger or consolidation and (v) upon payment in full of the aggregate principal
                             -
amount of all Transferred Notes then outstanding and all other Guaranteed
Obligations in respect of Transferred Notes then due and owing. Upon any such
occurrence specified in the preceding sentence, each Holder of Transferred Notes
shall execute any documents reasonably required in order to evidence such
release, discharge and termination of such Significant Subsidiary Guarantee (at
the expense of the Company).

                                  Article VIII
                        Negative Covenants of the Company
                        ---------------------------------

     The Company hereby agrees that, from and after the date hereof and until
payment in full of the Principal Amount of the Notes, as well as any other
amount then due and owing under or with respect to the Notes:

     8.1  Limitation on Indebtedness.
          --------------------------

          (a)  The Company will not, and will not permit any Restricted
Subsidiary to, Incur any Indebtedness, provided, however, that the Company or
                                       --------
any Note Guarantor Subsidiary may Incur Indebtedness if on the date of the
Incurrence of such Indebtedness, after giving effect to the Incurrence thereof,
the Consolidated Coverage Ratio would be greater than 2.00:1.00.

          (b)  Notwithstanding subsection (a) of this Section 8.1, the Company
and its Restricted Subsidiaries may Incur the following Indebtedness:

          (i)  Indebtedness Incurred pursuant to the Credit Facility (including
     but not limited to in respect of letters of credit or bankers' acceptances
     issued or created thereunder) and Indebtedness of any Foreign Subsidiary
     that is a Restricted Subsidiary Incurred other than under the Credit
     Facility, and (without limiting the foregoing), in each case, any
     Refinancing Indebtedness in respect thereof, in a maximum principal amount
     at any time outstanding not exceeding in the aggregate the amount equal to
     (A) $410,000,000, plus (B) the amount, if any, by which the Borrowing Base
      -                ----  -
     exceeds $110,000,000, plus (C) in the case of any refinancing of the Credit
                           ----  -
     Facility or any portion thereof, the aggregate amount of fees, underwriting
     discounts, premiums and other costs and expenses incurred in connection
     with such refinancing;

          (ii) Indebtedness (A) of any Restricted Subsidiary to the Company or
                             -
     (B) of the Company or any Restricted Subsidiary to any Restricted
      -
     Subsidiary, provided, that any subsequent issuance or transfer of any
                 --------
     Capital Stock of such Restricted Subsidiary to which such Indebtedness is
     owed, or other event, that

                                       44

<PAGE>

     results in such Restricted Subsidiary ceasing to be a Restricted Subsidiary
     or any other subsequent transfer of such Indebtedness (except to the
     Company or a Restricted Subsidiary) will be deemed, in each case, an
     Incurrence of such Indebtedness by the issuer thereof;

          (iii)  Indebtedness represented by the Notes, any Indebtedness
     represented by the Senior Subordinated Notes, any Indebtedness outstanding
     on the date hereof that was initially Incurred in accordance with Section
     406(a) of the Senior Subordinated Note Indenture, and any Refinancing
     Indebtedness Incurred in respect of any Indebtedness described in this
     clause (iii) or subsection (a) of this Section 8.1;

          (iv)   Purchase Money Obligations and Capitalized Lease Obligations,
     and any Refinancing Indebtedness with respect thereto, in an aggregate
     principal amount at any time outstanding not exceeding an amount equal to
     ten percent (10%) of Consolidated Total Assets at any time outstanding;

          (v)    Indebtedness of any Foreign Subsidiary that is a Restricted
     Subsidiary Incurred for working capital purposes;

          (vi)   (A) Guarantees by the Company or any Restricted Subsidiary of
                  -
     Indebtedness or any other obligation or liability of the Company or any
     Restricted Subsidiary (other than any Indebtedness incurred by the Company
     or such Restricted Subsidiary, as the case may be, in violation of this
     Section 8.1) or (B) Indebtedness of the Company or any Restricted
                      -
     Subsidiary arising by reason of any Lien granted by or applicable to such
     Person securing Indebtedness of the Company or any Restricted Subsidiary
     (other than any Indebtedness incurred by the Company or such Restricted
     Subsidiary, as the case may be, in violation of this Section 8.1);

          (vii)  Indebtedness of the Company or any Restricted Subsidiary (A)
                                                                           -
     arising from the honoring of a check, draft or similar instrument of such
     Person drawn against insufficient funds, provided that such Indebtedness is
     extinguished within five (5) Business Days of its incurrence, or (B)
                                                                       -
     consisting of guarantees, indemnities, obligations in respect of earnouts
     or other purchase price adjustments, or similar obligations, Incurred in
     connection with the acquisition or disposition of any business, assets or
     Person;

          (viii) Indebtedness of the Company or any Restricted Subsidiary in
     respect of (A) letters of credit, bankers' acceptances or other similar
                 -
     instruments or obligations issued, or relating to liabilities or
     obligations incurred, in the ordinary course of business (including those
     issued to any governmental entity in connection with self-insurance under
     applicable workers' compensation statutes),

                                       45

<PAGE>

     or (B) completion guarantees, surety, judgment, appeal or performance
         -
     bonds, or other similar bonds, instruments or obligations, provided, or
     relating to liabilities or obligations incurred, in the ordinary course of
     business, or (C) Hedging Obligations entered into for bona fide hedging
                   -
     purposes in the ordinary course of business, or (D) Management Guarantees,
                                                      -
     or (E) the financing of insurance premiums in the ordinary course of
         -
     business;

          (ix)  Indebtedness of a Receivables Subsidiary secured by a Lien on
     all or part of the assets disposed of in, or otherwise incurred in
     connection with, a Financing Disposition;

          (x)   Indebtedness of any Person that is assumed by the Company or any
     Restricted Subsidiary in connection with its acquisition of assets from
     such Person or any Affiliate thereof or is issued and outstanding on or
     prior to the date on which such Person was acquired by the Company or any
     Restricted Subsidiary or merged or consolidated with or into any Restricted
     Subsidiary (other than Indebtedness Incurred to finance, or otherwise in
     connection with, such acquisition), provided that on the date of such
                                         --------
     acquisition, merger or consolidation, after giving effect thereto, (A) with
                                                                         -
     respect to any such Indebtedness of the Company or any Note Guarantor
     Subsidiary, (1) the Company could Incur at least $1.00 of additional
                  -
     Indebtedness pursuant to paragraph (a) of this Section 8.1 or (2) the
                                                                    -
     Consolidated Coverage Ratio is greater than it was on such date immediately
     prior to giving effect to such acquisition and (B) with respect to any such
                                                     -
     Indebtedness of any Restricted Subsidiary that is a not a Note Guarantor
     Subsidiary, the Company could Incur at least $1.00 of additional
     Indebtedness pursuant to paragraph (a) of this Section 8.1; and any
     Refinancing Indebtedness with respect to any such Indebtedness;

          (xi)  Indebtedness of the Company or any Restricted Subsidiary in an
     amount at any time outstanding not exceeding twice the amount of Excluded
     Contributions made after May 21, 1998, provided that the proceeds of such
                                            --------
     Indebtedness and the related amount of such Excluded Contributions are used
     to finance the acquisition of assets of any Person in a Related Business or
     the merger or consolidation of such a Person into or with the Company or
     any Restricted Subsidiary (including but not limited to payment of any
     related fees and expenses) or to refinance any such acquisition, merger or
     consolidation with such Indebtedness being Incurred for such refinancing
     within nine (9) months of the closing of such acquisition, merger or
     consolidation; and any Refinancing Indebtedness with respect to any such
     Indebtedness; and

          (xii) Indebtedness of the Company or any Restricted Subsidiary in an
     aggregate principal amount at any time outstanding not exceeding an amount
     equal to (a) twenty percent (20%) of Consolidated Total Assets minus (b)
               -                                                           -
     the

                                       46

<PAGE>

     lesser of (x) $75.0 million and (y) the aggregate Principal Amount of Notes
                -                     -
     outstanding at any time.

          (c) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this Section 8.1, (i) any other obligation of the obligor on
                                    -
such Indebtedness (or of any other Person who could have Incurred such
Indebtedness under this Section 8.1) arising under any Guarantee, Lien or letter
of credit, bankers' acceptance or other similar instrument or obligation
supporting such Indebtedness shall be disregarded to the extent that such
Guarantee, Lien or letter of credit, bankers' acceptance or other similar
instrument or obligation secures the principal amount of such Indebtedness; (ii)
                                                                             --
in the event that Indebtedness meets the criteria of more than one of the types
of Indebtedness described in paragraph (b) of this Section 8.1, the Company, in
its sole discretion, shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of such
clauses and (iii) the amount of Indebtedness issued at a price that is less than
             ---
the principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in accordance with GAAP.

          (d) For purposes of determining compliance with any United States
dollar-denominated restriction on the Incurrence of Indebtedness denominated in
a foreign currency, the United States dollar-equivalent principal amount of such
Indebtedness Incurred pursuant thereto shall be calculated based on the relevant
currency exchange rate in effect on the date that such Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness, provided that (i) the United States
                               --------       -
dollar-equivalent principal amount of any such Indebtedness outstanding on May
21, 1998 shall be calculated based on the relevant currency exchange rate in
effect on May 21, 1998, (ii) if such Indebtedness is Incurred to refinance other
                         --
Indebtedness denominated in a foreign currency, and such refinancing would cause
the applicable United States dollar-denominated restriction to be exceeded if
calculated at the relevant currency exchange rate in effect on the date of such
refinancing, such United States dollar-denominated restriction shall be deemed
not to have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced and (iii) the United States dollar-equivalent principal amount of
                ---
Indebtedness denominated in a foreign currency and Incurred pursuant to the
Credit Agreement shall be calculated based on the relevant currency exchange
rate in effect on, at the Company's option, (x) May 21, 1998, (y) any date on
                                             -                 -
which any of the respective commitments under the Credit Agreement shall be
reallocated between or among facilities or subfacilities thereunder, or on which
such rate is otherwise calculated for any purpose thereunder, or (z) the date of
                                                                  -
such Incurrence. The principal amount of any Indebtedness Incurred to refinance
other Indebtedness, if Incurred in a different currency from the Indebtedness
being refinanced, shall be calculated based on the currency exchange rate
applicable to the currencies in

                                       47

<PAGE>

which such respective Indebtedness is denominated that is in effect on the date
of such refinancing.

          (e) The Company shall not Incur any Indebtedness that is subordinated
in right of payment to any other Indebtedness of the Company, unless such
Indebtedness so Incurred is subordinated in right of payment to the Notes on
terms no less favorable to the Holders than the terms on which it is
subordinated to such other Indebtedness. No Note Guarantor shall Incur any
Indebtedness that is subordinated in right of payment to any other Indebtedness
of such Note Guarantor, unless such Indebtedness so Incurred is subordinated in
right of payment to any Note Guarantee of such Note Guarantor on terms no less
favorable to the Holders than the terms on which it is subordinated to such
other Indebtedness.

     8.2 Limitation on Restricted Payments.
         ---------------------------------

          (a) The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to (i) declare or pay any dividend or make
                                        -
any distribution on or in respect of its Capital Stock (including any such
payment in connection with any merger or consolidation to which the Company is a
party) except (A) dividends or distributions payable solely in its Capital Stock
               -
(other than Disqualified Stock) and (B) dividends or distributions payable to
                                     -
the Company or any Restricted Subsidiary (and, in the case of any such
Restricted Subsidiary making such dividend or distribution, to other holders of
its Capital Stock on no more than a pro rata basis, measured by value); (ii)
                                    --- ----                             --
purchase, redeem, retire or otherwise acquire for value any Capital Stock of the
Company held by Persons other than the Company or a Restricted Subsidiary; (iii)
                                                                            ---
purchase, repurchase, redeem, defease or otherwise acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled sinking fund
payment, any Subordinated Obligations (other than a purchase, redemption,
defeasance or other acquisition or retirement for value in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of such acquisition or retirement);
or (iv) make any Investment (other than a Permitted Investment) in any Person
    --
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition or retirement or Investment being herein referred to as a
"Restricted Payment"), if at the time the Company or such Restricted Subsidiary
 ------------------
makes such Restricted Payment:

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

          (2) the Company could not incur at least an additional $1.00 of
     Indebtedness pursuant to paragraph (a) of Section 8.1; or

                                       48

<PAGE>

          (3) the aggregate amount of such Restricted Payment and all other
     Restricted Payments (the amount so expended, if other than in cash, to be
     as determined in good faith by the Board of Directors, whose determination
     shall be conclusive) declared or made subsequent to May 21, 1998 and then
     outstanding would exceed the sum of:

              (A) fifty percent (50%) of the Consolidated Net Income accrued
          during the period (treated as one accounting period) from March 31,
          1998 to the end of the most recent fiscal quarter ending prior to the
          date of such Restricted Payment for which consolidated financial
          statements of the Company are available (or, in case such Consolidated
          Net Income shall be a negative number, one-hundred percent (100%) of
          such negative number);

              (B) the aggregate Net Cash Proceeds, and fair value (as determined
          in good faith by the Board of Directors) of property or assets,
          received (x) by the Company as capital contributions to the Company
                    -
          after May 21, 1998 or from the issuance or sale (other than to a
          Restricted Subsidiary) of its Capital Stock (other than Disqualified
          Stock) after the Closing Date (other than Excluded Contributions) or
          (y) by the Company or any Restricted Subsidiary from the issuance and
           -
          sale by the Company or any Restricted Subsidiary after May 21, 1998 of
          Indebtedness that shall have been converted into or exchanged for
          Capital Stock of the Company (other than Disqualified Stock), plus the
                                                                        ----
          amount of cash, property or assets (determined as provided above)
          received by the Company or any Restricted Subsidiary upon such
          conversion or exchange;

              (C) the aggregate amount equal to the net reduction since May 21,
          1998 in Investments in Unrestricted Subsidiaries resulting from (x)
                                                                           -
          dividends, distributions, interest payments, return of capital,
          repayments of Investments or other transfers of assets to the Company
          or any Restricted Subsidiary from any Unrestricted Subsidiary, or (y)
                                                                             -
          the redesignation of any Unrestricted Subsidiary as a Restricted
          Subsidiary (valued in each case as provided in the definition of
          "Investment"), not to exceed in the case of any such Unrestricted
          Subsidiary the aggregate amount of Investments (other than Permitted
          Investments) made by the Company or any Restricted Subsidiary in such
          Unrestricted Subsidiary after May 21, 1998; and

              (D) in the case of any disposition or repayment since May 21, 1998
          of any Investment constituting a Restricted Payment (without
          duplication of any amount deducted in calculating the amount of
          Investments at any time outstanding included in the amount of
          Restricted

                                       49

<PAGE>

          Payments), an amount in the aggregate equal to the lesser of the
          return of capital, repayment or other proceeds with respect to all
          such Investments and the initial amount of all such Investments.

          (b) The provisions of subsection (a) of this Section 8.2 will not
prohibit any of the following (each, a "Permitted Payment"):
                                        ------------------

          (i)   any purchase, redemption, repurchase, defeasance or other
     acquisition or retirement of Capital Stock of the Company or Subordinated
     Obligations made by exchange (including any such exchange pursuant to the
     exercise of a conversion right or privilege in connection with which cash
     is paid in lieu of the issuance of fractional shares) for, or out of the
     proceeds of the substantially concurrent issuance or sale of, Capital Stock
     of the Company (other than Disqualified Stock and other than Capital Stock
     issued or sold to a Subsidiary) or a substantially concurrent capital
     contribution to the Company, provided, that the Net Cash Proceeds from any
                                  --------
     such issuance, sale or capital contribution since May 21, 1998 shall be
     excluded in subsequent calculations under subsection (a) of this Section
     8.2;

          (ii)  any purchase, redemption, repurchase, defeasance or other
     acquisition or retirement of Subordinated Obligations (A) made by exchange
                                                            -
     for, or out of the proceeds of the substantially concurrent issuance or
     sale of, Indebtedness of the Company or Refinancing Indebtedness Incurred
     in compliance with Section 8.1, (B) from Net Available Cash to the extent
                                      -
     permitted by Section 8.4 or (C) to the extent required by the agreement
                                  -
     governing such Subordinated Obligations, following the occurrence of a
     Change of Control (or other similar event described therein as a "change of
     control"), but only if the Company shall have repurchased all Notes
     surrendered for repurchase pursuant to Sections 6.5, 6.6 and 8.4 prior to
     purchasing or repaying such Subordinated Obligations;

          (iii) dividends paid within sixty (60) days after the date of
     declaration thereof if at such date of declaration such dividend would have
     complied with the subsection (a) of this Section 8.2;

          (iv)  Investments or other Restricted Payments in an aggregate amount
     outstanding at any time not to exceed the amount of Excluded Contributions,
     provided that such Excluded Contributions shall not include any Excluded
     --------
     Contribution the proceeds of which were used to finance the acquisition of
     assets from any Person in a Related Business or the merger or consolidation
     of such a Person into or with the Company or any Restricted Subsidiary
     pursuant to clause (xi) of subsection (b) of Section 8.1 (or, prior to the
     date hereof, pursuant

                                       50

<PAGE>

     to clause (xi) of paragraph (b) of Section 406 of the Senior Subordinated
     Note Indenture);

          (v)    loans, advances, dividends or distributions by the Company to
     the Parent to permit the Parent to repurchase or otherwise acquire its
     Capital Stock (including any options, warrants or other rights in respect
     thereof), or payments by the Company to repurchase or otherwise acquire
     Capital Stock (including any options, warrants or other rights in respect
     thereof), in each case from Management Investors, such payments, loans,
     advances, dividends or distributions not to exceed an amount (net of
     repayments of any such loans or advances) equal to (A) $25,000,000, plus
                                                         -
     (B) $5,000,000 multiplied by the number of calendar years that have
      -
     commenced since May 21, 1998, plus the Net Cash Proceeds received by the
                                   ----
     Company since May 21, 1998 from, or as a capital contribution from, the
     issuance or sale to Management Investors of Capital Stock (including any
     options, warrants or other rights in respect thereof), to the extent such
     Net Cash Proceeds since May 21, 1998 are not included in any calculation
     under clause (3)(B)(x) of subsection (a) of this Section 8.2;

          (vi)   the payment by the Company of, or loans, advances, dividends or
     distributions by the Company to the Parent to pay, dividends on the common
     stock or equity of the Company or the Parent following a public offering of
     such common stock or equity, in an amount not to exceed in any fiscal year
     six percent (6%) of the aggregate gross proceeds received by the Company in
     or from such public offering;

          (vii)  Restricted Payments (including loans or advances) in an
     aggregate amount outstanding at any time not to exceed $10,000,000 (net of
     repayments of any such loans or advances); provided that any "Restricted
                                                --------
     Payments" (as defined in the Senior Subordinated Note Indenture)
     outstanding on the date hereof under clause (vii) of paragraph (b) of
     Section 408 of the Senior Subordinated Note Indenture shall be deemed
     outstanding on such date under this clause (vii);

          (viii) loans, advances, dividends or distributions to the Parent or
     other payments by the Company or any Restricted Subsidiary (A) to satisfy
                                                                 -
     or permit the Parent to satisfy obligations under the Management
     Agreements, (B) pursuant to the Tax Sharing Agreement or (C) to pay or
                  -                                            -
     permit the Parent to pay any Parent Expenses or any Related Taxes;

          (ix)   payments by the Company, or loans, advances, dividends or
     distributions by the Company to the Parent to make payments, to holders of
     Capital Stock of the Company or the Parent in lieu of issuance of
     fractional shares of such Capital Stock, not to exceed $100,000 in the
     aggregate outstanding at any time; and

                                       51

<PAGE>

          (x) dividends or other distributions of Capital Stock, Indebtedness or
     other securities of Unrestricted Subsidiaries.

provided that (A) in the case of clauses (iii), (vi), (vii) and (ix), the net
--------       -
amount of any such Permitted Payment since May 21, 1998 shall be included in
subsequent calculations of the amount of Restricted Payments, (B) in the case of
                                                               -
clause (v), at the time of any calculation of the amount of Restricted Payments,
the net amount of Permitted Payments that have then actually been made under
clause (v) (or, prior to the date hereof, clause (v) of paragraph (b) of Section
408 of the Senior Subordinated Note Indenture) since May 21, 1998 that is in
excess of fifty percent (50%) of the total amount of Permitted Payments then
permitted under clause (v) shall be included in such calculation of the amount
of Restricted Payments, (C) in all cases other than pursuant to clauses (A) and
                         -
(B) immediately above, the net amount of any such Permitted Payment since May
21, 1998 shall be excluded in subsequent calculations of the amount of
Restricted Payments and (D) solely with respect to clause (vii), no Default or
                         -
Event of Default (and, prior to the date hereof, no Senior Subordinated Default
Event) shall have occurred or be continuing at the time of any such Permitted
Payment after giving effect thereto.

