JORDAN INDUSTRIES INC
8-K, 1996-11-20
COMMERCIAL PRINTING
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<PAGE>

==============================================================================

                   SECURITIES AND EXCHANGE COMMISSION
                         Washington D.C.  20549


                                FORM 8-K

                             Current Report

                 Pursuant to Section 13 or 15(d) of the
                     Securities Exchange Act of 1934



   Date of Report (Date of earliest event reported):  November 7, 1996  


                         JORDAN INDUSTRIES, INC.
         (Exact name of registrant as specified in its charter)


       Illinois                    33-24317                   36-3598114
(State or other jurisdiction   (Commission File number)    (I.R.S. Employer)
   of incorporation)                                       Identification No.)


            ArborLake Centre, Suite 550
        1751 Lake Cook Road, Deerfield, IL                         60015
     (Address of principal executive offices)                    (Zip Code)



Registrant's telephone number, including are code: (847) 945-5591


                             Not Applicable
      (Former name or former address, if changed since last report)

==============================================================================

<PAGE>
                  INFORMATION TO BE INCLUDED IN REPORT



Item 1.  Changes in Control of Registrant.

      Not Applicable.


Item 2.  Acquisition or Disposition of Assets.

      On November 7, 1996, Jordan Industries, Inc. (the "Company"), through 
its majority-owned subsidiaries Motors and Gears, Inc. ("Motors") and 
Motors and Gears Industries, Inc. ("Industries") and its newly formed 
majority-owned subsidiaries, The New Imperial Electric Company, The New 
Scott Motors Company and New Gear Research, Inc. (collectively, along with 
Motors and Industries, the "Purchasers") acquired the businesses and net 
assets of The Imperial Electric Company, The Scott Motors Company and Gear 
Research, Inc. (collectively, the "Sellers"), manufacturers of 
fractional/integral horsepower and gear and gearbox products, from JII, 
Inc. ("JII").  Each of the Sellers and JII is a wholly-owned subsidiary of 
the Company.  The acquisition was made pursuant to an Agreement for 
Purchase and Sale of Assets (the "Asset Purchase Agreement"), by and among 
the Purchasers and the Sellers.  The Purchasers presently intend to 
continue using the acquired assets in the same manner as was used by the 
Sellers immediately prior to the acquisition.  Each of the Purchasers is a 
"non-restricted" subsidiary while each of the Sellers and JII is a 
"restricted" subsidiary for purposes of the Company's indentures relating 
to its Senior Notes and Senior Subordinated Discount Debentures due 2003 
and 2005, respectively (collectively, the "Jordan Indentures").  Motors 
indirectly owns Merkle-Korff Industries, Inc. ("Merkle-Korff") and BCM 
Holdings, Inc. ("BCM") which are also "non-restricted" subsidiaries under 
the Jordan Indentures.

      In consideration for the assets purchased pursuant to the Asset 
Purchase Agreement, at the closing the Company, through the Purchasers: (i) 
paid the Sellers $75.0 million in cash and (ii) assumed and/or refinanced 
approximately $5.1 million in liabilities.  The Company further agreed, 
pursuant to a Contingent Earnout Agreement (the "Contingent Earnout 
Agreement"), and through the Purchasers, to pay to the Sellers 50% of the 
cumulative EBITDA (as defined in the Contingent Earnout Agreement) above 
$50 million of the Purchasers earned during the five fiscal years ended 
December 31, 1996 through December 31, 2000.  Payments, if any, under the 
Contingent Earnout Agreement will be determined and made on April 30, 2001.  
In order to determine the amount of consideration paid under the Asset 
Purchase Agreement, the Company compared the financial aspects of the 
Sellers to other Company acquisitions and received and reviewed a fairness 
opinion by Duff & Phelps.

      The cash portion of the consideration paid at closing was raised by 
the private placement by Motors of $170.0 million of its 10 3/4% Series A 
Senior Notes due 2006 (the "Series A Notes"), as more fully described in 
Item 5 hereof.

      Descriptions of the Asset Purchase Agreement and the Contingent 
Earnout Agreement and the transactions contemplated thereunder do not 
purport to be complete.  Included as exhibits hereto are the Asset Purchase 
Agreement and the Contingent Earnout Agreement and the documents relating 
thereto and, as such, the foregoing description is qualified in its 
entirety by reference to and incorporation of the terms and provisions 
contained in those exhibits.


Item 3.  Bankruptcy or Receivership.

      Not Applicable.


Item 4.  Changes in Registrant's Certifying Accountant.

      Not Applicable.


Item  5.  Other Events.

      On November 7, 1996, Motors completed an offering of Series A Notes 
pursuant to a Purchase Agreement (the "Note Purchase Agreement") in a 
private placement to certain initial purchasers who, in turn, offered the 
Series A Notes to qualified institutional buyers and certain accredited 
investors.  In addition, pursuant to a Registration Rights Agreement (the 
"Registration Rights Agreement"), Motors agreed to register its 10 3/4% 
Series B Senior Notes due 2006 (the "Series B Notes" and, together with the 
Series A Notes, the "Senior Notes") under the Securities Act of 1933, as 
amended, and to offer the Series B Notes in exchange for the outstanding 
Series A Notes.  The terms of the Senior Notes are governed by an Indenture 
(the "Indenture"), between Motors and Fleet National Bank, as trustee.

      Motors used the proceeds from the issuance of the Series A Notes to: 
(i) fund the cash portion of the purchase price payable by the Purchasers 
in connection with the acquisition of the businesses and net assets of the 
Sellers from JII and (ii) repay certain indebtedness under Merkle-Korff's 
existing credit agreement.  In connection with the issuance of the Series A 
Notes, Merkle-Korff refinanced its existing credit facility and Industries, 
along with Merkle-Korff, BCM and the Purchasers (other than Motors) entered 
into a new revolving credit facility (the "Credit Agreement") with Bankers 
Trust Company, which provides for revolving loans of up to $75.0 million.

      The Company applied the net proceeds received from Motors to repay 
senior indebtedness.

      Descriptions of the Note Purchase Agreement, the Registration Rights 
Agreement, the Indenture and the Credit Agreement and the transactions 
contemplated thereunder do not purport to be complete.  Included as 
exhibits hereto are the Note Purchase Agreement, the Registration Rights 
Agreement, the Indenture and the Credit Agreement and the documents 
relating thereto and, as such, the foregoing description is qualified in 
its entirety by reference to and incorporation of the terms and provisions 
contained in those exhibits.


Item 6.  Resignations of Registrant's Directors.

      Not Applicable.


Item 7.  Financial Statements, Pro Forma Financial Information and 
Exhibits.

      The response to this Item is submitted as a separate Exhibit Index 
accompanying this filing and is incorporated herein by reference.


Item 8.  Change in Fiscal Year.

      Not Applicable.


Item 9.  Sales of Equity Securities Pursuant to Regulation S.

      Not Applicable.

<PAGE>
                               SIGNATURES


      Pursuant to the requirements of the Securities Exchange Act of 1934, 
as amended, the registrant has duly caused this report to be signed on its 
behalf by the undersigned hereunto duly authorized.


                                   JORDAN INDUSTRIES, INC.



Date:  November 19, 1996           By:  /s/  Thomas C. Spielberger       
                                      ---------------------------------
                                        Name:   Thomas C. Spielberger
                                        Title:  Vice President, Controller and
                                                 Principal Accounting Officer

<PAGE>
                              EXHIBIT INDEX



Exhibit                                                         Sequential
Number      Description                                         Page No. 
- -------     -----------                                         ----------

1.1         Purchase Agreement, dated as of November 1, 
            1996, by and among Motors and Gears, Inc., 
            Donaldson, Lufkin & Jenrette Securities 
            Corporation, BT Securities Corporation and 
            Jefferies & Company, Inc. *

2.1         Agreement for Purchase and Sale of Assets, dated 
            as of November 7, 1996, by and among Motors and 
            Gears, Inc., Motors and Gears Industries, Inc., 
            The New Imperial Electric Company, The New 
            Scott Motors Company, New Gear Research, Inc., 
            The Imperial Electric Company, The Scott Motors 
            Company and Gear Research, Inc. *

2.2.        Contingent Earnout Agreement, dated as of November 7, 
            1996, by and among Motors and Gears, Inc., Motors and 
            Gears Industries, Inc., The New Imperial Electric 
            Company, The New Scott Motors Company, New Gear 
            Research, Inc., The Imperial Electric Company, 
            The Scott Motors Company and Gear Research, Inc.

10.1        Registration Rights Agreement, dated as of November 7, 
            1996, by and among Motors and Gears, Inc., Donaldson, 
            Lufkin & Jenrette Securities Corporation, BT 
            Securities Corporation and Jefferies & Company, Inc   

10.2        Indenture, dated as of November 7, 1996, between 
            Motors and Gears, Inc. and Fleet National Bank, 
            as Trustee *

10.3        Credit Agreement, dated as of November 7, 1996, 
            by and among Motors and Gears Industries, Inc., the 
            other lenders party thereto and Bankers Trust 
            Company, as agent *

10.4        Security Agreement, dated as of November 7, 1996, 
            by and among Motors and Gears Industries, Inc., 
            Merkle-Korff Industries, Inc., BCM Holdings, Inc., 
            The New Imperial Electric Company, The New 
            Scott Motors Company, New Gear Research, Inc. and 
            Bankers Trust Company, as agent *

10.5        Stock Pledge Agreement, dated as of November 7, 
            1996, by and among Motors and Gears Industries, 
            Inc., Merkle-Korff Industries, Inc., BCM Holdings, 
            Inc., The New Imperial Electric Company, The 
            New Scott Motors Company, New Gear Research, Inc. 
            and Bankers Trust Company, as agent *

10.6        Revolving Note in the aggregate principal amount of 
            $75,000,000

10.7        TJC Management Consulting Agreement, dated
            as of November 7, 1996, by and among Motors 
            and Gears Holdings, Inc., Motors and Gears, Inc., 
            Motors and Gears Industries, Inc., Merkle-Korff 
            Industries, Inc., BCM Holdings, Inc., The New 
            Imperial Electric Company, The New Scott Motors 
            Company, New Gear Research, Inc. and TJC 
            Management Corporation                  

10.8        JII Management Services Agreement, dated as of 
            November 7, 1996, by and among Motors and Gears 
            Holdings, Inc., Motors and Gears, Inc., Motors 
            and Gears Industries, Inc., Merkle-Korff Industries, 
            Inc., BCM Holdings, Inc., The New Imperial Electric 
            Company, The New Scott Motors Company, New Gear 
            Research, Inc. and the Company

99          Press release issued by the Company             
__________________

     *     The schedules to this agreement have not been filed pursuant to 
           Item 601(b)(2) of Regulation S-K.  Such schedules will be filed 
           supplementally upon the request of the Securities and Exchange 
           Commission.

<PAGE>
                               SIGNATURES


        Pursuant to the requirements of the Securities Exchange Act of 
1934, as amended, the registrant has duly caused this report to be signed 
on its behalf by the undersigned hereunto duly authorized.


                                  JORDAN INDUSTRIES, INC.



Date:  November 19, 1996          By:  /s/ Thomas C. Spielberger        
                                     --------------------------------
                                       Name:   Thomas C. Spielberger
                                       Title:  Vice President, Controller and
                                                Principal Accounting Officer



<PAGE>
                                      EXHIBIT 1.1




==============================================================================

                         MOTORS AND GEARS, INC.



                ________________________________________


                              $170,000,000
                   10 % SERIES A SENIOR NOTES DUE 2006

                ________________________________________


                           ___________________

                           PURCHASE AGREEMENT

                      DATED AS OF NOVEMBER 1, 1996

                           ___________________








Donaldson, Lufkin & Jenrette      BT Securities     Jefferies & Company, Inc.
   Securities Corporation          Corporation



==============================================================================


<PAGE>

                                                        November 1, 1996



DONALDSON, LUFKIN & JENRETTE
   SECURITIES CORPORATION
BT SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.
  c/o Donaldson, Lufkin & Jenrette
      Securities Corporation
    140 Broadway
    New York, New York  10005


Dear Sirs:

      Motors and Gears, Inc., a Delaware corporation (the "COMPANY"), 
proposes to issue and sell an aggregate of $170,000,000 in principal amount 
of 10 % Series A Senior Notes due 2006 (the "Series A Senior Notes") of the 
Company, to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), BT 
Securities Corporation ("BT") and Jefferies & Company, Inc. ("JEFFERIES" 
and, together with DLJ and BT, the "INITIAL PURCHASERS").  The Series A 
Senior Notes will be issued pursuant to an indenture (the "INDENTURE") 
among the Company and Fleet National Bank as trustee (the "TRUSTEE").

      The Senior Notes are being issued and sold in connection with the 
acquisition (the "ACQUISITION") by the Company, through a newly-formed 
indirect subsidiary of the Company ("ACQUISITION SUB"), of the business and 
net assets of Imperial Electric Company ("IMPERIAL"), Scott Motor Company 
("SCOTT") and Gear Research, Inc. ("GEAR" and, together with Imperial and 
Scott, the "ACQUIRED ENTITIES").  The Acquisition will close on the Closing 
Date (as defined below) pursuant to an agreement for the purchase and sale 
of assets (the "Acquisition Agreement"), to be dated as of November 7, 
1996.

      The proceeds to the Company from the sale to the Initial Purchasers 
of the Senior Notes (the "PROCEEDS") and borrowings (the "BORROWINGS") 
under a revolving credit agreement (the "NEW CREDIT AGREEMENT"), to be 
dated as of November 7, 1996, by and among Motors and Gears Industries, 
Inc., a wholly owned subsidiary of the Company, Bankers Trust Company 
("BTC"), as agent, and the other lenders thereunder will be used to fund 
the Acquisition.  In addition, the Company will use the Proceeds and the 
Borrowings to repay, in full, all outstanding indebtedness under the Credit 
Agreement, dated September 22, 1995, by and among Merkle-Korff Industries, 
Inc., an indirect wholly owned subsidiary of the Company, BTC, as agent, 
and the other lenders thereunder (the "OLD CREDIT AGREEMENT").


      1.   ISSUANCE OF SECURITIES.  The Series A Senior Notes will be 
offered and sold to the Initial Purchasers pursuant to an exemption from 
the registration requirements under the Securities Act of 1933, as amended 
(the "ACT").  The Company has prepared a preliminary offering memorandum, 
dated October 16, 1996 (the "PRELIMINARY OFFERING MEMORANDUM"), and a final 
offering memorandum, dated November 1, 1996 (the "OFFERING MEMORANDUM" and, 
together with the Preliminary Offering Memorandum, the "OFFERING 
DOCUMENTS"), relating to the Company and the Series A Senior Notes.

      Upon original issuance thereof, and until such time as the same is no 
longer required under the applicable requirements of the Act, the Series A 
Senior Notes (and all securities issued in exchange therefor or in 
substitution thereof) shall bear the following legend:

      "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY 
      ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF 
      THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND 
      THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE 
      TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE 
      EXEMPTION THEREFROM.  EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY 
      IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION 
      PROVIDED BY RULE 144A THEREUNDER.  THE HOLDER OF THE SECURITY 
      EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH 
      SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) 
      (A) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY 
      BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A 
      UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS 
      OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 
      144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A 
      FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 
      UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION 
      FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED 
      UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE 
      COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER 
      THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 
      APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY 
      OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH 
      SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE 
      SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) 
      ABOVE."


      2.   AGREEMENTS TO SELL AND PURCHASE.  On the basis of the 
representations and warranties contained in, and subject to the terms and 
conditions of, this Agreement, (i) the Company agrees to issue and sell the 
Series A Senior Notes to the Initial Purchasers, and (ii) each Initial 
Purchaser agrees, severally and not jointly, to purchase Series A Senior 
Notes from the Company in the principal amount set forth opposite the name 
of such Initial Purchaser in Schedule I at a price of 97% of the principal 
amount of the Series A Senior Notes (the "PURCHASE PRICE").


      3.   TERM OF OFFERING.  The Initial Purchasers have advised the 
Company that the Initial Purchasers will make offers (the "EXEMPT RESALES") 
of the Series A Senior Notes purchased by the Initial Purchasers hereunder 
on the terms set forth in the Offering Memorandum, as amended or 
supplemented, solely to (i) persons (each, a "144A PURCHASER") whom the 
Initial Purchasers reasonably believe to be "qualified institutional 
buyers" as defined in Rule 144A under the Act ("QIBs"), (ii) a limited 
number of other institutional "accredited investors," as defined in Rule 
501(a) (1), (2), (3) and (7) under the Act, that make certain 
representations and agreements to the Company (each, an "ACCREDITED 
INSTITUTION") and (iii) to non-U.S. persons outside the United States in 
reliance upon Regulation S under the Securities Act (such persons specified 
in clauses (i), (ii) and (iii) being referred to herein as the "ELIGIBLE 
PURCHASERS").  The Initial Purchasers will offer the Series A Senior Notes 
to Eligible Purchasers initially at a price equal to 100% of the principal 
amount thereof.  Such price may be changed at any time without notice.

      Holders (including subsequent transferees) of the Series A Senior 
Notes will have the registration rights set forth in the registration 
rights agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the 
Closing Date (as defined below), in substantially the form of Exhibit A 
hereto, for so long as such Series A Senior Notes constitute "TRANSFER 
RESTRICTED SECURITIES" (as defined in the Registration Rights Agreement).  
Pursuant to the Registration Rights Agreement, the Company will agree to 
file with the Securities and Exchange Commission (the "COMMISSION") under 
the circumstances set forth therein, (i) a registration statement under the 
Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to (A) the 
Company's 10 % Series B Senior Notes due 2006 (the "SERIES B SENIOR NOTES" 
and, together with the Series A Senior Notes, the "SENIOR NOTES") to be 
offered in exchange for the Series A Senior Notes, (such offer to exchange 
being referred to as the "REGISTERED EXCHANGE OFFER") and/or (ii) a shelf 
registration statement pursuant to Rule 415 under the Act (the "SHELF 
REGISTRATION STATEMENT" and together with the Exchange Offer Registration 
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain 
holders of the Series A Senior Notes, and to use their best efforts to 
cause such Registration Statements to be declared effective.  This 
Agreement, the Indenture and the Registration Rights Agreement are 
hereinafter referred to collectively as the "OPERATIVE DOCUMENTS."  


      4.   DELIVERY AND PAYMENT.  Delivery to the Initial Purchasers by the 
Company of, and payment by the Initial Purchasers for, the Series A Senior 
Notes shall be made at 10:00 A.M., New York City time, on November 7, 1996 
(the "CLOSING DATE") following the date of the initial offering (or such 
other date as the Company and the Initial Purchasers may agree), at the 
offices of Mayer, Brown & Platt, 1675 Broadway, New York, New York 10019.

      One or more Series A Senior Notes in definitive form, registered in 
the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), 
or such other names as the Initial Purchasers may request upon at least one 
business days' notice to the Company, having an aggregate principal amount 
corresponding to the aggregate principal amount of Series A Senior Notes 
sold pursuant to Exempt Resales to QIBs and to Accredited Institutions, 
shall be delivered by the Company to the Initial Purchasers, against 
payment by the Initial Purchasers of the purchase price thereof by 
certified or official bank check or checks payable in next day funds (prior 
payment or deposit of which the Initial Purchasers shall bear no 
responsibility for) to the order of the Company or as the Company may 
direct.  The Master Note in definitive form shall be made available to the 
Initial Purchasers for inspection not later than 9:30 a.m. on the business 
day immediately preceding the Closing Date.


      5.   AGREEMENTS OF THE COMPANY.  The Company agrees with the Initial 
Purchasers:

           (a)   To advise the Initial Purchasers promptly and, if 
      requested by the Initial Purchasers, to confirm such advice in 
      writing, (i) of receipt of any notification with respect to the 
      issuance by any state securities commission of any stop order 
      suspending the qualification or exemption from qualification of any 
      of the Series A Senior Notes for offering or sale in any jurisdiction 
      designated by the Initial Purchasers pursuant to Section 5(f), or the 
      initiation of any proceeding for such purpose by any state securities 
      commission or other regulatory authority, and (ii) of the happening 
      of any event that makes any statement of a material fact made in the 
      Offering Documents (or any amendment or supplement thereto) untrue or 
      that requires the making of any additions to or changes in the 
      Offering Documents (or any amendment or supplement thereto) in order 
      to make the statements therein, in the light of the circumstances in 
      which they are made, not misleading.  The Company shall use its best 
      efforts to prevent the issuance of any stop order or order suspending 
      the qualification or exemption from qualification of the Series A 
      Senior Notes under any state securities or Blue Sky laws, and, if at 
      any time any state securities commission or other regulatory 
      authority shall issue any stop order or order suspending the 
      qualification or exemption from qualification of any of the Series A 
      Senior Notes under any state securities or Blue Sky laws, the Company 
      shall use its best efforts to obtain the withdrawal or lifting of 
      such order at the earliest possible time.

           (b)   Subject to paragraph (e) below, to furnish to the Initial 
      Purchasers, without charge, as many copies of the Offering Documents, 
      and any amendments or supplements thereto, as the Initial Purchasers 
      may reasonably request.  The Company consents to the use of the 
      Offering Documents, and any amendments or supplements thereto, by the 
      Initial Purchasers in connection with Exempt Resales.

           (c)   Not to amend or supplement the Offering Memorandum, 
      whether before or after the Closing Date, unless (i) the Initial 
      Purchasers have been previously advised thereof, and (ii) the Initial 
      Purchasers have not reasonably objected thereto (unless in the 
      opinion of counsel to the Company such amendment or supplement is 
      necessary, in the judgment of counsel to the Company, to make the 
      statements made in the Offering Memorandum not misleading); and to 
      prepare, promptly upon the Initial Purchasers' request, any amendment 
      or supplement to the Offering Memorandum that the Initial Purchasers 
      deem necessary or advisable in connection with Exempt Resales (except 
      to the extent any such amendment or supplement requested would, in 
      the judgment of counsel to the Company, render the statements made in 
      the Offering Memorandum, as proposed to be amended or supplemented, 
      misleading).

           (d)   Subject to paragraph (e) below, if, after the date hereof 
      and prior to the completion of Exempt Resales of the Series A Senior 
      Notes by the Initial Purchasers, any event shall occur as a result of 
      which it becomes necessary to amend or supplement the Offering 
      Memorandum to comply with any law or to make the statements therein, 
      in the light of the circumstances at the time that the Offering 
      Memorandum is delivered to an Eligible Purchaser which is a 
      prospective purchaser, not misleading, to promptly (i) prepare an 
      appropriate amendment or supplement to the Offering Memorandum so 
      that the statements in the Offering Memorandum, as so amended or 
      supplemented, will comply with all applicable laws and will not, in 
      the light of the circumstances at the time it is so delivered, be 
      misleading, and (ii) furnish each Initial Purchaser with such number 
      of copies of the Offering Memorandum, as amended or supplemented, as 
      such Initial Purchaser may reasonably request.

           (e)   Prior to the earlier of the consummation of the Exchange 
      Offer or the effectiveness of an applicable shelf registration 
      statement if, in the reasonable judgment of the Initial Purchasers, 
      the Initial Purchaser or any of their affiliates (as such term is 
      defined in the rules and regulations under the Securities Act) are 
      required to deliver an offering memorandum in connection with sales 
      of, or market-making activities with respect to, the Senior Notes, 
      (A) to periodically amend or supplement the Offering Memorandum so 
      that the information contained in the Offering Memorandum complies 
      with the requirements of Rule 144A of the Securities Act, (B) to 
      amend or supplement the Offering Memorandum when necessary to reflect 
      any material changes in the information provided therein so that the 
      Offering Memorandum will not contain any untrue statement of a 
      material fact or omit to state any material fact necessary in order 
      to make the statements therein, in light of the circumstances 
      existing as of the date the Offering Memorandum is so delivered, not 
      misleading and (C) to provide the Initial Purchasers with copies of 
      each such amended or supplemented Offering Memorandum, as the Initial 
      Purchasers may reasonably request.

           Following the consummation of the Exchange Offer or the 
      effectiveness of an applicable shelf registration statement and for 
      so long as the Senior Notes are outstanding if, in the reasonable 
      judgment of the Initial Purchasers, the Initial Purchasers or any of 
      their affiliates (as such term is defined in the rules and 
      regulations under the Securities Act) are required to deliver a 
      prospectus in connection with sales of, or market-making activities 
      with respect to, such securities, (A) to periodically amend the 
      applicable registration statement so that the information contained 
      therein complies with the requirements of Section 10(a) of the 
      Securities Act, (B) to amend the applicable registration statement or 
      supplement the related prospectus or the documents incorporated 
      therein when necessary to reflect any material changes in the 
      information provided therein so that the registration statement and 
      the prospectus will not contain any untrue statement of a material 
      fact or omit to state any material fact necessary in order to make 
      the statements therein, in light of the circumstances existing as of 
      the date the prospectus is so delivered, not misleading and (C) to 
      provide the Initial Purchasers with copies of each amendment or 
      supplement filed and such other documents as the Initial Purchasers 
      may reasonably request.

           The Company hereby expressly acknowledges that the 
      indemnification and contribution provisions of Section 8 hereof are 
      specifically applicable and relate to each offering memorandum, 
      registration statement, prospectus, amendment or supplement referred 
      to in this Section 5(e).

           (f)   To (i) cooperate with the Initial Purchasers and counsel 
      for the Initial Purchasers in connection with the qualification of 
      the Series A Senior Notes for offer and sale by the Initial 
      Purchasers under the state securities or Blue Sky laws of such 
      jurisdictions as the Initial Purchasers may request, (ii) continue 
      such qualification in effect so long as required for Exempt Resales 
      of the Series A Senior Notes and (iii) file such consents to service 
      of process or other documents as may be necessary in order to effect 
      such qualification; provided that in no event shall the Company be 
      obligated to qualify to do business in any jurisdiction where it is 
      not now so qualified, or take any action which would subject it to 
      general service of process in any jurisdiction where it is not now so 
      subject.

           (g)   So long as any of the Senior Notes are outstanding, to 
      file reports pursuant to Section 13 or 15(d) of the Securities 
      Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and, during 
      the period of three years following the date of this Agreement, to 
      deliver to the Initial Purchasers, promptly upon their becoming 
      available, (i) copies of all current, regular and periodic reports 
      filed by the Company with any securities exchange or with the 
      Commission or any governmental authority succeeding to any of the 
      Commission's functions, and (ii) copies of each report or other 
      publicly available information of the Company mailed to the holders 
      of Senior Notes and such other publicly available information 
      concerning the Company and its subsidiaries as the Initial Purchasers 
      may request.

           (h)   To use the Proceeds from the sale of the Series A Senior 
      Notes in the manner specified in the Offering Documents (and any 
      amendments or supplements thereto) under the caption "Use of 
      Proceeds."

           (i)   Not to voluntarily claim, and to resist actively any 
      attempts to claim, the benefit of any usury laws against the holders 
      of the Senior Notes.

           (j)   Except as otherwise agreed to by the parties hereto, to 
      pay all costs, expenses, fees and taxes incident to,

                 (1)  the preparation, printing, filing and distribution of 
           the Offering Documents (including financial statements and 
           exhibits) and all amendments and supplements to any of them, 

                 (2)  the printing and delivery of the Operative Documents, 
           the Series A Senior Notes, the preliminary and supplemental Blue 
           Sky memoranda and all other agreements, memoranda, 
           correspondence and other documents printed and delivered in 
           connection herewith and with the Exempt Resales (including in 
           each case any disbursements of counsel to the Initial Purchasers 
           relating to such printing and delivery),

                 (3)  the issuance and delivery by the Company of the 
           Series A Senior Notes,

                 (4)  the registration or qualification of the Series A 
           Senior Notes for offer and sale under the securities or Blue Sky 
           laws of the several states (including in each case the fees and 
           disbursements of counsel to the Initial Purchasers relating to 
           such registration or qualification and memoranda relating 
           thereto),

                 (5)  furnishing such copies of the Offering Documents 
           (including all documents incorporated by reference therein) and 
           all amendments and supplements thereto as may be requested for 
           use in connection with the Exempt Resales,

                 (6)  the rating of the Series A Senior Notes by rating 
           agencies, if any,

                 (7)  all expenses and listing fees in connection with the 
           application for quotation of the Series A Senior Notes in the 
           National Association of Securities Dealers, Inc. Automated 
           Quotation System - PORTAL ("PORTAL"), 

                 (8)  all fees and expenses (including fees and expenses of 
           counsel) of the Company in connection with approval of the 
           Series A Senior Notes by DTC for "book-entry" transfer, and

                 (9)  the performance by the Company of its other 
           obligations under this Agreement.

           (k)   If this Agreement shall be terminated pursuant to any of 
      the provisions hereof (otherwise than a default by the Initial 
      Purchasers) or if for any reason the Company shall be unable or 
      unwilling to perform their obligations hereunder, the Company shall, 
      except as otherwise agreed by the parties hereto, reimburse the 
      Initial Purchasers for the fees and expenses to be paid or reimbursed 
      pursuant to Section 5(j) above, and reimburse the Initial Purchasers 
      for all out-of-pocket expenses (including the fees and expenses of 
      counsel to the Initial Purchasers) reasonably incurred by the Initial 
      Purchasers in connection with the transactions contemplated by this 
      Agreement.

           (l)   Prior to the Closing Date, to furnish to the Initial 
      Purchasers, as soon as they have been prepared by the Company, a copy 
      of any consolidated financial statements of the Company for any 
      period subsequent to the period covered by the financial statements 
      appearing in the Offering Documents.

           (m)   Not to distribute prior to the Closing Date any offering 
      material in connection with the offering and sale of the Series A 
      Senior Notes other than the Offering Documents.

           (n)   Not to sell, offer for sale or solicit offers to buy or 
      otherwise negotiate in respect of any security (as defined in the 
      Act) that would be integrated with the sale of the Series A Senior 
      Notes in a manner that would require the registration under the Act 
      of the sale to the Initial Purchasers or the Eligible Purchasers of 
      Series A Senior Notes.

           (o)   For so long as any of the Senior Notes remain outstanding 
      and during any period in which the Company is not subject to Section 
      13 or 15(d) of the Exchange Act, to make available to any Eligible 
      Purchaser or beneficial owner of Senior Notes in connection with any 
      sale thereof and any prospective purchaser of such Senior Notes from 
      such Eligible Purchaser or beneficial owner, the information required 
      by Rule 144A(d)(4) under the Act.

           (p)   To comply with their agreements in the Registration Rights 
      Agreement, and all agreements set forth in the representation letters 
      of the Company to DTC relating to the approval of the Series A Senior 
      Notes by DTC for "book-entry" transfer.

           (q)  On the Closing Date, to deliver to the Initial Purchasers 
      true and correct copies of the executed Acquisition Agreement and New 
      Credit Agreement and all documents and agreements related thereto and 
      not to enter into any amendment, alteration, modification or waiver 
      thereto or in the exhibits or schedules thereto that have not been 
      delivered to the Initial Purchasers. 

           (r)   To use its best efforts to effect the inclusion of the 
      Series A Senior Notes in PORTAL.

           (s)   To use its best efforts to do and perform all things 
      required or necessary to be done and performed under this Agreement 
      by the Company prior to the Closing Date and to satisfy all 
      conditions precedent to the delivery of the Series A Senior Notes.


      6.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company 
represents and warrants to each Initial Purchaser that:

           (a)   The Offering Documents have been prepared in connection 
      with the Exempt Resales.  The Preliminary Offering Memorandum as of 
      its date does not, and the Offering Memorandum as of its date does 
      not and as of the Closing Date will not, and any amendment or 
      supplement thereto will not, contain any untrue statement of a 
      material fact or omit to state any material fact necessary in order 
      to make the statements therein, in light of the circumstances under 
      which they were made, not misleading, except that the representations 
      and warranties contained in this paragraph (a) shall not apply to 
      statements or omissions in the Offering Documents (or any amendment 
      or supplement thereto) based upon information relating to the Initial 
      Purchasers furnished to the Company in writing by the Initial 
      Purchasers expressly for use therein.  No stop order preventing the 
      use of the any of the Offering Documents, or any amendment or 
      supplement thereto, or any order asserting that any of the 
      transactions contemplated by this Agreement are subject to the 
      registration requirements of the Securities Act, have been issued.

           (b)   The Company and each of its subsidiaries (1) is duly 
      organized, validly existing and in good standing under the laws of 
      its respective jurisdiction of incorporation, (2) has full corporate 
      power and authority to carry on its respective business as it is 
      currently being conducted and to own, lease and operate its 
      respective properties, and (3) except as otherwise agreed to by the 
      parties hereto, is duly qualified and in good standing as a foreign 
      corporation registered to do business in each jurisdiction in which 
      the nature of its business or its ownership or leasing of property 
      requires such qualification, except where the failure to be so 
      qualified would not have a material adverse effect on the condition 
      (financial or other), business, property, prospects, net worth or 
      results of operations of the Company and its subsidiaries taken as a 
      whole (a "MATERIAL ADVERSE EFFECT").  

           (c)   All of the outstanding capital stock of the Company and 
      each of its subsidiaries has been duly authorized and validly issued, 
      is fully paid and nonassessable, is not and, as a result of the 
      Offering or the consummation of the Acquisition pursuant to the 
      Acquisition Agreement, will not be, subject to preemptive or similar 
      rights and, except as described in the Offering Memorandum, (i) all 
      of the Company's subsidiaries' capital stock is owned by the Company, 
      free and clear of any security interest, claim, lien or encumbrance, 
      except as described in the Offering Memorandum and (ii) there are no 
      outstanding rights, warrants or options to acquire, or instruments 
      convertible into or exchangeable for, any shares of capital stock or 
      other equity interest in any such subsidiary. 

           (d)   The Company has all necessary corporate power and 
      authority to enter into and perform its obligations under the 
      Operative Documents and to issue, sell and deliver the Series A 
      Senior Notes to the Initial Purchasers.  

           (e)   Neither the Company nor any of its subsidiaries is (1) in 
      violation of its respective charter or bylaws or (2) in default in 
      any material respect in the performance of any obligation, agreement 
      or condition contained in any bond, debenture, note or any other 
      evidence of indebtedness or in any other agreement, indenture or 
      instrument material to the conduct of the business of the Company and 
      its subsidiaries taken as a whole, to which the Company or any of its 
      subsidiaries is a party or by which it or any of its subsidiaries or 
      their respective property is bound.

           (f)   None of (A) the execution, delivery or performance by the 
      Company of this Agreement, the New Credit Agreement and the other 
      Operative Documents, (B) the performance by the Company of the 
      Acquisition Agreement and consummation of the Acquisition pursuant to 
      the terms of the Acquisition Agreement, (C) the issuance and sale of 
      the Senior Notes by the Company and (D) the consummation by the 
      Company of the transactions described in the Offering Memorandum 
      under the caption "Use of Proceeds," will conflict with or constitute 
      a breach of any of the terms or provisions of, or a default under, or 
      result in the imposition of a lien or encumbrance on any properties 
      of the Company or any of its subsidiaries, or an acceleration of 
      indebtedness pursuant to, (1) the charter or bylaws of the Company or 
      any of its subsidiaries, (2) any bond, debenture, note, indenture, 
      mortgage, deed of trust or other agreement or instrument to which the 
      Company or any of its subsidiaries is a party or by which any of them 
      or their property is bound, the violation of which would reasonably 
      be expected to result in a Material Adverse Effect, or (3) any law or 
      administrative regulation applicable to the Company, any of its 
      subsidiaries or any of their assets or properties, or any judgment, 
      order or decree of any court or governmental agency or authority 
      entered in any proceeding to which the Company or any of its 
      subsidiaries was or is now a party or to which any of them or their 
      respective properties may be subject.  No consent, approval, 
      authorization or order of, or filing or registration with, any 
      regulatory body, administrative agency, or other governmental agency 
      (except as securities or Blue Sky laws of the various states may 
      require) that has not been made or obtained is required for (1) the 
      execution, delivery and performance of the Operative Documents, the 
      New Credit Agreement and the valid issuance and sale of the Series A 
      Senior Notes or (2) the performance by the Company of the Acquisition 
      Agreement and all documents or agreements related thereto and the 
      transactions contemplated hereby and thereby.  No consents or waivers 
      from any person are required to consummate the transactions 
      contemplated by the Operative Documents or the Offering Documents, 
      other than such consents and waivers as have been or will be obtained 
      prior to the Closing Date or, in the case of the Registration Rights 
      Agreement and the transactions contemplated thereby, will be obtained 
      and made) under the Act, the Trust Indenture Act of 1939, as amended 
      (the "Trust Indenture Act") and state securities or Blue Sky laws and 
      regulations.

           (g)   This Agreement has been duly authorized and validly 
      executed by the Company and (assuming the due execution and delivery 
      thereof by the Initial Purchasers) is a legally valid and binding 
      obligation of the Company, enforceable against it in accordance with 
      its terms, except as the enforceability thereof may be (i) subject to 
      applicable bankruptcy, insolvency, moratorium, reorganization or 
      similar laws in effect which affect the enforcement of creditors 
      rights generally, (ii) limited by general principles of equity 
      (whether considered in a proceeding at law or in equity) and (iii) 
      limited by securities laws prohibiting or limiting the availability 
      of, and public policy against, indemnification or contribution.  

           (h)   The Company has duly authorized the Indenture, and when 
      the Company has duly executed and delivered it (assuming the due 
      authorization, execution and delivery thereof by the Trustee), the 
      Indenture will be a legally valid and binding obligation of the 
      Company, enforceable against it in accordance with its terms, except 
      as the enforceability thereof may be (i) subject to applicable 
      bankruptcy, insolvency, moratorium, reorganization or similar laws in 
      effect which affect the enforcement of creditors rights generally and 
      (ii) limited by general principles of equity (whether considered in a 
      proceeding at law or in equity).  

           (i)   The Company has duly authorized the Series A Senior Notes 
      and, when issued and authenticated in accordance with the terms of 
      the Indenture and delivered to and paid for by the Initial Purchasers 
      in accordance with the terms hereof, the Series A Senior Notes will 
      conform to the description thereof in the Offering Memorandum, and 
      will be the legally valid and binding obligations of the Company, 
      enforceable against the Company in accordance with their terms, 
      except as the enforceability thereof may be (i) subject to applicable 
      bankruptcy, insolvency, moratorium, reorganization or similar laws in 
      effect which affect the enforcement of creditors rights generally and 
      (ii) limited by general principles of equity (whether considered in a 
      proceeding at law or in equity).

           (j)   The Company has duly authorized the Series B Senior Notes 
      and, when issued and authenticated in accordance with the terms of 
      the Registered Exchange Offer and the Indenture, the Series B Senior 
      Notes will conform to the description thereof in the applicable 
      Registration Statement, and will be the legally valid and binding 
      obligations of the Company, enforceable against the Company in 
      accordance with their terms, except as the enforceability thereof may 
      be (i) subject to applicable bankruptcy, insolvency, moratorium, 
      reorganization or similar laws in effect which affect the enforcement 
      of creditors rights generally and (ii) limited by general principles 
      of equity (whether considered in a proceeding at law or in equity).

           (k)   The Registration Rights Agreement has been duly authorized 
      and validly executed by the Company and (assuming the due execution 
      and delivery thereof by the Initial Purchasers) is a legally valid 
      and binding obligation of the Company, enforceable against it in 
      accordance with its terms, except as the enforceability thereof may 
      be (i) subject to applicable bankruptcy, insolvency, moratorium, 
      reorganization or similar laws in effect which affect the enforcement 
      of creditors rights generally, (ii) limited by general principles of 
      equity (whether considered in a proceeding at law or in equity) and 
      (iii) limited by securities laws prohibiting or limiting the 
      availability of, and public policy against, indemnification or 
      contribution.  

           (l)  The Acquisition Agreement has been duly and validly 
      authorized by Acquisition Sub and is a valid and binding agreement of 
      Acquisition Sub, enforceable against it in accordance with its terms, 
      except as enforcement may be (i) subject to applicable bankruptcy, 
      insolvency, moratorium, reorganization or similar laws in effect 
      which affect the enforcement of creditors rights generally, (ii) 
      limited by general principles of equity (whether considered in a 
      proceeding at law or in equity) and (iii) limited by securities laws 
      prohibiting or limiting the availability of, and public policy 
      against, indemnification or contribution. 

           (m)   There is (i) no action, suit or proceeding before or by 
      any court, arbitrator or governmental agency, body or official, 
      domestic or foreign, now pending, threatened, or, to the knowledge of 
      the Company, contemplated to which the Company or any of its 
      subsidiaries is or may be a party or to which the business or 
      property of the Company or any of its subsidiaries is subject, (ii) 
      no statute, rule, regulation or order that has been enacted, adopted 
      or issued by any governmental agency or, to the best knowledge of any 
      Company, proposed by any governmental body or (iii) no injunction, 
      restraining order or order of any nature by a federal or state court 
      of competent jurisdiction to which the Company or any of its 
      subsidiaries is or may be subject issued that, in the case of clauses 
      (i), (ii) and (iii) above, (1) is required to be disclosed in the 
      Offering Memorandum and that is not so disclosed, (2) might have a 
      Material Adverse Effect, (3) would interfere with or adversely affect 
      the issuance of the Series A Senior Notes or (4) in any manner draw 
      into question the validity of the Operative Documents or the Series A 
      Senior Notes.

           (n)   No holder of any security of the Company or any of its 
      subsidiaries has any right or, by reason of the execution by the 
      Company of this Agreement, the New Credit Agreement, any other 
      Operative Document or the Acquisition Agreement or the consummation 
      of the transactions contemplated hereby or and thereby, have the 
      right to require registration of any security of the Company.

           (o)   Neither the Company nor any of its subsidiaries is 
      involved in any material labor dispute nor, to the knowledge of the 
      Company or any of its subsidiaries, is any material dispute 
      threatened which, if such dispute were to occur, could have a 
      Material Adverse Effect.

           (p)   Neither the Company nor any of its subsidiaries has 
      violated any safety or similar law applicable to its business, nor 
      any federal or state law relating to discrimination in the hiring, 
      promotion or pay of employees nor any applicable federal or state 
      wages and hours laws, nor any provisions of the Employee Retirement 
      Income Security Act of 1974, as amended ("ERISA"), or the rules and 
      regulations promulgated thereunder, except for such instances of 
      noncompliance that, either singly or in the aggregate, could not have 
      a Material Adverse Effect.

           (q)   Except as set forth in the Offering Memorandum, the 
      Company, its subsidiaries and the Acquired Entities are in compliance 
      with all applicable existing federal, state, local and foreign laws 
      and regulations (collectively, "ENVIRONMENTAL LAWS") relating to 
      protection of human health or the environment or imposing liability 
      or standards of conduct concerning any Hazardous Material (as defined 
      below), except for such instances of noncompliance that, either 
      singly or in the aggregate, could not have a Material Adverse Effect.  
      The term "HAZARDOUS MATERIAL" means (i) any "hazardous substance" as 
      defined by the Comprehensive Environmental Response, Compensation and 
      Liability Act of 1980, as amended, (ii) any "hazardous waste" as 
      defined by the Resource Conservation and Recovery Act, as amended, 
      (iii) any petroleum or petroleum product, (iv) any polychlorinated 
      biphenyl and (v) any pollutant or contaminant or hazardous, dangerous 
      or toxic chemical, material, waste or substance regulated under or 
      within the meaning of any other Environmental Law.  Except as set 
      forth in the Offering Memorandum, there is no alleged liability, or, 
      to the best knowledge and information of the Company, potential 
      liability (including, without limitation, alleged or potential 
      liability for investigatory costs, cleanup costs, governmental 
      response costs, natural resources damages, property damages, personal 
      injuries, or penalties) of the Company, any of its subsidiaries or 
      the Acquired Entities arising out of, based on, or resulting from (1) 
      the presence or release into the environment of any Hazardous 
      Material at any location currently or previously owned by the 
      Company, any of its subsidiaries or the Acquired Entities or at any 
      location currently or previously used or leased by the Company, any 
      of its subsidiaries or the Acquired Entities, or (2) any violation or 
      alleged violation of any Environmental Law, except in each case with 
      respect to clause (1) and (2), alleged or potential liabilities that, 
      singly or in the aggregate, could not have a Material Adverse Effect.

           (r)   The Company and each of its subsidiaries owns or possesses 
      the patents, patent rights, licenses, inventions, copyrights, 
      know-how (including trade secrets and other unpatented and/or 
      unpatentable proprietary or confidential information, systems or 
      procedures), trademarks, service marks and trade names (collectively, 
      "INTELLECTUAL PROPERTY") presently employed by it and the Acquired 
      Entities in connection with the businesses now operated by it and the 
      Acquired Entities, except where the failure to own or possess such 
      Intellectual Property could not, either singly or in the aggregate, 
      have a Material Adverse Effect, and neither the Company nor any of 
      its subsidiaries has received any notice that its use of any 
      Intellectual Property allegedly infringes upon, or conflicts with, 
      rights asserted by others, except for such instances that, singly or 
      in the aggregate, could not have a Material Adverse Effect if an 
      unfavorable decision, judgment, ruling or finding is rendered against 
      the Company or any of its subsidiaries.

           (s)   Except as set forth in the Offering Memorandum, all tax 
      returns required to be filed by the Company and each of its 
      subsidiaries in any jurisdiction have been filed, and all material 
      taxes (including, but not limited to, withholding taxes, penalties 
      and interest, assessments, fees and other charges due or claimed to 
      be due from any taxing authority) have been paid other than those (i) 
      being contested in good faith and for which adequate reserves have 
      been provided, or (ii) currently payable without penalty or interest.

           (t)   Except as set forth in the Offering Memorandum or that, 
      singly or in the aggregate, could not have a Material Adverse Effect, 
      (i) the Company and each of its subsidiaries has (1) such permits, 
      licenses, franchises and authorizations of governmental or regulatory 
      authorities ("PERMITS") as are necessary to own, lease and operate 
      its respective properties and to conduct its business as presently 
      conducted, and (2) fulfilled and performed all of its material 
      obligations with respect to the Permits, and (ii) no event has 
      occurred that could allow, or after notice or lapse of time could 
      allow, revocation or termination of any Permit or that could result 
      in any other material impairment of the rights granted to the Company 
      or any of its subsidiaries under any Permit, and the Company has no 
      reason to believe that any governmental body or agency is considering 
      limiting, suspending or revoking any Permit.

           (u)   Except as set forth in the Offering Memorandum or that, 
      singly or in the aggregate, could not have a Material Adverse Effect, 
      (i) the Company and each of its subsidiaries has good and marketable 
      title, free and clear of all liens, claims, encumbrances and 
      restrictions except liens for taxes not yet due and payable, to all 
      property and assets described in the Offering Memorandum as being 
      owned by it, (ii) each lease to which the Company and each of its 
      subsidiaries is a party is valid and binding and no default has 
      occurred or is continuing thereunder and (iii) the Company and its 
      subsidiaries enjoy peaceful and undisturbed possession under all such 
      leases to which it is a party as lessee.

           (v)   The Company and each of its subsidiaries maintains 
      adequate insurance for their respective businesses and the value of 
      their respective properties (including, without limitation, public 
      liability insurance, third party property damage insurance and 
      replacement value insurance), and all such insurance is outstanding 
      and in force as of the date hereof.  

           (w)   The financial statements, together with related notes 
      forming part of the Offering Documents (and any amendment or 
      supplement thereto), present fairly the consolidated financial 
      position, results of operations and changes in financial position of 
      the Company and its subsidiaries on the basis stated in the Offering 
      Documents at the respective dates or for the respective periods to 
      which they apply, and such financial statements and related schedules 
      and notes have been prepared in accordance with generally accepted 
      accounting principles consistently applied throughout the periods 
      involved, except as disclosed therein.  The pro forma financial 
      statements, together with related notes forming part of the Offering 
      Documents (and any amendment or supplement thereto), are, in all 
      material respects, accurately presented and prepared in good faith on 
      the basis of the assumptions described therein, and such assumptions 
      are reasonable and the adjustments used therein are appropriate to 
      give effect to the transactions and circumstances referred to 
      therein.

           (x)   The Company and each of its subsidiaries maintains a 
      system of internal accounting controls sufficient to provide 
      assurance that:

                 (1)  transactions are executed in accordance with 
           management's general or specific authorizations;

                 (2)  transactions are recorded as necessary to permit 
           preparation of financial statements in conformity with generally 
           accepted accounting principles and to maintain accountability 
           for assets; and

                 (3)  the recorded accountability for assets is compared 
           with the existing assets at reasonable intervals and appropriate 
           action is taken with respect thereto.

           (y)   Subsequent to the dates for which information is given in 
      the Offering Documents and up to the Closing Date, unless set forth 
      in the Offering Memorandum or the Company has notified the Initial 
      Purchasers:

                 (1)  none of the Company or its subsidiaries has incurred 
           any liabilities or obligations, direct or contingent, which are 
           material, individually or in the aggregate, to the Company and 
           its subsidiaries taken as a whole, nor entered into any material 
           transactions not in the ordinary course of business;

                 (2)  there has not been any decrease in the Company's 
           capital stock or the capital stock of the Company's subsidiaries 
           or any increase in long-term indebtedness to meet working 
           capital requirements or any material increase in short-term 
           indebtedness of the Company or its subsidiaries or any payment 
           of or declaration to pay any dividends or any other distribution 
           with respect to the Company's or any of its subsidiaries' 
           capital stock, as the case may be; and

                 (3)  there has not been any event or series of events that 
           would have a Material Adverse Effect.

           (z)   Prior to and after the issuance of the Series A Senior 
      Notes, (i) the present fair salable value of the assets of the 
      Company and its subsidiaries exceeded and will exceed the amount that 
      will be required to be paid on, or in respect of, the debts and other 
      liabilities (including contingent liabilities) of the Company and its 
      subsidiaries as they become absolute and matured, (ii) the assets of 
      the Company and its subsidiaries do not constitute and will not 
      constitute unreasonably small capital to carry out their businesses 
      as conducted or as proposed to be conducted, and (iii) the Company 
      and its subsidiaries do not intend to, or believe that they will, 
      incur debts or other liabilities beyond their ability to pay such 
      debts and liabilities as they mature.  The Company does not intend to 
      permit any of its subsidiaries to incur debts or other liabilities 
      beyond their respective ability to pay such debts and liabilities as 
      they mature.

           (aa)  Neither the Company nor any agent thereof acting on its 
      behalf, has taken or will take any action that might cause this 
      Agreement or the issuance or sale of the Series A Senior Notes to 
      violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. 
      Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 
      C.F.R. Part 224) of the Board of Governors of the Federal Reserve 
      System, in each case as in effect now or as the same may hereafter be 
      in effect on the Closing Date.

           (ab)  The Company is not an "investment company" or a company 
      "controlled" by an "investment company" within the meaning of the 
      Investment Company Act of 1940, as amended.

           (ac)  Ernst & Young LLP is an independent public accountants 
      with respect to the Company as required by the Act.

           (ad)  When the Series A Senior Notes are issued and delivered 
      pursuant to this Agreement, such Series A Senior Notes will not be of 
      the same class (within the meaning of Rule 144A under the Act) as 
      securities of the Company that are listed on a national securities 
      exchange registered under Section 6 of the Exchange Act or that are 
      quoted in a United States automated inter-dealer quotation system.

           (ae)  Assuming (i) that the representations and warranties of 
      the Initial Purchasers in Section 7 hereof are true, (ii) that the 
      representations of the Accredited Institutions set forth in the 
      certificates of such Accredited Institutions in the form set forth in 
      Annex A to the Offering Memorandum are true, (iii) compliance by the 
      Initial Purchasers with their covenants set forth in Section 7 
      hereof, (iv) that none of the Eligible Purchasers is an affiliate of 
      the Company and (v) that each of the Eligible Purchasers is a QIB or 
      an Accredited Institution, the purchase and resale of the Series A 
      Senior Notes pursuant hereto (including pursuant to the Exempt 
      Resales) is exempt from the registration requirements of the Act.  No 
      form of general solicitation or general advertising (as these terms 
      are defined in Regulation D under the Act) was used by the Company or 
      any of their representatives (other than the Initial Purchasers, as 
      to whom the Company makes no representation) in connection with the 
      offer and sale of the Series A Senior Notes, including, but not 
      limited to, articles, notices or other communications published in 
      any newspaper, magazine, or similar medium or broadcast over 
      television or radio, or any seminar or meeting whose attendees have 
      been invited by any general solicitation or general advertising.  No 
      securities of the same class as the Series A Senior Notes have been 
      issued and sold by the Company within the six-month period 
      immediately prior to the date hereof.

           (af)  The Company has no direct or indirect subsidiaries other 
      than those listed on Exhibit A hereto.

           (ag)  Set forth on Exhibit B hereto is a list of each employee 
      pension or benefit plan with respect to which the Company is a party 
      in interest or disqualified person.  The execution and delivery of 
      this Agreement, the other Operative Documents and the sale of the 
      Series A Senior Notes to be purchased by the Eligible Purchasers will 
      not involve any prohibited transaction within the meaning of Section 
      406 of ERISA or Section 4975 of the Code.  The representation made by 
      the Company in the preceding sentence is made in reliance upon and 
      subject to the accuracy of, and compliance with, the representations 
      and covenants made or deemed made by the Eligible Purchasers as set 
      forth in the Offering Documents under the Section entitled "Notice to 
      Investors."

           (ah)  None of the Company, its subsidiaries or any of its or 
      their affiliates or any person acting on its or their behalf has 
      engaged or will engage in any directed selling efforts within the 
      meaning of Regulation S with respect to the Senior Notes, and the 
      Company, its subsidiaries and its or their affiliates and all persons 
      acting on its or their behalf have complied with and will comply with 
      the offering restrictions requirements of Regulation S in connection 
      with the offering of the Senior Notes outside the United States;

           (ai)  There is no "substantial U.S. market interest" as defined 
      in rule 902(n) of Regulation S for the Senior Notes or any security 
      of the same class as the Senior Notes; and

           (aj)  The sale of the Series A Senior Notes in offshore 
      transactions pursuant to Regulation S is not part of a plan or scheme 
      to evade the registration provisions of the Act.


      7.   REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE 
INITIAL PURCHASERS.

      (a)  Each Initial Purchaser, severally and not jointly, represents 
and warrants to the Company as follows:

           (1)   Each Initial Purchaser represents and warrants with 
      respect to itself that such Initial Purchaser is either a QIB or an 
      Accredited Institution, in either case with such knowledge and 
      experience in financial and business matters as are necessary in 
      order to evaluate the merits and risks of an investment in the Series 
      A Senior Notes.

           (2)   Such Initial Purchaser (i) is not acquiring the Series A 
      Senior Notes with a view to any distribution thereof or with any 
      present intention of offering or selling any of the Series A Senior 
      Notes in a transaction that would violate the Act or the securities 
      laws of any State of the United States or any other applicable 
      jurisdiction, (ii) will be reoffering and reselling the Series A 
      Senior Notes only to QIBs in reliance on the exemption from the 
      registration requirements of the Act provided by Rule 144A and to a 
      limited number of Accredited Institutions that execute and deliver a 
      letter containing certain representations and agreements in the form 
      attached as Annex A to the Offering Documents and (iii) has not 
      solicited and, unless and until the Series A Senior Notes are 
      registered under the Act, will not solicit any offer to buy or offer 
      to sell the Series A Senior Notes by means of any form of general 
      solicitation or general advertising (as such terms are defined in 
      Regulation D under the Act) or in any manner involving a public 
      offering within the meaning of the Act.

           (3)   Each Initial Purchaser also understands that the Company 
      and, for purposes of the opinions to be delivered to the Initial 
      Purchasers pursuant to Sections 9(d) and (e) hereof, counsel to the 
      Company and counsel to the Initial Purchasers will rely upon the 
      accuracy and truth of the foregoing representations and the Initial 
      Purchasers hereby consent to such reliance.

      (b)  The Initial Purchasers agree that, in connection with the Exempt 
Resales, the Initial Purchasers will solicit offers to buy the Series A 
Senior Notes only from, and will offer to sell the Series A Senior Notes 
only to, the Eligible Purchasers.  The Initial Purchasers further agree 
that they will offer to sell the Series A Senior Notes only to, and will 
solicit offers to buy the Series A Senior Notes only from, persons who in 
purchasing such Series A Senior Notes will be deemed to have represented 
and agreed (1) if such Eligible Purchaser is a QIB, that they are 
purchasing the Series A Senior Notes for their own account or an account 
with respect to which they exercise sole investment discretion and that 
they or such accounts are QIBs, (2) that such Series A Senior Notes will 
not have been registered under the Act and may be resold, pledged or 
otherwise transferred, only (A) (I) inside the United States to a person 
who the seller reasonably believes is a "qualified institutional buyer" 
within the meaning of Rule 144A under the Act in a transaction meeting the 
requirements of Rule 144A, (II) in a transaction meeting the requirements 
of Rule 144 under the Act, (III) outside the United States to a foreign 
person in a transaction meeting the requirements of Rule 904 under the Act 
or (IV) in accordance with another exemption from the registration 
requirements of the Act (and based upon an opinion of counsel if the 
Company so requests), (B) to the Company or (C) pursuant to an effective 
registration statement under the Act, in each case, in accordance with any 
applicable securities laws of any State of the United States or any other 
applicable jurisdiction, and (3) that the holder will, and each subsequent 
holder is required to, notify any purchaser from it of the security 
evidenced thereby of the resale restrictions set forth in (2) above.  
Accordingly, each Initial Purchaser represents and agrees that neither it, 
its affiliates nor any persons acting on its or their behalf has engaged or 
will engage in any directed selling efforts within the meaning of Rule 
901(b) of Regulation S with respect to the Senior Notes, and it, its 
affiliates and all persons acting on its or their behalf have complied and 
will comply with the offering restrictions requirements of Regulation S.

      (c)  Each Initial Purchaser represents and agrees that the Senior 
Notes offered and sold in reliance on Regulation S have been and will be 
offered and sold only in offshore transactions and that such securities 
have been and will be represented upon issuance by a global security that 
may not be exchanged for definitive securities until the expiration of the 
Restricted Period and only upon certification of beneficial ownership of 
the securities by a non-U.S. person or a U.S. person who purchased such 
securities in a transaction that was exempt from the registration 
requirements of the Act, which U.S. person will acquire an interest in a 
transfer restricted security.

      (d)  Each Initial Purchaser agrees that, at or prior to confirmation 
of a sale of Senior Notes (other than a sale pursuant to Rule 144A or to 
Accredited Institutional Investors in transactions that are exempt from the 
registration requirements of the Act), it will have sent to each 
distributor, dealer or person receiving a selling concession, fee or other 
remuneration that purchases Senior Notes from it during the Restricted 
Period a confirmation or notice to substantially the following effect:

      "The Senior Notes covered hereby have not been registered under the 
      U.S. Securities Act of 1933 (the "Securities Act") and may not be 
      offered and sold within the United States or to, or for the account 
      or benefit of, U.S. persons (i) as part of their distribution at any 
      time or (ii) otherwise until 40 days after the later of the 
      commencement of the offering and the closing date, except in either 
      case in accordance with Regulation S (or Rule 144A if available) 
      under the Securities Act.  Terms used above have the meanings 
      assigned to them in Regulation S."

      Each Initial Purchaser further agrees that it has not entered and 
will not enter into any contractual arrangement with respect to the 
distribution or delivery of the Senior Notes, except with its affiliates or 
with the prior written consent of the Company.

      (e)  Each Initial Purchaser further represents and agrees that (1) it 
has not offered or sold and will not offer or sell any Senior Notes to 
persons in the United Kingdom prior to the expiry of the period of six 
months from the issue date of the Senior Notes, except to persons whose 
ordinary activities involve them in acquiring, holding, managing or 
disposing of investments (as principal or agent) for the purposes of their 
business or otherwise in circumstances which have not resulted and will not 
result in an offer to the public in the United Kingdom within the meaning 
of the Public Offers of Securities Regulations 1995, (ii) it has complied 
and will comply with all applicable provisions of the Financial Services 
Act 1986 with respect to anything done by it in relation to the Senior 
Notes in, from or otherwise involving the United Kingdom, and (iii) it has 
only issued or passed on and will only issue or pass on in the United 
Kingdom any document received by it in connection with the issuance of the 
Senior Notes to a person who is of a kind described in Article 11(3) of the 
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) 
Order 1995 or is a person to whom the document may otherwise lawfully be 
issued or passed on. 

      (f)  Each Initial Purchaser agrees that it will not offer, sell or 
deliver any of the Senior Notes in any jurisdiction outside the United 
States except under circumstances that will result in compliance with the 
applicable laws thereof, and that it will take at its own expense whatever 
action is required to permit its purchase and resale of the Senior Notes in 
such jurisdictions.  The Initial Purchaser understands that no action has 
been taken to permit a public offering in any jurisdiction outside the 
United States where action would be required for such purpose.

      (g)  Each Initial Purchaser agrees not to cause any advertisement of 
the Senior Notes to be published in any newspaper or periodical or posted 
in any public place and not to issue any circular relating to the Senior 
Notes, except such advertisements as include the statements required by 
Regulation S.

      (h)  The sale of the Series A Senior Notes in offshore transactions 
pursuant to Regulation S is not part of a plan or scheme to evade the 
registration provisions of the Act.