     8.3 Limitation on Restrictions on Distributions from Restricted
         -----------------------------------------------------------
Subsidiaries. The Company will not, and will not permit any Restricted
------------
Subsidiary to, create or otherwise cause to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (x) pay dividends or make any other distributions on its Capital
               -
Stock or pay any Indebtedness or other obligations owed to the Company, (y) make
                                                                         -
any loans or advances to the Company or (z) transfer any of its property or
                                         -
assets to the Company, except any encumbrance or restriction:

          (a) pursuant to an agreement or instrument in effect at or entered
into on the date hereof (including, without limitation, the Credit Agreement,
the Senior Subordinated Note Indenture and this Agreement);

          (b) pursuant to any agreement or instrument of a Person, or relating
to Indebtedness or Capital Stock of a Person, which Person is acquired by or
merged or consolidated with or into the Company or any Restricted Subsidiary, or
which agreement or instrument is assumed by the Company or any Restricted
Subsidiary in connection with an acquisition of assets from such Person, as in
effect at the time of such acquisition, merger or consolidation (except to the
extent that such Indebtedness was incurred to finance, or otherwise in
connection with, such acquisition, merger or consolidation), provided that for
                                                             --------
purposes of this clause (b), if another Person is the Successor Company, any
Subsidiary thereof or agreement or instrument of such Person or any such
Subsidiary shall be deemed acquired or assumed, as the case may be, by the
Company or a Restricted Subsidiary, as the case may be, when such Person becomes
the Successor Company;

                                       52

<PAGE>

          (c) pursuant to an agreement or instrument (a "Refinancing Agreement")
                                                         ---------------------
effecting a refinancing of Indebtedness Incurred pursuant to, or that otherwise
extends, renews, refunds, refinances or replaces, an agreement or instrument
referred to in clause (a) or (b) of this Section 8.3 or this clause (c) (an
"Initial Agreement") or contained in any amendment, supplement or other
 -----------------
modification to an Initial Agreement (an "Amendment"), provided, however, that
                                          ---------    --------
the encumbrances and restrictions contained in any such Refinancing Agreement or
Amendment are not materially less favorable to the Holders taken as a whole than
encumbrances and restrictions contained in the Initial Agreement or Initial
Agreements to which such Refinancing Agreement or Amendment relates (as
determined in good faith by the Company);

          (d) (i) that restricts in a customary manner the subletting,
               -
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract, or the assignment or transfer of any lease, license
or other contract, (ii) by virtue of any transfer of, agreement to transfer,
                    --
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by this Agreement,
(iii) contained in mortgages, pledges or other security agreements securing
 ---
Indebtedness of a Restricted Subsidiary to the extent restricting the transfer
of the property or assets subject thereto, (iv) pursuant to customary provisions
                                            --
restricting dispositions of real property interests set forth in any reciprocal
easement agreements of the Company or any Restricted Subsidiary, (v) pursuant to
                                                                  -
Purchase Money Obligations that impose encumbrances or restrictions on the
property or assets so acquired, (vi) on cash or other deposits or net worth
                                 --
imposed by customers under agreements entered into in the ordinary course of
business, (vii) pursuant to customary provisions contained in agreements and
           ---
instruments entered into in the ordinary course of business (including but not
limited to leases and joint venture and other similar agreements entered into in
the ordinary course of business) or (viii) that arises or is agreed to in the
                                     ----
ordinary course of business and does not detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner material to the
Company or such Restricted Subsidiary;

          (e) with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or indirect
sale or disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition;

          (f) required by any applicable law, rule, regulation or order or by
any regulatory authority having jurisdiction over the Company or any Restricted
Subsidiary or any of their businesses; or

                                       53

<PAGE>

          (g)   pursuant to an agreement or instrument (i) relating to any
                                                        -
Indebtedness permitted to be Incurred subsequent to the date hereof pursuant to
the provisions of Section 8.1 if the Company determines that such encumbrance or
restriction will not cause the Company not to have the funds necessary to pay
the principal of or interest on the Notes, (ii) relating to any sale of
                                            --
receivables by a Foreign Subsidiary that is a Restricted Subsidiary or (iii)
                                                                        ---
relating to Indebtedness of or a Financing Disposition to or by any Receivables
Entity.

     8.4  Limitation on Sales of Assets and Subsidiary Stock.
          --------------------------------------------------

          (a)   The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Disposition unless:

          (i)   the Company or such Restricted Subsidiary receives consideration
     (including by way of relief from, or by any other Person assuming
     responsibility for, any liabilities, contingent or otherwise) at the time
     of such Asset Disposition at least equal to the fair market value of the
     shares and assets subject to such Asset Disposition, as such fair market
     value may be determined (and shall be determined, to the extent such Asset
     Disposition or any series of related Asset Dispositions involves aggregate
     consideration in excess of $10,000,000) in good faith by the Board of
     Directors, whose determination shall be conclusive (including as to the
     value of all non-cash consideration);

          (ii)  in the case of any Asset Disposition (or series of related Asset
     Dispositions) having a fair market value of $10,000,000 or more, at least
     seventy-five percent (75%) of the consideration therefor (excluding, in the
     case of an Asset Disposition (or series of related Asset Dispositions) of
     assets, any consideration by way of relief from, or by any other Person
     assuming responsibility for, any liabilities, contingent or otherwise, that
     are not Indebtedness) received by the Company or such Restricted Subsidiary
     is in the form of cash, and provided that this clause (ii) shall not apply
                                 --------
     to any Asset Disposition (or series of related Asset Dispositions),
     involving assets that accounted for less than two percent (2%) of
     Consolidated EBITDA during the period of the most recent four (4)
     consecutive fiscal quarters ending prior to the date of such Asset
     Disposition for which consolidated financial statements of the Company are
     available; and

          (iii) an amount equal to one-hundred percent (100%) of the Net
     Available Cash from such Asset Disposition is applied by the Company (or
     any Restricted Subsidiary, as the case may be) as follows:

                (A)  first, either (1) to the extent the Company elects (or is
                     -----          -
          required by the provisions of this Agreement or the terms of the
          Credit

                                       54

<PAGE>

          Agreement or of Indebtedness of a Restricted Subsidiary that is not a
          Note Guarantor of any of the Notes), to prepay, repay or purchase the
          Notes, the Bank Indebtedness under the Credit Agreement or such
          Indebtedness of a Restricted Subsidiary (in each case other than
          Indebtedness owed to the Company or a Restricted Subsidiary) within
          365 days after the date of such Asset Disposition or (2) to the extent
                                                                -
          the Company or such Restricted Subsidiary elects, to reinvest in
          Additional Assets (including by means of an investment in Additional
          Assets by a Restricted Subsidiary with Net Available Cash received by
          the Company or another Restricted Subsidiary) within 365 days from the
          date of such Asset Disposition, or, if such reinvestment in Additional
          Assets is a project that is authorized by the Board of Directors that
          will take longer than such 365 days to complete, the period of time
          necessary to complete such project;

               (B)  second, to the extent of the balance of such Net Available
                    ------
          Cash after application in accordance with clause (A) above, to make an
          offer to purchase Notes pursuant and subject to the conditions of this
          Section 8.4; and

               (C)  third, to the extent of the balance of such Net Available
                    -----
          Cash after application in accordance with clauses (A) and (B) above,
          to fund (to the extent consistent with any other applicable provision
          of this Agreement) any general corporate purpose (including but not
          limited to the repurchase, repayment or other acquisition or
          retirement of any Subordinated Obligations to the extent otherwise
          permitted hereby);

provided, however, that in connection with any prepayment, repayment or purchase
--------
of Indebtedness pursuant to clause (A)(1) or (B) above, the Company or such
Restricted Subsidiary will retire such Indebtedness and will cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.

          (b)  Notwithstanding the foregoing provisions of this Section 8.4, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 8.4 except to the extent that the
aggregate Net Available Cash from all Asset Dispositions that is not applied in
accordance with this Section 8.4 exceeds $15,000,000, it being understood that
lesser amounts of Net Available Cash shall be carried forward for future
application in accordance with this Section 8.4.

          (c)  For the purposes of clause (ii) of the first paragraph of this
Section 8.4, the following are deemed to be cash: (i) Temporary Cash Investments
                                                   -
and Cash Equivalents, (ii) the assumption of Indebtedness of the Company (other
                       --
than

                                       55

<PAGE>

Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on payment of
the principal amount of such Indebtedness in connection with such Asset
Disposition, (iii) Indebtedness of any Restricted Subsidiary that is no longer a
              ---
Restricted Subsidiary as a result of such Asset Disposition, to the extent that
the Company and each other Restricted Subsidiary are released from any Guarantee
of payment of the principal amount of such Indebtedness in connection with such
Asset Disposition, (iv) securities received by the Company or any Restricted
                    --
Subsidiary from the transferee that are converted by the Company or such
Restricted Subsidiary into cash and (v) consideration consisting of Indebtedness
                                     -
of the Company or any Restricted Subsidiary.

          (d)  In the event of an Asset Disposition that requires the purchase
of Notes pursuant to clause (iii)(B) of the first paragraph of this Section 8.4,
the Company will be required to purchase Notes tendered pursuant to an offer by
the Company for the Notes (the "Offer") at a purchase price of 100% of their
                                -----
Principal Amounts plus accrued and unpaid interest to the date of such purchase
in accordance with the procedures (including prorating in the event of
oversubscription) set forth in paragraph (e) of this Section 8.4. If the
aggregate purchase price of the Notes tendered pursuant to the Offer is less
than the Net Available Cash allotted to the purchase of Notes, the remaining Net
Available Cash will be available to the Company for use in accordance with
clause (iii)(C) of the subsection (a) of this Section 8.4. The Company shall not
be required to make an Offer for Notes pursuant to this Section 8.4 if the Net
Available Cash available therefor (after application of the proceeds as provided
in clause (iii)(A) of the first paragraph of this Section 8.4) is less than
$15,000,000 for any particular Asset Disposition (which lesser amounts shall be
carried forward for purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).

          (e)  The Company will, not later than five (5) days after the Company
becomes obligated to make an Offer pursuant to this Section 8.4, mail a notice
to each Holder stating: (i) that an Asset Disposition that requires the purchase
                         -
of a portion of the Notes has occurred and that such Holder has the right
(subject to the prorating described below) to require the Company, to purchase a
portion of such Holder's Notes at a purchase price in cash equal to one hundred
percent (100%) of the Principal Amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase; (ii) the circumstances and relevant
                                            --
facts and financial information regarding such Asset Disposition; (iii) the
                                                                   ---
repurchase date (which shall be no earlier than forty-five (45) days nor later
than sixty (60) days from the date such notice is mailed); (iv) the instructions
                                                            --
determined by the Company, consistent with this Section 8.4, that a Holder must
follow in order to have its Notes purchased; and (v) the amount of the Offer.
                                                  -
If, upon the expiration of the period for which the Offer remains open, the
aggregate Principal Amount of Notes surrendered by Holders exceeds the amount of
the Offer, the Company will select the Notes to be purchased on a pro rata
basis.

                                       56

<PAGE>

          (f)  The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to this
Section 8.4. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 8.4, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 8.4 by virtue
thereof.

          (g)  The provisions of this Section 8.4 are in addition to and not in
limitation of the provisions of Section 6.6.

     8.5  Limitation on Transactions with Affiliates.
          ------------------------------------------

          (a)  The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company (an "Affiliate Transaction") unless (i) the terms of such Affiliate
             ---------------------           -
Transaction are not materially less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time in
a transaction with a Person who is not such an Affiliate and (ii), if such
                                                              --
Affiliate Transaction involves aggregate consideration in excess of $10,000,000,
the terms of such Affiliate Transaction have been approved by a majority of the
Disinterested Directors. For purposes of this paragraph, any Affiliate
Transaction shall be deemed to have satisfied the requirements set forth in this
paragraph if (x) such Affiliate Transaction is approved by a majority of the
              -
Disinterested Directors or (y) in the event there are no Disinterested
                            -
Directors, a fairness opinion is provided by a nationally recognized appraisal
or investment banking firm with respect to such Affiliate Transaction.

          (b)  The provisions of the preceding subsection (a) of this Section
8.5 shall not apply to:

          (i)  any Restricted Payment Transaction;

          (ii) (A) the entering into, maintaining or performance of any
                -
     employment contract, collective bargaining agreement, benefit plan, program
     or arrangement, related trust agreement or any other similar arrangement
     for or with any employee, officer or director heretofore or hereafter
     entered into in the ordinary course of business, including vacation,
     health, insurance, deferred compensation, severance, retirement, savings or
     other similar plans, programs or arrangements, (B) the payment of
                                                     -
     compensation, performance of indemnification or contribution obligations,
     or any issuance, grant or award of stock, options, other equity-related
     interests or other securities, to employees, officers or

                                       57

<PAGE>

     directors in the ordinary course of business, (C) the payment of fees to
                                                    -
     directors of the Company or any of its Subsidiaries, (D) any transaction
                                                           -
     with an officer or director in the ordinary course of business not
     involving more than $100,000 in any one case or (E) Management Advances and
                                                      -
     payments in respect thereof;

          (iii) any transaction with the Company, any Restricted Subsidiary, or
     any Receivables Entity;

          (iv)  any transaction arising out of agreements or instruments in
     existence on the date hereof, and any payments made pursuant thereto;

          (v)   the execution, delivery and performance of the Tax Sharing
     Agreement and Management Agreements, including payment to CD&R or any
     Affiliate of CD&R of fees of up to $1,000,000 in any fiscal year, plus all
     out-of-pocket expenses incurred by CD&R or any such Affiliate in connection
     with its performance of management consulting, monitoring, financial
     advisory or other services with respect to the Company and its Restricted
     Subsidiaries;

          (vi)  any transaction in the ordinary course of business on terms not
     materially less favorable to the Company or the relevant Restricted
     Subsidiary than those that could be obtained at the time in a transaction
     with a Person who is not an Affiliate of the Company; and

          (vii) any transaction in the ordinary course of business, or approved
     by a majority of the Board of Directors, between the Company or any
     Restricted Subsidiary and any Affiliate of the Company controlled by the
     Company that is a joint venture or similar entity.

     8.6  Limitation on Liens.
          -------------------

         (a)  Without the prior written consent of the Majority CD&R Note
Holders, so long as any CD&R Notes are outstanding, the Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, create or permit to
exist any Lien upon any of its property or assets, whether owned on the date of
this Agreement or thereafter acquired, except for Permitted Liens. Without in
any way limiting the foregoing, in the event that the Company or any of its
Subsidiaries shall create or permit to exist any such Lien that is not a
Permitted Lien securing any liability or obligation, the Company shall, and
shall cause each such Subsidiary to, make effective provision to secure the
Indebtedness due under the CD&R Notes or, in respect of Liens on any
Subsidiary's property or assets, any Note Guarantee of such Subsidiary in
respect of the CD&R Notes, (i) equally and ratably with any such liability or
                            -
obligation that ranks pari passu in right of payment with the CD&R Notes or (ii)
                                                                             --
prior to any such liability or obligation that is subordinated in right of
payment to the CD&R Notes.