      (i)  On the Closing Date, the Initial Purchasers will provide the 
Company with a list setting forth the names, addresses and such other 
information as the Company may reasonably request of all persons to whom 
the Initial Purchasers will sell the Senior Notes in offshore transactions 
pursuant to Regulation S.

Terms used in this Section 7 that have meanings assigned to them in 
Regulation S are used herein as so defined.


      8.   INDEMNIFICATION.

           (a)   The Company agrees to indemnify and hold harmless each 
      Initial Purchaser and each person, if any, who controls any Initial 
      Purchaser within the meaning of Section 15 of the Act or Section 20 
      of the Exchange Act, from and against any and all losses, claims, 
      damages, liabilities and judgments caused by any untrue statement or 
      alleged untrue statement of a material fact contained in the Offering 
      Documents (as amended or supplemented if the Company shall have 
      furnished any amendments or supplements thereto), or caused by any 
      omission or alleged omission to state therein a material fact 
      required to be stated therein or necessary to make the statements 
      therein in light of the circumstances under which they were made, not 
      misleading, except insofar as such losses, claims, damages, 
      liabilities or judgments are caused by any such untrue statement or 
      omission or alleged untrue statement or omission based upon 
      information relating to such Initial Purchaser furnished in writing 
      to the Company by such Initial Purchaser expressly for use therein; 
      provided, however, that the indemnification contained in this 
      paragraph (a) with respect to the Preliminary Offering Memorandum 
      shall not inure to the benefit of any Initial Purchaser (or to the 
      benefit of any person controlling such Initial Purchaser) on account 
      of any such loss, claim, damage, liability or judgment (i) arising 
      from the sale of the Series A Senior Notes by such Initial Purchaser 
      to any person if a copy of the Offering Memorandum shall not have 
      been delivered or sent to such person, at or prior to the written 
      confirmation of such sale, and the untrue statement or alleged untrue 
      statement or omission or alleged omission of a material fact 
      contained in the Preliminary Offering Memorandum was corrected in the 
      Offering Memorandum, provided that the Company has delivered the 
      Offering Memorandum to the Initial Purchasers in requisite quantity 
      on a timely basis to permit such delivery or sending or (ii) 
      resulting from the use by such Initial Purchaser of any offering 
      memorandum, registration statement or prospectus, or any amendment or 
      supplement thereto, referred to in Section 5(e) hereof when, under 
      Section 11 hereof, such Initial Purchaser was not permitted to do so; 
      provided further, however, that the foregoing exceptions in clauses 
      (i) and (ii) shall not affect the indemnity with respect to any other 
      Initial Purchaser not otherwise subject to such exceptions.

           (b)   In case any action shall be brought against any Initial 
      Purchaser or any person controlling such Initial Purchaser, based 
      upon any Offering Document or any amendment or supplement thereto and 
      with respect to which indemnity  may be sought against the Company, 
      such Initial Purchaser shall promptly notify the Company in writing 
      and the Company shall assume the defense thereof, including the 
      employment of counsel reasonably satisfactory to such indemnified 
      party and payment of all fees and expenses.  Any Initial Purchaser or 
      any such controlling person shall have the right to employ separate 
      counsel in any such action and participate in the defense thereof, 
      but the reasonable fees and expenses of such counsel shall be at the 
      expense of such Initial Purchaser or such controlling person unless 
      (i) the employment of such counsel has been specifically authorized 
      in writing by the Company, (ii) the Company has failed to assume the 
      defense and employ counsel or (iii) the named parties to any such 
      action (including any impleaded parties) include both such Initial 
      Purchaser or such controlling person and the Company, and such 
      Initial Purchaser or such controlling person shall have been advised 
      by such counsel that there may be one or more legal defenses 
      available to it which are different from or additional to those 
      available to the Company (in which case the Company shall not have 
      the right to assume the defense of such action on behalf of such 
      Initial Purchaser or such controlling person, it being understood, 
      however, that the Company shall not, in connection with any one such 
      action or separate but substantially similar or related actions in 
      the same jurisdiction arising out of the same general allegations or 
      circumstances, be liable for the fees and expenses of more than one 
      separate firm of attorneys (in addition to any local counsel) for all 
      such Initial Purchasers and controlling persons, which firm shall be 
      designated in writing by DLJ, and that all such fees and expenses 
      shall be reimbursed as they are incurred).  The Company shall not be 
      liable for any settlement of any such action effected without the 
      written consent of the Company but if settled with the Company's 
      written consent, the Company agrees to indemnify and hold harmless 
      any Initial Purchaser and any such controlling person from and 
      against any loss or liability by reason of such settlement.  No 
      indemnifying party shall, without the prior written consent of the 
      indemnified party, effect any settlement of any pending or threatened 
      proceeding in respect of which any indemnified party is or could have 
      been a party and indemnity could have been sought hereunder by such 
      indemnified party, unless such settlement includes an unconditional 
      release of such indemnified party from all liability on claims that 
      are the subject matter of such proceeding.

           (c)   Each Initial Purchaser agrees, severally and not jointly, 
      to indemnify and hold harmless the Company, their directors and 
      officers, and any person controlling them within the meaning of 
      Section 15 of the Act or Section 20 of the Exchange Act (collectively 
      the "COMPANY INDEMNIFIED PARTIES"), to the same extent as the 
      foregoing indemnity from the Company to each Initial Purchaser but 
      only with reference to information relating to such Initial Purchaser 
      furnished in writing by such Initial Purchaser expressly for use in 
      the Offering Documents.  In case any action shall be brought against 
      any Issuer Indemnified Party in respect of which indemnity may be 
      sought against an Initial Purchaser, such Initial Purchaser shall 
      have the rights and duties given to the Company (except that if the 
      Company shall have assumed the defense thereof, such Initial 
      Purchaser shall not be required to do so, but may employ separate 
      counsel therein and participate in the defense thereof but the fees 
      and expenses of such counsel shall be at the expense of such Initial 
      Purchaser), and the Issuer Indemnified Parties shall have the rights 
      and duties given to such Initial Purchaser by Section 8(b) hereof.

           (d)   If the indemnification provided for in this Section 8 is 
      unavailable to an indemnified party in respect of any losses, claims, 
      damages, liabilities or judgments referred to therein, then each 
      indemnifying party, in lieu of indemnifying such indemnified party, 
      shall contribute to the amount paid or payable by such indemnified 
      party as a result of such losses, claims, damages, liabilities and 
      judgments (i) in such proportion as is appropriate to reflect the 
      relative benefits received by the Company on the one hand and the 
      Initial Purchasers on the other hand from the offering of the Series 
      A Senior Notes or (ii) if the allocation provided by clause (i) above 
      is not permitted by applicable law, in such proportion as is 
      appropriate to reflect not only the relative benefits referred to in 
      clause (i) above but also the relative fault of the Company and the 
      Initial Purchasers in connection with the statements or omissions 
      which resulted in such losses, claims, damages, liabilities or 
      judgments, as well as any other relevant equitable considerations.  
      Except in the case of any indemnity arising under the last paragraph 
      of Section 5(e) hereof, the relative benefits received by the Company 
      and the Initial Purchasers shall be deemed to be in the same 
      proportion as the total net proceeds from the offering of the Series 
      A Senior Notes (before deducting expenses) received by the Company, 
      and the total discounts and commissions received by the Initial 
      Purchasers, bear to the total price to investors of the Series A 
      Senior Notes, in each case as set forth in the table on the cover 
      page of the Offering Memorandum.  The relative fault of the Company 
      and the Initial Purchasers shall be determined by reference to, among 
      other things, whether the untrue or alleged untrue statement of a 
      material fact or the omission to state a material fact relates to 
      information supplied by the Company or the Initial Purchasers and the 
      parties' relative intent, knowledge, access to information and 
      opportunity to correct or prevent such statement or omission.

           The Company and the Initial Purchasers agree that it would not 
      be just and equitable if contribution pursuant to this paragraph were 
      determined by pro rata allocation (even if the Initial Purchasers 
      were treated as one entity for such purpose) or by any other method 
      of allocation which does not take account of the equitable 
      considerations referred to in the immediately preceding paragraph.  
      The losses, claims, damages, liabilities or judgments of an 
      indemnified party referred to in the immediately preceding paragraph 
      shall be deemed to include, subject to the limitations set forth 
      above, any legal or other expenses reasonably incurred by such 
      indemnified party in connection with investigating or defending any 
      such action or claim.  Notwithstanding the provisions of this Section 
      8, no Initial Purchaser shall be required to contribute any amount in 
      excess of the amount by which the discounts and commissions received 
      by it exceeds the amount of any damages which such Initial Purchaser 
      has otherwise been required to pay by reason of such untrue or 
      alleged untrue statement or omission or alleged omission.  No person 
      guilty of fraudulent misrepresentation (within the meaning of Section 
      11(f) of the Act) shall be entitled to contribution from any person 
      who was not guilty of such fraudulent misrepresentation.  The Initial 
      Purchasers' obligations to contribute pursuant to this Section 8(d) 
      are several in proportion to the respective principal amount of 
      Series A Senior Notes purchased by each of the Initial Purchasers 
      hereunder and not joint.

           (e)   The Company hereby designates The Jordan Company, 9 West 
      57th Street, New York, New York 10019, as their authorized agent, 
      upon which process may be served in any action, suit or proceeding 
      which may be instituted in any state or federal court in the State of 
      New York by any Initial Purchaser or person controlling such Initial 
      Purchaser asserting a claim for indemnification or contribution under 
      or pursuant to this Section 8, and the Company will accept the 
      jurisdiction of such court in such action, and waive, to the fullest 
      extent permitted by applicable law, any defense based upon lack of 
      personal jurisdiction or venue.  A copy of any such process shall be 
      sent or given to the Company, at the address for notices specified in 
      Section 11(a) hereof.

           (f)   The indemnity and contribution agreements contained in 
      this Section 8 are in addition to any liability which the 
      indemnifying persons may otherwise have to the indemnified persons 
      referred to above.


      9.   CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS.  The several 
obligations of the Initial Purchasers to purchase the Series A Senior Notes 
under this Agreement are subject to the satisfaction of each of the 
following conditions:

           (a)   All the representations and warranties of the Company, 
      after giving effect to the New Credit Agreement and the Acquisition 
      pursuant to the terms of the Acquisition Agreement, contained in this 
      Agreement shall be true and correct on the date hereof and on the 
      Closing Date, with the same force and effect as if made on and as of 
      the date hereof and the Closing Date, respectively.  The Company 
      shall have performed or complied with all of the agreements and 
      satisfied all conditions to be performed, complied with or satisfied 
      by it on or prior to the Closing Date.

           (b)   (1)  The Offering Memorandum shall have been printed and 
      copies distributed to the Initial Purchasers not later than 9:00 
      a.m., New York City time, on November 5, 1996, or at such later date 
      and time as the Initial Purchasers may approve in writing;

                 (2)  no injunction, restraining order or order of any 
           nature by a federal or state court of competent jurisdiction 
           shall have been issued as of the Closing Date which would 
           prevent the issuance of the Series A Senior Notes; and

                 (3)  at the Closing Date, no stop order preventing the use 
           of the Offering Documents, or any amendment or supplement 
           thereto, or suspending the qualification or exemption from 
           qualification of the Series A Senior Notes for sale in any 
           jurisdiction designated by the Initial Purchasers pursuant to 
           Section 5(f) hereof shall have been issued and no proceedings 
           for that purpose shall have been commenced or shall be pending 
           before or, to the knowledge of the Company, be contemplated.

           (c)   (1)  Since the date of the latest balance sheet included 
      in the Offering Documents, there shall not have been any event that 
      had a Material Adverse Effect, or any development involving a 
      prospective change that could have a Material Adverse Effect, whether 
      or not arising in the ordinary course of business;

                 (2)  since the date of the latest balance sheet included 
           in the Offering Documents, there has not been any change, or any 
           development involving a prospective change, in the capital stock 
           or in the long-term debt of the Company and its subsidiaries 
           from that set forth in the Offering Documents;

                 (3)  the Company and its subsidiaries shall have no 
           material liability or obligation, direct or contingent, other 
           than those reflected in the Offering Memorandum; 

                 (4)  there shall not have been any material adverse 
           change, or development that is reasonably likely to result in a 
           material adverse change, in the assets of Acquired Entities; and

                 (5)  on the Closing Date, the Initial Purchasers shall 
           have received certificates dated the Closing Date, signed on 
           behalf of the Company by the President and the Chief Financial 
           Officer of the Company, confirming all matters set forth in 
           Sections 9(a), (b), and (c) hereof with respect to the Company.

           (d)   The Initial Purchasers shall have received on the Closing 
      Date an opinion (satisfactory to the Initial Purchasers and counsel 
      to the Initial Purchasers) dated the Closing Date, of Mayer, Brown & 
      Platt, special securities law counsel for the Company, to the effect 
      that:

                 (1)  The Company has all necessary corporate power and 
           authority to enter into and perform its obligations under the 
           Operative Documents and to issue, sell and deliver the Series A 
           Senior Notes to the Initial Purchasers to be sold by the Initial 
           Purchasers pursuant hereto;

                 (2)  No consent, approval, authorization or order of, or 
           filing or registration with, any regulatory body, administrative 
           agency, or other governmental agency (except as securities or 
           Blue Sky laws of the various states may require) which has not 
           been made or obtained is required for (1) the execution, 
           delivery and performance of this Agreement, the New Credit 
           Agreement and the other Operative Documents and the valid 
           issuance and sale of the Series A Senior Notes or (2) the 
           performance by the Company of the Acquisition Agreement and all 
           documents or agreements related thereto and the transactions 
           contemplated hereby and thereby, such as to which the failure to 
           be obtained or made would not reasonably be expected, either 
           individually or in the aggregate, to have a Material Adverse 
           Effect;

                 (3)  To the best of such counsel's knowledge, no consents 
           or waivers from any person are required to consummate the 
           transactions contemplated by the Operative Documents or the 
           Offering Documents, other than such consents and waivers as have 
           been or will be obtained prior to the Closing Date or, in the 
           case of the Registration Rights Agreement and the transactions 
           contemplated thereby, will be obtained and made) under the Act, 
           the Trust Indenture Act of 1939, as amended (the "Trust 
           Indenture Act") and state securities or Blue Sky laws and 
           regulations.

                 (4)  This Agreement has been duly authorized and validly 
           executed by the Company and (assuming the due execution and 
           delivery thereof by the Initial Purchasers) is a legally valid 
           and binding obligation of the Company, enforceable against it in 
           accordance with its terms, except as the enforceability thereof 
           may be (i) subject to applicable bankruptcy, insolvency, 
           moratorium, reorganization or similar laws in effect which 
           affect the enforcement of creditors rights generally, (ii) 
           limited by general principles of equity (whether considered in a 
           proceeding at law or in equity) and (iii) limited by securities 
           laws prohibiting or limiting the availability of, and public 
           policy against, indemnification or contribution.

                 (5)  The Company has duly authorized the Indenture and 
           when the Company has duly executed and delivered it (assuming 
           due authorization, execution and delivery thereof by the 
           Trustee), the Indenture will be a legally valid and binding 
           obligation of the Company, enforceable against it in accordance 
           with its terms, except as the enforceability thereof may be (i) 
           subject to applicable bankruptcy, insolvency, moratorium, 
           reorganization or similar laws in effect which affect the 
           enforcement of creditors rights generally and (ii) limited by 
           general principles of equity (whether considered in a proceeding 
           at law or in equity). 

                 (6)  The Company has duly authorized the Series A Senior 
           Notes and, when issued and authenticated in accordance with the 
           terms of the Indenture and delivered to and paid for by the 
           Initial Purchasers in accordance with the terms hereof, the 
           Series A Senior Notes will conform to the description thereof in 
           the Offering Memorandum, and will be the legally valid and 
           binding obligations of the Company, enforceable against the 
           Company in accordance with their terms, except as the 
           enforceability thereof may be (i) subject to applicable 
           bankruptcy, insolvency, moratorium, reorganization or similar 
           laws in effect which affect the enforcement of creditors rights 
           generally and (ii) limited by general principles of equity 
           (whether considered in a proceeding at law or in equity).

                 (7)  The Company has duly authorized the Series B Senior 
           Notes and, when issued and authenticated in accordance with the 
           terms of the Registered Exchange Offer and the Indenture, the 
           Series B Senior Notes will conform to the description thereof in 
           the Offering Memorandum, and will be the legally valid and 
           binding obligations of the Company, enforceable against the 
           Company in accordance with their terms, except as the 
           enforceability thereof may be (i) subject to applicable 
           bankruptcy, insolvency, moratorium, reorganization or similar 
           laws in effect which affect the enforcement of creditors rights 
           generally and (ii) limited by general principles of equity 
           (whether considered in a proceeding at law or in equity).  

                 (8)  The Registration Rights Agreement has been duly 
           authorized and validly executed by the Company and (assuming the 
           due execution and delivery thereof by the Initial Purchasers) is 
           a legally valid and binding obligation of the Company, 
           enforceable against it in accordance with its terms, except as 
           the enforceability thereof may be (i) subject to applicable 
           bankruptcy, insolvency, moratorium, reorganization or similar 
           laws in effect which affect the enforcement of creditors rights 
           generally, (ii) limited by general principles of equity (whether 
           considered in a proceeding at law or in equity) and (iii) 
           limited by securities laws prohibiting or limiting the 
           availability of, and public policy against, indemnification or 
           contribution.

                 (9)  The New Credit Agreement has been duly authorized and 
           validly executed by Motors and Gears Industries, Inc. and 
           (assuming the due execution and delivery thereof by the other 
           parties thereto) is a legally valid and binding obligation of 
           Motors and Gears, Industries, Inc., enforceable against it in 
           accordance with its terms, except as the enforceability thereof 
           may be (i) subject to applicable bankruptcy, insolvency, 
           moratorium, reorganization or similar laws in effect which 
           affect the enforcement of creditors rights generally, (ii) 
           limited by general principles of equity (whether considered in a 
           proceeding at law or in equity) and (iii) limited by securities 
           laws prohibiting or limiting the availability of, and public 
           policy against, indemnification or contribution;

                 (10) The statements under the captions "Certain 
           Transactions," "Description of Notes" and "Description of 
           Certain Indebtedness" in the Offering Memorandum, insofar as 
           such statements constitute a summary of legal matters, documents 
           or proceedings referred to therein, are correct in all material 
           respects; 

                 (11) The Company is not and, after giving effect to the 
           New Credit Agreement and the Acquisition pursuant to the terms 
           of the Acquisition Agreement, will not be, an "investment 
           company" or a company "controlled" by an "investment company" 
           within the meaning of the Investment Company Act of 1940, as 
           amended;

                 (12) When the Series A Senior Notes are issued and 
           delivered pursuant to this Agreement, such Series A Senior Notes 
           will not be of the same class (within the meaning of Rule 144A 
           under the Act) as securities of the Company that are listed on a 
           national securities exchange registered under Section 6 of the 
           Exchange Act or that are quoted in a United States automated 
           inter-dealer quotation system; 

                 (13) Neither the Company nor any of its subsidiaries or 
           (any agent thereof acting on the behalf of any of them) has 
           taken, and none of them will take, any action that might cause 
           this Agreement or the issuance or sale of the Senior Notes to 
           violate Regulation G (12 C.F.R. Part 207), Regulation T (12 
           C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or 
           Regulation X (12 C.F.R. Part 224) of the Board of Governors of 
           the Federal Reserve System, in each case as in effect now or as 
           the same may hereafter be in effect on the Closing Date;

                 (14) The Indenture is not required to be qualified under 
           the Trust Indenture Act prior to the first to occur of (i) the 
           Registered Exchange Offer and (ii) the effectiveness of the 
           Shelf Registration Statement; and

                 (15) No registration under the Act of the Series A Senior 
           Notes is required for the sale of the Series A Senior Notes to 
           the Initial Purchasers as contemplated hereby or for the Exempt 
           Resales as described in the Offering Memorandum (assuming (i) 
           that the Eligible Purchasers who buy the Series A Senior Notes 
           in the Exempt Resales are QIBs or Accredited Institutions, (ii) 
           the accuracy of, and compliance with, the representations of the 
           Initial Purchasers and those of the Company contained in 
           Sections 6 and 7 hereof and (iii) the accuracy of the 
           representations made by each Accredited Institution who 
           purchases Series A Senior Notes pursuant to an Exempt Resale as 
           set forth in the letters of representation executed by such 
           Accredited Institutions in the form of Annex A to the Offering 
           Memorandum).

           In addition, such counsel shall state that it has participated 
      in conferences with representatives of the Company, representatives 
      of the Company's accountants, the Initial Purchasers' representatives 
      and counsel for the Initial Purchasers, at which conferences the 
      contents of the Offering Documents and related matters were 
      discussed, and, although such counsel has not independently verified 
      and is not passing upon and assumes no responsibility for the 
      accuracy, completeness or fairness of the statements contained in the 
      Offering Documents, no facts have come to such counsel's attention 
      which led it to believe that the Offering Memorandum, on the date 
      thereof or on the date of such opinion, contained or contains an 
      untrue statement of a material fact or omitted or omits to state a 
      material fact necessary to make the statements contained therein, in 
      light of the circumstances under which they were made, not misleading 
      (it being understood that such counsel need express no view with 
      respect to the financial statements and data and related notes, the 
      financial statement schedules and other financial, statistical and 
      accounting data included in the Offering Documents).

           (e)   The Initial Purchasers shall have received on the Closing 
      Date an opinion (satisfactory to the Initial Purchasers and counsel 
      to the Initial Purchasers) dated the Closing Date, of Bryan Cave LLP, 
      counsel for the Company, to the effect that:

                 (1)  Each of the Company and each of its subsidiaries (A) 
           is a corporation duly organized, validly existing and in good 
           standing under the laws of its respective jurisdiction of 
           incorporation, (B) has, and after giving effect to the New 
           Credit Agreement and the Acquisition, will have, full corporate 
           power and authority to carry on its respective business as it is 
           currently being conducted and to own, lease and operate its 
           respective properties, and (C) to the best of such counsel's 
           knowledge, is and, after giving effect to the New Credit 
           Agreement and the Acquisition, will be, duly qualified and is in 
           good standing as a foreign corporation registered to do business 
           in each jurisdiction in which the nature of its business or its 
           ownership or leasing of property requires such qualification, 
           except where the failure to be so qualified would not have a 
           Material Adverse Effect;

                 (2)  All of the outstanding capital stock of the Company 
           and each of its subsidiaries has been duly authorized and 
           validly issued and is fully paid and nonassessable, is not 
           subject to preemptive or similar rights and all of the Company's 
           subsidiaries' capital stock is directly or indirectly owned by 
           the Company, and, to the best of such counsel's knowledge, 
           except as described in the Offering Memorandum, is free and 
           clear of any security interest, claim, lien or encumbrance;

                 (3)  To the best of such counsel's knowledge, except as 
           disclosed in the Offering Memorandum, there are and, after 
           giving effect to the New Credit Agreement and the Acquisition 
           pursuant to the Acquisition Agreement, will not be, any 
           outstanding rights, warrants or options to acquire, or 
           instruments convertible into or exchangeable for, any shares of 
           capital stock in the Company or any of its subsidiaries;

                 (4)  Neither the Company nor any of its subsidiaries is in 
           violation of its respective charter or bylaws, as the case may 
           be, and, to the best knowledge of such counsel after due 
           inquiry, neither the Company nor any of its subsidiaries is in 
           default in the performance of any obligation, agreement or 
           condition contained in any bond, debenture, note or any other 
           evidence of indebtedness or in any other agreement, indenture or 
           instrument material to the conduct of the business of the 
           Company and its subsidiaries taken as a whole, to which the 
           Company or any of its subsidiaries is a party or by which it or 
           any of its subsidiaries or their respective property is bound;

                 (5)  None of (A) the execution, delivery or performance by 
           the Company of this Agreement, the New Credit Agreement and the 
           other Operative Documents, (B) the performance by the Company of 
           the Acquisition Agreement and consummation of the Acquisition 
           pursuant to the terms of the Acquisition Agreement, (C) the 
           issuance and sale of the Senior Notes by the Company and (D) the 
           consummation by the Company of the transactions described in the 
           Offering Memorandum under the caption "Use of Proceeds," will 
           conflict with or constitute a breach of any of the terms or 
           provisions of, or a default under, or result in the imposition 
           of a lien or encumbrance on any properties of the Company or any 
           of its subsidiaries, or an acceleration of indebtedness pursuant 
           to, (1) the charter or bylaws of any of the Company or the 
           Company's subsidiaries, (2) any bond, debenture, note, 
           indenture, mortgage, deed of trust or other agreement or 
           instrument known to such counsel after due inquiry to which the 
           Company or any of its subsidiaries is a party or by which any of 
           them or their property is bound, or (3) to the best of such 
           counsel's knowledge, any law or administrative regulation 
           applicable to the Company, any of its subsidiaries or any of 
           their assets or properties, or any judgment, order or decree of 
           any court or governmental agency or authority entered in any 
           proceeding to which the Company or any of its subsidiaries was 
           or is now a party or to which any of them or their respective 
           properties may be subject and which is known to such counsel;

                 (6)  The Acquisition Agreement has been duly and validly 
           authorized by Acquisition Sub and is a valid and binding 
           agreement of Acquisition Sub, enforceable against it in 
           accordance with its terms, except as enforcement may be limited 
           by applicable bankruptcy, insolvency, fraudulent conveyance, 
           moratorium, reorganization or other similar laws and court 
           decisions affecting or relating to the rights of creditors 
           generally or by general principles of equity, and except as 
           rights to indemnification may be limited by applicable law.  

                 (7)  To the best knowledge of such counsel, after due 
           inquiry, there is (i) no action, suit or proceeding before or by 
           any court, arbitrator or governmental agency, body or official, 
           domestic or foreign, now pending, threatened or contemplated to 
           which the Company or any of its subsidiaries is or may be a 
           party or to which the business or property of the Company or any 
           of its subsidiaries is or may be subject, (ii) no statute, rule, 
           regulation or order that has been enacted, adopted or issued by 
           any governmental agency or proposed by any governmental body, or 
           (iii) no injunction, restraining order or order of any nature by 
           a federal or state court of competent jurisdiction applicable to 
           the Company or any of its subsidiaries has been issued that, in 
           the case of clauses (i), (ii) and (iii) above, (a) is required 
           to be disclosed in the Offering Memorandum and that is not so 
           disclosed, (b) would interfere with or adversely affect the 
           issuance of the Series A Senior Notes, or (c) might invalidate 
           any provision or the validity of the Operative Documents or the 
           Series A Senior Notes;

                 (8)  To the best knowledge of such counsel, there is no 
           contract or document concerning the Company or any of its 
           subsidiaries that is not described in the Offering Memorandum, 
           that would be required to be described or filed in a 
           registration statement on Form S-4 if the Senior Notes were 
           registered pursuant to the Securities Act;

                 (9)  To the best knowledge of such counsel, after due 
           inquiry, no holder of any security of the Company has any right 
           to require registration of any of the Company's securities by 
           virtue of the execution of the Operative Documents or the 
           Acquisition Agreement by the Company, the issuance and sale of 
           the Series A Senior Notes by the Company or the transactions 
           contemplated hereby and thereby, other than such rights as will 
           be waived prior to the Closing Date;

           (f)   The Initial Purchasers shall have received on the Closing 
      Date an opinion, dated the Closing Date, of Latham & Watkins, in form 
      and substance satisfactory to the Initial Purchasers, and the Company 
      shall have provided Latham & Watkins such papers and information as 
      it requests to enable it to pass upon the matters contained in such 
      opinion.

           (g)   The Initial Purchasers shall have received letters from 
      Ernst & Young LLP, independent public accountants, on the date hereof 
      and on the Closing Date, in form and substance satisfactory to the 
      Initial Purchasers, with respect to the financial statements and 
      certain financial information contained in the Offering Memorandum.

           (h) The Company and the Trustee shall have entered into the 
      Indenture and the Initial Purchasers shall have received 
      counterparts, conformed as executed, thereof.

           (i) The Company and the Initial Purchasers shall have entered 
      into the Registration Rights Agreement and the Initial Purchaser 
      shall have received counterparts, conformed as executed, thereof.

           (j)  The Company shall have entered into the New Credit 
      Agreement (the form and substance of which shall be reasonably 
      acceptable to the Initial Purchasers) and the Initial Purchasers 
      shall have received counterparts, conformed as executed, thereof and 
      of all other documents and agreements entered into in connection 
      therewith.

           (k)  At or prior to the Closing Date, the closing under the New 
      Credit Agreement shall have been consummated on terms that conform in 
      all material respects to the description thereof in the Offering 
      Memorandum and the Initial Purchasers shall have received evidence 
      satisfactory to the Initial Purchaser of the consummation thereof.

           (l)  Each condition to the closing contemplated by the 
      Acquisition Agreement (other than the issuance and sale of the Senior 
      Notes pursuant hereto and the initial borrowing under the New Credit 
      Agreement) shall have been satisfied or waived.

           (m)   The Company shall have fully performed or complied with 
      any of the agreements herein contained and required to be performed 
      or complied with by the Company on or prior to the Closing Date.


      10.  EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement 
shall become effective at the time that the Company and the Initial 
Purchasers execute this Agreement.

      The Initial Purchasers may terminate this Agreement at any time prior 
to the Closing Date by written notice to the Company if any of the 
following has occurred:


           (a)   Since the respective dates as of which information is 
      given in the Offering Documents, any adverse change or development 
      involving a prospective adverse change which would cause a Material 
      Adverse Effect, on the earnings, affairs, or business prospects of 
      the Company or any of its subsidiaries, whether or not arising in the 
      ordinary course of business, which would, in the Initial Purchasers' 
      judgment, make it impracticable to market the Series A Senior Notes 
      on the terms and in the manner contemplated in the Offering 
      Documents;

           (b)   Any outbreak or escalation of hostilities or other 
      national or international calamity or crisis or material change in 
      economic conditions, if the effect of such outbreak, escalation, 
      calamity, crisis or change on the financial markets of the United 
      States or elsewhere would, in the Initial Purchasers' judgment, be 
      material and adverse and make it impracticable to market the Series A 
      Senior Notes on the terms and in the manner contemplated in the 
      Offering Documents;

           (c)   The suspension or material limitation of trading in 
      securities on the New York Stock Exchange, the American Stock 
      Exchange or the NASDAQ National Market System or limitation on prices 
      for securities on any such exchange or National Market Systems;

           (d)   The enactment, publication, decree or other promulgation 
      of any federal or state statute, regulation, rule or order of any 
      court or other governmental authority which in the Initial 
      Purchasers' opinion causes or will cause a Material Adverse Effect;

           (e)   The declaration of a banking moratorium by either federal 
      or New York State authorities;

           (f)   The taking of any action by any federal, state or local 
      government or agency in respect of its monetary or fiscal affairs 
      which in the Initial Purchasers' opinion has a material adverse 
      effect on the financial markets in the United States; or

           (g)   Any of the Company's securities shall have been downgraded 
      or placed on any "watch list" for possible downgrading by any 
      nationally recognized statistical rating organization, provided that 
      in the case of such "watch list" placement, termination shall be 
      permitted only if such placement would, in the judgment of any 
      Initial Purchaser, make it impracticable or inadvisable to market the 
      Series A Senior Notes or to enforce contracts for the sale of the 
      Series A Senior Notes or materially impair the investment quality of 
      the Series A Senior Notes.

      If on the Closing Date either of the Initial Purchasers shall fail or 
refuse to purchase the Series A Senior Notes, which it has agreed to 
purchase hereunder on such date and arrangements satisfactory to the 
Company for purchase of such Series A Senior Notes are not made within 48 
hours after such default, this Agreement will terminate without liability 
on the part of any non-defaulting Initial Purchaser.  In any such case that 
does not result in termination of this Agreement, the Company shall have 
the right to postpone the Closing Date, but in no event for longer than 
seven days, in order that the required changes, if any, in the Offering 
Memorandum or any other documents or arrangements may be effected.  Any 
action taken under this paragraph shall not relieve any defaulting Initial 
Purchaser from liability in respect of any default by it under this 
Agreement.


      11.  AGREEMENT OF THE INITIAL PURCHASERS.

      Each Initial Purchaser agrees, severally and not jointly, that, upon 
its receipt of any written notice from the Company of the existence of any 
fact or the happening of any event that requires the making of any 
additions to or changes in any offering memorandum, registration statement 
or prospectus, or amendment or supplement thereto, referred to in Section 
5(e) hereof in order that such document will not contain any untrue 
statement of a material fact or omission to state any material fact 
necessary in order to make the statements therein, in the light of the 
circumstances existing as of the date such document was delivered, not 
misleading, such Initial Purchaser shall forthwith discontinue disposition 
of the applicable Senior Notes pursuant to such document until (i) such 
Initial Purchaser receives from the Company copies of an amended or 
supplemented document that the Company states in writing may be used by 
such Initial Purchaser or (ii) such Initial Purchaser is advised in writing 
by the Company that the use of such document may be resumed.


      12.  MISCELLANEOUS.

           (a)   Notices given pursuant to any provision of this Agreement 
      shall be addressed as follows:  (i) if to the Company, to Motors and 
      Gears, Inc., ArborLake Centre, Suite 550, 1751 Lake Cook Road, 
      Deerfield, IL 60015, Attention: Chief Financial Officer, with a copy 
      to Mayer, Brown & Platt, 1675 Broadway, Suite 1900, New York, New 
      York 10019, Attention: James B. Carlson, (ii) if to the Initial 
      Purchasers, c/o Donaldson, Lufkin & Jenrette Securities Corporation, 
      140 Broadway, New York, New York 10005, Attention: Syndicate 
      Department, and (iii) if to the Initial Purchasers pursuant to 
      Section 11 hereof, (A) to Donaldson, Lufkin & Jenrette Securities 
      Corporation, 140 Broadway, New York, New York 10005, Attention: 
      Syndicate Department & Compliance Department, (B) to BT Securities 
      Corporation, 130 Liberty Street, 30th Floor, New York, NY 10062, 
      Attention:  Syndicate Department and (C) to Jefferies & Company, 
      Inc., 11100 Santa Monica Boulevard, Los Angeles, California 90025, 
      Attention: Syndicate Department & Compliance Department or in any 
      case to such other address as the person to be notified may have 
      requested in writing.

           (b)   The respective indemnities, contribution agreements, 
      representations, warranties and other statements set forth in or made 
      pursuant to this Agreement shall remain operative and in full force 
      and effect, and will survive delivery of and payment for the Series A 
      Senior Notes, regardless of (i) any investigation, or statement as to 
      the results thereof, made by or on behalf of any such person, (ii) 
      acceptance of the Series A Senior Notes and payment for them 
      hereunder and (iii) termination of this Agreement.

           (c)   Except as otherwise provided, this Agreement has been and 
      is made solely for the benefit of and shall be binding upon the 
      Company, the Initial Purchasers, any controlling persons referred to 
      herein and their respective successors and assigns, all as and to the 
      extent provided in this Agreement, and no other person shall acquire 
      or have any right under or by virtue of this Agreement.  The term 
      "successors and assigns" shall not include a purchaser of any of the 
      Series A Senior Notes from any of the several Initial Purchasers 
      merely because of such purchase.

           (d)   This Agreement shall be construed, interpreted and the 
      rights of the parties determined in accordance with the laws of the 
      State of New York without reference to its choice of law provisions.

           (e)   This Agreement may be signed in various counterparts which 
      together shall constitute one and the same instrument.


      Please confirm that the foregoing correctly sets forth the agreement 
between the Company and the Initial Purchasers.

                                 Very truly yours,

                                 MOTORS AND GEARS, INC.


                                 By:      /s/ Jonathan F. Boucher       
                                    --------------------------------
                                      Name: Jonathan F. Boucher
                                      Title:   Vice President



DONALDSON, LUFKIN & JENRETTE
   SECURITIES CORPORATION 
BT SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.

Acting on behalf of
  itself, BT Securities Corporation 
  and Jefferies & Company, Inc.

By:   DONALDSON, LUFKIN & JENRETTE
        SECURITIES CORPORATION

      By:      /s/ Craig Packer               
         ---------------------------
           Name: Craig Packer
           Title:   Vice President




<PAGE>
                                                           EXHIBIT 2.1









                AGREEMENT FOR PURCHASE AND SALE OF ASSETS

                                  among

                    THE NEW IMPERIAL ELECTRIC COMPANY
                      THE NEW SCOTT MOTORS COMPANY,
                           NEW GEAR RESEARCH,
                         MOTORS AND GEARS, INC.
                                   and
                    MOTORS AND GEARS INDUSTRIES, INC.


                                   and

                     THE IMPERIAL ELECTRIC COMPANY,
                      THE SCOTT MOTORS COMPANY, and
                           GEAR RESEARCH, INC.


<PAGE>

                            TABLE OF CONTENTS

                                                                    Page
                                                                    ----

ARTICLE I    PURCHASE AND SALE; PRICE................................  1
      1.01   Definitions.............................................  1
      1.02   Purchase and Sale.......................................  3
      1.03   Purchase Price..........................................  3
      1.04   Post Closing Adjustments................................  4
      1.05   Assumed Liabilities.....................................  4
      1.06   Purchase Price Allocation...............................  4
      1.07   Product Claims and Returns..............................  4

ARTICLE II   REPRESENTATIONS AND WARRANTIES OF SELLERS...............  4
      2.01   Corporate Organization, etc.............................  5
      2.02   Capital Stock; Options..................................  5
      2.03   Subsidiaries............................................  5
      2.04   Authorization, etc......................................  5
      2.05   No Violation............................................  5
      2.06   Governmental Authorities................................  5
      2.07   Disclosure..............................................  6
      2.08   Title and Related Matters...............................  6

ARTICLE III  REPRESENTATIONS AND WARRANTIES OF PURCHASER.............  6
      3.01   Corporate Organization, etc.............................  6
      3.02   Capitalization..........................................  6
      3.03   Authorization, etc......................................  6
      3.04   No Violation............................................  6
      3.05   Governmental Authorities................................  7

ARTICLE IV   COVENANTS OF THE SELLERS................................  7
      4.01   Regular Course of Business..............................  7
      4.02   Amendments..............................................  7
      4.03   Capital Changes.........................................  7
      4.04   Dividends; Bonuses......................................  7
      4.05   Capital and Other Expenditures..........................  7
      4.06   Borrowing...............................................  8
      4.07   Other Commitments.......................................  8
      4.08   Full Access and Disclosure..............................  8
      4.09   Consents................................................  8
      4.10   Breach of Agreement.....................................  8
      4.11   Further Assurances......................................  8
      4.12   Fulfillment of Conditions...............................  8

ARTICLE V    COVENANTS OF PURCHASER..................................  9
      5.01   Confidentiality.........................................  9
      5.02   Books and Records.......................................  9

ARTICLE VI   OTHER AGREEMENTS........................................  9
      6.01   Agreement to Defend.....................................  9
      6.02   Consultants, Brokers and Finders........................  9
      6.03   Assumption Agreement.................................... 10
      6.04   Apportionment of Taxes.................................. 10
      6.05   Contingent Earnout Agreement............................ 10

ARTICLE VII  CONDITIONS TO THE OBLIGATIONS OF PURCHASER.............. 11
      7.01   Representations and Warranties; Performance............. 11
      7.02   Consents and Approvals.................................. 11
      7.03   Opinion of Sellers' Counsel............................. 11
      7.04   No Adverse Change....................................... 11
      7.05   No Proceeding or Litigation............................. 11
      7.06   Other Documents......................................... 11
      7.07   Other Agreements........................................ 12
      7.08   Stockholder and Board of Directors Approval............. 12
      7.09   Cancellation or Conversion of Intercompany Debt......... 12
      7.10   Lender Approvals........................................ 12
      7.11   Fairness Opinion........................................ 12

ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE SELLERS............ 12
      8.01   Representations and Warranties; Performance............. 12
      8.02   No Proceeding or Litigation............................. 12
      8.03   Opinion of Counsel...................................... 13
      8.04   Payment................................................. 13
      8.05   Other Documents......................................... 13
      8.06   Other Agreements........................................ 13
      8.07   Board of Directors Approval............................. 13

ARTICLE IX   CLOSING................................................. 13
      9.01   Closing................................................. 13
      9.02   Deliveries at Closing................................... 13
      9.03   Specific Performance.................................... 14
      9.04   Bulk Sales Waiver....................................... 14
      9.05   Name Change............................................. 14

ARTICLE X    TERMINATION AND ABANDONMENT............................. 15
      10.01  Methods of Termination.................................. 15
      10.02  Procedure Upon Termination.............................. 15

ARTICLE XI   INDEMNIFICATION......................................... 15
      11.01  Indemnification of Sellers.............................. 15
      11.02  Tender of Defense for Damages........................... 17
      11.03  Survival................................................ 17
      11.04  Indemnification Exclusive Remedy........................ 18

ARTICLE XII  MISCELLANEOUS PROVISIONS................................ 19
      12.01  Amendment and Modification.............................. 19
      12.02  Waiver of Compliance; Consents.......................... 19
      12.03  Expenses................................................ 19
      12.04  Investigations; Survival of Warranties.................. 19
      12.05  Notices................................................. 19
      12.06  Definitions............................................. 21
      12.07  Assignment.............................................. 21
      12.08  Governing Law........................................... 21
      12.09  Counterparts............................................ 21
      12.10  Neutral Interpretation.................................. 21
      12.11  Headings................................................ 22
      12.12  Entire Agreement........................................ 22

SCHEDULE OF EXHIBITS................................................. 26
      ............................................................... iv



                AGREEMENT FOR PURCHASE AND SALE OF ASSETS
                -----------------------------------------

      THIS AGREEMENT (this "Agreement"), dated as of the 7th day of 
November, 1996, is made by and among (A) THE NEW IMPERIAL ELECTRIC COMPANY, 
a Delaware corporation (hereinafter "Purchaser"), THE NEW SCOTT MOTORS 
COMPANY, a Delaware corporation ("New Scott"), NEW GEAR RESEARCH, INC., a 
Delaware corporation ("New Gear"), MOTORS AND GEARS, INC., a Delaware 
corporation ("M&G"), and MOTORS AND GEARS INDUSTRIES, INC., a Delaware 
corporation ("Industries") and (B) THE IMPERIAL ELECTRIC COMPANY, an Ohio 
corporation ("Imperial"), THE SCOTT MOTORS COMPANY, a Delaware corporation 
("Scott") and GEAR RESEARCH, INC., a Delaware corporation ("Gear") 
(Imperial, Scott and Gear are hereinafter referred to collectively as 
"Sellers" and individually as "Seller").


                                ARTICLE I
                                ---------
                        PURCHASE AND SALE; PRICE
                        ------------------------

      1.01  Definitions.  For purposes of this Article I and other 
provisions of this Agreement, the following terms shall have the meanings 
set forth below:

      "Assumed Liabilities" means the liabilities and obligations of the 
Sellers described on Exhibit 1.05 hereto other than the Excluded 
Liabilities.

      "Capitalized Lease Amount" means the aggregate amounts paid by 
Sellers on November 6, 1996 in order to pay-off the outstanding balances 
due as of said date with respect to the capitalized leases described on the 
attached Exhibit 1.06.

      "Closing Balance Sheet" means the unaudited consolidated statement of 
financial position of Sellers as at the Closing as prepared by Purchaser in 
accordance with generally accepted accounting principals, consistently 
applied and reviewed by Ernst & Young LLP.

      "Current Operating Liabilities" means the current portion of Sellers' 
trade accounts payable, cash overdrafts, accrued payroll, accrued payroll 
taxes, advance deposits, accrued sales and use taxes, accrued operating 
expenses and other general current operating liabilities other than the 
Excluded Liabilities.

      "Excluded Liabilities" means the liabilities and obligations of the 
Sellers described on Exhibit 1.07 hereto.

      "Intercompany Notes" means the obligations of the Sellers to each 
other and certain other affiliates pursuant to the Intercompany Notes 
described on Exhibit 1.08.

      "NWC" means the difference of (a) the sum of all Sellers' net 
accounts receivable, inventories (net of reserves), prepaid expenses and 
other current assets as reflected in the Closing Balance Sheet, minus (b) 
Current Operating Liabilities as reflected in the Closing Balance Sheet.  
For example purposes, a calculation of NWC as of December 31, 1995, is 
attached as Exhibit 1.01.

      "Purchased Assets" means all of Sellers' assets, properties and 
rights (real and personal, tangible and intangible) owned or used in the 
conduct of their respective businesses as going concerns at December 31, 
1995 and all of Sellers' respective assets, properties and rights (real and 
personal, tangible and intangible) acquired after said date and owned by 
Sellers on the Closing Date except for those assets which have since been 
sold, transferred or disposed of in the ordinary and regular course of 
business (hereinafter collectively referred to as the "Purchased Assets").  
The Purchased Assets shall include, without limitation, the following at 
the Closing Date:

      (a)  Real Property.  All of Sellers' right, title and interest 
(including leasehold interests as tenant, if any) in the lands, buildings 
and any and all improvements thereon.

      (b)  Equipment.  All of Sellers' machinery, equipment, furniture, 
fixtures, telephone numbers (toll-free and others) and other personal 
property and all of Sellers' fixed assets.

      (c)  Cash and Accounts Receivable.  All of Sellers' cash, cash 
equivalents, certificates of deposit, notes receivable (and security 
therefor), accounts receivable and all other receivables of any other kind.

      (d)  Records.  All of Sellers' books, financial and business records, 
insurance policies and any claims and credits thereunder.

      (e)  Inventory.  All inventories and other supplies pertaining to 
Sellers' operations on hand or at third party premises or in transit 
including raw materials, work in process and finished goods, and including 
all rights of the Sellers to warranties received from suppliers.

      (f)  Intellectual Property.  All of Sellers' interests and rights to 
any and all patents, copyrights, trade names, service marks, trademarks, 
product designations, trade secrets, formula, processes, know-how and any 
other intellectual property, all registrations, applications, assignments, 
amendments, research, development, updates and modifications pertaining 
thereto and to all drawings, art work, designs, printing plates, dies, 
molds, samples and the like relating to Sellers' current business or 
business prospects and any corporate name variants thereof.

      (g)  Other Intangibles.  All of Sellers' right, title and interest in 
any claims franchises, licenses, permits, options and any inventions, 
developments and ideas.

      (h)  Contracts, Prepaids, Materials, etc.  Sellers' rights and 
privileges arising from its unshipped orders, prepaid expenses, customer 
contracts, customer lists, outstanding offers, sales records, advertising 
materials, and all agreements for the sale, purchase or lease of goods or 
services, and all other contracts, agreements, assets and things of value 
now beneficially owned or acquired by Sellers at or before the Closing 
Date, whether tangible or intangible, real or personal, inchoate, partial 
or complete, fixed or contingent, of every kind and description and 
wherever situated.

      (i)  Securities.  All of Sellers' securities, stocks and other 
investments or ownership interests in other entities except for Imperial's 
stock ownership in Scott and Gear.

      "Purchase Price" means the total consideration to be paid by 
Purchaser to Sellers at the Closing as described in further detail herein.

      1.02  Purchase and Sale.  In consideration of the Purchase Price, the 
assumption by Purchaser of the Assumed Liabilities of Sellers, the other 
agreements contained herein and subject to the terms and conditions set 
forth in this Agreement, Sellers will sell to Purchaser and Purchaser will 
purchase from Sellers, at the Closing Date (as hereinafter defined), all or 
substantially all of the Purchased Assets.

      1.03  Purchase Price.  Subject to the terms and conditions of this 
Agreement and in reliance on the representations and warranties of the 
Sellers herein contained, and in consideration of the sale, conveyance, 
transfer and delivery of the Purchased Assets (subject to the Assumed 
Liabilities) provided for in this Agreement, Purchaser agrees to pay and 
deliver to the Sellers at the Closing the Purchase Price as follows:

      (a)  $75,000,000 by delivery to the Sellers of a certified or 
cashier's check or funds by wire transfer to Sellers' accounts; 

      (b)  An amount equal to the Capitalized Lease Amount as set forth on 
Exhibit 1.06 hereof; and 

      (c)  The Contingent Earnout Agreement described in Section 6.05 
hereof.

      1.04  Post Closing Adjustments.  Within sixty (60) days after the 
Closing, Sellers and Purchaser (with Sellers paying one-half of the cost 
and expense and Purchaser paying the other one-half of the cost and 
expense) shall cause the Closing Balance Sheet to be completed and copies 
thereof delivered to Purchaser and Sellers.  Within thirty (30) days after 
completion and delivery of the Closing Balance Sheet, the parties shall 
make payment as follows:  (a) if NWC exceeds $11,336,029, then Purchaser 
shall pay an amount in cash equal to such excess to Sellers; (b) if NWC is 
less than $11,336,029, then Sellers shall pay an amount in cash equal to 
such deficiency to Purchaser; and (c) if NWC equals $11,336,029, no 
payments between the parties shall be made.

      1.05  Assumed Liabilities.  The parties have agreed that the amount 
of the Purchase Price was established and agreed upon and will be paid 
based on the agreement of the parties that effective at the Closing, and 
subject to Sections 6.04 and 1.07, Purchaser will assume the Assumed 
Liabilities; provided, however, the Purchaser shall not assume any other 
liabilities, obligations or debts of Sellers, including, but not limited to 
the Excluded Liabilities.  For purposes of this Agreement, the "Assumed 
Liabilities" are limited to those obligations, liabilities and claims 
listed on Exhibit 1.05.

      1.06  Purchase Price Allocation.  The Purchase Price shall be 
allocated to the Purchased Assets and among the Sellers as set forth on 
Exhibit 1.09.

      1.07  Product Claims and Returns.  Purchaser shall be responsible for 
customer claims relating to services rendered by Sellers prior to the 
Closing Date, and customer claims relating to, or returns of, products of 
Sellers sold and shipped by Sellers prior to the Closing Date or in the 
finished goods inventory of Sellers as of the Closing Date.  If a customer 
makes a claim or seeks a return and, in the judgment of Purchaser the claim 
or return is proper, Purchaser shall replace or repair, as the case may be, 
the services rendered or product purchased at Purchaser's then generally 
prevailing prices and labor rates.  Such repairs or returns shall be for 
the account of Purchaser.



                               ARTICLE II
                               ----------
                REPRESENTATIONS AND WARRANTIES OF SELLERS
                -----------------------------------------

      The Sellers, jointly and severally, hereby represent and warrant to 
Purchaser, as follows:

      2.01  Corporate Organization, etc.  Sellers are corporations duly 
organized, validly existing and in good standing under the laws of the 
state of Delaware with respect to Scott and Gear and Ohio with respect to 
Imperial.  Each has all requisite corporate power and authority to carry on 
its business as it is now being conducted and to own, operate and lease its 
properties and assets.  Exhibit 2.01.1 lists each of the states where 
Sellers are qualified as a foreign corporation.  Exhibit 2.01.2 contains 
complete and correct copies of Sellers' (i) articles or certificate of 
incorporation; (ii) bylaws; and (iii) certificates of authority for the 
states listed in Exhibit 2.01.1, each amended to date.

      2.02  Capital Stock; Options.  The authorized capital stock of 
Sellers and the shares of capital stock of Sellers issued and outstanding 
("Shares"), of all classes, are as set forth in Exhibit 2.02.  Sellers have 
no treasury stock except as listed in Exhibit 2.02.  All of the Shares are 
validly issued, fully paid and nonassessable.  There are no issued and 
outstanding options, warrants, rights, securities, contracts, commitments, 
understandings or arrangements by which Sellers are bound to issue any 
additional shares of capital stock or options to purchase shares of capital 
stock.

      2.03  Subsidiaries.  Except as set forth in Exhibit 2.03, Sellers 
have no subsidiaries or investments in any other entity or business 
operation.  

      2.04  Authorization, etc.  The Sellers have full power and authority 
to enter into this Agreement and to carry out the transactions contemplated 
hereby.  This Agreement and all actions contemplated herein which require 
the approval of Sellers' directors or stockholders have duly received the 
required approval and Sellers shall have delivered certified copies of 
their stockholder lists and consents to resolutions which shall have been 
duly adopted by Sellers' directors and stockholders, substantially in the 
form of Exhibit 2.04.

      2.05  No Violation.  Except as set forth in Exhibit 2.05, Sellers are 
not subject to or obligated under any article or certificate of 
incorporation, bylaw, Law (as defined in Section 12.06), or any material 
agreement or instrument, or any material license, franchise or permit, 
which would be breached or violated by Sellers' execution, delivery and 
performance of this Agreement.  Sellers will comply with all applicable 
Laws in connection with their execution, delivery and performance of this 
Agreement and the consummation of the transactions contemplated hereby.

      2.06  Governmental Authorities.  The Sellers are not required to 
submit any notice, report or other filing with, and no consent, approval or 
authorization is required, by any governmental or regulatory authority in 
connection with their execution, delivery, consummation or performance of 
this Agreement or the transactions contemplated hereby.

      2.07  Disclosure.  No representation or warranty made by Sellers in 
this Agreement or in any agreement, instrument, document, certificate, 
statement or letter furnished to Purchaser, by or on behalf of Sellers in 
connection with any of the transactions contemplated by this Agreement, 
when taken as a whole, contains any untrue statement of fact or omits to 
state a material fact necessary in order to make the statements herein or 
therein not materially misleading in light of the circumstances in which 
they are made.

      2.08  Title and Related Matters.  Subject to the Assumed Liabilities, 
Sellers have good and marketable title to the Purchased Assets and Sellers 
will convey the Purchased Assets to Purchaser free and clear of liens and 
encumbrances.


                               ARTICLE III
                               -----------
               REPRESENTATIONS AND WARRANTIES OF PURCHASER
               -------------------------------------------

      Purchaser hereby represents and warrants to the Sellers, as follows:

      3.01  Corporate Organization, etc.  Purchaser is a corporation duly 
organized, validly existing and in good standing under the laws of the 
State of Delaware and will be qualified to do business in Delaware on the 
Closing Date.

      3.02  Capitalization.  As of the date of this Agreement, Purchaser 
has authorized capital stock consisting of 1,000 shares of Common Stock, 
$.01 par value per share.  

      3.03  Authorization, etc.  Purchaser has full corporate power and 
authority to enter into this Agreement and to carry out the transactions 
contemplated hereby.  The Board of Directors of Purchaser has duly 
authorized the execution and delivery of this Agreement and the 
transactions contemplated hereby, and no other corporate proceedings on its 
part are necessary to authorize this Agreement and the transactions 
contemplated hereby.

      3.04  No Violation.  Purchaser is not subject to or obligated under 
any certificate of incorporation, bylaw, Law, or any agreement or 
instrument, or any license, franchise or permit, which would be breached or 
violated by its execution, delivery or performance of this Agreement.  
Purchaser will comply with all Laws in connection with its execution, 
delivery and performance of this Agreement and the transactions 
contemplated hereby.

      3.05  Governmental Authorities.  Purchaser is not required to submit 
any notice, report or other filing with and no consent, approval or 
authorization is required by any governmental or regulatory authority in 
connection with Purchaser's execution or delivery of this Agreement or the 
consummation of the transactions contemplated hereby.



                               ARTICLE IV
                               ----------
                        COVENANTS OF THE SELLERS
                        ------------------------

      Except as otherwise consented to or approved by Purchaser in writing, 
until the Closing, the Sellers covenant and agree as follows:

      4.01  Regular Course of Business.  Sellers will operate their 
businesses in the ordinary course, diligently and in good faith, consistent 
with past management practices.

      4.02  Amendments.  Except as required for the transactions 
contemplated in this Agreement, no change or amendment shall be made in 
Sellers' articles or certificate of incorporation or bylaws.  Sellers will 
not merge into or consolidate with any other corporation or person, or 
change the character of their businesses.

      4.03  Capital Changes.  Sellers will not issue or sell any shares of 
capital stock of any class or issue or sell any securities convertible 
into, or options, warrants to purchase or rights to subscribe to, any 
shares of capital stock of any class.

      4.04  Dividends; Bonuses.  Sellers will not, except in the ordinary 
course of the conduct of business, declare, pay or set aside for payment 
any dividend or other distribution in respect of its capital stock, nor 
shall Sellers, directly or indirectly, redeem, purchase or otherwise 
acquire any shares of capital stock.  Sellers will not, except in the 
ordinary course of the conduct of business, pay, set aside, accrue, agree 
to or become liable in any manner for any bonus, of any nature or type, to 
shareholders or to any employee or officer of Sellers.

      4.05  Capital and Other Expenditures.  Sellers will not, except in 
the ordinary course of the conduct of business, make any capital 
expenditures, or commitments with respect thereto, except as set forth in 
Exhibit 4.05.  Sellers will not prepay any debt or obligation in excess of 
$25,000 (except for prepaying trade accounts payable in the normal course 
of business to take advantage of cash discounts).  
      4.06  Borrowing.  Sellers will not incur, assume or guarantee any 
indebtedness or capital leases.  Sellers will not create or permit to 
become effective any mortgage, pledge, lien, encumbrance or charge of any 
kind upon its assets other than in the ordinary course of business.

      4.07  Other Commitments.  Except in the ordinary course of business 
consistent with past practices, Sellers will not enter into any 
transaction, make any commitment or incur any obligation.

      4.08  Full Access and Disclosure.

      (a)  Sellers shall afford to Purchaser and its counsel, accountants 
and other authorized representatives access during business hours to 
Sellers' plants, properties, books and records in order that Purchaser may 
have full opportunity to make such reasonable investigations as it shall 
desire to make of the affairs of Sellers and Sellers will cause its 
respective officers and employees to furnish such additional financial and 
operating data and other information as Purchaser shall from time to time 
reasonably request.

      (b)  From time to time prior to the Closing Date, Sellers will 
promptly supplement or amend in writing information previously delivered to 
Purchaser with respect to any matter hereafter arising which, if existing 
or occurring at the date of this Agreement, would have been required to be 
set forth or disclosed.

      4.09  Consents.  Sellers will use all necessary means at its disposal 
to obtain on or prior to the Closing Date all consents necessary to the 
consummation of the transactions contemplated hereby.

      4.10  Breach of Agreement.  Sellers will not take any action which, 
if taken prior to the Closing Date, would constitute a breach of this 
Agreement.

      4.11  Further Assurances.  Sellers and Sellers' counsel will furnish 
Purchaser with such other and further documents, certificates, opinions, 
consents and information as Purchaser shall reasonably request to enable 
Purchaser to borrow funds from a bank or other lending entity or 
individual(s) for the acquisition of the Purchased Assets and to evidence 
compliance with the terms and conditions of any credit agreement to be 
entered into between Purchaser and a bank and/or other lending entities or 
individuals.

      4.12  Fulfillment of Conditions.  Sellers will take all commercially 
reasonable steps necessary or desirable, and proceed diligently and in good 
faith, to satisfy each condition to the obligations of Purchaser contained 
in this Agreement and will not take or fail to take any action that could 
reasonably be expected to result in the nonfulfillment of any material 
condition.


                                ARTICLE V
                                ---------
                         COVENANTS OF PURCHASER
                         ----------------------

      Purchaser hereby covenants and agrees with the Sellers that:

      5.01  Confidentiality.  Purchaser will hold in strict confidence and 
not disclose to any other party (other than its counsel and other 
advisors), without the Sellers' prior consent, all information received by 
Purchaser from the Sellers or any of Sellers' officers, directors, 
employees, agents, counsel or auditors in connection with the transactions 
contemplated hereby, except as may be required by applicable law or as 
otherwise contemplated herein.

      5.02  Books and Records.  Purchaser shall preserve and keep Sellers' 
books and records delivered hereunder for a period of three (3) years from 
the date hereof and shall, during such period, make such books and records 
available to former officers and directors of Sellers for any reasonable 
purpose.


                               ARTICLE VI
                               ----------
                            OTHER AGREEMENTS
                            ----------------

      Purchaser and the Sellers covenant and agree that: 

      6.01  Agreement to Defend.  In the event any action, suit, proceeding 
or investigation of the nature specified in Section 7.05 or Section 8.02 
hereof is commenced, whether before or after the Closing Date, all the 
parties hereto agree to cooperate and use their best efforts to defend 
against and respond thereto.

      6.02  Consultants, Brokers and Finders.  The Sellers and Purchaser 
each represent and warrant to the other that they have not retained any 
consultant, broker or finder in connection with the transactions 
contemplated by this Agreement, except Jordan Industries, Inc. and The 
Jordan Company.  The Sellers and Purchaser each hereby agree to indemnify, 
defend and hold the other party and its officers, directors, employees and 
affiliates, harmless from and against any and all claims, liabilities or 
expenses for any brokerage fees, commissions or finders fees due to any 
consultant, broker or finder retained by the indemnifying party.

      6.03  Assumption Agreement.  At the Closing, Purchaser and Sellers 
will enter into the Assumption Agreement, as contemplated by Section 
9.02(e) hereof, in the form set forth in Exhibit 6.03.