                                       58

<PAGE>

          (b)  Without the prior written consent of the Majority Transferred
Note Holders, so long as any Transferred Notes are outstanding, the Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, create or permit to exist any Lien (other than Permitted Liens) on
any of its property or assets (including Capital Stock of any other Person),
whether owned on the date of this Agreement or thereafter acquired, securing any
Indebtedness of the Company or any Note Guarantor of the Transferred Notes (the
"Initial Lien"), unless contemporaneously therewith effective provision is made
 ------------
to secure the Indebtedness due under the Transferred Notes or, in respect of
Liens on any Restricted Subsidiary's property or assets, any Note Guarantee of
such Restricted Subsidiary in respect of the Transferred Notes, (i) equally and
                                                                 -
ratably with any such obligation that ranks pari passu in right of payment with
the Transferred Notes or (ii) prior to any such obligation that by its terms is
                          --
expressly subordinated in right of payment to the Transferred Notes, in each
case for so long as such obligation is so secured by such Initial Lien. Any such
Lien thereby created in favor of the Transferred Notes or any such Note
Guarantee will be automatically and unconditionally released and discharged upon
(i) the release and discharge of the Initial Lien to which it relates, or (ii)
 -                                                                         --
any sale, exchange or transfer to any Person not an Affiliate of the Company of
the property or assets secured by such Initial Lien, or of all of the Capital
Stock held by the Company or any Restricted Subsidiary in, or all or
substantially all the assets of, any Restricted Subsidiary creating such Lien.

     8.7  Limitation on Optional Payments and Modifications of Debt Instruments
          ---------------------------------------------------------------------
and other Material Agreements. The Company shall not, and shall not permit any
-----------------------------
of its Subsidiaries to, directly or indirectly:

          (a)  make any optional payment, prepayment, repurchase or redemption
     of the Senior Subordinated Notes or make any optional payments on account
     of or for a sinking or other analogous fund for the repurchase, redemption,
     defeasance or other acquisition thereof (other than mandatory payments of
     principal and interest and payments of, in each case, fees and expenses
     required by the Senior Subordinated Notes or the Senior Subordinated Note
     Indenture, only to the extent permitted under the subordination provisions,
     if any, applicable thereto);

          (b)  make any amendment, supplement, modification or waiver of any of
     the terms of the Senior Subordinated Notes or the Senior Subordinated Note
     Indenture which (i) amends or modifies the subordination - provisions
                      -
     contained in the Senior Subordinated Notes and the Senior Subordinated Note
     Indenture, (ii) shortens the fixed maturity or increases the principal
                 --
     amount of, or increases the rate or shortens the time of payment of
     interest on, or increases the amount or shortens the time of payment of any
     principal or premium payable whether at maturity, at a date fixed for
     prepayment or by acceleration or otherwise of the Indebtedness evidenced by
     the Senior Subordinated Notes or increases the amount

                                       59

<PAGE>

     of, or accelerates the time of payment of, any fees or other amounts
     payable in connection therewith to any holder of the Senior Subordinated
     Notes, (iii) relates to any material affirmative or negative covenants or
             ---
     any events of default or remedies under the Senior Subordinated Notes and
     the Senior Subordinated Note Indenture, and the effect of which is to
     subject the Company, or any of its Subsidiaries, to any more onerous or
     more restrictive provisions or (iv) which otherwise adversely affects the
                                     --
     interests of the Holders as senior creditors with respect to the Senior
     Subordinated Notes or the interests of the Holders hereunder in any
     material respect;

          (c)  in the event of the occurrence of a Change of Control, repurchase
     the Senior Subordinated Notes, unless the Company shall have (i) made, or
                                                                   -
     caused to have been made, payment in full of the Notes and any other
     amounts then due and owing to any Holder under the Notes or this Agreement
     (including, without limitation, accrued but unpaid interest on the Notes)
     or (ii) made, or caused to have been made, an offer to pay the Notes and
         --
     any amounts then due and owing to each Holder under the Notes or this
     Agreement (including, without limitation, accrued but unpaid interest on
     the Notes), or caused to have been made, payment in full thereof to each
     such Holder which has accepted such offer; or

          (d)  make any amendment, supplement, modification or waiver of any of
     the terms of Section 14.12(d), (e) and (f) of the Credit Agreement as
     amended by the Second Credit Agreement Amendment that adversely affects any
     Holder without the consent of the Majority CD&R Note Holders.

     8.8  Limitation on Negative Pledge Clauses. The Company shall not, and
          -------------------------------------
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any agreement which prohibits or limits the ability of the Company or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property or revenues, whether now owned or hereafter acquired, to secure the
obligations under the CD&R Notes or any Note Financing Document to the extent
relating to the CD&R Notes or, in the case of any Note Guarantor, its
obligations under its Note Guarantee of the CD&R Notes or any Note Financing
Document to the extent relating to such Note Guarantee, other than (a) the
                                                                    -
Credit Facility, this Agreement and the other Note Financing Documents and any
related documents and (b) any industrial revenue or development bonds,
                       -
agreements governing any purchase money Liens, acquisition agreements or
Financing Leases or operating leases of real property entered into in the
ordinary course of business otherwise permitted hereby (in which case, any
prohibition or limitation shall only be effective against the assets financed,
acquired or leased thereby).

                                       60

<PAGE>

                                   Article IX
                                Successor Company
                                -----------------

     9.1  When the Company May Merge, etc.
          -------------------------------

          (a)   The Company will not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets to, any Person,
unless:

          (i)   the resulting, surviving or transferee Person (the "Successor
                                                                    ---------
     Company") will be a Person organized and existing under the laws of the
     -------
     United States of America, any State thereof or the District of Columbia and
     the Successor Company (if not the Company) will expressly assume all the
     obligations of the Company under this Agreement, the Notes and the other
     Note Financing Documents by executing and delivering to the Holders an
     agreement or one or more other documents or instruments in form reasonably
     satisfactory to the Holders;

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

          (iii) immediately after giving effect to such transaction, either (A)
                                                                             -
     the Successor Company could Incur at least $1.00 of additional Indebtedness
     pursuant to paragraph 8.1(a) or (B) the Consolidated Coverage Ratio of the
                                      -
     Successor Company would equal or exceed the Consolidated Coverage Ratio of
     the Company immediately prior to giving effect to such transaction;

          (iv)  each Note Guarantor (other than any party to any such
     consolidation or merger) shall have delivered a document or instrument in
     form and substance reasonably satisfactory to the Holders confirming its
     Note Guarantee; and

          (v)   the Company shall have delivered to the Holders a certificate of
     a Responsible Officer and an opinion of counsel (which counsel shall be
     reasonably acceptable to the Holders), each to the effect that such
     consolidation, merger or transfer complies with the provisions described in
     this paragraph of this Section 9.1, and each in form and substance
     reasonably satisfactory to the Holders, provided that (A) in giving such
                                             --------       -
     opinion such counsel may rely on a certificate of a Responsible Officer as
     to compliance with the foregoing clauses (ii) and (iii) and as to any
     matters of fact, and (B) no opinion of counsel will be required for a
                           -
     consolidation, merger or transfer described in subsection (c) of this
     Section 9.1.

                                       61

<PAGE>

          (b)  Any Indebtedness that becomes an obligation of the Company or any
Restricted Subsidiary (or that is deemed to be Incurred by any Restricted
Subsidiary that becomes a Restricted Subsidiary) as a result of any such
transaction undertaken in compliance with this Section 9.1, and any Refinancing
Indebtedness with respect thereto, shall be deemed to have been Incurred in
compliance with Section 8.1.

          (c)  Clauses (ii) and (iii) of subsection (a) of this Section 9.1 will
not apply to any transaction in which (A) any Restricted Subsidiary consolidates
                                       -
with, merges into or transfers all or part of its properties and assets to the
Company or (B) the Company consolidates or merges with or into or transfers all
            -
or substantially all its assets to (1) an Affiliate incorporated or organized
                                    -
for the purpose of reincorporating or reorganizing the Company in another
jurisdiction or changing its legal structure to a corporation or other entity or
(2) a Restricted Subsidiary of the Company so long as all assets of the Company
 -
and the Restricted Subsidiaries immediately prior to such transaction (other
than Capital Stock of such Restricted Subsidiary) are owned by such Restricted
Subsidiary and its Restricted Subsidiaries immediately after the consummation
thereof.

     9.2  Successor Company Substituted. Upon any transaction involving the
          -----------------------------
Company in accordance with Section 9.1, in which the Company is not the
Successor Company, the Successor Company will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Agreement, and thereafter (other than in the case of a lease) the predecessor
Company shall be relieved of all obligations and covenants under this Agreement.

                                   Article X
                                Events of Default
                                -----------------

     10.1 Events of Default. An "Event of Default" occurs if, voluntarily or
          -----------------      ----------------
involuntarily, by operation of law or pursuant to any judgment, decree or order
of any Governmental Authority or otherwise:

          (a)  the Company defaults in any payment of interest on any Note when
due or any other amount payable under any Note Financing Document when due
(other than a payment governed by the following clause (b)), and such default
continues for a period of thirty (30) days;

          (b)  the Company defaults in the payment of the principal of any Note
when the same becomes due and payable, whether at the Maturity Date, upon
optional redemption, upon purchase, upon declaration of acceleration or
otherwise;

          (c)  the Company fails to comply with any covenant or obligation (x)
                                                                            -
contained in Section 6.5 (other than a failure to purchase Notes, which shall be
governed

                                       62

<PAGE>

by the preceding clause (b)) or Article IX and such failure continues for a
period of thirty (30) days after notice thereof is given to the Company by any
Holder or (y) to issue shares of Common Stock or Warrants pursuant to Section
           -
6.3, 6.7 or 13.9(b) or any other provision of any Note Financing Document and
such failure continues for a period of ten (10) days;

          (d)  the Company or any other Note Financing Party fails to comply
with any covenant or obligation (x) contained in Section 6.6 (other than a
                                 -
failure to purchase Notes, which shall be governed by clause (b) of this Section
10.1), Article VII (other than any covenant or obligation referred to in clause
(o) of this Section 10.1) or Section 13.9 or (y) under any Note Financing
                                              -
Document other than this Agreement and the Notes (other than any covenant or
obligation referred to in clauses (a), (b), (c), (o) and (p) of this Section
10.1), and in any such case, such failure continues for a period of thirty (30)
days after either a Responsible Officer shall have discovered or should have
discovered such default or notice thereof is given to the Company by any Holder;

          (e)  the Company or any other Note Financing Party fails to comply
with any of its covenants and obligations under this Agreement or any Note
(other than those referred to in clauses (a), (b), (c), (d), (o) and (p) of this
Section 10.1) and such failure continues for a period of sixty (60) days after
notice thereof is given to the Company by any Holder;

          (f)  (i) Any Senior Subordinated Default Event shall occur or exist or
                -
(ii) any Bank Default Event shall occur or exist and either the Commitments (as
 --
defined in the Credit Agreement) shall be terminated or the Loans (as defined in
the Credit Agreement) shall be declared due and payable;

          (g)  The Company, any Note Guarantor or any other Subsidiary of the
Company shall (i) default in any payment of principal of or interest of any
               -
Indebtedness (other than the Notes), beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (ii) default in the observance or performance of any other agreement
             --
or condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice or lapse of time if required,
such Indebtedness to become due prior to its stated maturity, and (in the case
of any such Indebtedness not constituting Subordinated Obligations) such
Indebtedness shall have so become due; provided, however, that no Default or
Event of Default shall exist under this paragraph unless the amount of any such
Indebtedness in respect of which any default or other event or condition
referred to in this paragraph shall have occurred shall be equal to at least
$15,000,000;

                                       63

<PAGE>

          (h)  the Parent, the Company or any Material Subsidiary shall commence
any case, proceeding or other action (i) under any existing or future law of any
                                      -
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(ii) seeking appointment of a receiver, trustee, custodian, conservator or other
 --
similar official for it or for all or any substantial part of its assets, or the
Parent, the Company or any Material Subsidiary shall make a general assignment
for the benefit of its creditors;

          (i)  there shall be commenced against any of the Parent, the Company
or any Material Subsidiary any case, proceeding or other action of a nature
referred to in clause (g) above which (i) results in the entry of an order for
                                       -
relief or any such adjudication or appointment or (ii) remains undismissed,
                                                   --
undischarged or unbonded for a period of sixty (60) days;

          (j)  there shall be commenced against the Parent, the Company or any
Material Subsidiary any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof;

          (k)  the Parent, the Company or any Material Subsidiary shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (g), (h), or (i) of this
Section 10.1;

          (l)  the Parent, the Company or any Material Subsidiary shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;

          (m)  one or more judgments or decrees shall be entered against the
Company or any of its Active Subsidiaries involving in the aggregate a liability
(net of any insurance or indemnity payments actually received in respect thereof
prior to or within sixty (60) days from the entry thereof, or to be received in
respect thereof, in the event any appeal thereof shall be unsuccessful) of
$15,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within sixty (60) days from
the entry thereof;

          (n)  (i) Any Person shall engage in any "prohibited transaction" (as
                -
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
 --
whether

                                       64

<PAGE>

or not waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of the Company or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
                    ---
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is
reasonably likely to result in the termination of such Plan for purposes of
Title IV of ERISA (other than a standard termination pursuant to Section 4041(b)
of ERISA), (iv) any Single Employer Plan shall terminate for purposes of Title
            --
IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or is
              -
reasonably likely to, incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, a Multiemployer Plan, (vi) the
                                                               --
occurrence or expected occurrence of any event or condition which results or is
reasonably likely to result in the Company's or any Commonly Controlled Entity's
becoming responsible for any liability in respect of a Former Plan, or (vii) any
                                                                        ---
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vii) above, such event or condition, together
with all other such events or conditions, if any, would be reasonably expected
to result in liability which would have a Material Adverse Effect;

          (o)  (i) Any of the Note Security Documents (or any guarantee
                -
thereunder by any Note Financing Party of the monetary obligations of the
Company hereunder) shall cease, for any reason, to be in full force and effect
other than pursuant to the terms hereof and thereof, or the Company or any other
Note Financing Party which is a party to any of the Note Security Documents
shall so assert in writing, (ii) the Company shall fail to perform any covenant
                             --
or obligation contained in Section 7.10, 7.11(a), 8.6(a) or 8.8 or (iii) the
                                                                    ---
Lien created by any of the Note Security Documents shall cease to be enforceable
and of the same effect as to perfection and priority purported to be created
thereby with respect to any significant portion of the Collateral (other than in
connection with any termination of such Lien in respect of any Collateral as
permitted hereby or by any Note Security Document), and such failure of such
Lien to be perfected and enforceable with such priority shall have continued
unremedied for a period of twenty (20) days; or

          (p)  (i) The Senior Subordinated Notes, for any reason, shall not be
                -
or shall cease to be validly subordinated as provided therein and in the Senior
Subordinated Note Indenture to the obligations of the Company under this
Agreement, any Notes and the other Note Financing Documents or (ii) the Company
                                                                --
shall fail to perform any covenant or obligation contained in Section 8.7.

     10.2 Acceleration of Maturity; Rescission and Annulment.
          --------------------------------------------------

          (a)  If an Event of Default (other than an Event of Default specified
in clauses 10.1(h) through (l) with respect to the Company) occurs and is
continuing, the Holders of at least a twenty five percent (25%) of the aggregate
Principal Amount of the

                                       65

<PAGE>

outstanding Notes, by notice to the Company specifying the respective Event of
Default and that such notice is a "Notice of Acceleration," may declare the
principal of and accrued but unpaid interest on all the Notes to be due and
payable. Upon such declaration, such principal and interest will be due and
payable immediately.

          (b)   Notwithstanding subsection (a) of this Section 10.2, if an Event
of Default specified in clauses 10.1(h) through (l) with respect to the Company
occurs and is continuing, then the principal of and any accrued interest on the
outstanding Notes will ipso facto become and be immediately due and payable
                       ---- -----
without any declaration or other act on the part of any Holder.

          (c)   The Holders of a majority in aggregate Principal Amount of the
outstanding Notes may, by notice to the Company, rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.

          10.3  Unconditional Right of Holders to Receive Principal, Premium and
                ----------------------------------------------------------------
Interest. Notwithstanding any other provision of this Agreement or any other
--------
Note Financing Document, each Holder's right to receive payment of the principal
of and all interest on the Note or Notes held by it on the Interest Payment
Dates and Stated Maturity expressed in such Note or Notes, and to institute suit
for the enforcement of any such payment on or after such Interest Payment Dates
and Stated Maturity, shall not be impaired without the consent of such Holder.

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

          10.5  Rights and Remedies Cumulative. No right or remedy herein
                ------------------------------
conferred upon 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.

          10.6  Delay or Omission Not Waiver. No delay or omission of any Holder
                ----------------------------
to exercise any right or remedy accruing upon any Event of Default shall impair
any such

                                       66

<PAGE>

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 X or by law
to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Holders.

          10.7  Waiver of Past Defaults. The Holders of not less than a majority
                -----------------------
in aggregate Principal Amount of the outstanding Notes may, on behalf of the
Holders of all of the Notes, waive any past Default hereunder and its
consequences, except a Default in the payment of the principal of or interest on
any Note (which may only be waived with the consent of each Holder of Notes
directly affected), and except as may otherwise be provided in Section 13.7.
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,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereon. In case of any such waiver, the
Company, each Note Guarantor, any other obligor upon the Notes and the Holders
shall be restored to their former positions and rights hereunder and under the
Notes, respectively.

          10.8  Waiver of Stay, Extension or Usury 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 or any usury or other similar law
wherever enacted, now or at any time hereafter in force, that would prohibit or
forgive the Company from paying all or any portion of the principal of (or
premium, if any) or interest on the Notes contemplated herein or in the Notes or
that may affect the covenants or the performance of this Agreement.

                                   Article XI
                                   Termination
                                   -----------

          11.1  Termination. This Agreement may be terminated prior to the
                -----------
Closing (a) at any time by the written agreement of the Parent, the Company and
         -
the Investor, and (b) at any time upon written notice given by any of the
                   -
Parent, the Company and the Investor to the other parties that the consummation
of the transactions contemplated hereby would violate, in whole or in part, a
Requirement of Law.

          11.2  Effect of Termination. In the event of the termination of this
                ---------------------
Agreement pursuant to the provisions of Section 11.1, this Agreement shall
become void and have no effect, without any liability to any Person; provided
that the provisions of Sections, 13.1, 13.2, 13.3, 13.6, 13.7, 13.8, 13.9,
13.10, 13.11, 13.12, 13.13 and 13.14 shall survive any termination of this
Agreement.