      6.04  Apportionment of Taxes.  Sellers shall be liable and indemnify 
Purchaser for all Taxes attributable to the ownership or sale of the 
Purchased Assets or any operations of the Sellers for all taxable periods 
ending on or before the Closing Date ("Pre-Closing Taxes").  Purchaser 
shall be liable and indemnify Sellers for all Taxes attributable to the 
ownership of the Purchased Assets or any operations of Purchaser for all 
taxable periods from and after the Closing Date ("Post-Closing Taxes").  
With respect to Taxes attributable to a taxable period beginning prior to 
and ending after the Closing Date ("Straddle Taxes"), Pre-Closing Taxes 
shall include the portion of such Straddle Taxes attributable to the 
operations of the Sellers and the ownership of the Purchased Assets for the 
period ending immediately prior to the Closing Date, including any income 
or gain arising from the sale of the Purchased Assets and all transactions 
related thereto, and Post-Closing Taxes shall include the Straddle Taxes 
attributable to the ownership of the Purchased Assets for the period 
beginning from and ending after the Closing Date.  Straddle Taxes which are 
real property or personal property Taxes shall be apportioned between 
Pre-Closing Taxes and Post-Closing Taxes based on the number of days in the 
applicable taxable period during which the Purchased Assets were owned by 
the Sellers and Purchaser.  If Purchaser makes a payment of any Pre-Closing 
Taxes, it shall be entitled to prompt reimbursement from Sellers for such 
Taxes upon presentation to Sellers of evidence of such payment.  If Sellers 
pay any Post-Closing Taxes, Sellers shall be entitled to prompt 
reimbursement from Purchaser for such Post-Closing Taxes upon presentation 
to Purchaser of evidence of such payment.  Sellers shall be liable and 
indemnify Purchaser for any sales, use, documentary, recording, stamp, 
transfer or similar Taxes arising from the sale of the Purchased Assets and 
the transactions contemplated by this Agreement.

      6.05  Contingent Earnout Agreement.  Purchaser, New Scott, New Gear, 
M&G, Industries and Imperial agree to enter into the Contingent Earnout 
Agreement as of the Closing, as contemplated by Section 9.02(a) hereof, in 
the form set forth in Exhibit 6.05 ("Contingent Earnout Agreement").


                               ARTICLE VII
                               -----------
               CONDITIONS TO THE OBLIGATIONS OF PURCHASER
               ------------------------------------------

      Each and every obligation of Purchaser under this Agreement shall be 
subject to the satisfaction, on or before the Closing Date, of each of the 
following conditions unless waived in writing by Purchaser:

      7.01  Representations and Warranties; Performance.  The 
representations and warranties made by the Sellers herein shall be true and 
correct on the Closing Date; the Sellers shall have performed and complied 
with all agreements, covenants and conditions required by this Agreement to 
be performed and complied with by them prior to the Closing Date; Sellers 
shall have caused an executive officer of Sellers to have delivered to 
Purchaser certificates, dated the Closing Date, in the form designated 
Exhibit 7.01 hereto, certifying to such matters and the other conditions 
contained in this Article VII.  

      7.02  Consents and Approvals.  All consents from and filings with 
third parties, regulators and governmental agencies required to consummate 
the transactions contemplated hereby, or which, either individually or in 
the aggregate, if not obtained, would cause a material adverse effect on 
Sellers' financial condition or business shall have been obtained and 
delivered to Purchaser.

      7.03  Opinion of Sellers' Counsel.  Purchaser shall have received an 
opinion of Sellers' counsel, dated the Closing Date, substantially in the 
form attached hereto as Exhibit 7.03.

      7.04  No Adverse Change.  There shall have been no material adverse 
change in the business, prospects, financial condition, earnings or 
operations of Sellers' businesses.

      7.05  No Proceeding or Litigation.  No material action, suit or 
proceeding before any court or any governmental or regulatory authority 
shall have been commenced or threatened, and no investigation by any 
governmental or regulatory authority shall have been commenced or 
threatened against the Sellers, Purchaser or any of their respective 
principals, officers or directors seeking to restrain, prevent or change 
the transactions contemplated hereby or questioning the validity or 
legality of any of such transactions or seeking damages in a material 
amount in connection with any of such transactions.

      7.06  Other Documents.  Sellers will furnish Purchaser with such 
other and further documents and certificates of its officers and others as 
Purchaser shall reasonably request to evidence compliance with the 
conditions set forth in this Agreement.

      7.07  Other Agreements.  The Agreements described in Article VI shall 
have been entered into and delivered.

      7.08  Stockholder and Board of Directors Approval.  The Stockholder 
and Board of Directors of Purchaser shall have approved this Agreement, the 
transactions contemplated hereby and the Closing.

      7.09  Cancellation or Conversion of Intercompany Notes.  Purchaser 
shall have received written evidence satisfactory to Purchaser that prior 
to Closing, all of Sellers' obligations pursuant to the Intercompany Notes 
have been cancelled or converted to equity.

      7.10  Lender Approvals.  Sellers shall have obtained all required 
consents, approvals and documents from First National Bank of Boston, JII, 
Inc., and any other lenders necessary to the consummation of the terms of 
this Agreement.

      7.11  Fairness Opinion.  Purchaser shall have received a fairness 
opinion regarding the transactions contemplated hereby from Duff and 
Phelps, LLC.


                              ARTICLE VIII
                              ------------
              CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
              --------------------------------------------

      Each and every obligation of the Sellers under this Agreement shall 
be subject to the satisfaction, on or before the Closing Date, of each of 
the following conditions unless waived in writing by the Sellers:

      8.01  Representations and Warranties; Performance.  The 
representations and warranties made by Purchaser herein shall be true and 
correct on the Closing Date; Purchaser shall have performed and complied 
with all agreements, covenants and conditions required by this Agreement to 
be performed and complied with by it prior to the Closing Date; Purchaser 
shall have delivered to the Sellers a certificate of an executive officer 
dated the Closing Date, certifying to the fulfillment of the conditions set 
forth herein, in the form designated as Exhibit 8.01 and the other 
conditions contained in this Article VIII.  

      8.02  No Proceeding or Litigation.  No material action, suit or 
proceeding before any court or any governmental or regulatory authority 
shall have been commenced, or threatened, and no investigation by any 
governmental or regulatory authority shall have been commenced, or 
threatened, against Sellers, Purchaser or any of their respective 
principals, officers or directors, seeking to restrain, prevent or change 
the transactions contemplated hereby or questioning the validity or 
legality of any of such transactions or seeking damages in a material 
amount in connection with any of such transactions.

      8.03  Opinion of Counsel.  The Sellers shall have received an opinion 
of counsel to Purchaser dated the Closing Date substantially in the form of 
Exhibit 8.03.

      8.04  Payment.  The payment(s) described in Section 1.03 shall have 
been made.

      8.05  Other Documents.  Purchaser will furnish the Sellers with such 
other documents and certificates to evidence compliance with the conditions 
set forth in this Article as may be reasonably requested by the Sellers.

      8.06  Other Agreements.  The agreements described in Article VI shall 
have been entered into and delivered.

      8.07  Board of Directors Approval.  The Board of Directors of Sellers 
shall have approved this Agreement, the fairness opinion being rendered by 
Duff and Phelps and the transactions contemplated hereby and the Closing.


                               ARTICLE IX
                               ----------
                                 CLOSING
                                 -------

      9.01  Closing.  The parties agree that a closing (the "Closing") 
shall be held on November 7, 1996 upon full execution of this Agreement by 
all of the parties hereto (the "Closing Date") at such place or places as 
Purchaser shall designate.

      9.02  Deliveries at Closing.

      (a)  At the Closing, Sellers shall transfer and assign to Purchaser 
all of the Purchased Assets, subject to the Assumed Liabilities, and the 
Purchaser shall deliver to the Sellers cash consideration, the fully 
executed Contingent Earnout Agreement (as set forth in Exhibit 6.05), and 
the other agreements, certifications and other documents required to be 
executed and delivered hereunder at the Closing.

      (b)  At and after the Closing, Sellers shall have the right to review 
and obtain copies of any financial records of Sellers, in the possession of 
Purchaser, necessary for the preparation of Sellers' tax returns, and 
Purchaser agrees to retain such records until the statute of limitations 
pertaining to the final tax returns filed by Sellers expires, and Purchaser 
shall have the right to review and obtain copies of the minute book, stock 
book and stock register of Sellers.

      (c)  At the Closing, Sellers shall deliver to Purchaser, in form 
reasonably satisfactory to counsel for Purchaser, such bills of sale, 
assignments, deeds or other conveyances and all third party consents as may 
be appropriate or necessary to effect the transfer to Purchaser of the 
property and rights as contemplated herein.

      (d)  From time to time after the Closing, at Purchaser's request and 
without further consideration from Purchaser, Sellers shall execute and 
deliver such other instruments of conveyance and transfer and take such 
other action as Purchaser reasonably may require to convey, transfer to and 
vest in Purchaser and to put Purchaser in possession of any assets or 
property to be sold, conveyed, transferred and delivered hereunder.

      (e)  The assumption of the Assumed Liabilities hereunder shall be by 
assumption agreement (as set forth in Exhibit 6.03).  Purchaser and its 
successors and assigns will forever defend, indemnify and hold Sellers 
harmless from any and all of the Assumed Liabilities of Sellers which have 
been assumed by Purchaser at the Closing, or which shall arise from any 
acts or omissions of Purchaser after the Closing.

      9.03  Specific Performance.  The parties agree that if any party 
hereto is obligated to, but nevertheless does not, consummate this 
transaction, then any other party, in addition to all other rights or 
remedies, shall be entitled to the remedy of specific performance mandating 
that the other party or parties consummate this transaction.  In an action 
for specific performance by any party against any other party, the other 
party shall not plead adequacy of damages at law.

      9.04  Bulk Sales Waiver.  Purchaser waives compliance with the 
provisions of the Bulk Sales Act (Article 6 of the Uniform Commercial Code) 
in reliance upon the representations and warranties of Sellers and the 
covenants to perform the obligations hereunder.

      9.05  Name Change.  Within thirty (30) days after the Closing, 
Sellers shall change their respective names to another name different from 
the present names and do such other things as shall be necessary or 
desirable to permit Purchaser to assume and use the names "The Scott Motors 
Company", "Gear Research, Inc." and "The Imperial Electric Company" and use 
all other names utilized by Sellers in operating their respective 
businesses as ongoing concerns.


                                ARTICLE X
                                ---------
                       TERMINATION AND ABANDONMENT
                       ---------------------------

      10.01  Methods of Termination.  This Agreement may be terminated and 
the transactions herein contemplated may be abandoned at any time 
(notwithstanding approval by the Board of Directors of Purchaser):

             (a)    by mutual consent of Purchaser and the Sellers; or

             (b)    by either Purchaser or Sellers, if (i) such party is 
not in breach hereunder and the other party is in breach hereunder, and 
(ii) this Agreement is not consummated on or before the Closing Date, 
including extensions.

      10.02  Procedure Upon Termination.  In the event of termination and 
abandonment pursuant to Section 10.01 hereof, this Agreement shall 
terminate and shall be abandoned, without further action by any of the 
parties hereto.  If this Agreement is terminated as provided herein:

      (a)  each party will upon request redeliver all documents and other 
materials of any other party relating to the transactions contemplated 
hereby, whether so obtained before or after the execution hereof, to the 
party furnishing the same;

      (b)  no party hereto shall have any liability or further obligation 
to any other party to this Agreement; and

      (c)  each party shall bear its own expenses.


                               ARTICLE XI
                               ----------
                             INDEMNIFICATION
                             ---------------

      11.01  Indemnification of Sellers.  The Sellers jointly and severally 
agree to indemnify Purchaser and each of its shareholders, officers and 
directors against any loss, damage, or expense, (including but not limited 
to reasonable attorneys' fees) ("Damages"), incurred or sustained by 
Purchaser or any of its shareholders, officers or directors as a result of 
(a) any breach of any term, provision, covenant or agreement contained in 
this Agreement by the Sellers;  (b) any inaccuracy in any of the 
representations or warranties made by the Sellers in Article II of this 
Agreement; (c) any liability or obligation of Sellers or any stockholder of 
Sellers not expressly assumed in writing by Purchaser; or (d) failure of 
Sellers and Purchaser to comply with the provisions of any applicable 
Uniform Commercial Code provisions or similar laws and/or regulations 
relating to bulk sales.  The indemnification obligations of the Sellers as 
set forth in this Article XI shall be subject to and limited by the 
following:

      (a)  Purchaser shall not be entitled to indemnification pursuant to 
subparts (b), (c) or (d) of Section 11.01 until such time as its aggregate 
right to such indemnification exceeds $500,000 after which Purchaser will 
be entitled to such indemnification in excess of $500,000.   Purchaser 
shall not be entitled to indemnification pursuant to this Section 11.01 for 
amounts which, in the aggregate, exceed a $15,000,000 ceiling, except for 
indemnification claims in respect of a breach by any Seller of its 
representations and warranties set forth in Section 2.01, as to which 
Purchaser shall not be entitled to indemnification pursuant to said Section 
2.01 for amounts which, in the aggregate, exceed the Purchase Price.  
Purchaser releases and discharges the Sellers from any further claims, 
obligations or liabilities for any losses, claims or Damages in excess of 
such ceiling amounts.

      (b)  Purchaser will not be entitled to indemnification pursuant to 
this Article XI:

               (i)  with respect to consequential Damages consisting of 
             business interruption or lost profits, or with respect to 
             punitive Damages;

               (ii) with respect to any claim by or liability to any 
             employee employed by Sellers arising as the result of the 
             termination of such employee's employment with the Sellers or 
             any action by Purchaser subsequent to the Closing Date; 

               (iii) with respect to any obligation, liability or matter, 
             including environmental remediation and clean-up, arising 
             under laws, regulations or statutes that arise or are 
             promulgated or announced after the Closing Date; and

               (iv) any obligation, liability or matter arising out of 
             information Purchaser discloses to any third party which 
             disclosure is not required by applicable environmental laws or 
             for which disclosure would not otherwise be reasonable 
             business practice in accordance with Purchaser's past 
             practices, without consideration of indemnification under this 
             Article XI.

      (c)  Purchaser shall utilize all reasonable efforts, consistent with 
normal practices and policies and good commercial practice, to mitigate 
Damages, including reasonably pursuing other available indemnity rights.

      (d)  Any amounts payable under this Article XI shall be treated by 
Purchaser and Sellers as an adjustment to the Purchase Price, and shall be 
calculated after giving effect to (i) any proceeds received for insurance 
policies covering the Damage, loss, liability or expense that is the 
subject to the claim for indemnity and (ii) the actual recognized tax 
benefit to the indemnitee resulting from the Damage, loss, liability or 
expense that is the subject of the indemnity as long as Purchaser and 
Seller are part of the same consolidated tax group; provided that to the 
extent that any tax benefit is recognized in a tax year other than the year 
in which the indemnity is paid, the indemnitee shall make a payment to the 
indemnitor in the amount of such recognized tax benefit in the year in 
which it is realized.  For purposes hereof, an actual recognized tax 
benefit is an actual reduction in taxes payable or a refund of taxes 
previously paid.  Without limiting clause (ii), the taking of a tax 
deduction in connection with any such Damage, loss, liability or expense 
that is subject to a claim for indemnification shall be at the discretion 
of Purchaser.

      11.02  Tender of Defense for Damages.  Promptly upon receipt by 
Purchaser of a notice of a claim by a third party which may give rise to a 
claim for Damages, Purchaser shall give written notice thereof to Sellers.  
No failure or delay of Purchaser in the performance of the foregoing shall 
relieve, reduce or otherwise affect the Sellers' obligations and liability 
to indemnify Purchaser pursuant to this Agreement, except to the extent 
that such failure or delay shall have adversely affected the Sellers' 
ability to defend against such claim for Damages.  If Sellers give to 
Purchaser an agreement in writing, in a form reasonably satisfactory to 
Purchaser's counsel, to defend such claim for Damages, Sellers may, at 
their sole expense, undertake the defense against such claim and may 
contest or settle such claim on such terms, at such time and in such manner 
as Sellers, in their sole discretion, shall elect and Purchaser shall 
execute such documents and take such steps as may be reasonably necessary 
in the opinion of counsel for Sellers to enable Sellers to conduct the 
defense of such claim for Damages.  If Sellers fail or refuse to defend any 
claim for Damages, Sellers may nevertheless, at their own expense, 
participate in the defense of such claim by Purchaser and in any and all 
settlement negotiations relating thereto.  In any and all events, Sellers 
shall have such access to the records and files of Purchaser relating to 
any claim for Damages as may be reasonably necessary to effectively defend 
or participate in the defense thereof.

      11.03  Survival.  All of the terms and conditions of this Agreement, 
together with the warranties, representations, agreements and covenants 
contained herein or in any instrument or document delivered or to be 
delivered pursuant to this Agreement, shall survive the execution of this 
Agreement and the Closing Date, notwithstanding any investigation 
heretofore or hereafter made by or on behalf of any party hereto; provided, 
however, that (a) the agreements and covenants (other than the 
indemnification provisions set forth in this Article XI, which will survive 
as provided below) therein shall have been performed and satisfied and the 
applicable statute of limitations for breaches or defaults of such 
agreements and covenants has expired; and (b) all representations and 
warranties, and the related agreements of the Sellers to indemnify set 
forth in this Article XI, shall survive and continue for, and all 
indemnification claims with respect thereto shall be made prior to the end 
of two years from the Closing Date, except for representations, warranties 
and related indemnities for which an indemnification claim shall be pending 
as of the end of the applicable period referred to above, in which event 
such indemnities shall survive with respect to such indemnification claim 
until the final disposition thereof, and (c) representations and warranties 
set forth in Section 2.01 and indemnities related thereto, which will 
survive indefinitely.  Thereafter, no party shall be under any obligation 
or liability whatsoever with respect to any such representation, warranty, 
covenant or agreement or any certificate in respect thereto.

      11.04  Indemnification Exclusive Remedy.  The sole recourse and 
exclusive remedy of Purchaser after the Closing Date for the breach of any 
representations and warranties contained in this Agreement, any agreement, 
or instrument contemplated hereby, any document relating hereto or thereto 
contained in any Schedules or Exhibit to this Agreement, or otherwise 
arising from Purchaser's acquisition of the Purchased Assets, shall be to 
assert a claim for indemnification under the indemnification provisions of 
this Article XI.  The only legal action which may be asserted by any party 
hereto against any other party hereto with respect to any matter which is 
the subject of this Article XI shall be a contract action to enforce, or to 
recover Damages for the breach of, this Agreement.  Without limiting the 
generality of the foregoing, no legal action based upon predecessor or 
successor liability, contribution, tort or strict liability may be 
maintained by any party hereto against any other party hereto with respect 
to any matter that is the subject of this Article XI.


                               ARTICLE XII
                               -----------
                        MISCELLANEOUS PROVISIONS
                        ------------------------

      12.01  Amendment and Modification.  Subject to applicable law, this 
Agreement may be amended, modified and supplemented only by written 
agreement of the Sellers and Purchaser.

      12.02  Waiver of Compliance; Consents.  Any failure of the Sellers on 
the one hand, or Purchaser on the other hand, to comply with any 
obligation, covenant, agreement or condition herein may be waived in 
writing by Purchaser or the Sellers, respectively, but such waiver or 
failure to insist upon strict compliance with such obligation, covenant, 
agreement or condition shall not operate as a waiver of, or estoppel with 
respect to, any subsequent or other failure.  Whenever this Agreement 
requires or permits consent by or on behalf of any party hereto, such 
consent shall be given in writing in a manner consistent with the 
requirements for a waiver of compliance as set forth in this Section 12.02.

      12.03  Expenses.  Each party will pay its own legal, accounting and 
other expenses incurred by such party or on its behalf in connection with 
this Agreement and the transactions contemplated herein.  If Sellers shall 
at any time pay any expenses incurred in connection with this Agreement or 
any part thereof or any of the proceedings and transactions contemplated 
hereunder including, without limitation, any legal, accounting, printing, 
filing or other costs, then the Purchase Price shall be reduced by an equal 
amount.

      12.04  Investigations; Survival of Warranties.  The respective 
representations and warranties of the Sellers and Purchaser contained 
herein or in any certificates or other documents delivered prior to or at 
the Closing are true, accurate and correct and each and every such 
representation and warranty shall survive the Closing Date.

      12.05  Notices.  Any notice, request, consent or communication 
(collectively a "Notice") under this Agreement shall be effective only if 
it is in writing and (i) personally delivered, (ii) sent by certified or 
registered mail, return receipt requested, postage prepaid, (iii) sent by a 
nationally recognized overnight delivery service, with delivery confirmed, 
or (iv) telexed or telecopied, with receipt confirmed, addressed as 
follows:

             (a)  If to the Purchaser to:

               The New Imperial Electric Company
               Attn:  Thomas H. Quinn
               ArborLake Centre, Suite 550
               1751 Lake Cook Road
               Deerfield, Illinois 60015
               Telephone:  (708) 945-5591
               Telecopier:  (708) 945-5698

in each case with a copy to:

               Mayer, Brown & Platt
               Attn:  James B. Carlson, Esq.
               1675 Broadway, Suite 1900
               New York, New York 10019
               Telephone:  (212) 506-2515
               Telecopier:  (212) 262-1910

or to such other person or address as Purchaser shall furnish to Sellers in 
writing.

             (b)  If to Sellers to:

               The Imperial Electric
               Company, The Scott Motors
               Company and Gear Research, Inc.
               Attention: Gordon Nelson
               ArborLake Centre, Suite 550
               1751 Lake Cook Road
               Deerfield, Illinois 60015
               Telephone:  (708) 945-5591
               Telecopier:  (708) 945-5698

with a copy to:

               G. Robert Fisher, Esq.
               Steven L. Rist, Esq.
               Bryan Cave LLP
               One Kansas City Place
               1200 Main, Suite 3500
               Kansas City, Missouri 64105
               Telephone:  (816) 474-7400
               Telecopier:  (816) 391-7600

or such other persons or addresses as shall be furnished in writing by any 
party to the other party.  A Notice shall be deemed to have been given as 
of the date when (i) personally delivered, (ii) five (5) days after the 
date when deposited with the United States mail properly addressed, (iii) 
when receipt of a Notice sent by an overnight delivery service is confirmed 
by such overnight delivery service, or (iv) when receipt of the telex or 
telecopy is confirmed, as the case may be, unless the sending party has 
actual knowledge that a Notice was not received by the intended recipient.

      12.06  Definitions.  For the purpose of this Agreement, "Laws" shall 
include, without limitation, all foreign, federal, state and local laws, 
statutes, rules, regulations, codes, ordinances, plans, orders, judicial 
decrees, writs, injunctions, notices, decisions or demand letters issued, 
entered or promulgated pursuant to any foreign, federal, state or local 
law.  For the purpose of this Agreement, "generally accepted accounting 
principles" shall mean such principles, applied on a consistent basis, as 
set forth in Opinions of the Accounting Principles Board of the American 
Institute of Certified Public Accountants and/or in statements of the 
Financial Accounting Standards Board which are applicable in the 
circumstances as of the date in question, and the requirement that such 
principles be applied on a "consistent basis" means that accounting 
principles observed in the current period are comparable in all material 
respects to those applied in the preceding periods, except as change is 
permitted or required under or pursuant to such accounting principles.

      12.07  Assignment.  This Agreement and all of the provisions hereof 
shall be binding upon and inure to the benefit of the parties hereto and 
their respective heirs, successors and permitted assigns.  Neither this 
Agreement nor any of the rights, interests or obligations hereunder shall 
be assigned by either party without the prior written consent of the other 
party, provided, however, that (i) Sellers hereby consent to the 
Purchaser's assignment of this Agreement and the right to enforce the terms 
hereof to any lender who is now, or may in the future be, financing the 
Purchaser's acquisition of the Purchased Assets as contemplated by this 
Agreement or any other lender of Purchaser and (ii) Purchaser hereby 
consents to the Sellers' assignment of this Agreement and the right to 
enforce the terms hereof to JII, Inc., Jordan Industries, Inc. or any 
subsidiary of Jordan Industries, Inc. or any lender of Sellers.

      12.08  Governing Law.  This Agreement shall be governed by the laws 
of the State of Illinois (regardless of the laws that might otherwise 
govern under applicable principles of conflicts of law of the state of 
Illinois) as to all matters including, but not limited to, matters of 
validity, construction, effect, performance and remedies.

      12.09  Counterparts.  This Agreement may be executed in two or more 
counterparts, each of which shall be deemed an original, but all of which 
together shall constitute one and the same instrument.

      12.10  Neutral Interpretation.  This Agreement constitutes the 
product of the negotiation of the parties hereto and the enforcement hereof 
shall be interpreted in a neutral manner, and not more strongly for or 
against any party based upon the source of the draftsmanship hereof.

      12.11  Headings.  The article and section headings contained in this 
Agreement are for reference purposes only and shall not affect in any way 
the meaning or interpretation of this Agreement.

      12.12  Entire Agreement.  This Agreement, which term as used 
throughout includes the Exhibits hereto, embodies the entire agreement and 
understanding of the parties hereto in respect of the subject matter 
contained herein.  There are no restrictions, promises, representations, 
warranties, covenants or undertakings other than those expressly set forth 
or referred to herein.  This Agreement supersedes all prior agreements and 
understandings between the parties with respect to such subject matter.

      IN WITNESS WHEREOF, the parties hereto have entered into this 
Agreement as of the date first hereinabove set forth.

                                 PURCHASER:

                                 THE NEW IMPERIAL ELECTRIC COMPANY


                                 By:   /s/ Jonathan F. Boucher       
                                    -------------------------------
                                 Printed Name: Jonathan F. Boucher 
                                 Title: Vice President                


                                 NEW SCOTT:

                                 THE NEW SCOTT MOTORS COMPANY


                                 By:   /s/ Jonathan F. Boucher      
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher  
                                 Title: Vice President              



                                 NEW GEAR:

                                 NEW GEAR RESEARCH, INC.


                                 By:   /s/ Jonathan F. Boucher      
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher  
                                 Title: Vice President              



                                 M&G:

                                 MOTORS AND GEARS, INC.


                                 By:   /s/ Jonathan F. Boucher      
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher  
                                 Title: Vice President              


                                 INDUSTRIES:

                                 MOTORS AND GEARS INDUSTRIES, INC.


                                 By:   /s/ Jonathan F. Boucher      
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher  
                                 Title: Vice President              



                                 SELLER:

                                 THE IMPERIAL ELECTRIC COMPANY


                                 By:   /s/ Jonathan F. Boucher       
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher  
                                 Title: Vice President              





                                 SELLER:

                                 THE SCOTT MOTORS COMPANY


                                 By:   /s/ Jonathan F. Boucher       
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher   
                                 Title: Vice President               



                                 SELLER:

                                 GEAR RESEARCH, INC.


                                 By:   /s/ Jonathan F. Boucher       
                                    ------------------------------
                                 Printed Name: Jonathan F. Boucher  

                                 Title: Vice President              



                         SCHEDULE OF EXHIBITS TO
             AGREEMENT FOR PURCHASE AND SALE OF ASSETS AMONG
                   THE NEW IMPERIAL ELECTRIC COMPANY,
                      THE NEW SCOTT MOTORS COMPANY,
                           NEW GEAR RESEARCH,
                         MOTORS AND GEARS, INC.
                                   and
                    MOTORS AND GEARS INDUSTRIES, INC.
                                   AND
                     THE IMPERIAL ELECTRIC COMPANY,
                      THE SCOTT MOTORS COMPANY, and
                           GEAR RESEARCH, INC.




Exhibits                    Title
- ---------                   -----

Exhibit 1.01        Calculation of NWC

Exhibit 1.05        Assumed Liabilities

Exhibit 1.06        Capitalized Lease Amount

Exhibit 1.07        Excluded Liabilities

Exhibit 1.08        Intercompany Debt

Exhibit 1.09        Allocation

Exhibit 2.01.1      Foreign Qualifications

Exhibit 2.01.2      Certificate or Articles of Incorporation, Bylaws and 
                    Certificates of Authority 

Exhibit 2.02        Schedule of Authorized, Issued and Outstanding Capital 
                    Stock

Exhibit 2.03        Schedule of Subsidiaries and Affiliates

Exhibit 2.04        Authorizing Resolutions

Exhibit 2.05        Restrictions on Ability to Perform

Exhibit 6.03        Assumption Agreement

Exhibit 6.05        Contingent Earnout Agreement

Exhibit 7.01        Certificate of Fulfillment of Conditions by Sellers

Exhibit 7.03        Opinion of the Sellers' Counsel

Exhibit 8.01        Certificate of Fulfillment of Conditions by Purchaser

Exhibit 8.03        Opinion of Purchaser's Counsel



<PAGE>
                                                         EXHIBIT 2.2




                      CONTINGENT EARNOUT AGREEMENT






                      CONTINGENT EARNOUT AGREEMENT
                      ----------------------------

      THIS CONTINGENT EARNOUT AGREEMENT ("Agreement"), dated as of November 
7, 1996, by and among (A) MOTORS AND GEARS, INC., a Delaware corporation 
("M&G"), MOTORS AND GEARS INDUSTRIES, INC., a Delaware corporation 
("INDUSTRIES"), THE NEW IMPERIAL ELECTRIC COMPANY, a Delaware corporation 
("New Imperial"), THE NEW SCOTT MOTORS COMPANY, a Delaware corporation and 
a direct, wholly-owned subsidiary of New Imperial ("New Scott"), and NEW 
GEAR RESEARCH, INC., a Delaware corporation and a direct, wholly-owned 
subsidiary of New Imperial ("New Gear"), and (B) THE IMPERIAL ELECTRIC 
COMPANY, an Ohio corporation ("Old Imperial"), SCOTT MOTORS COMPANY, a 
Delaware corporation ("Old Scott"), and GEAR RESEARCH, INC., a Delaware 
corporation ("Old Gear").

                                Recitals
                                --------

      (a)  New Imperial, Old Imperial, Old Scott and Old Gear are parties 
to a certain Agreement for Purchase and Sale of Assets dated November 7, 
1996 (the "Purchase Agreement").  

      (b)  The Companies (defined below) have agreed to enter into this 
Agreement as partial payment of the "Purchase Price" (defined in the 
Purchase Agreement) in order to induce Old Imperial to (i) enter into the 
Purchase Agreement and to cause Old Scott and Old Gear to do the same, and 
(ii) consummate and cause Old Scott and Old Gear to consummate the 
transactions contemplated therein.

      In consideration of the mutual covenants and agreements herein set 
forth, and the special benefits described herein and in the Purchase 
Agreement accruing to the Companies on the one hand and Old Imperial on the 
other, the parties hereto agree as follows:

                               AGREEMENTS:
                               ----------

      1.  Definitions
          -----------

      "Closing Date" means the date of execution of this Agreement by the 
parties hereto.