                                       67

<PAGE>

                                   Article XII
                                   Definitions
                                   -----------

          "Active Subsidiaries" means each Subsidiary of the Company other than
           -------------------
any Inactive Subsidiary.

          "Affiliate" means, with respect to any Person, a Person that directly
           ---------
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the first Person. "Control" (including the terms
                                                 -------
"controlled by" and "under common control with") means the possession, directly
 -------------       -------------------------
or indirectly, of the power to direct or cause the direction of the management
policies of a Person (whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise) and shall be deemed to exist
upon the ownership of securities entitling the holder thereof to exercise more
than 20% of the voting power in the election of directors of such Person (or
other Persons or body performing similar functions).

          "Affiliate Transaction" has the meaning given to it in Section 8.5.
           ---------------------

          "Agreement Currency" has the meaning given to it in Section 13.10.
           ------------------

          "Amendment" has the meaning given to it in Section 8.3(c).
           ---------

          "Asset Disposition" means any sale, lease, transfer or other
           -----------------
disposition of shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares, or, in the case of a Foreign Subsidiary, to the
extent required by any Requirement of Law), property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction), other than (a) a
                                                                      -
disposition to the Company or a Restricted Subsidiary, (b) a disposition in the
                                                        -
ordinary course of business, (c) the sale or discount (with or without recourse,
                              -
and on customary or commercially reasonable terms) of accounts receivable or
notes receivable arising in the ordinary course of business, or the conversion
or exchange of accounts receivable for notes receivable, (d) any Restricted
                                                          -
Payment Transactions, (e) a disposition that is governed by the provisions
                       -
described under Article IX hereof, (f) any Financing Disposition, (g) any "fee
                                    -                              -
in lieu" or other disposition of assets to any governmental authority or agency
that continue in use by the Company or any Restricted Subsidiary, so long as the
Company or any Restricted Subsidiary may obtain title to such assets upon
reasonable notice by paying a nominal fee, (h) any exchange of like property
                                            -
pursuant to Section 1031 (or any successor section) of the Code, (i) any
                                                                  -
financing transaction with respect to property built or acquired by the Company
or any Restricted Subsidiary after the Closing Date, including without
limitation any sale/leaseback transaction or asset securitization, (j) any
                                                                    -
disposition arising from foreclosure, condemnation or similar action with
respect to any property or other assets, (k) any disposition of Capital Stock,
                                          -

                                       68

<PAGE>

Indebtedness or other securities of an Unrestricted Subsidiary, (l) a
                                                                 -
disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement
or other obligation with or to a Person (other than the Company or a Restricted
Subsidiary) from whom such Restricted Subsidiary was acquired, or from whom such
Restricted Subsidiary acquired its business and assets (having been newly formed
in connection with such acquisition), entered into in connection with such
acquisition, (m) a disposition of not more than five-percent (5%) of the
              -
outstanding Capital Stock of a Foreign Subsidiary that is a Restricted
Subsidiary that has been approved by the Board of Directors, or (n) any
                                                                 -
disposition or series of related dispositions for aggregate consideration not to
exceed $2.5 million.

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

          "Bank Agent" means JPMorgan Chase Bank (as successor by merger to the
           ----------
Morgan Guaranty Trust Company of New York), and any successors thereto, in its
capacity as administrative agent under the Credit Agreement.

          "Bank Default Event" means a "Default" or "Event of Default" as those
           ------------------
terms are defined in the Credit Agreement, or any other default or event of
default under the Credit Agreement.

          "Bank Indebtedness" means any and all amounts, whether outstanding on
           -----------------
the date hereof or thereafter incurred, payable under or in respect of the
Credit Facility, including without limitation principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or any Restricted
Subsidiary whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees,
other monetary obligations of any nature and all other amounts payable
thereunder or in respect thereof.

          "Board of Directors" means, unless the context otherwise requires, the
           ------------------
Board of Directors of the Company.

          "Borrowing Base" means the sum (determined as of the end of the most
           --------------
recently ended fiscal quarter for which consolidated financial statements of the
Company are available) of (a) sixty percent (60%) of Inventory of the Company
                           -
and its Restricted Subsidiaries and (b) eighty percent (80%) of Receivables of
                                     -
the Company and its Restricted Subsidiaries.

                                       69

<PAGE>

          "Business" has the meaning given to it in Section 3.17.
           --------

          "Business Day" means any day other than a Saturday, Sunday or other
           ------------
day on which banking institutions in the City of New York, New York are
authorized or obligated by any Requirement of Law to be closed.

          "Capital Stock" means any and all shares, interests, participations or
           -------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.

          "Capitalized Lease Obligation" means an obligation that is required to
           ----------------------------
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP. The stated maturity of any Capitalized Lease
Obligation shall be the date of the last payment of rent or any other amount due
under the related lease.

          "CD&R" means Clayton, Dubilier & Rice, Inc., a Delaware corporation,
           ----
and any successors thereto.

          "CD&R Group" means CD&R, Fund V, the Investor or any other investment
           ----------
fund or vehicle managed, sponsored or advised by CD&R, or any Affiliate of or
successor to CD&R, Fund V, the Investor or any such other investment fund or
vehicle.

          "CD&R Investment" means the investment by the Investor in the Notes.
           ---------------

          "CD&R Notes" means one or more Notes held by the Investor or any other
           ----------
member of the CD&R Group.

          "Change of Control" means the occurrence of the following: (a) any
           -----------------                                          -
Person or "group" (within the meaning of Section 13(d) or 14(d) of the Exchange
Act), other than any of the Permitted Investors, shall have acquired a
percentage of shares of Voting Stock that is greater than as held in the
aggregate by the Permitted Investors or (b) the Permitted Investors shall cease
                                         -
to hold in the aggregate at least (i) at any time prior to a New Equity
                                   -
Financing, thirty-five percent (35%) of the outstanding Voting Stock of the
Parent or (ii) upon or at any time after a New Equity Financing, twenty-five
           --
percent (25%) of the outstanding Voting Stock of the Parent or (c) a "Change of
                                                                -
Control" as defined in the Senior Subordinated Note Indenture. "Voting Stock"
                                                                ------------
means shares of Capital Stock entitled to vote generally in the election of
directors and "Permitted Investors" means any of (x) the Investor, CD&R, Fund V,
               -------------------                -
any other investment fund or vehicle managed, sponsored or advised by CD&R, or
any Affiliate of or successor to the Investor, CD&R, Fund V or any such other
investment fund or vehicle, (y) any Management Investor and (z) for a period not
                             -                               -
exceeding three (3) Business Days, any Person acting in the capacity of an
underwriter in connection with a public or private offering of Capital Stock of
the Parent. "New Equity Financing" means the receipt by the
             --------------------

                                       70

<PAGE>

Parent of at least $150,000,000 in gross cash proceeds from the issuance and
sale of newly-issued shares of Common Stock after the Closing Date to Persons
other than the Permitted Investors and "Management Investor" means,
                                        -------------------
collectively, the officers, directors, employees and other members of the
management of the Parent, the Company or any Subsidiary of the Company, or
immediate family members or relatives thereof, or trusts or partnerships for the
benefit of any of the foregoing, or any of their heirs, executors or legal
representatives, who at any particular date shall beneficially own or have the
right to acquire, directly or indirectly, common stock of the Parent or the
Company.

          "Change of Control Notice Event" means (a) the execution of any
           ------------------------------         -
written agreement (including, without limitation, any "letter of intent" or
other similar agreement which contemplates more complete documentation or
agreement) which, when fully performed by the parties thereto, would result in a
Change of Control or (b) the making of any written offer by any person (as such
                      -
term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in
effect on the Closing Date) or related persons constituting a group (as such
term is used in Rule 13d-5 under the Exchange Act as in effect on the Closing
Date), which offer, if accepted by the requisite number of such Holders, would
result in a Change of Control.

          "Change of Control Payment Date" has the meaning given to it in
           ------------------------------
Section 6.5.

          "Closing" has the meaning given to it in Section 2.1.
           -------

          "Closing Date" has the meaning given to it in Section 2.1.
           ------------

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

          "Collateral" means all assets of the Note Financing Parties, now owned
           ----------
or hereinafter acquired, upon which a Lien is purported to be created by any
Note Security Document.

          "Common Stock" means the common stock, par value $0.01 per share, of
           ------------
the Parent.

          "Commonly Controlled Entity" means an entity, whether or not
           --------------------------
incorporated, which is under common control with the Parent, the Company or any
Subsidiary of the Company within the meaning of Section 4001 of ERISA or is part
of a group which includes the Parent, the Company or any Subsidiary of the
Company and which is treated as a single employer under Section 414(b) or 414(c)
of the Code.

          "Company" has the meaning given to it in the Heading.
           -------

                                       71

<PAGE>

          "Consolidated Coverage Ratio" as of any date of determination means
           ---------------------------
the ratio of (x) the aggregate amount of Consolidated EBITDA of the Company and
the Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (y)
                                                                   -
Consolidated Interest Expense for such four fiscal quarters, provided that:
                                                             --------

               (a)  if since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
Consolidated EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period (except that
in making such computation, the amount of Indebtedness under any revolving
credit facility outstanding on the date of such calculation shall be computed
based on (i) the average daily balance of such Indebtedness during such four
          -
fiscal quarters or such shorter period for which such facility was outstanding
or (ii) if such facility was created after the end of such four fiscal quarters,
    --
the average daily balance of such Indebtedness during the period from the date
of creation of such facility to the date of such calculation);

               (b)  if since the beginning of such period the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed, defeased or otherwise
acquired, retired or discharged any Indebtedness (each, a "Discharge") or if the
                                                           ---------
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
involves a Discharge of Indebtedness (in each case other than Indebtedness
Incurred under any revolving credit facility unless such Indebtedness has been
permanently repaid), Consolidated EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro forma basis to such
                                                         --- -----
Discharge of such Indebtedness, including with the proceeds of such new
Indebtedness, as if such Discharge had occurred on the first day of such period;

               (c)  if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any company, any business or any
group of assets constituting an operating unit of a business (any such
disposition, a "Sale"), the Consolidated EBITDA for such period shall be reduced
                ----
by an amount equal to the Consolidated EBITDA (if positive) attributable to the
assets that are the subject of such Sale for such period or increased by an
amount equal to the Consolidated EBITDA (if negative) attributable thereto for
such period and Consolidated Interest Expense for such period shall be reduced
by an amount equal to (i) the Consolidated Interest Expense attributable to any
                       -
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
redeemed, defeased or otherwise acquired, retired or discharged with respect to
the Company and its continuing Restricted Subsidiaries in connection with

<PAGE>

such Sale for such period (including but not limited to through the assumption
of such Indebtedness by another Person) plus (ii) if the Capital Stock of any
                                        ----  --
Restricted Subsidiary is sold, the Consolidated Interest Expense for such period
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such Sale;

          (d)  if since the beginning of such period the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise) shall have made an
Investment in any Person that thereby becomes a Restricted Subsidiary, or
otherwise acquired any company, any business or any group of assets constituting
an operating unit of a business, including any such Investment or acquisition
occurring in connection with a transaction causing a calculation to be made
hereunder (any such Investment or acquisition, a "Purchase"), Consolidated
                                                  --------
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto (including the Incurrence of any related
Indebtedness) as if such Purchase occurred on the first day of such period; and

          (e)  if since the beginning of such period any Person became a
Restricted Subsidiary or was merged or consolidated with or into the Company or
any Restricted Subsidiary, and since the beginning of such period such Person
shall have Discharged any Indebtedness or made any Sale or Purchase that would
have required an adjustment pursuant to clause (b), (c) or (d) above if made by
the Company or a Restricted Subsidiary during such period, Consolidated EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Discharge, Sale or Purchase occurred
on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to any
Sale, Purchase or other transaction, or the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Indebtedness Incurred or repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged in connection therewith, the pro forma
calculations in respect thereof (including without limitation in respect of
anticipated cost savings or synergies relating to any such Sale, Purchase or
other transaction) shall be as determined in good faith by a responsible
financial or accounting officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness). If
any Indebtedness bears, at the option of the Company or a Restricted Subsidiary,
a rate of interest based on a prime or similar rate, a eurocurrency interbank
offered rate or other fixed or floating rate, and such Indebtedness is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated by applying such optional rate as the Company or such Restricted
Subsidiary may designate. If any Indebtedness that is being given pro forma
effect was Incurred

                                       73

<PAGE>

under a revolving credit facility, the interest expense on such Indebtedness
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on a Capitalized Lease Obligation shall
be deemed to accrue at an interest rate determined in good faith by a
responsible financial or accounting officer of the Company to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

     "Consolidated EBITDA" means, for any period, the Consolidated Net Income
      -------------------
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) provision for all taxes (whether or not paid,
                          -
estimated or accrued) based on income, profits or capital, (b) Consolidated
                                                            -
Interest Expense and any Receivables Fees, (c) depreciation, amortization
                                            -
(including but not limited to amortization of goodwill and intangibles and
amortization and write-off of financing costs) and all other non-cash charges or
non-cash losses, (d) any expenses or charges related to any sale of Capital
                  -
Stock (other than Disqualified Stock) of the Company and (e) the amount of any
                                                          -
minority interest expense.

     "Consolidated Net Income" means, for any period, the net income (loss) of
      -----------------------
the Company and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP and before any reduction in respect of Preferred Stock
dividends, if any; provided, that there shall not be included in such
                   --------
Consolidated Net Income:

          (a)  any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (i) subject to the limitations contained in
                                    -
clause (d) below, the Company's equity in the net income of any such Person for
such period shall be included in such Consolidated Net Income up to the
aggregate amount actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (c) below) and (ii) the Company's equity in
                                                    --
the net loss of such Person shall be included to the extent of the aggregate
Investment of the Company or any of its Restricted Subsidiaries in such Person;

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

          (c) any net income (loss) of any Restricted Subsidiary that is not a
Note Guarantor Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of similar distributions by such Restricted Subsidiary, directly or indirectly,
to the Company by operation of the terms of such Restricted Subsidiary's charter
or any agreement, instrument, judgment, decree, order, statute or governmental
rule or regulation applicable to such Restricted Subsidiary

                                       74

<PAGE>

or its stockholders (other than (x) restrictions that have been waived or
                                 -
otherwise released, (y) restrictions pursuant to the Notes or this Agreement and
                     -
(z) restrictions in effect on May 21, 1998 with respect to a Restricted
 -
Subsidiary and other restrictions with respect to such Restricted Subsidiary
that taken as a whole are not materially less favorable to the Holders than such
restrictions in effect on May 21, 1998), except that (i) subject to the
                                                      -
limitations contained in clause (d) below, the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of any dividend or
distribution that was or that could have been made by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary (subject, in
the case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (ii) the net loss of
                                                             --
such Restricted Subsidiary shall be included to the extent of the aggregate
Investment of the Company or any of its other Restricted Subsidiaries in such
Restricted Subsidiary;

          (d)  any gain or loss realized upon the sale or other disposition of
any asset of the Company or any Restricted Subsidiary (including pursuant to any
sale/leaseback transaction) that is not sold or otherwise disposed of in the
ordinary course of business (as determined in good faith by the Board of
Directors);

          (e)  any item classified as an extraordinary, unusual or nonrecurring
gain, loss or charge, including, without limitation, fees, expenses and charges
associated with any acquisition, merger or consolidation after the Closing Date;

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

          (g)  all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness;

          (h)  any unrealized gains or losses in respect of Currency Agreements;

          (i)  any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency other than the
functional currency of such Person; and

          (j)  any non-cash compensation charge arising from any grant of stock,
stock options or other equity-based awards.

In the case of any unusual or nonrecurring gain, loss or charge not included in
Consolidated Net Income pursuant to clause (f) above in any determination
thereof, the Company will deliver a certificate of a Responsible Officer to each
Holder promptly after the date on which Consolidated Net Income is so
determined, setting forth the nature and amount of such unusual or nonrecurring
gain, loss or charge.

                                       75

<PAGE>

     "Consolidated Total Assets" means, as of any date of determination, the
      -------------------------
total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith), provided that for purposes of
                                                --------
paragraph (b) of Section 8.1 and the definition of "Permitted Investment,"
Consolidated Total Assets shall not be less than $285,300,000 million.

     "Constituent Person" has the meaning given to it in Section 6.3(i).
      ------------------

     "Contractual Obligation" means, with respect to any Person, any
      ----------------------
provision of any material security issued by such Person or of any material
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.

     "Conversion Price" means, at any time, a price per share of Common
      ----------------
Stock equal to $1,000 divided by the number of shares of Common Stock delivered
upon conversion for each $1,000 Principal Amount of Notes as determined by the
Conversion Rate in effect at such time.

     "Conversion Rate" has the meaning given to it in Section 6.3(a).
      ---------------

     "Credit Agreement" means the credit agreement dated as of May 23, 2000,
      ----------------
among the Company, the banks and other financial institutions party thereto from
time to time, Credit Suisse First Boston, as syndication agent, The Chase
Manhattan Bank, as documentation agent, and the Bank Agent, as administrative
agent, as such agreement may be assumed by any successor in interest, and as
such agreement may be amended, supplemented, waived or otherwise modified from
time to time, or refunded, refinanced, restructured, replaced, renewed, repaid,
increased or extended from time to time (whether in whole or in part, whether
with the original agent and lenders or other agents and lenders or otherwise,
and whether provided under the original Credit Agreement or otherwise).

     "Credit Facility" means the collective reference to the Credit
      ---------------
Agreement, any Credit Documents (as defined therein), any notes and letters of
credit issued pursuant thereto and any guarantee and collateral agreement,
patent and trademark security agreement, mortgages, letter of credit
applications and other guarantees, pledge agreements, security agreements and
collateral documents, and other instruments and documents, executed and
delivered pursuant to or in connection with any of the foregoing, in each case
as the same may be amended, supplemented, waived or otherwise modified from time
to time, or refunded, refinanced, restructured, replaced, renewed, repaid,
increased or extended from time to time (whether in whole or in part, whether

                                       76

<PAGE>

with the original agent and lenders or other agents and lenders or otherwise,
and whether provided under the original Credit Agreement or one or more other
credit agreements, indentures or financing agreements or otherwise). Without
limiting the generality of the foregoing, the term "Credit Facility" shall
include any agreement (i) changing the maturity of any Indebtedness incurred
                       -
thereunder or contemplated thereby, (ii) adding Subsidiaries of the Company as
                                     --
additional borrowers or guarantors thereunder, (iii) increasing the amount of
                                                ---
Indebtedness incurred thereunder or available to be borrowed thereunder or (iv)
                                                                            --
otherwise altering the terms and conditions thereof.

     "Currency Agreement" means, in respect of a Person, any foreign exchange
      ------------------
contract, currency swap agreement or other similar agreement or arrangements
(including derivative agreements or arrangements), as to which such Person is a
party or a beneficiary.

     "Current Market Price" means, on any date specified herein, (a) in the case
      --------------------                                        -
of securities that have an existing public trading market, the amount per
security equal to (i) the average of the last sale price of such security,
                   -
regular way, for the five (5) consecutive trading days selected by the Company
commencing not more than ten (10) trading days before, and ending not later than
the earlier of the day in question and the day before the "ex" date with respect
to the issuance or distribution requiring such computation (the five (5) trading
days so selected by the Company, the "Trading Period"), or, if no such sale
                                      --------------
takes place during such period, the average of the closing bid and asked prices
thereof during the Trading Period, in each case as officially reported on the
principal national securities exchange on which the same are then listed or
admitted to trading, or (ii) if no such security is then listed or admitted to
                         --
trading on any national securities exchange but such security is designated as a
national market system security by the NASD, the average of the last sale price
of such security, regular way, during the Trading Period, or if such security is
not so designated, the average of the reported closing bid and asked prices
thereof during the Trading Period as shown by the NASD automated quotation
system or, if no shares thereof are then quoted in such system, as published by
the National Quotation Bureau, Incorporated or any successor organization, and
in either case as reported by any member firm of the New York Stock Exchange
selected by the Company, and (b) in the case of securities that do not have an
                              -
existing public trading market and in the case of other property, the higher of
(i) the book value thereof as determined by agreement between the Company and
 -
the Holder, or if the Company and the Holder fail to agree, by any firm of
independent public accountants of recognized standing selected by the Board of
Directors of the Company, as of the last day of any month ending within sixty
(60) days preceding the date as of which the determination is to be made and
(ii) the fair value thereof (w) determined by an agreement between the Company
 --                          -
and the Holder or (x) if the Company and the Holder fail to agree, determined
                   -
jointly by an independent investment banking firm retained by the Company and by
an independent investment banking firm retained by the Holder, either of which
firms may be an independent investment banking firm regularly retained

                                       77

<PAGE>

by the Company or the Holder or (y) if the Company or the Holder shall fail so
                                 -
to retain an independent investment banking firm within five Business Days of
the retention of such firm by the Holders or the Company, as the case may be,
determined solely by the firm so retained or (z) if the firms so retained by the
                                              -
Company and by such holders shall be unable to reach a joint determination
within fifteen (15) Business Days of the retention of the last firm so retained,
determined by another independent investment banking firm chosen by the first
two such firms and which is not a regular investment banking firm of the Company
or any such holder.

     "Default" means any of the events specified in Section 10.1, whether or not
      -------
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.

     "Disinterested Director" means, with respect to any Affiliate Transaction,
      ----------------------
a member of the Board of Directors of the Parent having no material direct or
indirect financial interest in or with respect to such Affiliate Transaction. A
member of the Board of Directors shall not be deemed to have such a financial
interest by reason of such member's holding Capital Stock of the Parent or any
options, warrants or other rights in respect of such Capital Stock.

     "Disqualified Stock" means, with respect to any Person, any Capital Stock
      ------------------
(other than Management Stock) that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (other than following the occurrence of a Change
of Control or other similar event described under such terms as a "change of
control" or an Asset Disposition) (a) matures or is mandatorily redeemable
                                   -
pursuant to a sinking fund obligation or otherwise, (b) is convertible or
                                                     -
exchangeable for Indebtedness or Disqualified Stock or (c) is redeemable at the
                                                        -
option of the holder thereof (other than following the occurrence of a Change of
Control or other similar event described under such terms as a "change of
control," or an Asset Disposition), in whole or in part, in each case on or
prior to the Maturity Date.

     "Domestic Subsidiary" means any Subsidiary of the Company organized under
      -------------------
the laws of any jurisdiction within the United States (other than any Foreign
Subsidiary Holdco).

     "Environmental Laws" means any and all foreign, Federal, state, local or
      ------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority properly promulgated and
having the force and effect of law, or other Requirements of Law (including,
without limitation, common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or human health as
related to the environment, as now or may at any relevant time hereafter be in
effect.

                                       78

<PAGE>

     "Environmental Permits" has the meaning given to it in Section 7.8.
      ---------------------

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended from time to time.

     "Event of Default" means any of the events specified in Section 10.1,
      ----------------
provided that any requirement for the giving of notice, the lapse of time, or
--------
both, or any other condition, has been satisfied.

     "Exchange Act" means the Securities Exchange Act of 1934, or any successor
      ------------
statute, and the rules and regulations of the SEC thereunder, as amended.

     "Excluded Contribution" means Net Cash Proceeds, or the fair value, as
      ----------------------
determined in good faith by the Board of Directors, of property or assets,
received by the Company as capital contributions to the Company after the
Closing Date or from the issuance or sale (other than to a Restricted
Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company, in
each case not previously included in the calculation set forth in subparagraph
(a)(3)(B)(x) of Section 8.2 for purposes of determining whether a Restricted
Payment may be made.

     "Excluded Subsidiaries" has the meaning given to it in Section 7.9(f).
      ---------------------

     "Financing Disposition" means any sale, transfer, conveyance or other
      ---------------------
disposition of property or assets by the Company or any Subsidiary of the
Company to any Receivables Entity, or by any Receivables Subsidiary, in each
case in connection with the Incurrence by a Receivables Entity of Indebtedness,
or obligations to make payments to the obligor on Indebtedness, which may be
secured by a Lien in respect of such property or assets.

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

     "Foreign Pledge Agreement" each pledge agreement (or analogous document),
      ------------------------
which pledge agreement (or analogous document) shall be in form and substance
reasonably satisfactory to the Secured Parties, pursuant to which the Company or
any of its Domestic Subsidiaries purports to grant a Lien on any portion of the
Capital Stock of any Foreign Subsidiary, as the same may be amended,
supplemented or otherwise modified from time to time.

     "Foreign Subsidiary" means any Subsidiary of the Company that is organized
      ------------------
under the laws of any jurisdiction outside the United States of America, or that
is a Foreign Subsidiary Holdco.

                                       79

<PAGE>

     "Foreign Subsidiary Holdco" means any Subsidiary of the Company that has no
      -------------------------
material assets other than Capital Stock or other securities of one or more
Foreign Subsidiaries or other Foreign Subsidiary Holdcos, and other assets
relating to an ownership interest in such Capital Stock, securities or Foreign
Subsidiaries.

     "Former Plan" means any employee benefit plan in respect of which the
      -----------
Parent, the Company or any Subsidiary of the Company or a Commonly Controlled
Entity has engaged in a transaction described in Section 4069 or Section 4212(c)
of ERISA.

     "Fund V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
      ------
Cayman Islands exempted limited partnership managed by CD&R, and its successors
and assigns who are members of the CD&R Group at the time of any such
assignment.

     "GAAP" means generally accepted accounting principles in the United States
      ----
of America as in effect on May 21, 1998 (for purposes of the definitions of the
terms "Consolidated Coverage Ratio," "Consolidated EBITDA," "Consolidated
Interest Expense," "Consolidated Net Income" and "Consolidated Total Assets,"
all defined terms in this Agreement to the extent used in or relating to any of
the foregoing definitions, and all ratios and computations in this Agreement
based on any of the foregoing definitions) and as in effect from time to time
(for purposes of Section 8.1(c)(iii) and for all other purposes of this
Agreement), including those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession. All ratios and computations
based on GAAP contained in this Agreement shall be computed in conformity with
GAAP.

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

     "Guarantee and Collateral Agreement" has the meaning given to it in the
      ----------------------------------
Recitals.

     "Guarantee" and "Guarantee Obligations" means, with respect to any Person
      ---------       ---------------------
(the "guaranteeing person"), any obligation of (a) the guaranteeing person or
      --------------------
(b) another Person (including, without limitation, any bank under any letter of
 -
credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other third Person (the
                        -------------------
"primary obligor") in any manner, whether directly or indirectly, including,
 ---------------
without limitation, any such obligation of the guaranteeing person, whether or
not contingent, (i) to purchase any such primary obligation or any property
                 -
constituting

                                       80

<PAGE>

direct or indirect security therefor, (ii) to advance or supply funds (A) for
                                       --                              -
the purchase or payment of any such primary obligation or (B) to maintain
                                                           -
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to purchase
                                                            ---
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
                                       --
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
--------  -------
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (x) an amount equal to the stated or
                                    -
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (y) the maximum amount for which such guaranteeing person
                        -
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Company in good faith. (The term "Guarantee" used as a verb has a corresponding
                                  ---------
meaning.)

     "Holder" means the Person in whose name a Note is registered in the
      ------
Register of Holders.

     "Inactive Subsidiaries" means each Subsidiary of the Company listed on
      ---------------------
Schedule 3.16 so long as such Subsidiary is in compliance with Section 7.9(e).

     "Incur" means issue, assume, enter into any Guarantee of, incur or
      -----
otherwise become liable for; provided, however, that any Indebtedness or Capital
                             --------
Stock of a Person existing at the time such Person becomes a Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Subsidiary at the time it becomes a Subsidiary. Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including Indebtedness on
which interest is payable through the issuance of additional Indebtedness) shall
be deemed Incurred at the time of original issuance of the Indebtedness at the
initial accreted amount thereof. For purposes of this Agreement, all
Indebtedness of the Company and its Restricted Subsidiaries that is outstanding
on the date hereof and was initially Incurred in accordance with Section 406(b)
of the Senior Subordinated Note Indenture, shall be deemed Incurred on the date
hereof and outstanding under the respective clauses of Section 8.1(b)
corresponding to the respective clauses of Section 406(b) of the Senior
Subordinated Indenture under which such Indebtedness was initially Incurred and
is outstanding on the date hereof (with the United States dollar equivalent
principal amount of any Indebtedness denominated in a foreign

                                       81

<PAGE>

currency being calculated in accordance with Section 8.1(d) without giving
effect to such deemed new Incurrence thereof on the date hereof).

         "Initial Agreement" has the meaning given to it in Section 8.3(c).
          -----------------

         "Initial Lien" has the meaning given to it in Section 8.6(b).
          ------------

         "Initial Notes" has the meaning given to it in the Recitals.
          -------------

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

                  (a)     the principal of indebtedness of such Person for
borrowed money;

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

                  (c)     all reimbursement obligations of such Person in
respect of letters of credit or other similar instruments (the amount of such
obligations being equal at any time to the aggregate then undrawn and unexpired
amount of such letters of credit or other instruments plus the aggregate amount
of drawings thereunder that have not then been reimbursed);

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

                  (e)     all Capitalized Lease Obligations of such Person;

                  (f)     the redemption, repayment or other repurchase amount
of such Person with respect to any Disqualified Stock of such Person or (if such
Person is a Subsidiary of the Company other than a Note Guarantor Subsidiary)
any Preferred Stock of such Subsidiary, but excluding, in each case, any accrued
dividends (the amount of such obligation to be equal at any time to the maximum
fixed involuntary redemption, repayment or repurchase price for such Capital
Stock, or if less (or if such Capital Stock has no such fixed price), to the
involuntary redemption, repayment or repurchase price therefor calculated in
accordance with the terms thereof as if then redeemed, repaid or repurchased,
and if such price is based upon or measured by the fair market value of such
Capital Stock, such fair market value shall be as determined in good faith by
the board of directors or other governing body of the issuer of such Capital
Stock);

                  (g)     all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, that
        --------

                                       82

<PAGE>

the amount of Indebtedness of such Person shall be the
lesser of (i) the fair market value of such asset at such date of determination
           -
(as determined in good faith by the Company) and (ii) the amount of such
                                                  --
Indebtedness of such other Persons;

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

                  (i)    to the extent not otherwise included in this
definition, net hedging obligations in respect of any Currency Agreements and
Interest Rate Agreements of such Person (the amount of any such obligation to be
equal at any time to the termination value of such agreement or arrangement
giving rise to such hedging obligation that would be payable by such Person at
such time).

The amount of Indebtedness of any Person at any date shall be determined as set
forth above or otherwise provided in this Agreement, or otherwise shall equal
the amount thereof that would appear on a balance sheet of such Person
(excluding any notes thereto) prepared in accordance with GAAP.

         "Insolvency" means, with respect to any Multiemployer Plan, the
          ----------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.

         "Intellectual Property" has the meaning given to it in Section 3.10.
          ---------------------

         "Intercreditor Agreement" has the meaning given to it in the Recitals.
          -----------------------

         "Interest Payment" has the meaning given to it in Section 6.2.
          ----------------

         "Interest Payment Date" has the meaning given to it in Section 6.1.
          ---------------------

         "Interest Rate" has the meaning given to it in Section 6.1.
          -------------

         "Interest Rate Agreement" means, with respect to any Person, any
          -----------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement (including derivative agreements or
arrangements), as to which such Person is party or a beneficiary.

         "Investment" in any Person by any other Person means any direct or
          ----------
indirect advance, loan or other extension of credit (other than to customers,
suppliers, directors, officers or employees of any Person in the ordinary course
of business) or capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others) to, or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by, such Person. For purposes of the
definition of "Unrestricted Subsidiary" and Section 8.2(a), (a)
               -----------------------                       -

                                       83

<PAGE>

"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary, provided that upon a redesignation of such Subsidiary
                         --------
as a Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (x) the Company's "Investment" in such Subsidiary at the time of such
          -
redesignation less (y) the portion (proportionate to the Company's equity
                    -
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation, (b) any property transferred to or
                                               -
from an Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer and (c) in each case under clause (a) or (b) above, fair
                           -
market value shall be as determined in good faith by the Board of Directors.
Guarantees shall not be deemed to be Investments. The amount of any Investment
outstanding at any time shall be the original cost of such Investment, reduced
(at the Company's option) by any dividend, distribution, interest payment,
return of capital, repayment or other amount or value received in respect of
such Investment; provided, that to the extent that the amount of Restricted
                 --------
Payments outstanding at any time since May 21, 1998 (including, prior to the
date hereof, pursuant to the Senior Subordinated Note Indenture) is so reduced
by any portion of any such amount or value that would otherwise be included in
the calculation of Consolidated Net Income, such portion of such amount or value
shall not be so included for purposes of calculating the amount of Restricted
Payments that may be made pursuant to paragraph (a) of Section 8.2.

         "Investor" has the meaning given to it in the Heading.
          --------

         "Judgment Currency" has the meaning given to it in Section 13.10.
          -----------------

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

         "Majority CD&R Note Holders" means, at any time, Holders holding more
          --------------------------
than fifty percent (50%) of the aggregate principal amount of CD&R Notes
outstanding at such time.

         "Majority Holders" means, at any time, Holders holding more than fifty
          ----------------
percent (50%) of the aggregate principal amount of Notes outstanding at such
time.

                                       84

<PAGE>
         "Majority Transferred Note Holders" means, at any time, Holders holding
          ---------------------------------
more than fifty percent (50%) of the aggregate principal amount of Transferred
Notes outstanding at such time.

         "Management Advances" means (a) loans or advances made to directors,
          -------------------         -
officers or employees of the Parent, the Company or any Restricted Subsidiary
(i) in respect of travel, entertainment or moving-related expenses incurred in
 -
the ordinary course of business, (ii) in respect of moving-related expenses
                                  --
incurred in connection with any closing or consolidation of any facility or
(iii) in the ordinary course of business and (in the case of this clause (iii))
 ---
not exceeding $2,500,000 in the aggregate outstanding at any time, (b)
                                                                    -
promissory notes of Management Investors acquired in connection with the
issuance of Management Stock to such Management Investors, (c) Management
                                                            -
Guarantees, or (d) other Guarantees of borrowings by Management Investors in
                -
connection with the purchase of Management Stock, which Guarantees are permitted
under Section 8.1.

         "Management Agreements" means, collectively, the Consulting Agreement
          ---------------------
and the Indemnification Agreement, each dated as of May 21, 1998, each between
the Company and CD&R (and its permitted successors and assigns thereunder), as
each may be amended, supplemented, waived or otherwise modified from time to
time in accordance with the terms thereof and of this Agreement.

         "Management Guarantees" means guarantees (a) of up to an aggregate
          ---------------------                    -
principal amount of $20,000,000 of borrowings by Management Investors in
connection with their purchase of Management Stock or (b) made on behalf of, or
                                                       -
in respect of loans or advances made to, directors, officers or employees of the
Parent, the Company or any Restricted Subsidiary (i) in respect of travel,
                                                  -
entertainment and moving-related expenses incurred in the ordinary course of
business, or (ii) in the ordinary course of business and (in the case of this
              --
clause (ii)) not exceeding $2,500,000 million in the aggregate outstanding at
any time.

         "Management Investors" means the officers, directors, employees and
          --------------------
other members of the management of the Parent, the Company and any Subsidiary of
the Company, or family members or relatives thereof, or trusts or partnerships
for the benefit of any of the foregoing, or any of their heirs, executors,
successors and legal representatives, who at any date beneficially own or have
the right to acquire, directly or indirectly, Capital Stock of the Parent or the
Company.

         "Management Stock" means Capital Stock of the Parent or the Company
          ----------------
(including any options, warrants or other rights in respect thereof) held by any
of the Management Investors.

                                       85

<PAGE>
         "Material Adverse Effect" means a material adverse effect on (a) the
          -----------------------                                      -
business, operations, property or condition (financial or otherwise) of the
Parent, the Company and the Subsidiaries of the Company, taken as a whole, or
(b) the validity or enforceability of the Note Financing Documents as to any
 -
Note Financing Parties party thereto or the rights and remedies of the Investor
or any other Holder hereunder and thereunder, taken as a whole.

         "Material Environmental Amount" means an amount payable by the Parent,
          -----------------------------
the Company or any Subsidiary of the Company in respect of or under any
Environmental Law for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof in an amount that
would reasonably be expected to have a Material Adverse Effect.