      "Cash Flow" for purposes of this Agreement shall have the same 
meaning as set forth in the Indenture except that in calculating Cash Flow 
for purposes hereof (i) neither subpart (l) of said defined term in the 
Indenture relating to net losses in respect of discontinued operations nor 
subpart (k) of said defined term in the Indenture relating to the net loss 
of any person, other than those of a Restricted Subsidiary shall apply to 
said definition for purposes hereof, and (ii) in determining Consolidated 
Net income (as defined in the Indenture) for purposes of calculating Cash 
Flow herein, Restructuring Charges (defined in the Indenture) shall be 
included in Consolidated Net Income notwithstanding subpart (E) of said 
definition of Consolidated Net Income in the Indenture which excludes 
Restructuring Charges and Consolidated Net Income shall be increased by an 
amount equal to any fees charged in respect of the JII Services Agreement 
provided said fees would otherwise reduce Consolidated Net Income.  Cash 
Flow under this Agreement shall be determined from audited financial 
statements prepared by independent public accountants excluding any impact 
of Post Closing Acquired Companies.

      "Companies" means M&G, Industries, New Imperial, New Scott and New 
Gear.

      "Cumulative Cash Flow" means the sum of Cash Flow of Old Imperial, 
Old Scott and Old Gear for the period commencing as of January 1, 1996 
until (but excluding) the Closing Date plus the aggregate Cash Flow of New 
Imperial, New Scott and New Gear for the period commencing as of the 
Closing Date through the close of business as of December 31, 2000 (the 
"Expiration Date").

      "Financing Agreements" means any senior or subordinated debt, 
preferred stock, common or other capital stock, lease or other financing 
agreements, instruments and documents, including, without limitation, any 
agreements or instruments relating to any Indebtedness, binding upon M&G, 
Industries,  New Imperial or any of their direct or indirect subsidiaries, 
or their respective properties and assets, from time to time in effect.

      "Indebtedness" means any indebtedness, whether or not contingent, in 
respect of borrowed money or evidenced by bonds, notes, debentures or 
similar instruments or letters of credit (or reimbursement agreements in 
respect thereof) or representing the deferred and unpaid balance of the 
purchase price of any property (including pursuant to capital leases), 
except any such balance that constitutes an accrued expense or a trade 
payable, and any financial hedging obligations, if and to the extent such 
indebtedness (other than a financial hedging obligation) would appear as a 
liability upon a balance sheet prepared on a consolidated basis in 
accordance with generally accepted accounting principles, and also 
includes, to the extent not otherwise included, the guarantee of items that 
would be included within this definition.

      "Indenture" means the Indenture dated as of November 7, 1996 between 
M&G and Fleet National Bank, as trustee regarding the 10 3/4% Series A 
Senior Notes due 2006 of M&G in the aggregate principal amount of 
$170,000,000.

      "Post Closing Acquired Company" means any business, the assets or 
capital stock of which are acquired after the Closing Date by New Imperial, 
New Scott or New Gear.

      "Payment Amount" means an amount equal to one-half of Cumulative Cash 
Flow in excess of $50,000,000.

      "Payment Date" means the date following the Expiration Date upon 
which the calculation of the Payment Amount is finally determined in 
accordance with the provisions hereof; provided, however, that in all 
events the Payment Date shall occur prior to December 31, 2001.  

      "Stop Payment Event" means the occurrence and existence as of the 
applicable date of any violation or breach of any Financing Agreement after 
the Closing Date if the violation or breach prohibits payment of the 
Payment Amount.

      2.  Calculation of Payment Amount.  Following the Expiration Date the 
parties shall calculate the Payment Amount based upon audited Financial 
Statements which shall be reviewed by independent public accountants.  Any 
disputes regarding the calculation of Cumulative Cash Flow or the Payment 
Amount and the preparation of audited financial statements in connection 
with said calculations shall be resolved in accordance with Sections 14 and 
15 hereof.  The parties acknowledge and agree that the Payment Amount is 
based on a cumulative test of Cash Flow over a five-year period ending on 
the Expiration Date.  Accordingly, no determination of amounts due Old 
Imperial hereunder can be made until after the Expiration Date and, 
therefore, the Companies shall have no payment obligations hereunder until 
the Payment Date.

      3.  Payment.  If there is no Stop Payment Event as of the Payment 
Date, the Companies hereby jointly and severally agree to pay Old Imperial 
the Payment Amount on the Payment Date.  If a Stop Payment Event exists on 
the Payment Date, the Companies jointly and severally agree to pay Old 
Imperial the Payment Amount immediately upon termination or elimination of 
the Stop Payment Event. 

      4.  Not A Stock Equivalent.  The Companies and Old Imperial agree and 
acknowledge that this Agreement does not confer upon Old Imperial any 
rights or interests as a stockholder of any of the Companies and that no 
fiduciary duties are owed by the Companies or their respective directors, 
officers and stockholders in respect of this Agreement.  Old Imperial 
further agrees and acknowledges that the Companies are not, and shall not 
be, restricted or limited in any manner from engaging in transactions that 
may have dilutive effects, entering into or modifying any Financing 
Agreements that restrict or limit payments hereunder, incurring 
Indebtedness, engaging in transactions involving the stock or assets of the 
Companies, acquiring business interests, completing capital expenditures, 
declaring dividends, allocating amounts, determining rates or otherwise 
making determinations in respect of Indebtedness or Cash Flow, making other 
adjustments pursuant to this Agreement, or otherwise taking actions that 
may affect the Payment Amount.  The determination of Post Closing Acquired 
Companies and the amounts thereof and income derived therefrom and expenses 
related thereto, shall be determined by the appropriate Board of Directors 
of the Companies.  Nothing in this Agreement shall be construed to create a 
right for the benefit of Old Imperial to participate in or receive the 
benefit of any related or unrelated business opportunities evaluated or 
pursued by any of the Companies other than as provided specifically herein. 

      5.  Successors and Assigns.  This Agreement shall be binding on Old 
Imperial and the Companies and their respective successors and assigns. 

      6.  Counterparts.  This Agreement may be executed in two or more 
counterparts, any one of which shall be deemed an original without 
reference to the others.

      7.  Amendments.  This Agreement may not be amended or modified, and 
no waivers hereunder may be granted, except with the approval of each of 
the parties hereto.  

      8.  Notice.  Any notice ("Notice"), request, demand or other 
communication required or permitted to be given under this Agreement shall 
be given in writing and if delivered personally, or sent by certified or 
registered mail, return receipt requested, as follows (or to such other 
addressee or address as shall be set forth in a notice given in the same 
manner):

           a.  If to the Companies to:

               Motors and Gears, Inc.
               Attn:  Thomas H. Quinn
               ArborLake Centre, Suite 550
               1751 Lake Cook Road
               Deerfield, Illinois 60015
               Telephone:  (708) 945-5591
               Telecopier:  (708) 945-5698

in each case with a copy to:

               Mayer, Brown & Platt
               Attn:  James B. Carlson, Esq.
               1675 Broadway, Suite 1900
               New York, New York 10019
               Telephone:  (212) 506-2515
               Telecopier:  (212) 262-1910

or to such other person or address as the Companies shall furnish to Old 
Imperial in writing.

           b.  If to Old Imperial to:

               The Imperial Electric Company
               Attn:  Gordon Nelson
               ArborLake Centre, Suite 550
               1751 Lake Cook Road
               Deerfield, Illinois 60015
               Telephone:  (708) 945-5591
               Telecopier:  (708) 945-5698

with a copy to:

               G. Robert Fisher, Esq.
               Steven L. Rist, Esq.
               Bryan Cave LLP
               One Kansas City Place
               1200 Main, Suite 3500
               Kansas City, Missouri 64105
               Telephone:  (816) 474-7400
               Telecopier:  (816) 391-7600

Any such notices shall be deemed to be given on the date personally 
delivered or such return receipt is issued.

      9.  Old Imperial's Representations.  Old Imperial hereby warrants and 
represents to the Companies that Old Imperial has carefully reviewed and 
considered the provisions of this Agreement, and in connection therewith, 
has consulted with such advisors as it considers appropriate, and that Old 
Imperial is not subject to any covenants, agreements or restrictions, 
including without limitation any covenants, agreements or restrictions 
which would be breached or violated by Old Imperial's execution of this 
Agreement.

      10.  Obligations of the Companies.  Old Imperial agrees and 
acknowledges that this Agreement and the obligations of the Companies 
hereunder are solely obligations and liabilities of the Companies.  None of 
the Companies' directors, officers, employees, stockholders and affiliates 
or any other persons shall be obligated or liable in respect of this 
Agreement, and Old Imperial hereby releases them from any such obligation 
or liability.

      11.  Entire Agreement.  This Agreement reflects the entire agreement 
among the parties relating to the subject matter of this Agreement, and 
supersedes and terminates all prior agreements, obligations, commitments or 
understandings relating to such subject matter.

      12.  Severability.  If for any reason, any provision hereof shall be 
determined to be invalid or unenforceable, the validity and effect of the 
other provisions hereof shall not be affected thereby.  Whenever possible, 
each provision of this Agreement shall be interpreted in such a manner as 
to be effective and valid under applicable law, but if any provision of 
this Agreement is held to be invalid, illegal or unenforceable in any 
respect under any applicable law or rule in any jurisdiction, such 
invalidity, illegality or unenforceability shall not affect any other 
provision or any other jurisdiction, but this Agreement shall be reformed, 
construed and enforced in such jurisdiction as if such invalid, illegal or 
unenforceable provision had never been contained herein.  If any court 
determines that any provision hereof is unenforceable because of the power 
to reduce the scope or duration of such provision, as the case may be and, 
in its reduced form, such provision shall then be enforceable.

      13.  Waiver of Breach; Enforcement.  The waiver by the Companies or 
Old Imperial of a breach of any provision of this Agreement by the other 
party shall not operate or be construed as a waiver of any other breach of 
such other party.  Each of the parties (and third party beneficiaries) to 
this Agreement shall be entitled to enforce its rights under this breach of 
any provision of this Agreement and to exercise all other rights existing 
in its favor. 

      14.  Litigation.  THIS AGREEMENT SHALL BE GOVERNED BY CONSTRUED, 
APPLIED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF 
ILLINOIS, UNITED STATES OF AMERICA, AND NO DOCTRINE OF CHOICE OF LAW SHALL 
BE USED TO APPLY ANY LAW OTHER THAN THAT OF ILLINOIS, AND NO DEFENSE, 
COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER 
STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR 
REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN 
JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON.  SUBJECT TO SECTION 15, 
THE PARTIES AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT 
OF THIS AGREEMENT MAY BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED 
STATES DISTRICT COURTS IN CHICAGO, ILLINOIS.  THE PARTIES CONSENT TO SUCH 
JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY 
OBJECTIONS BASED UPON FORUM NON CONVENIENS.  THE CHOICE OF FORUM SET FORTH 
IN THIS SECTION 14 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY 
ACTION UNDER THIS AGREEMENT IN ANY OTHER JURISDICTION.

      15.  Arbitration.  THE COMPANIES AND OLD IMPERIAL HEREBY WAIVE AND 
SHALL NOT SEEK JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM, 
DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS 
AGREEMENT.  THE PARTIES AGREE THAT ANY SUCH DISPUTE BETWEEN OR AMONG THE 
PARTIES TO THIS AGREEMENT RELATING TO OR IN RESPECT OF THIS AGREEMENT, ITS 
NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF 
CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT, SHALL 
BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO ARBITRATION IN 
ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN 
ARBITRATION ASSOCIATION.  SUCH ARBITRATION SHALL TAKE PLACE IN CHICAGO, 
ILLINOIS, UNITED STATES OF AMERICA, AND SHALL BE SUBJECT TO THE SUBSTANTIVE 
LAW OF THE STATE OF ILLINOIS.  DECISIONS PURSUANT TO SUCH ARBITRATION SHALL 
BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES.  UPON THE CONCLUSION OF 
ARBITRATION, SELLER, OR THE COMPANIES MAY APPLY TO ANY COURT OF THE TYPE 
DESCRIBED IN SECTION 14 TO ENFORCE THE DECISION PURSUANT TO SUCH 
ARBITRATION.

      IN WITNESS WHEREOF, the parties hereto have caused this Contingent 
Earnout Agreement to be duly executed as of the day and year first above 
written.

                            OLD IMPERIAL

                            THE IMPERIAL ELECTRIC COMPANY:



                            By: /s/ Jonathan F. Boucher           
                               ------------------------
                            Its:  Vice President                      


                            THE COMPANIES

                            MOTORS AND GEARS, INC.


                            By: /s/ Jonathan F. Boucher           
                               ------------------------
                            Its:  Vice President                       


                            MOTORS AND GEARS INDUSTRIES, INC.


                            By: /s/ Jonathan F. Boucher           
                               ------------------------
                            Its:  Vice President                      


                            THE NEW IMPERIAL ELECTRIC COMPANY


                            By: /s/ Jonathan F. Boucher                 
                               ------------------------
                            Its:  Vice President                        


                            THE NEW SCOTT MOTORS COMPANY


                            By: /s/ Jonathan F. Boucher             
                               ------------------------
                            Its:  Vice President                      


                            NEW GEAR RESEARCH, INC.


                            By: /s/ Jonathan F. Boucher             
                               ------------------------
                            Its:  Vice President                      


                            SCOTT MOTORS COMPANY


                            By: /s/ Jonathan F. Boucher            
                               ------------------------
                            Its:  Vice President                    


                            GEAR RESEARCH, INC.


                            By: /s/ Jonathan F. Boucher            
                               ------------------------
                            Its:  Vice President                    



<PAGE>
                                                              EXHIBIT 10.1







==============================================================================

                         MOTORS AND GEARS, INC.



                ________________________________________


                              $170,000,000
                   10 % SERIES A SENIOR NOTES DUE 2006

                ________________________________________


                           ___________________

                      REGISTRATION RIGHTS AGREEMENT

                      DATED AS OF NOVEMBER 7, 1996

                           ___________________










Donaldson, Lufkin & Jenrette      BT Securities     Jefferies & Company, Inc. 
  Securities Corporation          Corporation


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      This Registration Rights Agreement (this "Agreement") is made and 
entered into as of November  7, 1996, by and among Motors and Gears, Inc., 
a Delaware corporation (the "Company"), and Donaldson, Lufkin & Jenrette 
Securities Corporation, BT Securities Corporation and Jefferies & Company, 
Inc. (each a "Purchaser" and, collectively, the "Purchasers"), each of 
which has agreed to purchase the Company's 10 % Series A Senior Notes due 
2006 (the "Series A Senior Notes") pursuant to the Purchase Agreement (as 
defined below).

      This Agreement is made pursuant to the Purchase Agreement, dated 
November 1, 1996 (the "Purchase Agreement"), by and between the Company and 
the Purchasers.  In order to induce the Purchasers to purchase the Series A 
Senior Notes, the Company has agreed to provide the registration rights set 
forth in this Agreement.  The execution and delivery of this Agreement is a 
condition to the obligations of the Purchasers set forth in the Purchase 
Agreement.

      The parties hereby agree as follows:

1.    DEFINITIONS

      As used in this Agreement, the following capitalized terms shall have 
the following meanings:

      Act:  The Securities Act of 1933, as amended.

      Business Day:  Any day except a Saturday, Sunday or other day in the 
City of New York, or in the city of the corporate trust office of the 
Trustee, on which banks are authorized to close.

      Broker-Dealer:  Any broker or dealer registered under the Exchange 
Act.

      Broker-Dealer Transfer Restricted Senior Notes:  Series B Senior 
Notes that are acquired by a Broker-Dealer in the Exchange Offer in 
exchange for Series A Senior Notes that such Broker-Dealer acquired for its 
own account as a result of market-making activities or other trading 
activities (other than Series A Senior Notes acquired directly from the 
Company or any of its affiliates).

      Closing Date:  The date hereof.

      Commission:  The Securities and Exchange Commission.

      Consummate:  An Exchange Offer shall be deemed "Consummated" for 
purposes of this Agreement upon the occurrence of (a) the filing and 
effectiveness under the Act of the Exchange Offer Registration Statement 
relating to the Series B Senior Notes to be issued in the Exchange Offer, 
(b) the maintenance of such Registration Statement continuously effective 
and the keeping of the Exchange Offer open for a period not less than the 
minimum period required pursuant to Section 3(b) hereof and (c) the 
delivery by the Company to the Registrar under the Indenture of Series B 
Senior Notes in the same aggregate principal amount as the aggregate 
principal amount of Series A Senior Notes tendered by Holders thereof 
pursuant to the Exchange Offer.

      Damages Payment Date:  With respect to the Series A Senior Notes, 
each Interest Payment Date.

      Effectiveness Target Date:  As defined in Section 5.

      Exchange Act:  The Securities Exchange Act of 1934, as amended. 

      Exchange Offer:  The registration by the Company under the Act of the 
Series B Senior Notes pursuant to the Exchange Offer Registration Statement 
pursuant to which the Company shall offer the Holders of all outstanding 
Transfer Restricted Senior Notes the opportunity to exchange all such 
outstanding Transfer Restricted Senior Notes for Series B Senior Notes in 
an aggregate principal amount equal to the aggregate principal amount of 
the Transfer Restricted Senior Notes tendered in such exchange offer by 
such Holders.

      Exchange Offer Registration Statement:  The Registration Statement 
relating to the Exchange Offer, including the related Prospectus.

      Exempt Resales:  The transactions in which the Initial Purchasers 
propose to sell the Series A Senior Notes to certain "qualified 
institutional buyers," as such term is defined in Rule 144A under the Act, 
and to certain "accredited investors," as such term is defined in Rule 
501(a)(1), (2), (3), (5) and (7) of Regulation D under the Act.

      Holders:  As defined in Section 2 hereof.

      Indemnified Holder:  As defined in Section 8(a) hereof.

      Indenture:  The Indenture, dated the Closing Date, among the Company 
and Fleet National Bank, as trustee (the "Trustee"), pursuant to which the 
Senior Notes are to be issued, as such Indenture is amended or supplemented 
from time to time in accordance with the terms thereof.

      Interest Payment Date:  As defined in the Indenture and the Senior 
Notes.

      NASD:  National Association of Securities Dealers, Inc.

      Person:  An individual, partnership, corporation, trust, 
unincorporated organization, or a government or agency or political 
subdivision thereof.

      Prospectus:  The prospectus included in a Registration Statement at 
the time such Registration Statement is declared effective, as amended or 
supplemented by any prospectus supplement and by all other amendments 
thereto, including post-effective amendments, and all material incorporated 
by reference into such Prospectus.

      Record Holder:  With respect to any Damages Payment Date, each Person 
who is a Holder of Senior Notes on the record date with respect to the 
Interest Payment Date on which such Damages Payment Date shall occur.

      Registration Default:  As defined in Section 5 hereof.

      Registration Statement:  Any registration statement of the Company 
relating to (a) an offering of Series B Senior Notes pursuant to an 
Exchange Offer or (b) the registration for resale of Transfer Restricted 
Senior Notes pursuant to the Shelf Registration Statement, in each case, 
(i) which is filed pursuant to the provisions of this Agreement and (ii) 
including the Prospectus included therein, all amendments and supplements 
thereto (including post-effective amendments) and all exhibits and material 
incorporated by reference therein.

      Restricted Broker-Dealer:  Any Broker-Dealer which holds 
Broker-Dealer Transfer Restricted Senior Notes.

      Senior Notes:  The Series A Senior Notes and the Series B Senior 
Notes.

      Series B Senior Notes:  The Company's 10 % Series B Senior Notes due 
2006 to be issued pursuant to the Indenture (i) in the Exchange Offer or 
(ii) upon the request of any Holder of Series A Senior Notes covered by a 
Shelf Registration Statement, in exchange for such Series A Senior Notes.

      Shelf Registration Statement:  As defined in Section 4 hereof.

      TIA:  The Trust Indenture Act of 1939 (15 U.S.C. Section 
77aaa-77bbbb) as in effect on the date of the Indenture.

      Transfer Restricted Senior Notes:  Each Senior Note, until the 
earliest to occur of (a) the date on which such Senior Note is exchanged in 
the Exchange Offer and entitled to be resold to the public by the Holder 
thereof without complying with the prospectus delivery requirements of the 
Act, (b) the date on which such Senior Note has been disposed of in 
accordance with a Shelf Registration Statement, (c) the date on which such 
Senior Note is disposed of by a Broker-Dealer pursuant to the "Plan of 
Distribution" contemplated by the Exchange Offer Registration Statement 
(including delivery of the Prospectus contained therein) or (d) the date on 
which such Senior Note is distributed to the public pursuant to Rule 144 
under the Act.

      Underwritten Registration or Underwritten Offering:  A registration 
in which securities of the Company are sold to an underwriter for 
reoffering to the public.

2.    HOLDERS

      A Person is deemed to be a holder of Transfer Restricted Senior Notes 
(each, a "Holder") whenever such Person owns Transfer Restricted Senior 
Notes.

3.    REGISTERED EXCHANGE OFFER

      (a)  Unless the Exchange Offer shall not be permitted by applicable 
federal law (after the procedures set forth in Section 6(a)(i) below have 
been complied with), the Company shall (i) cause to be filed with the 
Commission as soon as practicable after the Closing Date, but in no event 
later than 60 days after the Closing Date, the Exchange Offer Registration 
Statement, (ii) use their best efforts to cause such Exchange Offer 
Registration Statement to become effective at the earliest possible time, 
but in no event later than 120 days after the Closing Date, (iii) in 
connection with the foregoing, (A) file all pre-effective amendments to 
such Exchange Offer Registration Statement as may be necessary in order to 
cause such Exchange Offer Registration Statement to become effective, (B) 
file, if applicable, a post-effective amendment to such Exchange Offer 
Registration Statement pursuant to Rule 430A under the Act and (C) cause 
all necessary filings, if any, in connection with the registration and 
qualification of the Series B Senior Notes to be made under the Blue Sky 
laws of such jurisdictions as are necessary to permit Consummation of the 
Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer 
Registration Statement, commence and Consummate the Exchange Offer.  The 
Exchange Offer shall be on the appropriate form permitting registration of 
the Series B Senior Notes to be offered in exchange for the Series A Senior 
Notes that are Transfer Restricted Senior Notes and to permit sales of 
Broker-Dealer Transfer Restricted Senior Notes by Restricted Broker-Dealers 
as contemplated by Section 3(c) below.

      (b)  The Company shall use its best efforts to cause the Exchange 
Offer Registration Statement to be effective continuously, and shall keep 
the Exchange Offer open, for a period of not less than the minimum period 
required under applicable federal and state securities laws to Consummate 
the Exchange Offer; provided, however, that in no event shall such period 
be less than 20 Business Days.  The Company shall cause the Exchange Offer 
to comply with all applicable federal and state securities laws.  No 
securities other than the Senior Notes shall be included in the Exchange 
Offer Registration Statement.  The Company shall use its best efforts to 
cause the Exchange Offer to be Consummated on the earliest practicable date 
after the Exchange Offer Registration Statement has become effective, but 
in no event later than 30 Business Days thereafter.

      (c)  The Company shall include a "Plan of Distribution" section in 
the Prospectus contained in the Exchange Offer Registration Statement and 
indicate therein that any Restricted Broker-Dealer who holds Series A 
Senior Notes that are Transfer Restricted Senior Notes and that were 
acquired for the account of such Broker-Dealer as a result of market-making 
activities or other trading activities, may exchange such Series A Senior 
Notes (other than Transfer Restricted Senior Notes acquired directly from 
the Company) pursuant to the Exchange Offer; however, such Broker-Dealer 
may be deemed to be an "underwriter" within the meaning of the Act and 
must, therefore, deliver a prospectus meeting the requirements of the Act 
in connection with its initial sale of each Series B Senior Note received 
by such Broker-Dealer in the Exchange Offer, which prospectus delivery 
requirement may be satisfied by the delivery by such Broker-Dealer of the 
Prospectus contained in the Exchange Offer Registration Statement.  Such 
"Plan of Distribution" section shall also contain all other information 
with respect to such sales of Broker-Dealer Transfer Restricted Senior 
Notes by Restricted Broker-Dealers that the Commission may require in order 
to permit such sales pursuant thereto, but such "Plan of Distribution" 
shall not name any such Broker-Dealer or disclose the amount of Senior 
Notes held by any such Broker-Dealer except to the extent required by the 
Commission as a result of a change in policy after the date of this 
Agreement.

      The Company shall use its reasonable best efforts to keep the 
Exchange Offer Registration Statement continuously effective, supplemented 
and amended as required by the provisions of Section 6(c) below to the 
extent necessary to ensure that it is available for sales of Broker-Dealer 
Transfer Restricted Senior Notes by Restricted Broker-Dealers, and to 
ensure that such Registration Statement conforms with the requirements of 
this Agreement, the Act and the policies, rules and regulations of the 
Commission as announced from time to time, for a period of 180 days from 
the date on which the Exchange Offer is Consummated.

      The Company shall promptly provide sufficient copies of the latest 
version of such Prospectus to such Restricted Broker-Dealers promptly upon 
request, and in no event later than two days after such request, at any 
time during such one-year period in order to facilitate such sales.

4.    SHELF REGISTRATION

      (a)  Shelf Registration.  If (i) the Company is not required to file 
an Exchange Offer Registration Statement with respect to the Series B 
Senior Notes because the Exchange Offer is not permitted by applicable law 
(after the procedures set forth in Section 6(a)(i) below have been complied 
with) or (ii) if any Holder of Transfer Restricted Senior Notes shall 
notify the Company within 20 Business Days following the Consummation of 
the Exchange Offer that (A) such Holder is prohibited by law or Commission 
policy from participating in the Exchange Offer or (B) such Holder may not 
resell the Series B Senior Notes acquired by it in the Exchange Offer to 
the public without delivering a prospectus and the Prospectus contained in 
the Exchange Offer Registration Statement is not appropriate or available 
for such resales by such Holder or (C) such Holder is a Broker-Dealer and 
holds Series A Senior Notes acquired directly from the Company or one of 
its affiliates, then the Company shall (x) cause to be filed on or prior to 
the earliest of (1) 60 days after the date on which the Company is notified 
by the Commission or otherwise determines that it is not required to file 
the Exchange Offer Registration Statement pursuant to clause (i) above and 
(2) 60 days after the date on which the Company receives the notice 
specified in clause (ii) above, a shelf registration statement pursuant to 
Rule 415 under the Act, (which may be an amendment to the Exchange Offer 
Registration Statement (in either event, the "Shelf Registration 
Statement")), relating to all Transfer Restricted Senior Notes the Holders 
of which shall have provided the information required pursuant to Section 
4(b) hereof, and (y) use their best efforts to cause such Shelf 
Registration Statement to become effective at the earliest possible time, 
but in no event later than 120 days after the date on which the Company 
becomes obligated to file such Shelf Registration Statement.  If, after the 
Company has filed an Exchange Offer Registration Statement which satisfies 
the requirements of Section 3(a) above, the Company is required to file and 
make effective a Shelf Registration Statement solely because the Exchange 
Offer shall not be permitted under applicable federal law, then the filing 
of the Exchange Offer Registration Statement shall be deemed to satisfy the 
requirements of clause (x) above.  Such an event shall have no effect on 
the requirements of clause (y) above, or on the Effectiveness Target Date 
as defined in Section 5 below.  The Company shall use its reasonable best 
efforts to keep the Shelf Registration Statement discussed in this Section 
4(a) continuously effective, supplemented and amended as required by and 
subject to the provisions of Sections 6(b) and (c) hereof to the extent 
necessary to ensure that it is available for sales of Transfer Restricted 
Senior Notes by the Holders thereof entitled to the benefit of this Section 
4(a), and to ensure that it conforms with the requirements of this 
Agreement, the Act and the policies, rules and regulations of the 
Commission as announced from time to time, for a period of at least three 
years (as extended pursuant to Section 6(c)(i)) following the date on which 
such Shelf Registration Statement first becomes effective under the Act or 
such shorter period that will terminate when all Transfer Restricted Senior 
Notes covered by the Shelf Registration Statement have been sold pursuant 
thereto.

      (b)  Provision by Holders of Certain Information in Connection with 
the Shelf Registration Statement.  No Holder of Transfer Restricted Senior 
Notes may include any of its Transfer Restricted Senior Notes in any Shelf 
Registration Statement pursuant to this Agreement unless and until such 
Holder furnishes to the Company in writing, within 20 days after receipt of 
a request therefor, such information specified in item 507 of Regulation 
S-K under the Act for use in connection with any Shelf Registration 
Statement or Prospectus or preliminary Prospectus included therein.  No 
Holder of Transfer Restricted Senior Notes shall be entitled to Liquidated 
Damages pursuant to Section 5 hereof unless and until such Holder shall 
have used its best efforts to provide all such information.  Each Holder as 
to which any Shelf Registration Statement is being effected agrees to 
furnish promptly to the Company all information required to be disclosed in 
order to make the information previously furnished to the Company by such 
Holder not materially misleading.

5.    LIQUIDATED DAMAGES

      If (i) any Registration Statement required by this Agreement is not 
filed with the Commission on or prior to the date specified for such filing 
in this Agreement, (ii) any such Registration Statement has not been 
declared effective by the Commission on or prior to the date specified for 
such effectiveness in this Agreement (the "Effectiveness Target Date"), 
(iii) the Exchange Offer has not been Consummated within 30 Business Days 
after the Effectiveness Target Date with respect to the Exchange Offer 
Registration Statement or (iv) subject to the provisions of Section 6(c)(i) 
below, any Registration Statement required by this Agreement is filed and 
declared effective but shall thereafter cease to be effective or fail to be 
usable for its intended purpose without being succeeded immediately (but in 
any event within five Business Days thereafter) by a post-effective 
amendment to such Registration Statement that cures such failure and that 
is itself declared effective within such five Business Day period, other 
than, in the case of clause (iv) above, for such period in which such 
Registration Statement shall cease to be effective as  a result of 
post-effective amendments to incorporate annual filings which the Company 
is required to file with the Commission or post-effective amendments not 
otherwise covered by Section 6(c)(i) hereof, provided that the Company in 
good faith attempts to cause such Registration Statement to be declared 
effective as soon as reasonably practicable (each such event referred to in 
clauses (i) through (iv), a "Registration Default"), the Company hereby 
agrees to pay to each Holder of Transfer Restricted Senior Notes, for the 
first 90-day period immediately following the occurrence of such 
Registration Default, liquidated damages in an amount equal to $.05 per 
week per $1,000 principal amount of Senior Notes constituting Transfer 
Restricted Senior Notes held by such Holder for so long as the Registration 
Default continues.  The amount of liquidated damages payable to each Holder 
shall increase by an additional $.05 per week per $1,000 in principal 
amount of Transfer Restricted Senior Notes held by such Holder for each 
subsequent 90-day period up to a maximum of $.40 per week per $1,000 in 
principal amount of Senior Notes constituting Transfer Restricted Senior 
Notes held by such Holder; provided, however, that (1) upon filing of the 
Exchange Offer Registration Statement (and/or, if applicable, the Shelf 
Registration Statement), in the case of (i) above, (2) upon the 
effectiveness of the Exchange Offer Registration Statement (and/or, if 
applicable, the Shelf Registration Statement), in the case of (ii) above, 
(3) upon Consummation of the Exchange Offer, in the case of (iii) above, or 
(4) upon the filing of a post-effective amendment to the Registration 
Statement or an additional Registration Statement that causes the Exchange 
Offer Registration Statement (and/or, if applicable, the Shelf Registration 
Statement) to again be declared effective or made usable in the case of 
(iv) above, the liquidated damages payable with respect to such Transfer 
Restricted Senior Notes as a result of such clause (i), (ii), (iii) or 
(iv), as applicable, shall cease.