         "Material Subsidiary" means, at any date, any Subsidiary of the Company
          -------------------
which at such date has assets with a market value in excess of $5,000,000 or
annual revenues in excess of $5,000,000.

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

         "Maturity Date" means December 31, 2007.
          -------------

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

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

         "Net Available Cash" from an Asset Disposition means cash payments
          ------------------
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of (a) all
                                                                     -
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP, as a consequence of such Asset
Disposition (including as a consequence of any transfer of funds in connection
with the application thereof in accordance with the covenant described in
Section 8.4), (b) all payments made, and all installment payments required to be
               -
made, on any Indebtedness that is secured by any assets subject to such Asset
Disposition, in accordance with the

                                       86

<PAGE>

terms of any Lien upon such assets, or that must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (c) all distributions
                                                         -
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, or to any
other Person (other than the Company or a Restricted Subsidiary) owning a
beneficial interest in the assets disposed of in such Asset Disposition and (d)
                                                                             -
any liabilities or obligations associated with the assets disposed of in such
Asset Disposition and retained by the Company or any Restricted Subsidiary after
such Asset Disposition, including without limitation pension and other
post-employment benefit liabilities, liabilities related to environmental
matters, and liabilities relating to any indemnification obligations associated
with such Asset Disposition.

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

         "New Common Stock" means any newly-issued shares of Common Stock (or
          ----------------
securities convertible into or exercisable or exchangeable for newly-issued
shares of Common Stock) issued or proposed to be issued after the Closing Date,
other than (a) shares of Common Stock issued upon the exercise of any Warrant
            -
issued by the Parent pursuant to this Agreement or upon the conversion of any of
the Notes pursuant to Section 6.3 and, (b) any issuance of shares of Common
                                        -
Stock issuable as a result of an adjustment of the Conversion Rate under clauses
(i), (ii), (iii), (iv), (v) or (vi) of Section 6.3(c).

         "New Issue Price" has the meaning given to it in Section 6.3(c).
          ---------------

         "New Price Per Share" has the meaning given to it in Section
          -------------------
6.3(c)(vi).

         "New York Court" has the meaning given to it in Section 13.3.
          --------------

         "Non-electing Share" has the meaning given to it in Section 6.3(i).
          ------------------

         "Note Financing Documents" means this Agreement, the Notes, the
          ------------------------
Intercreditor Agreement and the Note Security Documents.

         "Note Financing Party" means the Parent, the Company and each
          --------------------
Subsidiary of the Company that is a party to a Note Financing Document.

                                       87

<PAGE>

         "Note Guarantee" means any Guarantee with respect to any of the Notes
          --------------
by Parent or any Subsidiary of the Company.

         "Note Guarantor" means Parent or any Restricted Subsidiary of the
          --------------
Company that is party to a Note Guarantee.

         "Note Guarantor Subsidiary" means any Restricted Subsidiary of the
          -------------------------
Company that is a Note Guarantor of both the CD&R Notes and the Transferred
Notes (if any).

         "Note Security Documents" means the Guarantee and Collateral Agreement
          -----------------------
and all other security documents hereafter delivered to any of the Secured
Parties granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Company hereunder and under any of the other
Note Financing Documents or to secure any guarantee of any such obligations and
liabilities.

         "Notes" means (a) the Initial Notes, (b) any additional promissory
          -----         -                      -
notes issued by the Company (i) in lieu of payment of an Interest Payment in
                             -
cash, in accordance with Section 6.2, (ii) in connection with any Optional
                                       --
Redemption, in accordance with Section 6.4, (iii) in connection with any
                                             ---
repurchase offer, in accordance with Section 6.6, (iv) in connection with any
                                                   --
transfer of Notes, in accordance with Section 6.9, (v) in replacement of any
                                                    -
mutilated, destroyed, lost or stolen Notes, in accordance with Section 6.10 and
(vi) in connection with any repurchase offer, in accordance with Section 8.4.
 --

         "Offer" has the meaning given to it in Section 8.4(d).
          -----

         "Optional Redemption" has the meaning given to it in Section 6.4.
          -------------------

         "Parent" has the meaning given to it in the first paragraph of this
          ------
Agreement.

         "Parent Expenses" means (a) costs (including all professional fees and
          ---------------         -
expenses) incurred by the Parent to comply with its reporting obligations under
federal or state laws or under this Indenture, including any reports filed with
respect to the Securities Act, Exchange Act or the respective rules and
regulations promulgated thereunder, (b) indemnification obligations of the
                                     -
Parent owing to directors, officers, employees or other Persons under its
charter or by-laws or pursuant to written agreements with any such Person, (c)
                                                                            -
other operational expenses of the Parent incurred in the ordinary course of
business and (d) expenses incurred by the Parent in connection with any public
              -
offering of Capital Stock or Indebtedness (i) where the net proceeds of such
                                           -
offering are intended to be received by or contributed or loaned to the Company
or a Restricted Subsidiary, or (ii) in a prorated amount of such expenses in
                                --
proportion to the amount of such net proceeds intended to be so received,
contributed or loaned or (iii) otherwise on an interim basis prior to completion
                          ---
of such offering so long as the Parent shall cause the

                                       88

<PAGE>

amount of such expenses to be repaid to the Company or the relevant Restricted
Subsidiary out of the proceeds of such offering promptly if completed.

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

         "Permitted Investment" means an Investment by the Company or any
          --------------------
Restricted Subsidiary in, or consisting of, any of the following:

                (a)      a Restricted Subsidiary, the Company, or a Person that
will, upon the making of such Investment, become a Restricted Subsidiary;

                (b)      another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;

                (c)      Temporary Cash Investments or Cash Equivalents;

                (d)      receivables owing to the Company or any Restricted
Subsidiary, if created or acquired in the ordinary course of business;

                (e)      any securities or other Investments received as
consideration in, or retained in connection with, sales or other dispositions of
property or assets, including Asset Dispositions made in compliance with Section
8.4;

                (f)      securities or other Investments received in settlement
of debts created in the ordinary course of business and owing to the Company or
any Restricted Subsidiary, or as a result of foreclosure, perfection or
enforcement of any Lien, or in satisfaction of judgments, including in
connection with any bankruptcy proceeding or other reorganization of another
Person;

                (g)      Investments in existence or made pursuant to legally
binding written commitments in existence on the Closing Date;

                (h)      Currency Agreements, Interest Rate Agreements and
related hedging obligations, which obligations are Incurred in compliance with
Section 8.1;

                (i)      pledges or deposits (x) with respect to leases or
                                              -
utilities provided to third parties in the ordinary course of business or (y)
                                                                           -
otherwise described in the definition of "Permitted Liens";

                (j)      any Investment in a joint venture or similar entity
that is not a Restricted Subsidiary, or in any Related Business, in an aggregate
amount outstanding at any time not to exceed seven percent (7%) of Consolidated
Total Assets;

                                       89

<PAGE>

        (k)      (i) Investments in any Receivables Subsidiary, or in connection
                  -
with a Financing Disposition by or to any Receivables Entity, including
Investments of funds held in accounts permitted or required by the arrangements
governing such Financing Disposition or any related Indebtedness, or (ii) any
                                                                      --
promissory note issued by the Company or the Parent, provided that if the Parent
receives cash from the relevant Receivables Entity in exchange for such note, an
equal cash amount is contributed by the Parent to the Company;

        (l)      bonds secured by assets leased to and operated by the Company
or any Restricted Subsidiary that were issued in connection with the financing
of such assets so long as the Company or any Restricted Subsidiary may obtain
title to such assets at any time by paying a nominal fee, canceling such bonds
and terminating the transaction;

        (m)      the Notes;

        (n)      any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of the Parent, as
consideration;

        (o)      Management Advances; and

        (p)      other Investments in an aggregate amount outstanding at any
time not to exceed ten percent (10%) of Consolidated Total Assets.

     "Permitted Liens" means:
      ---------------

        (a)      Liens for taxes, assessments or other governmental charges not
yet delinquent or the nonpayment of which in the aggregate would not reasonably
be expected to have a material adverse effect on the Company and its Restricted
Subsidiaries, or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company or a Subsidiary thereof, as the case may be, in accordance
with GAAP;

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

        (c)      pledges, deposits or Liens in connection with workers'
compensation, unemployment insurance and other social security and other similar
legislation or other insurance-related obligations (including, without
limitation, pledges or deposits securing liability to insurance carriers under
insurance or self-insurance arrangements);

                                       90

<PAGE>

              (d)    pledges, deposits or Liens to secure the performance of
bids, tenders, trade, government or other contracts (other than for borrowed
money), obligations for utilities, leases, licenses, statutory obligations,
completion guarantees, surety, judgment, appeal or performance bonds, other
similar bonds, instruments or obligations, and other obligations of a like
nature incurred in the ordinary course of business;

              (e)    easements (including reciprocal easement agreements),
rights-of-way, building, zoning and similar restrictions, utility agreements,
covenants, reservations, restrictions, encroachments, changes, and other similar
encumbrances or title defects incurred, or leases or subleases granted to
others, in the ordinary course of business, which do not in the aggregate
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries, taken as a whole;

              (f)    Liens existing on, or provided for under written
arrangements existing on, the date hereof, or (in the case of any such Liens
securing Indebtedness of the Company or any of its Subsidiaries existing or
arising under written arrangements existing on the date hereof) securing any
Refinancing Indebtedness in respect of such Indebtedness so long as the Lien
securing such Refinancing Indebtedness is limited to all or part of the same
property or assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or under such written
arrangements could secure) the original Indebtedness;

              (g)    (i) mortgages, liens, security interests, restrictions,
                      -
encumbrances or any other matters of record that have been placed by any
developer, landlord or other third party on property over which the Company or
any Restricted Subsidiary of the Company has easement rights or on any leased
property and subordination or similar agreements relating thereto and (ii) any
                                                                       --
condemnation or eminent domain proceedings affecting any real property;

              (h)    Liens securing (i) Hedging Obligations Incurred in
                                     -
compliance with clause (b)(viii)(C) of Section 8.1 or (ii) Purchase Money
                                                       --
Obligations or Capitalized Lease Obligations Incurred in compliance with Section
8.1; provided that, in the case of this clause (ii), (A) such Liens shall be
     --------                                         -
created prior to or substantially simultaneously with or within six months of
the acquisition thereby financed or the date of the incurrence or assumption of
such Indebtedness and (B) such Liens do not at any time encumber any property
                       -
other than the property financed by such Indebtedness;

              (i)    Liens arising out of judgments, decrees, orders or awards
in respect of which the Company shall in good faith be prosecuting an appeal or
proceedings for review, which appeal or proceedings shall not have been finally
terminated, or if the period within which such appeal or proceedings may be
initiated shall not have expired;

                                       91

<PAGE>

              (j)    leases, subleases, licenses or sublicenses to third
parties;

              (k)    Liens (1) on Collateral securing Bank Indebtedness Incurred
                            -
under the Credit Agreement in compliance with Section 8.1, (2) on property or
                                                            -
assets of a Foreign Subsidiary that is a Restricted Subsidiary securing
Indebtedness of a Foreign Subsidiary that is a Restricted Subsidiary Incurred in
compliance with clause (b)(v) of Section 8.1, (3) securing the Notes or (4)
                                               -                         -
securing Indebtedness or other obligations of any Receivables Entity;

              (l)    Liens existing on property or assets of a Person at the
time such Person becomes a Subsidiary of the Company (or at the time the Company
or a Restricted Subsidiary acquires such property or assets); provided, however,
                                                              --------
that such Liens are not created in connection with, or in contemplation of, such
other Person becoming such a Subsidiary (or such acquisition of such property or
assets), and that such Liens are limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or distributions in
respect thereof) that secured (or, under the written arrangements under which
such Liens arose, could secure) the obligations to which such Liens relate;

              (m)    Liens on Capital Stock or other securities of an
Unrestricted Subsidiary that secure Indebtedness or other obligations of such
Unrestricted Subsidiary;

              (n)    any encumbrance or restriction (including, but not limited
to, put and call agreements) with respect to Capital Stock of any joint venture
or similar arrangement pursuant to any joint venture or similar agreement; and

              (o)    Liens securing Refinancing Indebtedness Incurred in respect
of any Indebtedness secured by, or securing any refinancing, refunding,
extension, renewal or replacement (in whole or in part) of any other obligation
secured by, any other Permitted Liens, provided that any such new Lien is
limited to all or part of the same property or assets (plus improvements,
accessions, proceeds or dividends or distributions in respect thereof) that
secured (or, under the written arrangements under which the original Lien arose,
could secure) the obligations to which such Liens relate;

              (p)    Liens securing the CD&R Notes; and

              (q) Liens securing the Transferred Notes incurred pursuant to
Section 8.6(b).

For purposes of Section 8.6(b), "Permitted Liens" shall also mean and include
Liens securing (1) other Hedging Obligations, Purchase Money Obligations and
                -
Capitalized Lease Obligations Incurred in compliance with Section 8.1, (2)
                                                                        -
Indebtedness Incurred in compliance with clause (b)(i), (b)(iv), (b)(v),
(b)(vii), (b)(viii) or (b)(x) of Section 8.1, (3) Bank Indebtedness, (4)
                                               -                      -
commercial bank Indebtedness, (5) Indebtedness of any
                               -

                                       92

<PAGE>

Restricted Subsidiary that is not a Note Guarantor of the Transferred Notes, (6)
                                                                              -
the Notes or (7) Indebtedness or other obligations of any Receivables Entity
              -

       "Permitted Payment" has the meaning given to it in Section 8.2(b).
        -----------------

       "Plan" means any employee benefit plan that is covered by ERISA and in
        ----
respect of which the Parent, the Company, any Subsidiary of the Company or a
Commonly Controlled Entity is an "employer" as defined in Section 3(5) of ERISA.

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

       "Principal Amount" means, with respect to any Note, the principal amount
        ----------------
that will become due and payable to the Holder thereof on the Maturity Date, as
adjusted from time to time to account for the partial redemption or repurchase
of such Note by the Company prior to the Maturity Date.

       "Properties" has the meaning given to it in Section 3.17.
        ----------

       "Purchase Money Obligations" means any Indebtedness Incurred to finance
        --------------------------
or refinance the acquisition, leasing, construction or improvement of property
(real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the Capital Stock
of any Person owning such property or assets, or otherwise.

       "Purchase Price" has the meaning given to it in Section 1.3.
        --------------

       "Receivable" means a right to receive payment arising from a sale or
        ----------
lease of goods or services by a Person pursuant to an arrangement with another
Person pursuant to which such other Person is obligated to pay for goods or
services under terms that permit the purchase of such goods and services on
credit, as determined in accordance with GAAP.

       "Receivables Entity" means (a) any Receivables Subsidiary or (b) any
        ------------------         -                                 -
other Person that is engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in the Uniform
Commercial Code as in effect in any jurisdiction from time to time), other
accounts and/or other receivables, and/or related assets.

       "Receivables Fees" means distributions or payments made directly or by
        ----------------
means of discounts with respect to any participation interest issued or sold in
connection with, and

                                       93

<PAGE>

other fees paid to a Person that is not a Restricted Subsidiary in connection
with, any Receivables Financing.

       "Receivables Financing" means any financing of Receivables of the Company
        ---------------------
or any Restricted Subsidiary that have been transferred to a Receivables Entity
in a Financing Disposition.

       "Receivables Subsidiary" means a Subsidiary of the Company that (a) is
        ----------------------                                          -
engaged solely in the business of acquiring, selling, collecting, financing or
refinancing Receivables, accounts (as defined in the Uniform Commercial Code as
in effect in any jurisdiction from time to time) and other accounts and
receivables (including any thereof constituting or evidenced by chattel paper,
instruments or general intangibles), all proceeds thereof and all rights
(contractual and other), collateral and other assets relating thereto, and any
business or activities incidental or related to such business, and (b) is
                                                                    -
designated as a "Receivables Subsidiary" by the Board of Directors.

       "Redemption Date" has the meaning given to it in Section 6.4.
        ---------------

       "Redemption Notice" has the meaning given to it in Section 6.4.
        -----------------

       "Redemption Price" has the meaning given to it in Section 6.4.
        ----------------

       "Refinancing Agreement" has the meaning given to it in Section 8.3(c).
        ---------------------

       "refinance" means, for purposes of Articles VIII and IX, to refinance,
        ---------
refund, replace, renew, repay, modify, restate, defer, substitute, supplement,
reissue, resell or extend (including pursuant to any defeasance or discharge
mechanism); and the terms "refinances," "refinanced" and "refinancing" as used
for any purpose of Articles VIII and IX shall have a correlative meaning.

       "Refinancing Indebtedness" means Indebtedness that is Incurred to
        ------------------------
refinance any Indebtedness existing on the date of this Agreement or Incurred in
compliance with this Agreement (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary (to the extent permitted in
this Agreement) and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, that (a) the Refinancing
                                     --------        -
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced, (b) such Refinancing Indebtedness is Incurred in an aggregate
                   -
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the sum of (x) the aggregate principal
                                                 -
amount (or if issued with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being refinanced, plus (y) fees,
                                                             -
underwriting discounts, premiums and other costs and expenses incurred in
connection with such Refinancing Indebtedness, (c) in the event that the
                                                -

                                       94

<PAGE>

Indebtedness to be refinanced is subordinated in right of payment to the Notes
or any Note Guarantee, such new Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such new Indebtedness is issued or
remains outstanding, is made subordinate in right of payment to the Notes or
such Note Guarantee at least to the same extent that the Indebtedness to be
refinanced is subordinated to the Notes or such Note Guarantee, and (d)
                                                                     -
Refinancing Indebtedness shall not include (x) Indebtedness of a Restricted
                                            -
Subsidiary that is not a Note Guarantor Subsidiary that refinances Indebtedness
of the Company or a Note Guarantor that was incurred pursuant to paragraph (a)
of Section 8.1 or (prior to the date hereof) Section 406(a) of the Senior
Subordinated Note Indenture or (y) Indebtedness of the Company or a Restricted
                                -
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.

       "Register of Holders" has the meaning given to it in Section 6.8.
        -------------------

       "Registration Rights Agreement" means that certain Registration Rights
        -----------------------------
Agreement, dated as of May 21, 1998, and subsequently amended on May 23, 2000,
among the Parent, the Investor, Fund V and certain other parties, as such
agreement may be amended, supplemented, waived or otherwise modified from time
to time in accordance with the terms thereof and of this Agreement.

       "Related Business" means those businesses in which the Company or any of
        ----------------
its Subsidiaries is engaged on the date of this Agreement, or that are related,
complementary, incidental or ancillary thereto or extensions, developments or
expansions thereof.

       "Related Taxes" means (a) any taxes, charges or assessments, including
        -------------         -
but not limited to sales, use, transfer, rental, ad valorem, value-added, stamp,
property, consumption, franchise, license, capital, net worth, gross receipts,
excise, occupancy, intangibles or similar taxes, charges or assessments (other
than federal, state or local taxes measured by income and federal, state or
local withholding imposed on payments made by the Parent), required to be paid
by the Parent by virtue of its being incorporated or having Capital Stock
outstanding (but not by virtue of owning stock or other equity interests of any
corporation or other entity other than the Company or any of its Subsidiaries),
or being a holding company parent of the Company or receiving dividends from or
other distributions in respect of the Capital Stock of the Company, or having
guaranteed any obligations of the Company or any Subsidiary thereof, or having
made any payment in respect of any of the items for which the Company is
permitted to make payments to the Parent pursuant to Section 8.2, or (b) any
                                                                      -
other federal, state, foreign, provincial or local taxes measured by income for
which the Parent is liable up to an amount not to exceed with respect to such
federal taxes the amount of any such taxes that the Company would have been
required to pay on a separate company basis or on a consolidated basis if the
Company had filed a consolidated return on behalf of an affiliated group (as
defined in Section 1504 of the Code, or an analogous provision of state, local
or foreign law) of which it were the common parent, or with respect to state

                                       95

<PAGE>

and local taxes, on a combined basis if the Company had filed a combined return
on behalf of an affiliated group consisting only of the Company and its
Subsidiaries.

       "Reorganization" means, with respect to any Multiemployer Plan, the
        --------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

       "Reportable Event" means any of the events set forth in Section 4043(b)
        ----------------
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615.

       "Requirement of Law" means, as to any Person, the Certificate of
        ------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject; provided that the foregoing shall not apply to
                                --------
any non-binding recommendation of any Governmental Authority.

       "Responsible Officer" means the chief executive officer and the President
        -------------------
of the Company or, with respect to financial matters, the chief financial
officer of the Company.

       "Restricted Payment" has the meaning given to it in Section 8.2(a). For
        ------------------
purposes of this Agreement, all Investments and Restricted Payments of the
Company and its Restricted Subsidiaries outstanding on the date hereof that have
been made since May 21, 1998 in accordance with Section 408(b) of the Senior
Subordinated Note Indenture, or (in the case of any Investment) the definition
of "Permitted Investments" contained in such indenture, shall be deemed made on
the date hereof and outstanding under the respective clauses of Section 8.2(b)
and the definition of "Permitted Investments" contained herein corresponding to
the respective clauses of Section 408(b) of the Senior Subordinated Note
Indenture and the definition of "Permitted Investments" contained in such
indenture under which such Investments and Restricted Payments were made and are
outstanding on the date hereof.

       "Restricted Payment Transaction" means any Restricted Payment permitted
        ------------------------------
pursuant to Section 8.2, any Permitted Payment, any Permitted Investment, or any
transaction specifically excluded from the definition of the term "Restricted
Payment."

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

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

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

                                       96

<PAGE>

       "Second Credit Agreement Amendment" means the Second Amendment, dated as
        ---------------------------------
of December 27, 2001, to the Credit Agreement.

       "Secured Parties" means the Investor and each other member of the CD&R
        ---------------
Group that is a Holder.

       "Securities Act" means the Securities Act of 1933, or any successor
        --------------
statute, and the rules and regulations of the SEC thereunder, as amended.

       "Senior Subordinated Default Event" means a "Default" or "Event of
        ---------------------------------
Default", as those terms are defined in the Senior Subordinated Note Indenture,
or any other default or event of default under the Senior Subordinated Note
Indenture.

       "Senior Subordinated Note Indenture" means the Indenture, dated as of May
        ----------------------------------
21, 1998, among the Parent, the Company and State Street Bank and Trust Company,
as Trustee, relating to the 9 3/4% Senior Subordinated Notes Due 2008 of the
Company, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and of this Agreement.

       "Senior Subordinated Notes" means the Company's 9 3/4% Senior
        -------------------------
Subordinated Notes due 2008, in an aggregate principal amount not exceeding
$270,000,000 outstanding at any time, issued and outstanding pursuant to the
Senior Subordinated Note Indenture.

       "Significant Subsidiary" means any Restricted Subsidiary that would be a
        ----------------------
"significant subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC, as in effect on May 21, 1998.

       "Significant Subsidiary Guarantor" has the meaning given to it in Section
        --------------------------------
7.11.

       "Single Employer Plan" means any Plan which is covered by Title IV of
        --------------------
ERISA, but which is not a Multiemployer Plan.

       "Solvent", when used with respect to any Person, means that, as of any
        -------
date of determination, (a) the amount of the assets of such Person, at a fair
                        -
valuation, will, as of such date, exceed the amount of all liabilities of such
Person, contingent or otherwise, as of such date, (b) the present fair saleable
                                                   -
value of the assets of such Person will, as of such date, be greater than the
amount that will be required to pay the probable liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
                                                  -
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
                   -
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances

                                       97

<PAGE>

existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

       "Specified Change" has the meaning given to it in Section 13.7.
        ----------------

       "Springing Guarantee" has the meaning given to it in Section 7.11.
        -------------------

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

       "Subordinated Obligations" means (a) any Indebtedness represented by any
        ------------------------         -
Senior Subordinated Note or any Guarantee thereof or (b) any Indebtedness of the
                                                      -
Company or any Note Guarantor (whether outstanding on the date of this Agreement
or thereafter Incurred) that is subordinated in right of payment to the Notes,
any Note Guarantee or any other Indebtedness of the Company or any Note
Guarantor.

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

       "Successor Company" has the meaning given to it in Section 9.1.
        -----------------

       "Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of May
        ---------------------
21, 1998, between the Parent and the Company, as the same may be amended,
supplemented, waived or otherwise modified from time to time in accordance with
the terms thereof and of this Agreement.

       "Temporary Cash Investments" means any of the following: (a) any
        --------------------------                               -
investment in (i) direct obligations of the United States of America or any
               -
agency or instrumentality thereof or obligations Guaranteed by the United States
of America or any agency or instrumentality thereof or (ii) direct obligations
                                                        --
of any foreign country recognized by the United States of America rated at least
"A" by S&P or "A-1" by Moody's (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody's then exists, the
equivalent of such rating by any nationally recognized rating organization), (b)
                                                                              -
overnight bank deposits, and investments in time deposit accounts, certificates
of deposit, bankers' acceptances and money market deposits (or, with respect to
foreign banks, similar instruments) maturing not more than one year after the
date of

                                       98

<PAGE>

acquisition thereof issued by (i) any lender under the Credit Agreement
                               -
or (ii) a bank or trust company that is organized under the laws of the United
    --
States of America, any state thereof or any foreign country recognized by the
United States of America having capital and surplus aggregating in excess of
$250,000,000 (or the foreign currency equivalent thereof) and whose long term
debt is rated at least "A" by S&P or "A-1" by Moody's (or, in either case, the
equivalent of such rating by such organization or, if no rating of S&P or
Moody's then exists, the equivalent of such rating by any nationally recognized
rating organization) at the time such Investment is made, (c) repurchase
                                                           -
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clause (a) or (b) above entered into with a
bank meeting the qualifications described in clause (c) above, (d) Investments
                                                                -
in commercial paper, maturing not more than two-hundred and seventy (270) days
after the date of acquisition, issued by a Person (other than the Company or any
of its Subsidiaries), with a rating at the time as of which any Investment
therein is made of "P-2" (or higher) according to Moody's or "A-2" (or higher)
according to S&P (or, in either case, the equivalent of such rating by such
organization or, if no rating of S&P or Moody's then exists, the equivalent of
such rating by any nationally recognized rating organization), (e) Investments
                                                                -
in securities maturing not more than one year after the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A" by Moody's (or, in either case, the
equivalent of such rating by such organization or, if no rating of S&P or
Moody's then exists, the equivalent of such rating by any nationally recognized
rating organization), (f) Preferred Stock (other than of the Company or any of
                       -
its Subsidiaries) having a rating of "A" or higher by S&P or "A2" or higher by
Moody's (or, in either case, the equivalent of such rating by such organization
or, if no rating of S&P or Moody's then exists, the equivalent of such rating by
any nationally recognized rating organization), (g) investment funds investing
ninety-five percent (95%) of their assets in securities of the type described in
clauses (a)-(f) above (which funds may also hold reasonable amounts of cash
pending investment and/or distribution), (h) any money market deposit accounts
                                          -
issued or offered by a domestic commercial bank or a commercial bank organized
and located in a country recognized by the United States of America, in each
case, having capital and surplus in excess of $250,000,000 (or the foreign
currency equivalent thereof), or investments in money market funds complying
with the risk limiting conditions of Rule 2a-7 (or any successor rule) of the
SEC under the Investment Company Act of 1940, as amended, and (i) similar
                                                               -
short-term investments approved by the Board of Directors in the ordinary course
of business.

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

                                       99

<PAGE>

         "Transactions" means the CD&R Investment, the effectiveness of the
          ------------
Second Credit Agreement Amendment and all other transactions relating thereto.

         "Transaction Agreements" means (a) this Agreement, (b) Amendment No. 2
          ----------------------         -                   -
to the Registration Rights Agreement, (c) the Guarantee and Collateral
                                       -
Agreement, (d) the Intercreditor Agreement, (e) the Notes, (f) the Second Credit
            -                                -              -
Agreement Amendment, (g) the Note Security Documents and (h) the Warrants.
                      -                                   -
         "Transferred Notes" means one or more Notes held by any Person other
          -----------------
than the Investor or a member of the CD&R Group.

         "Trigger Event" has the meaning given to it in Section 6.3(j).
          -------------

         "Underfunding" means an excess of all accrued benefits under a Plan
          ------------
(based on those assumptions used to fund such Plan), determined as of the most
recent annual valuation date, over the value of the assets of such Plan
allocable to such accrued benefits.

         "Unrestricted Subsidiary" means (a) any Subsidiary of the Company that
          -----------------------         -
at the time of determination is an Unrestricted Subsidiary, as designated by the
Board of Directors in the manner provided below, and (b) any Subsidiary of an
                                                      -
Unrestricted Subsidiary; provided that any Subsidiary of the Company that on the
                         --------
date hereof is an "Unrestricted Subsidiary" (as defined in the Senior
Subordinated Note Indenture) for purposes of the Senior Subordinated Note
Indenture (if any) shall, as of the date hereof, be deemed to have been
designated an Unrestricted Subsidiary hereunder as of the date on which such
Subsidiary became an "Unrestricted Subsidiary" (as defined in the Senior
Subordinated Note Indenture). The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of,
or owns or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated, provided that either (A) the Subsidiary to be so designated
                     --------              -
has total consolidated assets of $1,000 or less or (B) if such Subsidiary has
                                                    -
consolidated assets greater than $1,000, then such designation would be
permitted under Section 8.2. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary, provided that immediately
                                                       --------
after giving effect to such designation either (x) the Company could incur at
                                                -
least $1.00 of additional Indebtedness under paragraph (a) of Section 8.1 or (y)
                                                                              -
the Consolidated Coverage Ratio would be greater than it was immediately prior
to giving effect to such designation.

         "Warrant" has the meaning given to it in Section 1.2.
          -------

                                      100

<PAGE>

     "WWG" means Wavetek Wandel Goltermann LLC, a Delaware limited liability
      ---
company, and any successors thereto.

                                  Article XIII
                                  Miscellaneous
                                  -------------

     13.1 Notices. Except as otherwise specifically provided for in this
          -------
Agreement, notices and other communications given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given (a) on receipt,
                                                                 -
if delivered personally, (b) three Business Days after being mailed by
                          -
first-class, registered or certified mail, return receipt requested, postage
prepaid, (c) one Business Day after being sent by internationally recognized
          -
courier (appropriately marked for two-day delivery) or (d) upon transmission, if
                                                        -
it is sent by telecopy (so long as the transmitting machine records electronic
confirmation of due transmission) to the address or telecopy number set forth
below, or such other address or telecopy number as may be specified to the other
parties hereto from time to time:

                  (i)      if to the Parent, at

                           Acterna Corporation
                           20410 Observation Drive
                           Germantown, Maryland  20876
                           Fax:  (301) 353-1536
                           Attention:  General Counsel

                  (ii)     if to the Company, at

                           Acterna LLC
                           20410 Observation Drive
                           Germantown, Maryland  20876
                           Fax:  (301) 353-1536
                           Attention:  General Counsel

                  (iii)    if to the Investor, at

                           Clayton, Dubilier & Rice Fund VI Limited Partnership
                           1403 Foulk Road, Suite 106
                           Wilmington, Delaware  19803
                           Attention:  General Partner

                   (iv)    if to any Holder other than the Investor, at the
          address or facsimile number of such Holder recorded in the Register of
          Holders (or such other address or facsimile number provided to the
          Company in writing for use under this Section 13.1 by such Holder).

                                      101

<PAGE>

          (v)  Copies of any notice or other communication given under this
Agreement shall be given to:

               Clayton, Dubilier & Rice, Inc.
               375 Park Avenue
               New York, New York  10152
               Fax:  (212) 407-5254
               Attention:  Brian Finn

               and

               Debevoise & Plimpton
               919 Third Avenue
               New York, New York  10022
               Fax:  (212) 909-6836
               Attention:  Franci J. Blassberg, Esq.

     13.2 Governing Law, etc.  This Agreement shall be governed by and
          ------------------
construed in accordance with the laws of the State of New York.

     13.3 Jurisdiction; Waiver of Jury Trial; Waiver of Punitive Damages.
          --------------------------------------------------------------

          (a) Each of the parties hereto irrevocably and unconditionally (i)
                                                                          -
agrees that any legal suit, action or proceeding brought by any party hereto
arising out of or based upon this Agreement or the transactions contemplated
hereby may be brought in the United States District Court for the Southern
District of New York or any New York State court sitting in the Borough of
Manhattan, in the City of New York (each, a "New York Court"), (ii) waives, to
                                             --------------     --
the fullest extent it may effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such proceeding brought in the New
York Court, and any claim that any such action or proceeding brought in the New
York Court has been brought in an inconvenient forum and (iii) submits to the
                                                          ---
non-exclusive jurisdiction of the New York Court in any suit, action or
proceeding. Each of the parties agrees that a judgment in any suit, action or
proceeding brought in the New York Court shall be conclusive and binding upon it
and may be enforced in any other courts to whose jurisdiction it is or may be
subject, by suit upon such judgment.

          (b) EACH OF THE PARTIES AGREES AND ACKNOWLEDGES THAT ANY CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
NCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR

                                      102

<PAGE>

INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION
AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT OR ANY
TRANSACTION AGREEMENT.

          (c) Each of the parties waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover any punitive damages in any
legal action or proceeding referred to in this Section 13.3.

     13.4 Binding Effect.  This Agreement shall be binding upon and inure to the
          --------------
benefit of the parties hereto and their respective heirs, successors and
assigns.

     13.5 Assignment. This Agreement and the other Note Financing Documents may
          ----------
not be assigned or otherwise transferred (by merger, consolidation, operation of
law or otherwise) by the Parent or the Company without the prior written consent
of the Majority CD&R Note Holders, and any attempt to so assign or otherwise
transfer this Agreement or any other Note Financing Document without such
consent shall be void and of no effect. The Investor and each other Holder may
assign or otherwise transfer this Agreement or any other Note Financing Document
to any Person without the consent of the Parent or the Company.

     13.6 No Third-Party Beneficiaries. Nothing in this Agreement shall be
          ----------------------------
construed as conferring any rights upon any person or entity other than the
parties hereto, each Holder and their respective heirs, successors and permitted
assigns.

     13.7 Amendment; Waivers, etc.
          -----------------------

          (a)  Neither this Agreement nor any other Note Financing Document, nor
any terms hereof or thereof, may be amended, supplemented, modified or waived
except in accordance with the provisions of this Section 13.7.

          (b)  Except as set forth in the succeeding paragraphs of this Section
13.7, the Majority Holders may (i) enter into with the relevant Note Financing
                                -
Parties written amendments, supplements or modifications to this Agreement and
the other Note Financing Documents for the purpose of adding any provisions to
this Agreement or the other Note Financing Documents or changing in any manner
the rights of the Holders or of the Note Financing Parties hereunder or
thereunder or (ii) waive at any Note Financing Party's request on such terms and
               --
conditions as the Majority Holders may specify in such instrument, any of the
requirements of this Agreement or the other Note Financing Documents or any
Default or Event of Default and its consequences (any such amendment,
supplement, modification or waiver, a "Specified Change"); provided, that
                                       ----------------    --------
without the written consent of all Holders, no Specified Change shall reduce the
percentage specified in the definition of "Majority Holders".

                                      103

<PAGE>

          (c) Without the written consent of the Majority CD&R Note Holders, no
Specified Change shall amend, supplement, modify or waive any of the provisions
of Sections 6.6, 6.9, 7.9, 7.10, 7.11(a), 8.6(a), 8.8 or 13.5, or any provision
of any Note Security Document, or the definition of "Majority CD&R Note
Holders";

          (d) Without the written consent of the Majority Transferred Note
Holders, no Specified Change shall amend, supplement, modify or waive any of the
provisions of Sections 7.11(b) and 8.6(b), Annex A or the definition of
"Majority Transferred Note Holders";

          (e) Without the written consent of the Majority CD&R Note Holders, no
Specified Change shall take any action which has the effect of releasing any of
the Collateral securing any CD&R Notes or any of the Note Guarantors from their
Guarantee in respect of any CD&R Note (except as permitted hereby or by any Note
Financing Document).