      All accrued liquidated damages shall be paid by the Company to the 
Global Note Holder by wire transfer of immediately available funds or by 
federal funds check and to Holders of Certificated Securities by wire 
transfer to the accounts specified by them or by mailing checks to their 
registered addresses if no such accounts have been specified on each 
Damages Payment Date.  All obligations of the Company set forth in the 
preceding paragraph that are outstanding with respect to any Transfer 
Restricted Senior Note at the time such security ceases to be a Transfer 
Restricted Senior Note shall survive until such time as all such 
obligations with respect to such security shall have been satisfied in 
full.

6.    REGISTRATION PROCEDURES

      (a)  Exchange Offer Registration Statement.  In connection with the 
Exchange Offer, the Company shall comply with all applicable provisions of 
Section 6(c) below, shall use their best efforts to effect such exchange 
and to permit the sale of Broker-Dealer Transfer Restricted Senior Notes 
being sold in accordance with the intended method or methods of 
distribution thereof, and shall comply with all of the following 
provisions:

           (i)   If, following the date hereof there has been published a 
      change in Commission policy with respect to exchange offers such as 
      the Exchange Offer, such that in the reasonable opinion of counsel to 
      the Company there is a substantial question as to whether the 
      Exchange Offer is permitted by applicable federal law or Commission 
      policy, the Company hereby agrees to seek a no-action letter or other 
      favorable decision from the Commission allowing the Company to 
      Consummate an Exchange Offer for such Series A Senior Notes.  The 
      Company hereby agrees to pursue the issuance of such a decision to 
      the Commission staff level but shall not be required to take 
      commercially unreasonable action to effect a change of Commission 
      policy.  In connection with the foregoing, the Company hereby agrees, 
      however, to take all such other actions as are requested by the 
      Commission or otherwise required in connection with the issuance of 
      such decision, including without limitation (A) participating in 
      telephonic conferences with the Commission, (B) delivering to the 
      Commission staff an analysis prepared by counsel to the Company 
      setting forth the legal bases, if any, upon which such counsel has 
      concluded that such an Exchange Offer should be permitted and (C) 
      diligently pursuing a resolution (which need not be favorable) by the 
      Commission staff of such submission.

           (ii)  As a condition to its participation in the Exchange Offer 
      pursuant to the terms of this Agreement, each Holder of Transfer 
      Restricted Senior Notes shall furnish, upon the request of the 
      Company, prior to the Consummation of the Exchange Offer, a written 
      representation to the Company (which may be contained in the letter 
      of transmittal contemplated by the Exchange Offer Registration 
      Statement) to the effect that (A) it is not an affiliate of the 
      Company, (B) it is not engaged in, and does not intend to engage in, 
      and has no arrangement or understanding with any person to 
      participate in, a distribution of the Series B Senior Notes to be 
      issued in the Exchange Offer and (C) it is acquiring the Series B 
      Senior Notes in its ordinary course of business.  Each Holder hereby 
      acknowledges and agrees that any Broker-Dealer and any such Holder 
      using the Exchange Offer to participate in a distribution of the 
      securities to be acquired in the Exchange Offer (1) could not under 
      Commission policy as in effect on the date of this Agreement rely on 
      the position of the Commission enunciated in Morgan Stanley and Co., 
      Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation 
      (available May 13, 1988), as interpreted in the Commission's letter 
      to Shearman & Sterling dated July 2, 1993, and similar no-action 
      letters (including, if applicable, any no-action letter obtained 
      pursuant to clause (i) above), and (2) must comply with the 
      registration and prospectus delivery requirements of the Act in 
      connection with a secondary resale transaction and that such a 
      secondary resale transaction must be covered by an effective 
      registration statement containing the selling security holder 
      information required by Item 507 or 508, as applicable, of Regulation 
      S-K if the resales are of Series B Senior Notes obtained by such 
      Holder in exchange for Series A Senior Notes acquired by such Holder 
      directly from the Company or an affiliate thereof.

           (iii) To the extent required by the Commission, prior to 
      effectiveness of the Exchange Offer Registration Statement, the 
      Company shall provide a supplemental letter to the Commission (A) 
      stating that the Company is registering the Exchange Offer in 
      reliance on the position of the Commission enunciated in Exxon 
      Capital Holdings Corporation (available May 13, 1988), Morgan Stanley 
      and Co., Inc. (available June 5, 1991) and, if applicable, any 
      no-action letter obtained pursuant to clause (i) above, (B) including 
      a representation that the Company has not entered into any 
      arrangement or understanding with any Person to distribute the Series 
      B Senior Notes to be received in the Exchange Offer and that, to the 
      best of the Company's information and belief, each Holder 
      participating in the Exchange Offer is acquiring the Series B Senior 
      Notes in its ordinary course of business and has no arrangement or 
      understanding with any Person to participate in the distribution of 
      the Series B Senior Notes received in the Exchange Offer and (C) any 
      other undertaking or representation required by the Commission as set 
      forth in any no-action letter obtained pursuant to clause (i) above.

      (b)  Shelf Registration Statement.  In connection with the Shelf 
Registration Statement the Company shall comply with all the provisions of 
Section 6(c) below and shall use its best efforts to effect such 
registration to permit the sale of the Transfer Restricted Senior Notes 
being sold in accordance with the intended method or methods of 
distribution thereof (as indicated in the information furnished to the 
Company pursuant to Section 4(b) hereof), and pursuant thereto the Company 
will prepare and file with the Commission a Registration Statement relating 
to the registration on any appropriate form under the Act, which form shall 
be available for the sale of the Transfer Restricted Senior Notes in 
accordance with the intended method or methods of distribution thereof 
within the time periods and otherwise in accordance with the provisions 
hereof. 

      (c)  General Provisions.  In connection with any Registration 
Statement and any related Prospectus required by this Agreement to permit 
the sale or resale of Transfer Restricted Senior Notes (including, without 
limitation, any Exchange Offer Registration Statement and the related 
Prospectus, to the extent that the same are required to be available to 
permit sales of Broker-Dealer Transfer Restricted Senior Notes by 
Restricted Broker-Dealers), the Company shall:

           (i)   use its reasonable efforts to keep such Registration 
      Statement continuously effective and provide all requisite financial 
      statements for the period specified in Section 3 or 4 of this 
      Agreement, as applicable.  Upon the occurrence of any event that 
      would cause any such Registration Statement or the Prospectus 
      contained therein (A) to contain a material misstatement or omission 
      or (B) not to be effective and usable for resale of Transfer 
      Restricted Senior Notes during the period required by this Agreement, 
      the Company shall file promptly an appropriate amendment to such 
      Registration Statement, (1) in the case of clause (A), correcting any 
      such misstatement or omission, and (2) in the case of either clause 
      (A) or (B), use its reasonable efforts to cause such amendment to be 
      declared effective and such Registration Statement and the related 
      Prospectus to become usable for their intended purpose(s) as soon as 
      practicable thereafter.  Notwithstanding the foregoing, if (A) the 
      Board of Directors of the Company determines in good faith that it is 
      in the best interests of the Company not to disclose the existence of 
      or facts surrounding any proposed or pending material corporate 
      transaction involving the Company or its subsidiaries and (B) the 
      Company notifies the Holders within two Business Days after the Board 
      of Directors makes such determination, the Company may allow the 
      Shelf Registration Statement to fail to be effective and usable as a 
      result of such nondisclosure for up to 60 days during the three-year 
      period of effectiveness required by Section 4 hereof, but in no event 
      for any period in excess of 30 consecutive days; provided, however, 
      that the three-year period referred to in Section 4 hereof during 
      which the Shelf Registration Statement is required to be effective 
      and usable shall be extended by the number of days during which such 
      registration statement was not effective or usable pursuant to the 
      foregoing provisions.

           (ii)  prepare and file with the Commission such amendments and 
      post-effective amendments to the Registration Statement as may be 
      necessary to keep the Registration Statement effective for the 
      applicable period set forth in Section 3 or 4 hereof, or such shorter 
      period as will terminate when all Transfer Restricted Senior Notes 
      covered by such Registration Statement have been sold; cause the 
      Prospectus to be supplemented by any required Prospectus supplement, 
      and as so supplemented to be filed pursuant to Rule 424 under the 
      Act, and to comply fully with Rules 424 and 430A, as applicable, 
      under the Act in a timely manner; and comply with the provisions of 
      the Act with respect to the disposition of all securities covered by 
      such Registration Statement during the applicable period in 
      accordance with the intended method or methods of distribution by the 
      sellers thereof set forth in such Registration Statement or 
      supplement to the Prospectus;

           (iii) advise the underwriter(s), if any, and selling Holders 
      promptly and, if requested by such Persons, confirm such advice in 
      writing, (A) when the Prospectus or any Prospectus supplement or 
      post-effective amendment has been filed, and, with respect to any 
      Registration Statement or any post-effective amendment thereto, when 
      the same has become effective, (B) of any request by the Commission 
      for amendments to the Registration Statement or amendments or 
      supplements to the Prospectus or for additional information relating 
      thereto, (C) of the issuance by the Commission of any stop order 
      suspending the effectiveness of the Registration Statement under the 
      Act or of the suspension by any state securities commission of the 
      qualification of the Transfer Restricted Senior Notes for offering or 
      sale in any jurisdiction, or the initiation of any proceeding for any 
      of the preceding purposes, (D) of the existence of any fact or the 
      happening of any event that makes any statement of a material fact 
      made in the Registration Statement, the Prospectus, any amendment or 
      supplement thereto or any document incorporated by reference therein 
      untrue, or that requires the making of any additions to or changes in 
      the Registration Statement in order to make the statements therein 
      not misleading, or that requires the making of any additions to or 
      changes in the Prospectus in order to make the statements therein, in 
      the light of the circumstances under which they were made, not 
      misleading.  If at any time the Commission shall issue any stop order 
      suspending the effectiveness of the Registration Statement, or any 
      state securities commission or other regulatory authority shall issue 
      an order suspending the qualification or exemption from qualification 
      of the Transfer Restricted Senior Notes under state securities or 
      Blue Sky laws, the Company shall use its reasonable efforts to obtain 
      the withdrawal or lifting of such order at the earliest possible 
      time;

           (iv)  in the case of a Shelf Registration Statement, use 
      reasonable efforts to furnish to the Purchaser, each selling Holder 
      named in any Registration Statement or Prospectus and each of the 
      underwriter(s) in connection with such sale, if any, before filing 
      with the Commission, copies of any Registration Statement or any 
      Prospectus included therein or any amendments or supplements to any 
      such Registration Statement or Prospectus (including all documents 
      incorporated by reference after the initial filing of such 
      Registration Statement), prior to filing and reasonably respond to 
      comments received from such persons, and make the Company's 
      representatives available for discussion of such documents and other 
      customary due diligence matters.

           (v)   subject to execution of confidentiality agreements that 
      are reasonably satisfactory to the Company as to the disclosure of 
      any non-public information obtained pursuant to this Section 
      6(c)(vi), make available upon reasonable notice and at reasonable 
      times for inspection by the selling Holders, any managing underwriter 
      participating in any disposition pursuant to such Registration 
      Statement and any attorney or accountant retained by such selling 
      Holders or any of such underwriter(s), all financial and other 
      records, pertinent corporate documents and properties of the Company 
      and cause the Company's officers, directors and employees to supply 
      all information reasonably requested by any such Holder, underwriter, 
      attorney or accountant in connection with such Registration Statement 
      or any post-effective amendment thereto subsequent to the filing 
      thereof and prior to its effectiveness;

           (vi)  in the case of a Shelf Registration Statement, if 
      requested by any selling Holders or the underwriter(s) in connection 
      with such sale, if any, promptly include in any Registration 
      Statement or Prospectus, pursuant to a supplement or post-effective 
      amendment if necessary, such information as such selling Holders and 
      underwriter(s), if any, may reasonably request to have included 
      therein, including, without limitation, information relating to the 
      "Plan of Distribution" of the Transfer Restricted Senior Notes, 
      information with respect to the principal amount of Transfer 
      Restricted Senior Notes being sold to such underwriter(s), the 
      purchase price being paid therefor and any other terms of the 
      offering of the Transfer Restricted Senior Notes to be sold in such 
      offering; and make all required filings of such Prospectus supplement 
      or post-effective amendment as soon as practicable after the Company 
      is notified of the matters reasonably requested to be included in 
      such Prospectus supplement or post-effective amendment;

           (vii) in the case of a Shelf Registration Statement, furnish to 
      each selling Holder and each of the underwriter(s) in connection with 
      such sale, if any, without charge, at least one copy of the 
      Registration Statement, as first filed with the Commission, and of 
      each amendment thereto, including all documents incorporated by 
      reference therein and all exhibits (including exhibits incorporated 
      therein by reference);

           (viii) deliver to each selling Holder and each of the 
      underwriter(s), if any, without charge, as many copies of the 
      Prospectus (including each preliminary prospectus) and any amendment 
      or supplement thereto as such Persons reasonably may request; the 
      Company hereby consents to the use (in accordance with law) of the 
      Prospectus and any amendment or supplement thereto by each of the 
      selling Holders and each of the underwriter(s), if any, in connection 
      with the offering and the sale of the Transfer Restricted Senior 
      Notes covered by the Prospectus or any amendment or supplement 
      thereto;

           (ix)  enter into such customary agreements and make such 
      representations and warranties and take all such other actions in 
      connection therewith in order to expedite or facilitate the 
      disposition of the Transfer Restricted Senior Notes pursuant to any 
      Registration Statement contemplated by this Agreement as may be 
      reasonably requested by any Holder of Transfer Restricted Senior 
      Notes or underwriter in connection with any sale or resale pursuant 
      to any Registration Statement contemplated by this Agreement, and in 
      such connection, whether or not an underwriting agreement is entered 
      into and whether or not the registration is an Underwritten 
      Registration, the Company shall:

                 (A)  furnish (or in the case of paragraphs (2) and (3), 
           use its best efforts to furnish) to each selling Holder and each 
           underwriter, if any, upon the effectiveness of the Shelf 
           Registration Statement and to each Restricted Broker-Dealer upon 
           Consummation of the Exchange Offer: 

                      (1)   a certificate, dated the date of Consummation 
                 of the Exchange Offer or the date of effectiveness of the 
                 Shelf Registration Statement, as the case may be, signed 
                 on behalf of the Company by (x) the President or any Vice 
                 President and (y) a principal financial or accounting 
                 officer of the Company confirming, as of the date thereof, 
                 the matters set forth in paragraphs (a) through (d) of 
                 Section 9 of the Purchase Agreement and such other similar 
                 matters as the Holders and/or underwriter(s) may 
                 reasonably request;

                      (2)   an opinion, dated the date of Consummation of 
                 the Exchange Offer or the date of effectiveness of the 
                 Shelf Registration Statement, as the case may be, of 
                 counsel for the Company, covering matters customarily 
                 covered in opinions requested in Underwritten Offerings 
                 and dated the date of effectiveness of the Shelf 
                 Registration Statement or the date of Consummation of the 
                 Exchange Offer, as the case may be; and
                 
                      (3)   a customary comfort letter, dated as of the 
                 date of effectiveness of the Shelf Registration Statement 
                 or the date of Consummation of the Exchange Offer, as the 
                 case may be, from the Company's independent accountants, 
                 in the customary form and covering matters of the type 
                 customarily covered in comfort letters to underwriters in 
                 connection with Underwritten Offerings, and affirming the 
                 matters set forth in the comfort letters delivered 
                 pursuant to Section 9(i) of the Purchase Agreement, 
                 without exception; 

                 (B)  set forth in full or incorporate by reference in the 
           underwriting agreement, if any, in connection with any sale or 
           resale pursuant to any Shelf Registration Statement the 
           indemnification provisions and procedures of Section 8 hereof 
           with respect to all parties to be indemnified pursuant to said 
           Section; and

                 (C)  deliver such other documents and certificates as may 
           be reasonably requested by the selling Holders or the 
           underwriter(s), if any, to evidence compliance with clause (A) 
           above and with any customary conditions contained in the 
           underwriting agreement or other agreement entered into by the 
           Company pursuant to this clause (x). 

           The above shall be done at each closing under such underwriting 
      or similar agreement, as and to the extent required thereunder, and 
      if at any time the representations and warranties of the Company 
      contemplated in (A)(1) above cease to be true and correct, the 
      Company shall so advise the underwriter(s), if any, and selling 
      Holders promptly and if requested by such Persons, shall confirm such 
      advice in writing;

           (x)   prior to any public offering of Transfer Restricted Senior 
      Notes, cooperate with the selling Holders, the underwriter(s), if 
      any, and their respective counsel in connection with the registration 
      and qualification of the Transfer Restricted Senior Notes under the 
      securities or Blue Sky laws of such jurisdictions as the selling 
      Holders or underwriter(s), if any, may request and do any and all 
      other acts or things necessary or advisable to enable the disposition 
      in such jurisdictions of the Transfer Restricted Senior Notes covered 
      by the applicable Registration Statement; provided, however, that the 
      Company shall not be required to register or qualify as a foreign 
      corporation where it is not now so qualified or to take any action 
      that would subject it to the service of process in suits or to 
      taxation, other than as to matters and transactions relating to the 
      Registration Statement, in any jurisdiction where it is not now so 
      subject;

           (xi)  issue, upon the request of any Holder of Series A Senior 
      Notes covered by any Shelf Registration Statement contemplated by 
      this Agreement, Series B Senior Notes, having an aggregate principal 
      amount equal to the aggregate principal amount of Series A Senior 
      Notes surrendered to the Company by such Holder in exchange therefor 
      or being sold by such Holder; such Series B Senior Notes to be 
      registered in the name of such Holder or in the name of the 
      purchaser(s) of such Senior Notes, as the case may be; in return, the 
      Series A Senior Notes held by such Holder shall be surrendered to the 
      Company for cancellation;

           (xii) in connection with any sale of Transfer Restricted Senior 
      Notes that will result in such securities no longer being Transfer 
      Restricted Senior Notes, cooperate with the selling Holders and the 
      underwriter(s), if any, to facilitate the timely preparation and 
      delivery of certificates representing Transfer Restricted Senior 
      Notes to be sold and not bearing any restrictive legends; and to 
      register such Transfer Restricted Senior Notes in such denominations 
      and such names as the Holders or the underwriter(s), if any, may 
      request at least two Business Days prior to such sale of Transfer 
      Restricted Senior Notes;

           (xiii)use its reasonable efforts to cause the disposition of the 
      Transfer Restricted Senior Notes covered by the Registration 
      Statement to be registered with or approved by such other U.S. 
      governmental agencies or authorities as may be necessary to enable 
      the seller or sellers thereof or the underwriter(s), if any, to 
      consummate the disposition of such Transfer Restricted Senior Notes, 
      subject to the proviso contained in clause (xi) above;

           (xiv) subject to Section 6(c)(i), if any fact or event 
      contemplated by Section 6(c)(iii)(D) above shall exist or have 
      occurred, prepare a supplement or post-effective amendment to the 
      Registration Statement or related Prospectus or any document 
      incorporated therein by reference or file any other required document 
      so that, as thereafter delivered to the purchasers of Transfer 
      Restricted Senior Notes, the Prospectus will not contain an untrue 
      statement of a material fact or omit to state any material fact 
      necessary to make the statements therein, in the light of the 
      circumstances under which they were made, not misleading;

           (xv)  provide a CUSIP number for all Transfer Restricted Senior 
      Notes not later than the effective date of a Registration Statement 
      covering such Transfer Restricted Senior Notes and provide the 
      Trustee under the Indenture with printed certificates for the 
      Transfer Restricted Senior Notes which are in a form eligible for 
      deposit with the Depository Trust Company;

           (xvi) cooperate and assist in any filings required to be made 
      with the NASD and in the performance of any due diligence 
      investigation by any underwriter (including any "qualified 
      independent underwriter") that is required to be retained in 
      accordance with the rules and regulations of the NASD, and use its 
      reasonable efforts to cause such Registration Statement to become 
      effective and approved by such governmental agencies or authorities 
      as may be necessary to enable the Holders selling Transfer Restricted 
      Senior Notes to consummate the disposition of such Transfer 
      Restricted Senior Notes;

          (xvii) otherwise use its reasonable efforts to comply with all 
      applicable rules and regulations of the Commission, and make 
      generally available to its security holders with regard to any 
      applicable Registration Statement, as soon as practicable, a 
      consolidated earnings statement meeting the requirements of Rule 158 
      (which need not be audited) covering a twelve-month period beginning 
      after the effective date of the Registration Statement (as such term 
      is defined in paragraph (c) of Rule 158 under the Act);

          (xviii) cause the Indenture to be qualified under the TIA not 
      later than the effective date of the first Registration Statement 
      required by this Agreement and, in connection therewith, cooperate 
      with the Trustee and the Holders of Senior Notes to effect such 
      changes to the Indenture as may be required for such Indenture to be 
      so qualified in accordance with the terms of the TIA; and execute and 
      use its reasonable efforts to cause the Trustee to execute, all 
      documents that may be required to effect such changes and all other 
      forms and documents required to be filed with the Commission to 
      enable such Indenture to be so qualified in a timely manner; and

           (xix) provide promptly to each Holder upon request each document 
      filed with the Commission pursuant to the requirements of Section 13 
      or Section 15(d) of the Exchange Act.

      (d)  Restrictions on Holders.  Each Holder agrees by acquisition of a 
Transfer Restricted Senior Note that, upon receipt of the notice referred 
to in Section 6(c)(i) or any notice from the Company of the existence of 
any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder 
will forthwith discontinue disposition of Transfer Restricted Senior Notes 
pursuant to the applicable Registration Statement until such Holder's 
receipt of the copies of the supplemented or amended Prospectus 
contemplated by Section 6(c)(xv) hereof, or until it is advised in writing 
by the Company that the use of the Prospectus may be resumed, and has 
received copies of any additional or supplemental filings that are 
incorporated by reference in the Prospectus (the "Advice").  If so directed 
by the Company, each Holder will deliver to the Company (at the Company's 
expense) all copies, other than permanent file copies then in such Holder's 
possession, of the Prospectus covering such Transfer Restricted Senior 
Notes that was current at the time of receipt of either such notice.  In 
the event the Company shall give any such notice, the time period regarding 
the effectiveness of such Registration Statement set forth in Section 3 or 
4 hereof, as applicable, shall be extended by the number of days during the 
period from and including the date of the giving of such notice pursuant to 
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date 
when each selling Holder covered by such Registration Statement shall have 
received the copies of the supplemented or amended Prospectus contemplated 
by Section 6(c)(xv) hereof or shall have received the Advice.

7.    REGISTRATION EXPENSES

      (a)  All expenses incident to the Company's performance of or 
compliance with this Agreement will be borne by the Company, regardless of 
whether a Registration Statement becomes effective, including without 
limitation: (i) all registration and filing fees and expenses (including 
filings made with the NASD and counsel fees in connection therewith); (ii) 
all fees and expenses of compliance with federal securities and state Blue 
Sky or securities laws; (iii) all printing expenses of printing (including 
printing certificates for the Series B Senior Notes and printing of 
Prospectuses); (iv) all fees and disbursements of counsel for the Company 
and, in accordance with Section 7(b) below, the Holders of Transfer 
Restricted Senior Notes; and (v) all fees and disbursements of independent 
certified public accountants of the Company (including the expenses of any 
special audit and comfort letters required by or incident to such 
performance).

      The Company will, in any event, bear its internal expenses 
(including, without limitation, all salaries and expenses of its officers 
and employees performing legal or accounting duties), the expenses of any 
annual audit and the fees and expenses of any Person, including special 
experts, retained by the Company.

      (b)  In connection with any Shelf Registration Statement required by 
this Agreement, the Company will reimburse the Holders of Transfer 
Restricted Senior Notes the distribution of which is being registered 
pursuant to the Shelf Registration Statement for the reasonable fees and 
disbursements of not more than one counsel chosen by the Holders of a 
majority of the principal amount of such Transfer Restricted Senior Notes, 
which counsel shall be satisfactory to the Company in its sole discretion.

8.    INDEMNIFICATION

      (a)  The Company agrees to indemnify and hold harmless (i) each 
Holder and (ii) each person, if any, who controls (within the meaning of 
Section 15 of the Act or Section 20 of the Exchange Act) any Holder (any of 
the persons referred to in this clause (ii) being hereinafter referred to 
as a "controlling person") and (iii) the respective officers, directors, 
partners, employees, representatives and agents of any Holder or any 
controlling person (any person referred to in clause (i), (ii) or (iii) may 
hereinafter be referred to as an "Indemnified Holder"), from and against 
any and all losses, claims, damages, liabilities and judgments caused by 
any untrue statement or alleged untrue statement of a material fact 
contained in any Registration Statement or Prospectus (or any amendment or 
supplement thereto), or caused by any omission or alleged omission to state 
therein a material fact required to be stated therein or necessary to make 
the statements therein, in light of the circumstances under which they were 
made, not misleading, except insofar as such losses, claims, damages, 
liabilities or judgments (i) are caused by any such untrue statement or 
omission or alleged untrue statement or omission based upon information 
relating to any of the Holders furnished in writing to the Company by any 
of the Holders expressly for use therein, (ii) with respect to the 
preliminary prospectus, result from the fact that the Holder sold Transfer 
Restricted Senior Notes to a person to whom there was not sent or given, at 
or prior to the written confirmation of such sale, a copy of the 
prospectus, as amended or supplemented, if the Company shall have 
previously furnished copies thereof to the Holder in accordance with this 
Agreement and the prospectus, as amended or supplemented, would have 
corrected such untrue statement or omission or (iii) are a result of the 
use by the Indemnified Holder of any prospectus, when, upon receipt of a 
notice from the Company of the existence of any fact of the kind described 
in Section 6(c)(iii)(D) hereof contemplated by the last paragraph of 
Section 6 hereof, the Indemnified Holder was not permitted to do so.

      In case any action or proceeding shall be brought against any of the 
Indemnified Holders with respect to which indemnity may be sought against 
the Company, such Indemnified Holder (or the Indemnified Holder controlled 
by such controlling person) shall promptly notify the Company in writing 
(provided, that the failure to give such notice shall not relieve the 
Company of its obligations pursuant to this Agreement).  Such Indemnified 
Holder shall have the right to employ its own counsel in any such action 
but the fees and expenses of such counsel shall be at the expense of the 
Indemnified Holder or such controlling person unless (i) the employment of 
such counsel shall have been specifically authorized in writing by the 
Company, (ii) the Company shall have failed to assume the defense and 
employ counsel or (iii) the named parties to any such action (including any 
impleaded parties) include both the Indemnified Holder or such controlling 
person and the Company and the Indemnified Holder or such controlling 
person shall have been advised in writing by such counsel that there may be 
one or more legal defenses available to it which are different from or 
additional to those available to the Company (in which case the Company 
shall not have the right to assume the defense of such action on behalf of 
the Indemnified Holder or such controlling person), it being understood, 
however, that the Company shall not, in connection with any one such action 
or proceeding or separate but substantially similar or related actions or 
proceedings in the same jurisdiction arising out of the same general 
allegations or circumstances, be liable for the reasonable fees and 
expenses of more than one separate firm of attorneys (in addition to any 
local counsel) at any time for such Indemnified Holders, which firm shall 
be designated by the Holders and be reasonably satisfactory to the Company.  
The Company shall not be liable for any settlement of any such action or 
proceeding effected without the Company's prior written consent, which 
consent shall not be withheld unreasonably, but if settled with the 
Company's written consent, and the Company agrees to indemnify and hold 
harmless any Indemnified Holder from and against any loss or liability by 
reason of such settlement.  The Company shall not, without the prior 
written consent of each Indemnified Holder effect any settlement of any 
pending or threatened proceeding in respect of which any Indemnified Holder 
is or could have been a party and indemnity could have been sought 
hereunder by such Indemnified Holder, unless such settlement includes an 
unconditional release of such Indemnified Holder from all liability on 
claims that are the subject matter of such proceeding.

      (b)  Each Holder of Transfer Restricted Senior Notes agrees, 
severally and not jointly, to indemnify and hold harmless the Company, and 
its directors, officers, and any person controlling the Company (within the 
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the 
same extent as the foregoing indemnity from the Company to each of the 
Indemnified Holders, but only with respect to information relating to such 
Holder furnished in writing by such Holder expressly for use in any 
Registration Statement.  In case any action or proceeding shall be brought 
against the Company or its directors or officers or any such controlling 
person in respect of which indemnity may be sought against a Holder of 
Transfer Restricted Senior Notes, such Holder shall have the rights and 
duties given the Company and the Company or its directors or officers or 
such controlling person shall have the rights and duties given to each 
Holder by the preceding paragraph.  In no event shall the liability of any 
selling Holder hereunder be greater in amount than the dollar amount of the 
proceeds received by such Holder upon the sale of the Registrable 
Securities giving rise to such indemnification obligation.

      (c)  If the indemnification provided for in this Section 8 is 
unavailable to an indemnified party under Section 8(a) or Section 8(b) 
hereof (other than by reason of exceptions provided in those Sections) in 
respect of any losses, claims, damages, liabilities or judgments referred 
to therein, then each applicable indemnifying party, in lieu of 
indemnifying such indemnified party, shall contribute to the amount paid or 
payable by such indemnified party as a result of such losses, claims, 
damages, liabilities or judgments (i) in such proportion as is appropriate 
to reflect the relative benefits received by the Company on the one hand 
and the Holders on the other hand from their sale of Transfer Restricted 
Senior Notes or (ii) if the allocation provided by clause (i) above is not 
permitted by applicable law, in such proportion as is appropriate to 
reflect the relative fault of the Company on the one hand and of the 
Indemnified Holder on the other in connection with the statements or 
omissions which resulted in such losses, claims, damages, liabilities or 
judgments, as well as any other relevant equitable considerations.  The 
relative fault of the Company on the one hand and of the Indemnified Holder 
on the other shall be determined by reference to, among other things, 
whether the untrue or alleged untrue statement of a material fact or the 
omission to state a material fact relates to information supplied by the 
Company or by the Indemnified Holder and the parties' relative intent, 
knowledge, access to information and opportunity to correct or prevent such 
statement or omission.  The amount paid or payable by a party as a result 
of the losses, claims, damages, liabilities and judgments referred to above 
shall be deemed to include, subject to the limitations set forth in the 
second paragraph of Section 8(a), any legal or other fees or expenses 
reasonably incurred by such party in connection with investigating or 
defending any action or claim.