          (f) Subject to Section 10.7, without the written consent of each
Holder directly affected thereby, no Specified Change shall reduce the Principal
Amount of any Note, extend the Maturity Date or any Interest Payment Date,
reduce the Interest Rate or any fee payable hereunder or extend the scheduled
date of any payment thereof or amend, modify or waive any provision of this
Section 13.7(f).

          (g) Without the written consent of the Majority CD&R Note Holders, no
Specified Change shall consent to the assignment or transfer by the Company of
any of its rights and obligations under this Agreement and the other Note
Financing Documents.

          (h) Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the Holders and shall be binding upon the Note
Financing Parties and the Holders (including all future Holders). In the case of
any waiver, each of the Note Financing Parties and the Holders shall be restored
to their former positions and rights hereunder and under the other Note
Financing Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.

          (i) No delay or omission of any Holder to exercise any right, remedy,
power or privilege hereunder or under the other Transaction Agreements shall
impair such right, remedy, power or privilege or operate as a waiver thereof or
acquiescence therein; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided

                                      104

<PAGE>

are cumulative and not exclusive of any rights, remedies, powers and privileges
provided hereunder or now or hereafter existing at law or in equity or
otherwise.

     13.8 Survival of Representations and Warranties. All representations and
          ------------------------------------------
warranties made hereunder, in the other Transaction Agreements and in any
certificate delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the purchase and sale of the
Notes and the issuance of the Warrants hereunder.

     13.9 Payment of Expenses and Taxes.
          -----------------------------

          (a) The Company agrees (i) to pay or reimburse each Holder for all its
                                  -
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation and execution of, and any amendment, supplement or modification to,
or proposed amendment, supplement or modification to, this Agreement and the
other Transaction Agreements and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Holders; (ii) to pay or
                                                              --
reimburse each Holder for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Transaction Agreements and any such other documents,
including, without limitation, the reasonable fees and disbursements of counsel
to the Holders; (iii) to pay, indemnify, and hold each Holder harmless from, any
                 ---
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other similar taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other
Transaction Agreements and any such other documents and (iv) to pay, indemnify,
                                                         --
and hold harmless each Holder from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Transaction Agreements and any such other documents, or the
use of the proceeds of the Notes, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Company, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (iv),
collectively, the "indemnified liabilities"), provided that the Company shall
                   -----------------------    --------
have no obligation under this Section 13.9(a)(iv) to any Holder with respect to
indemnified liabilities arising from (A) the gross negligence or willful
                                      -
misconduct of such Holder (or any of its respective directors, trustees,
officers, employees, agents, successors and assigns) or (B) claims made or legal
                                                         -
proceedings commenced against such Holder by any securityholder or creditor
thereof arising out of

                                      105

<PAGE>

and based upon rights afforded any such securityholder or creditor solely in its
capacity as such.

          (b) Notwithstanding the foregoing provisions of Section 13.9(a),
except as provided in clauses (ii) and (iii) of Section 13.9(a) and subject to
the provisions of this Section 13.9(b), the Company shall have no obligation
under Section 13.9(a) to any Holder with respect to any withholding or deduction
required by any Governmental Authority to be made by the Company from any
payment by the Company to such Holder of principal of or interest on any Note,
for or on account of any tax, levy, impost or duty, or any charge or fee in the
nature of a tax, levy, impost or duty, that is imposed, levied, collected or
assessed by such Governmental Authority (a "withholding tax"). If any payment of
                                            ---------------
withholding tax shall be required by any Governmental Authority to be made by
the Company from any payment of principal of or interest on any Note, the
Company shall give notice thereof to the Holder of such Note no later than 15
Business Days prior to such payment. If any payment of withholding tax shall be
required by any Governmental Authority to be made by the Company from any
payment of principal of or interest on any Note in cash, a portion of such
payment of principal or interest equal to the amount of such withholding tax
paid to such Governmental Authority shall be deemed to have been paid to the
Holder of such Note for all purposes of this Agreement. If any payment of
withholding tax shall be required by any Governmental Authority to be made by
the Company from any payment of interest on any Note through the issuance of an
additional Note as provided in Section 6.2(a), the Company shall withhold and
reduce the face value of such additional Note by an amount equal to the amount
of such withholding tax paid to such Governmental Authority, and a portion of
such payment of interest equal to the amount of face value so withheld and
reduced shall be deemed to have been paid to the Holder of such Note for all
purposes of this Agreement, provided that the Parent shall, upon such
withholding and reduction of face amount, issue and deliver Warrants to the
Holder of such Note that entitle such Holder to purchase a number of shares of
Common Stock (or other property) that shall fairly compensate such Holder for
the loss of the conversion rights pursuant to Section 6.3 with respect to the
face amount of such additional Note so withheld and reduced, and with respect to
the face amount of any additional Notes that would have been issued in respect
of interest on any such additional Note if the face amount thereof had not been
so withheld and reduced, the provisions of such Warrants and the issuance and
delivery thereof to be effected as provided in Section 6.7, with such changes as
may be necessary or appropriate under the circumstances. The Company and the
relevant Holder shall use their respective good faith efforts to agree on the
number of such shares of Common Stock (or other property) and the provisions of
such Warrants. The Company and the relevant Holder shall use their respective
good faith efforts to avoid or minimize the payment of withholding tax from any
payment of principal of or interest on the Notes, provided that such Holder
shall not be required to (x) change its place of organization or any office or
                          -
other place of business thereof or (y) take other any action or refrain from
                                    -
taking any action, which action or inaction, in its reasonable judgment, would
be significantly disadvantageous to

                                      106

<PAGE>

its business or operations or would require it to incur additional costs. Such
efforts shall include but not be limited to such Holder's provision of all
applicable withholding certificates, compliance certificates and representations
relating to status, subject to the proviso to the preceding sentence. Nothing in
this Section 13.9(b) shall be construed to require any Holder to disclose any of
such Holder's books, records or tax filings to the Company or any other party.

           (c) The agreements in this Section 13.9 shall survive repayment of
the Notes and all other amounts payable hereunder and the issuance of the
Warrants.

     13.10 Judgment Currency.
           -----------------

           (a) If for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in one currency into another currency,
the parties hereto 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 each Holder could purchase the first currency with such other
currency in the City of New York, New York for the first currency on the
Business Day preceding the day on which final judgment is given.

           (b) The obligation of the Company in respect of any sum due from it
to any Holder hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
 -----------------
accordance with the applicable provisions of this Agreement (the "Agreement
                                                                  ---------
Currency"), be discharged only to the extent that on the Business Day following
--------
receipt by such Holder of any sum adjudged to be so due in the Judgment Currency
such Holder may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Holder in the
Agreement Currency, the Company agrees notwithstanding any such judgment to
indemnify such Holder against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Holder, such Holder
agrees to remit to the Company such excess.

     13.11 Entire Agreement. This Agreement and the other Transaction Agreements
           ----------------
(when executed and delivered) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and thereof.

     13.12 Severability. If any provision of this Agreement is held to be
           ------------
invalid or unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties hereto to the
maximum extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that

                                      107

<PAGE>

jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.

     13.13 Headings. The headings contained in this Agreement are for purposes
           --------
of convenience only and shall not affect the meaning or interpretation of this
Agreement.

     13.14 Rules of Construction. For all purposes of this Agreement, except as
           ---------------------
otherwise expressly provided or unless the context otherwise requires:

     (a)  the terms defined in this Agreement have the meanings assigned to them
in this Agreement;

     (b)  "or" is not exclusive;

     (c)  all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;

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

     (e)  all references to "$" or "dollars" shall refer to the lawful currency
                             -      -------
of the United States of America;

     (f) the words "include," "included" and "including" as used herein
                    -------    --------       ---------
shall be deemed in each case to be followed by the phrase "without limitation,"
                                                           ------------------
if not expressly followed by such phrase or the phrase "but not limited to";
                                                        ------------------

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

     (h)  any reference to a Section or Article refers to such Section or
Article of this Agreement.

     13.15 Schedules. As soon as practicable after the date hereof, but in any
           ---------
event no later than five (5) Business Days prior to the Closing Date, the Parent
and the Company shall deliver all Schedules to this Agreement and the Guarantee
and Collateral Agreement to the Investor, which Schedules shall be subject in
all respects to review and approval by the Investor. Unless the context
otherwise requires, if the Closing shall occur, all references to any "Schedule"
herein shall be deemed to be a reference to a Schedule hereto delivered pursuant
this Section 13.15, as if such Schedule had been delivered on the date hereof.
Notwithstanding anything to the contrary herein, from and after the Closing
Date, this Agreement shall be construed as if all such Schedules hereto
delivered pursuant to this Section 13.15 had been delivered on the date hereof.

                                      108

<PAGE>

     13.16 Counterparts. This Agreement may be executed in several counterparts,
           ------------
each of which shall be deemed an original and all of which shall together
constitute one and the same instrument.

                                      109

<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.

                               ACTERNA CORPORATION

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

                               ACTERNA LLC

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

                               CLAYTON, DUBILIER & RICE FUND VI
                                    LIMITED PARTNERSHIP

                                    By:   CD&R Associates VI Limited
                                             Partnership, its general partner

                                    By:   CD&R Investment Associates VI,
                                             Inc., its managing general partner

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

                                      110

<PAGE>

                                                                         Annex A

                  Terms of Note Guarantees of Transferred Notes

     1.   Guarantees Generally.
          --------------------

     (a) Parent Guarantee. Parent, as a primary obligor and not merely as
         ----------------
surety, hereby irrevocably and fully and unconditionally Guarantees, on a senior
basis, the punctual payment when due, whether at the Maturity Date, by
acceleration or otherwise, of all monetary obligations of the Company under the
Agreement and the Transferred Notes, whether for principal of or interest on the
Transferred Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by Parent being herein called the "Parent Guaranteed Obligations").
                                              -----------------------------

     (b) Note Guarantees. Any Significant Subsidiary Guarantor from time to time
         ---------------
party hereto, as primary obligor and not merely as surety, hereby jointly and
severally, irrevocably and fully and unconditionally Guarantees, on a senior
basis, the punctual payment when due, whether at the Maturity Date, by
acceleration or otherwise, of all monetary obligations of the Company under the
Agreement and the Transferred Notes, whether for principal of or interest on the
Transferred Notes, expenses, indemnification or otherwise (all such obligations
guaranteed by such Significant Subsidiary Guarantors being herein called the
"Springing Guaranteed Obligations").
 --------------------------------

     Any term or provision of the Agreement notwithstanding, each Springing
Guarantee shall not exceed the maximum amount that can be guaranteed by the
applicable Significant Subsidiary Guarantor without rendering the Springing
Guarantee, as it relates to such Significant Subsidiary Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.

     (c) Further Agreements of Parent Guarantor and any Significant Subsidiary
         ---------------------------------------------------------------------
Guarantor. (i) Parent, in its capacity as guarantor of the Parent Guaranteed
---------
Obligations hereunder (in such capacity, the "Parent Guarantor") and any
                                              ----------------
Significant Subsidiary Guarantor from time to time party hereto (each of the
Parent Guarantor and any Significant Subsidiary Guarantor, a "Guarantor") each
                                                              ---------
hereby agrees that (to the fullest extent permitted by law) its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Agreement, the Transferred Notes or the obligations of the
Company or any other Guarantor to the Holders of the Transferred Notes hereunder
or thereunder, the absence of any action to enforce the same, any waiver or
consent by any Holder of Transferred Notes with respect to any provisions hereof
or thereof, any release of any other Guarantor, the recovery of any judgment
against the Company, any action to enforce the same, whether or not a notation
concerning its respective Parent Guarantee or Springing Guarantee is made on any
particular Transferred Note, or any other circumstance that might otherwise
constitute a legal or equitable discharge or defense of a guarantor.

<PAGE>

     (ii) Each Guarantor hereby waives (to the fullest extent permitted by law)
the benefit of diligence, presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Parent Guarantee or (except as otherwise
provided in Section 7.11(b) of the Agreement) Springing Guarantee, as the case
may be, will not be discharged except by complete performance of the obligations
contained in the Transferred Notes, the Agreement, and its Parent Guarantee or
Springing Guarantee, as the case may be. Such Parent Guarantee or Springing
Guarantee, as the case may be, is a guarantee of payment and not of collection.
Each Guarantor further agrees (to the fullest extent permitted by law) that, as
between it, on the one hand, and the Holders of the Transferred Notes, on the
other hand, subject to the provisions of this Annex A, (1) the maturity of the
                                                        -
obligations guaranteed by its Parent Guarantee or Springing Guarantee, as the
case may be, may be accelerated as and to the extent provided in Article X of
the Agreement for the purposes of such Parent Guarantee or Springing Guarantee,
as the case may be, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed by such
Parent Guarantee or Springing Guarantee, as the case may be, and (2) in the
                                                                  -
event of any acceleration of such obligations as provided in Article X of the
Agreement, such obligations (whether or not due and payable) shall forthwith
become due and payable by such Guarantor in accordance with the terms of the
provisions of this Annex A for the purpose of such Parent Guarantee or Springing
Guarantee, as the case may be. No Holder of Transferred Notes shall have any
obligation to enforce or exhaust any rights or remedies or to take any other
steps under any security for the Parent Guaranteed Obligations or the Springing
Guaranteed Obligations (collectively, the "Guaranteed Note Obligations") or
                                           ---------------------------
against the Company or any other Person or any property of the Company or any
other Person before the Holder of Transferred Notes is entitled to demand
payment and performance by any or all Guarantors of their obligations under
their respective Parent Guarantee or Significant Guarantees or under the
Agreement.

     (iii) The Parent Guarantee and, unless and until terminated in accordance
with Section 7.11(b) of the Agreement, any Springing Guarantee, shall remain in
full force and effect and continue to be effective should any petition be filed
by or against the Company for liquidation or reorganization, should the Company
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 the
Company's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Transferred Notes are, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by any obligee
on such Transferred Notes, whether as a "voidable preference," "fraudulent
transfer" 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

                                       A-2

<PAGE>

Transferred Notes shall, to the fullest extent permitted by law, be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

     (d) Each Guarantor that makes a payment or distribution under the Parent
Guarantee or any Springing Guarantee, as the case may be, shall have the right
to seek contribution from the Company or any non-paying Guarantor that has also
Guaranteed the Guaranteed Note Obligations in respect of which such payment or
distribution is made, so long as the exercise of such right does not impair the
rights of the Holders of the Transferred Notes under the Parent Guarantee or
such Springing Guarantee.

     (e) Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Agreement and that
its Parent Guarantee or its Springing Guarantee, as the case may be, and the
waiver set forth in Section 3 of this Annex A is knowingly made in contemplation
of such benefits.

     (f) Each Guarantor also hereby agrees to pay any and all reasonable
out-of-pocket expenses (including reasonable counsel fees and expenses) incurred
by the Holders of Transferred Notes in enforcing any rights under its Parent
Guarantee or its Springing Guarantee, as the case may be.

     2.   Continuing Guarantees. (a) The Parent Guarantee shall be a continuing
          ---------------------
Guarantee and shall (i) remain in full force and effect until payment in full of
                     -
the Principal Amount of all outstanding Transferred Notes (whether by payment at
maturity, purchase, redemption, defeasance, retirement or other acquisition) and
all other Parent Guaranteed Obligations then due and owing, (ii) be binding upon
                                                             --
Parent and (iii) inure to the benefit of and be enforceable by the Holders of
            ---
Transferred Notes and their permitted successors, transferees and assigns.

     (b) Each Springing Guarantee shall be a continuing Guarantee and shall (i)
                                                                             -
remain in full force and effect until payment in full of the principal amount of
all outstanding Transferred Notes (whether by payment at maturity, purchase,
redemption, defeasance, retirement or other acquisition) and all other
Guaranteed Obligations then due and owing, unless earlier terminated as provided
in Section 7.11(b) of the Agreement, (ii) be binding upon such Guarantor and
                                      --
(iii) inure to the benefit of and be enforceable by the Holders of the
 ---
Transferred Notes and their permitted successors, transferees and assigns.

     3.   Waiver of Subrogation. Each of the Parent Guarantor and each
          ---------------------
Significant Subsidiary Guarantor hereby irrevocably waives any claim or other
rights that it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of the Company's obligations
under the Transferred Notes and the Agreement or such Guarantor's obligations
under its Parent Guarantee or Springing Guarantee, as the case may be, and the
Agreement, including, without

                                       A-3

<PAGE>

limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any
Holder of Transferred Notes against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
until the Agreement is discharged and all of the Transferred Notes are
discharged and paid in full. If any amount shall be paid to a Guarantor in
violation of the preceding sentence and the Transferred Notes shall not have
been paid in full, such amount shall have been deemed to have been paid to such
Guarantor for the benefit of, and held in trust for the benefit of, the Holders
of the Transferred Notes, and shall forthwith be paid to the Holders of
Transferred Notes to be credited and applied upon the Transferred Notes, whether
matured or unmatured, in accordance with the terms of the Agreement and this
Annex A.

     4.   Notation Not Required. Neither the Company nor any Guarantor shall be
          ---------------------
required to make a notation on the Transferred Notes to reflect the Parent
Guarantee or any Springing Guarantee or any such release, termination or
discharge thereof.

     5.   Successors and Assigns of the Parent Guarantor and the Other
          ------------------------------------------------------------
Guarantors. All covenants and agreements in the Agreement or the terms of this
----------
Annex A by each Guarantor shall bind its respective successors and assigns,
whether so expressed or not.

     6.   Execution and Delivery of Note Guarantees. Concurrently with the
          -----------------------------------------
execution and delivery of the instrument required to be delivered under Section
7.11(b) of the Agreement, the Company shall deliver to the Holders of
Transferred Notes an opinion of counsel (which counsel shall be reasonably
satisfactory to the Majority Transferred Note Holders) in form and substance
reasonably satisfactory to the Majority Transferred Note Holders to the effect
that such instrument has been duly authorized, executed and delivered by the
relevant Significant Subsidiary Guarantor and that, subject to the applicable
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium and other laws now or hereafter in effect affecting
creditors' rights or remedies generally and the general principles of equity
(including standards of materiality, good faith, fair dealing and
reasonableness), whether considered in a proceeding at law or at equity such
instrument is a valid and binding agreement of such Significant Subsidiary
Guarantor, enforceable against such Significant Subsidiary Guarantor in
accordance with its terms.

                                       A-4

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