      The Company and each Holder of Transfer Restricted Senior Notes agree 
that it would not be just and equitable if contribution pursuant to this 
Section 8(c) were determined by pro rata allocation (even if the Holders 
were treated as one entity for such purpose) or by any other method of 
allocation which does not take account of the equitable considerations 
referred to in the immediately preceding paragraph.  The losses, claims, 
damages, liabilities or judgments referred to in the immediately preceding 
paragraph shall be deemed to include, subject to the limitations set forth 
above, any legal or other expenses reasonably incurred by such indemnified 
party in connection with investigating or defending any such action or 
claim.  Notwithstanding the provisions of this Section 8, none of the 
Holders (and its related Indemnified Holders) shall be required to 
contribute, in the aggregate, any amount in excess of the amount by which 
the dollar amount of proceeds received by such Holder upon the sale of 
Transfer Restricted Senior Notes exceeds the amount of any damages which 
such Holder has otherwise been required to pay by reason of such untrue or 
alleged untrue statement or omission or alleged omission.  No person guilty 
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 
Act) shall be entitled to contribution from any person who was not guilty 
of such fraudulent misrepresentation.  The Holders' obligations to 
contribute pursuant to this Section 8(c) are several in proportion to the 
respective principal amount of Series A Senior Notes held by each of the 
Holders hereunder and not joint.

9.    RULE 144A

      The Company hereby agrees with each Holder, for so long as any 
Transfer Restricted Senior Notes remain outstanding and during any period 
in which the Company is not subject to Section 13 or 15(d) of the 
Securities Exchange Act, to make available, upon request of any Holder of 
Transfer Restricted Senior Notes, to any Holder or beneficial owner of 
Transfer Restricted Senior Notes in connection with any sale thereof and 
any prospective purchaser of such Transfer Restricted Senior Notes 
designated by such Holder or beneficial owner, the information required by 
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer 
Restricted Senior Notes pursuant to Rule 144A.

10.   UNDERWRITTEN REGISTRATIONS

      No Holder may participate in any Underwritten Registration hereunder 
unless such Holder (a) agrees to sell such Holder's Transfer Restricted 
Senior Notes on the basis provided in customary underwriting arrangements 
entered into in connection therewith and (b) completes and executes all 
reasonable questionnaires, powers of attorney, lock-up letters and other 
documents required under the terms of such underwriting arrangements.

11.   SELECTION OF UNDERWRITERS

      Subject to the Company's consent, for any Underwritten Offering, the 
investment banker or investment bankers and manager or managers for any 
Underwritten Offering that will administer such offering will be selected 
by the Holders of a majority in aggregate principal amount of the Transfer 
Restricted Senior Notes included in such offering.  Such investment bankers 
and managers are referred to herein as the "underwriters."

12.   MISCELLANEOUS

      (a)  Remedies.  Each Holder, in addition to being entitled to 
exercise all rights provided herein, in the Indenture, the Purchase 
Agreement or granted by law, including recovery of liquidated or other 
damages, will be entitled to specific performance of its rights under this 
Agreement.  The Company agrees that monetary damages would not be adequate 
compensation for any loss incurred by reason of a breach by it of the 
provisions of this Agreement and hereby agrees to waive the defense in any 
action for specific performance that a remedy at law would be adequate.

      (b)  No Inconsistent Agreements.  The Company will not, on or after 
the date of this Agreement, enter into any agreement with respect to its 
securities that is inconsistent with the rights granted to the Holders in 
this Agreement or otherwise conflicts with the provisions hereof.  The 
Company has not previously entered into any agreement granting any 
registration rights with respect to its securities to any Person, other 
than those rights existing by virtue of the Stockholders Agreement, dated 
April 14, 1989, among the Company and certain of its stockholders, as 
amended.  The rights granted to the Holders hereunder do not in any way 
conflict with and are not inconsistent with the rights granted to the 
holders of the Company's securities under any agreement in effect on the 
date hereof.

      (c)  Adjustments Affecting the Senior Notes.  The Company will not 
take any action, or voluntarily permit any change to occur, with respect to 
the Senior Notes that would materially and adversely affect the ability of 
the Holders to Consummate any Exchange Offer.

      (d)  Amendments and Waivers.  The provisions of this Agreement may 
not be amended, modified or supplemented, and waivers or consents to or 
departures from the provisions hereof may not be given unless the Company 
has obtained the written consent of Holders of a majority of the 
outstanding principal amount of Transfer Restricted Senior Notes.  
Notwithstanding the foregoing, a waiver or consent to departure from the 
provisions hereof that relates exclusively to the rights of Holders whose 
securities are being tendered pursuant to the Exchange Offer and that does 
not affect directly or indirectly the rights of other Holders whose 
securities are not being tendered pursuant to such Exchange Offer may be 
given by the Holders of a majority of the outstanding principal amount of 
Transfer Restricted Senior Notes subject to such Exchange Offer.

      (e)  Notices.  All notices and other communications provided for or 
permitted hereunder shall be made in writing by hand-delivery, first-class 
mail (registered or certified, return receipt requested), telex, 
telecopier, or air courier guaranteeing overnight delivery:

           (i)   if to a Holder, at the address set forth on the records of 
      the Registrar under the Indenture, with a copy to the Registrar under 
      the Indenture; and

           (ii)  if to the Company:

                      Motors and Gears, Inc.
                      1751 Lake Cook Road
                      Suite 550
                      Deerfield, IL  60015
                      Telecopier No.: (708) 945-5698
                      Attention:  Chief Financial Officer

                 With a copy to:

                      Mayer, Brown & Platt
                      1675 Broadway
                      New York, NY  10019
                      Telecopier No.: (212) 262-1910
                      Attention:  James B. Carlson, Esq.

      All such notices and communications shall be deemed to have been duly 
given:  at the time delivered by hand, if personally delivered; five 
Business Days after being deposited in the mail, postage prepaid, if 
mailed; when receipt acknowledged, if telecopied; and on the next business 
day, if timely delivered to an air courier guaranteeing overnight delivery.

      Copies of all such notices, demands or other communications shall be 
concurrently delivered by the Person giving the same to the Trustee at the 
address specified in the Indenture.

      (f)  Successors and Assigns.  This Agreement shall inure to the 
benefit of and be binding upon the successors and assigns of each of the 
parties, including without limitation and without the need for an express 
assignment, subsequent Holders of Transfer Restricted Senior Notes; 
provided, however, that this Agreement shall not inure to the benefit of or 
be binding upon a successor or assign of a Holder unless and to the extent 
such successor or assign acquired Transfer Restricted Senior Notes directly 
from such Holder at a time when such Holder could not transfer such 
Transfer Restricted Senior Notes pursuant to a Shelf Registration 
Statement.

      (g)  Counterparts.  This Agreement may be executed in any number of 
counterparts and by the parties hereto in separate counterparts, each of 
which when so executed shall be deemed to be an original and all of which 
taken together shall constitute one and the same agreement.

      (h)  Headings.  The headings in this Agreement are for convenience of 
reference only and shall not limit or otherwise affect the meaning hereof.

      (i)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND 
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT 
REGARD TO THE CONFLICT OF LAW RULES THEREOF.

      (j)  Severability.  In the event that any one or more of the 
provisions contained herein, or the application thereof in any 
circumstance, is held invalid, illegal or unenforceable, the validity, 
legality and enforceability of any such provision in every other respect 
and of the remaining provisions contained herein shall not be affected or 
impaired thereby.

      (k)  Entire Agreement.  This Agreement together with the other 
Operative Documents (as defined in the Purchase Agreement) is intended by 
the parties as a final expression of their agreement and intended to be a 
complete and exclusive statement of the agreement and understanding of the 
parties hereto in respect of the subject matter contained herein.  There 
are no restrictions, promises, warranties or undertakings, other than those 
set forth or referred to herein with respect to the registration rights 
granted by the Company with respect to the Transfer Restricted Senior 
Notes.  This Agreement supersedes all prior agreements and understandings 
between the parties with respect to such subject matter.
           IN WITNESS WHEREOF, the parties have executed this Agreement as 
of the date first written above.

                                       MOTORS AND GEARS, INC.


                                       By:  /s/ Jonathan F. Boucher
                                          --------------------------------
                                            Name: Jonathan F. Boucher
                                            Title:   Vice President




DONALDSON, LUFKIN & JENRETTE
  SECURITIES CORPORATION
BT SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.

Acting on behalf of itself,
BT Securities Corporation and
Jefferies & Company, Inc.

By:   DONALDSON, LUFKIN & JENRETTE
        SECURITIES CORPORATION

      By:  /s/ Craig Packer               
         ------------------------
           Name:  Craig Packer
           Title: Vice President



<PAGE>
                                                        EXHIBIT 10.2
                                                                        






===============================================================================

                         Motors and Gears, Inc.




                ________________________________________


                          SERIES A AND SERIES B

                       10 % SENIOR NOTES DUE 2006

                ________________________________________


                           ___________________

                                INDENTURE

                      DATED AS OF NOVEMBER 7, 1996

                           ___________________







                           Fleet National Bank

                                 Trustee



===============================================================================


      This Indenture, dated as of November 7, 1996, is between Motors and 
Gears, Inc., a Delaware corporation (the "Company"), and Fleet National 
Bank, as trustee (the "Trustee").

      Each party agrees as follows for the benefit of the other party and 
for the equal and ratable benefit of the holders of the Company's 10 % 
Series A Senior Notes due 2006 (the "Series A Senior Notes") and the 
Company's 10 % Series B Senior Notes due 2006 (the "Series B Senior Notes," 
and, together with the Series A Senior Notes, the "Senior Notes"):

                                ARTICLE 1
                      DEFINITIONS AND INCORPORATION
                              BY REFERENCE

Section 1.01.Definitions.

      "Affiliate" means any of the following: (i) any Person directly or 
indirectly controlling or controlled by or under direct or indirect common 
control with the Company, (ii) any spouse, immediate family member or other 
relative who has the same principal residence as any Person described in 
clause (i) above, (iii) any trust in which any such Persons described in 
clause (i) or (ii) above has a beneficial interest, and (iv) any 
corporation or other organization of which any such Persons described above 
collectively own 50% or more of the equity of such entity. 

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

      "Asset Sale" means the sale, lease, conveyance or other disposition 
by the Company or a Restricted Subsidiary of assets or property whether 
owned on the date of original issuance of the Senior Notes or thereafter 
acquired, in a single transaction or in a series of related transactions, 
that are outside of the ordinary course of business of the Company or such 
Restricted Subsidiary; provided that Asset Sales will not include such 
sales, leases, conveyances or dispositions in connection with (i) the sale 
or disposition of any Restricted Investment, (ii) any Equity Offering by 
(a) the Company or (b) any Restricted Subsidiary if the proceeds therefrom 
are used to make mandatory prepayments of Indebtedness under the New Credit 
Agreement or Indebtedness of the Restricted Subsidiaries or redeem Senior 
Notes as described in Section 3.07, (iii) the sale or lease of equipment, 
inventory, accounts receivable or other assets in the ordinary course of 
business, (iv) Receivables Financings, (v) the surrender or waiver of 
contract rights or the settlement, release or surrender of contract, tort 
or other claims of any kind, (vi) the grant of any license of patents, 
trademarks, registration therefor and other similar intellectual property, 
(vii) a transfer of assets by the Company or a Restricted Subsidiary to any 
of the Company, a Restricted Subsidiary or a Non-Restricted Subsidiary, 
(viii) the designation of a Restricted Subsidiary as a Non-Restricted 
Subsidiary pursuant to Section 4.17, (ix) the sale, lease, conveyance or 
other disposition of all or substantially all of the assets of the Company 
as permitted under Section 5.01," (x) the sale or disposition of obsolete 
equipment or other obsolete assets, or (xi) Restricted Payments permitted 
by Section 4.05. 

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

      "Board of Directors" means the Company's board of directors or any 
authorized committee of such board of directors. 

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

      "Capital Stock" means any and all shares, interests, participations 
or other equivalents (however designated) of corporate stock, including any 
preferred stock. 

      "Cash Flow" means, for any given period and Person, the sum of, 
without duplication, Consolidated Net Income, plus (a) the portion of Net 
Income attributable to the minority interests in its Subsidiaries, to the 
extent not included in calculating Consolidated Net Income, plus (b) any 
provision for taxes based on income or profits to the extent such income or 
profits were included in computing Consolidated Net Income, plus (c) 
Consolidated Interest Expense, to the extent deducted in computing 
Consolidated Net Income, plus (d) the amortization of all intangible 
assets, to the extent such amortization was deducted in computing 
Consolidated Net Income (including, but not limited to, inventory 
write-ups, goodwill, debt and financing costs, and Incentive Arrangements), 
plus (e) any non-capitalized transaction costs incurred in connection with 
financings, acquisitions or divestitures (including, but not limited to, 
financing and refinancing fees, including those in connection with the 
Offering and the Refinancing Plan, in each case, to the extent deducted in 
computing Consolidated Net Income), plus (f) all depreciation and all other 
non-cash charges (including, without limitation, those charges relating to 
purchase accounting adjustments and LIFO adjustments), to the extent 
deducted in computing Consolidated Net Income, plus (g) any interest 
income, to the extent such income was not included in computing 
Consolidated Net Income, plus (h) all dividend payments on preferred stock 
(whether or not paid in cash) to the extent deducted in computing 
Consolidated Net Income, plus (i) any extraordinary or non-recurring charge 
or expense arising out of the implementation of SFAS 106 or SFAS 109 to the 
extent deducted in computing Consolidated Net Income, plus (j) to the 
extent not covered in clause (e) above, fees paid or payable in respect of 
the TJC Agreement to the extent deducted in computing Consolidated Net 
Income, plus (k) the net loss of any Person, other than those of a 
Restricted Subsidiary, to the extent deducted in computing Consolidated Net 
Income, plus (l) net losses in respect of any discontinued operations as 
determined in accordance with GAAP, to the extent deducted in computing 
Consolidated Net Income; provided, however, that if any such calculation 
includes any period during which an acquisition or sale of a Person or the 
incurrence or repayment of Indebtedness occurred, then such calculation for 
such period shall be made on a Pro Forma Basis. 

      "Cash Flow Coverage Ratio" means, for any given period and Person, 
the ratio of: (i) Cash Flow, divided by (ii) the sum of Consolidated 
Interest Expense and the amount of all dividend payments on any series of 
preferred stock of such Person (except dividends paid or payable in 
additional shares of Capital Stock (other than Disqualified Stock)), in 
each case, without duplication; provided, however, that if any such 
calculation includes any period during which an acquisition or sale of a 
Person or the incurrence or repayment of Indebtedness occurred, then such 
calculation for such period shall be made on a Pro Forma Basis. 

      "Change of Control" means the occurrence of each of the following: 
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 
14(d) of the Exchange Act), excluding the Jordan Stockholders, is or 
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under 
the Exchange Act, except that a Person shall be deemed to have "beneficial 
ownership" of all securities that such Person has the right to acquire, 
whether such right is exercisable immediately or only after the passage of 
time), directly or indirectly, of more than 50% of the total Voting Stock 
of the Company; and (ii) the Company consolidates with, or merges with or 
into, another Person or sells, assigns, conveys, transfers, leases or 
otherwise disposes of all or substantially all of its assets to any Person, 
or any Person consolidates with, or merges with or into, the Company, in 
any such event pursuant to a transaction in which the outstanding Voting 
Stock of the Company is converted into or exchanged for cash, securities or 
other property, other than any such transaction where (A) the outstanding 
Voting Stock of the Company is converted into or exchanged for (1) Voting 
Stock (other than Redeemable Capital Stock) of the surviving or transferee 
corporation or (2) cash, securities and other property in an amount which 
could be paid by the Company as a Restricted Payment under the Indenture 
and (B) immediately after such transaction no "person" or "group" (as such 
terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding 
the Jordan Stockholders, is the "beneficial owner" (as defined in Rules 
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be 
deemed to have "beneficial ownership" of all securities that such Person 
has the right to acquire, whether such right is exercisable immediately or 
only after the passage of time), directly or indirectly, of more than 50% 
of the total Voting Stock of the surviving or transferee corporation; and 
(iii) during any consecutive two-year period, individuals who at the 
beginning of such period constituted the Board of Directors of the Company 
(together with any new directors whose election by such Board of Directors 
or whose nomination for election by the stockholders of the Company was 
approved by a vote of a majority of the directors then still in office who 
are entitled to vote to elect such new director and were either directors 
at the beginning of such period or Persons whose election as directors or 
nomination for election was previously so approved) cease for any reason to 
constitute a majority of the Board of Directors of the Company then in 
office. 

      The definition of Change of Control includes a phrase relating to the 
sale, lease, transfer, conveyance or other disposition of "all or 
substantially all" of the Company's assets. Although there is a developing 
body of case law interpreting the phrase "substantially all," there is no 
precise established definition of the phrase under applicable law. 
Accordingly, the ability of a holder of Senior Notes to require the Company 
to repurchase such Senior Notes as a result of a sale, lease, transfer, 
conveyance or other disposition of less than all of the assets of the 
Company and its subsidiaries to another Person may be uncertain. 
Furthermore, an acquisition of the Company by the Jordan Stockholders 
including pursuant to a spin-off to the Jordan Stockholders by Jordan 
Industries, Inc., directly or indirectly of its investment in the Company, 
would not constitute a Change of Control. 

      "Commission" means the Securities and Exchange Commission. 

      "Company" means Motors and Gears, Inc., a Delaware Corporation.

      "Consolidated Interest Expense" means, for any given period and 
Person, the aggregate of the interest expense in respect of all 
Indebtedness of such Person and its Subsidiaries for such period, on a 
consolidated basis, determined in accordance with GAAP (including 
amortization of original issue discount on any such Indebtedness, all 
non-cash interest payments, the interest portion of any deferred payment 
obligation and the interest component of capital lease obligations, but 
excluding amortization of deferred financing fees if such amortization 
would otherwise be included in interest expense); provided, however, that 
for the purpose of the Cash Flow Coverage Ratio, Consolidated Interest 
Expense shall be calculated on a Pro Forma Basis; provided further that any 
premiums, fees and expenses (including the amortization thereof) payable in 
connection with the Offering and the Refinancing Plan and the application 
of the net proceeds therefrom or any other refinancing of Indebtedness will 
be excluded. 

      "Consolidated Net Income" means, for any given period and Person, the 
aggregate of the Net Income of such Person and its Subsidiaries for such 
period, on a consolidated basis, determined in accordance with GAAP; 
provided, however, that: (i) the Net Income of any Person acquired in a 
pooling of interests transaction for any period prior to the date of such 
acquisition shall be excluded, and (ii) Consolidated Net Income of any 
Person will not include, without duplication, any deduction for: (A) any 
increased amortization or depreciation resulting from the write-up of 
assets pursuant to Accounting Principles Board Opinion Nos. 16 and 17, as 
amended or supplemented from time to time, (B) the amortization of all 
intangible assets (including amortization attributable to inventory 
write-ups, goodwill, debt and financing costs, and Incentive Arrangements), 
(C) any non-capitalized transaction costs incurred in connection with 
financings, acquisitions or divestitures (including, but not limited to, 
financing and refinancing fees), (D) any extraordinary or nonrecurring 
charges relating to any premium or penalty paid, write-off or deferred 
financing costs or other financial recapitalization charges in connection 
with redeeming or retiring any Indebtedness prior to its stated maturity, 
and (E) any Restructuring Charges; provided, however, that for purposes of 
determining the Cash Flow Coverage Ratio, Consolidated Net Income shall be 
calculated on a Pro Forma Basis. 

      "Consolidated Net Worth" with respect to any Person means, as of any 
date, the consolidated equity of the common stockholders of such Person 
(excluding the cumulated foreign currency translation adjustment), all 
determined on a consolidated basis in accordance with GAAP, but without any 
reduction in respect of the payment of dividends on any series of such 
Person's preferred stock if such dividends are paid in additional shares of 
Capital Stock (other than Disqualified Stock); provided, however, that 
Consolidated Net Worth shall also include, without duplication: (a) the 
amortization of all write-ups of inventory, (b) the amortization of all 
intangible assets (including amortization of goodwill, debt and financing 
costs, and Incentive Arrangements), (c) any non-capitalized transaction 
costs incurred in connection with financings, acquisitions or divestitures 
(including, but not limited to, financing and refinancing fees), (d) any 
increased amortization or depreciation resulting from the write-up of 
assets pursuant to Accounting Principles Board Opinion Nos. 16 and 17, as 
amended and supplemented from time to time, (e) any extraordinary or 
nonrecurring charges or expenses relating to any premium or penalty paid, 
write-off or deferred financing costs or other financial recapitalization 
charges incurred in connection with redeeming or retiring any Indebtedness 
prior to its stated maturity, (f) any Restructuring Charges, and (g) any 
extraordinary or non-recurring charge arising out of the implementation of 
SFAS 106 or SFAS 109; provided, however, that Consolidated Net Worth shall 
be calculated on a Pro Forma Basis. 

      "Contingent Earnout Agreement" means the Contingent Earnout 
Agreement, among the Company and certain of its Restricted Subsidiaries and 
Jordan Industries, Inc. and certain of its Restricted Subsidiaries, as in 
effect on the date of original issuance of the Senior Notes. 

      "Credit Agreement" means the Credit Agreement, dated September 22, 
1995, among Merkle-Korff Industries, Inc., its Subsidiaries and Bankers 
Trust Company, and all loan documents and instruments thereunder, as 
amended and restated in connection with the Offering, and as further 
amended, modified, extended, restated, replaced, or supplemented, from time 
to time. 

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

      "Definitive Senior Notes" means Senior Notes that are in the form of 
Exhibit A attached hereto (but without including the text referred to in 
footnotes 1 and 2 thereto).

      "Depositary" means, with respect to the Senior Notes issuable or 
issued in whole or in part in global form, the Person specified in Section 
2.03 hereof as the Depositary with respect to the Senior Notes, until a 
successor shall have been appointed and become such pursuant to Section 
2.06 of this Indenture, and, thereafter, "Depositary" shall mean or include 
such successor.

      "Disqualified Stock" means any Capital Stock that by its terms (or by 
the terms of any security into which it is convertible-or for which it is 
exchangeable), or upon the happening of any event, matures or is 
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, 
or is redeemable at the option of the holder thereof, in whole or in part 
on, or prior to, the maturity date of the Senior Notes. 

      "Equity Interests" means Capital Stock or partnership interests or 
warrants, options or other rights to acquire Capital Stock or partnership 
interests (but excluding (i) any debt security that is convertible into, or 
exchangeable for, Capital Stock or partnership interests, and (ii) any 
other Indebtedness or Obligation) provided, however, that Equity Interests 
will not include any Incentive Arrangements or obligations or payments 
thereunder. 

      "Equity Offering" means a public or private offering by the Company 
and/or its Subsidiaries for cash of Capital Stock or other Equity Interests 
and all warrants, options or other rights to acquire Capital Stock, other 
than (i) an offering of Disqualified Stock or (ii) Incentive Arrangements 
or obligations or payments thereunder. 

      "Exchange Offer" means the offer by the Company to Holders to 
exchange Series B Senior Notes for Series A Senior Notes.

      "GAAP" means generally accepted accounting principles, consistently 
applied, as of the date of original issuance of the Senior Notes. All 
financial and accounting determinations and calculations under the 
Indenture will be made in accordance with GAAP. 

      "Global Senior Note" means a Senior Note that contains the paragraph 
referred to in footnote 1 and the additional schedule referred to in 
footnote 2 to the form of the Note attached hereto as Exhibit A.

      "Hedging Obligations" means, with respect to any Person, the 
Obligations of such Persons under (i) interest rate swap agreements, 
interest rate cap agreements and interest rate collar agreements, (ii) 
foreign exchange contracts, currency swap agreements or similar agreements, 
and (iii) other agreements or arrangements designed to protect such Person 
against fluctuations, or otherwise to establish financial hedges in respect 
of, exchange rates, currency rates or interest rates. 

      "Holder" means a Person in whose name a Senior Note is registered.

      "Imperial Acquisitions" means the acquisition by the Company and 
certain of its Restricted Subsidiaries of the business and net assets of 
Imperial Electric Company, Scott Motor Company and Gear Research Company, 
as contemplated by the Offering Memorandum. 

      "Incentive Arrangements" means any earn-out agreements, stock 
appreciation rights, "phantom" stock plans, employment agreements, 
non-competition agreements, subscription and stockholders agreements and 
other incentive and bonus plans and similar arrangements made in connection 
with acquisitions of Persons or businesses by the Company or the Restricted 
Subsidiaries or the retention of executives, officers or employees by the 
Company or the Restricted Subsidiaries. 

      "Indebtedness" means, with respect to any Person, any indebtedness, 
whether or not contingent, in respect of borrowed money or evidenced by 
bonds, notes, debentures or similar instruments or letters of credit (or 
reimbursement agreements in respect thereof) or representing the deferred 
and unpaid balance of the purchase price of any property (including 
pursuant to capital leases), except any such balance that constitutes an 
accrued expense or a trade payable, and any Hedging Obligations, if and to 
the extent such indebtedness (other than a Hedging Obligation) would appear 
as a liability upon a balance sheet of such Person prepared on a 
consolidated basis in accordance with GAAP, and also includes, to the 
extent not otherwise included, the guarantee of items that would be 
included within this definition; provided, however, that "Indebtedness" 
will not include any Incentive Arrangements or obligations or payments 
thereunder. 

      "Indenture" means this Indenture, as amended or supplemented from 
time to time.

      "Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities 
Corporation, BT Securities Corporation and Jefferies & Company, Inc.

      "Insolvency or Liquidation Proceeding" means (i) any insolvency or 
bankruptcy or similar case or proceeding, or any reorganization, 
receivership, liquidation, dissolution or winding up of the Company, 
whether voluntary or involuntary, or (ii) any assignment for the benefit of 
creditors or any other marshalling of assets and liabilities of the 
Company. 

      "Investment" means any capital contribution to, or other debt or 
equity investment in, any Person. 
      "issue" means create, issue, assume, guarantee, incur or otherwise 
become directly or indirectly liable for any Indebtedness or Capital Stock, 
as applicable; provided, however, that any Indebtedness or Capital Stock of 
a Person existing at the time such Person becomes a Restricted Subsidiary 
(whether by merger, consolidation, acquisition or otherwise) shall be 
deemed to be issued by such Restricted Subsidiary at the time it becomes a 
Restricted Subsidiary. For this definition, the terms "issuing," "issuer," 
"issuance" and "issued" have meanings correlative to the foregoing. 

      "JII Services Agreement" means the Management and Administration 
Services Agreement, to be dated November 7, 1996, between the Company and 
Jordan Industries, Inc., as in effect on the date of original issuance of 
the Senior Notes. 

      "Jordan Stockholders" means Jordan Industries, Inc., The Jordan 
Company and Jordan/Zalaznick Capital Corporation and their respective 
affiliates, principals, partners and employees, family members of any of 
the foregoing and trusts for the benefit of any of the foregoing, 
including, without limitation, MCIT PLC and Leucadia National Corporation 
and their respective Subsidiaries. 

      "Junior Seller Note" means the subordinated promissory note, dated 
September 22, 1995, issued by Merkle-Korff Industries, Inc., in the 
principal amount of $5.0 million, and maturing on December 31, 2003, as in 
effect on the date of the original issuance of the Senior Notes. 

      "Legal Holiday" means a Saturday, a Sunday or a day on which banking 
institutions in the City of New York, the city in which the principal 
corporate trust office of the Trustee is located or at a place of payment 
are authorized by law, regulation or executive order to remain closed.  If 
a payment date is a Legal Holiday at a place of payment, payment may be 
made at that place on the next succeeding day that is not a Legal Holiday, 
and no interest shall accrue for the intervening period.

      "Lien" means, with respect to any asset, any mortgage, lien, pledge, 
charge, security interest or encumbrance of any kind in respect of such 
asset, whether or not filed, recorded or otherwise perfected under 
applicable law (including any conditional sale or other title retention 
agreement, any lease in the nature thereof, any option or other agreement 
to sell and any filing of or agreement to give any financing statement 
under the Uniform Commercial Code (or equivalent statutes) of any 
jurisdiction). 

      "Liquidated Damages" means all liquidated damages then owing pursuant 
to Section 5 of the Registration Rights Agreement.

      "Motors and Gears Industries" means Motors and Gears Industries, 
Inc., a Delaware corporation and a wholly owned subsidiary of the Company.

      "MK Installment Note" means the promissory note, dated September 22, 
1995, issued by Merkle-Korff Industries, Inc., in the principal amount of 
$90.0 million, and due and payable on December 26, 1996, as in effect on 
the date of the original issuance of the Senior Notes. 

      "MK Installment Note LC Facility" means the Letter of Credit 
Agreement, dated September 22, 1995, among the Company, Merkle-Korff 
Industries, Inc., and Bankers Trust Company, including the cash collateral 
agreement and letter of credit thereunder, and all loan documents and 
instruments thereunder, pursuant to which Bankers Trust Company has issued 
and has outstanding a standby letter of credit in the face amount of $90.0 
million, as in effect on the date of the original issuance of the Senior 
Notes. 

      "Net Income" means, with respect to any Person, the net income (loss) 
of such Person, determined in accordance with GAAP, excluding, however, any 
gain or loss, together with any related provision for taxes, realized in 
connection with any Asset Sale (including, without limitation, dispositions 
pursuant to sale and leaseback transactions). 

      "Net Proceeds" means, with respect to any Asset Sale, the aggregate 
amount of cash proceeds (including any cash received by way of deferred 
payment pursuant to a note receivable issued in connection with such Asset 
Sale, other than the portion of such deferred payment constituting 
interest, and including any amounts received as disbursements or 
withdrawals from any escrow or similar account established in connection 
with any such Asset Sale, but, in either such case, only as and when so 
received) received by the Company or any of its Restricted Subsidiaries in 
respect of such Asset Sale, net of: (i) the cash expenses of such Asset 
Sale (including, without limitation, the payment of principal of, and 
premium, if any, and interest on, Indebtedness required to be paid as a 
result of such Asset Sale (other than the Senior Notes) and legal, 
accounting, management and advisory and investment banking fees and sales 
commissions), (ii) taxes paid or payable as a result thereof, (iii) any 
portion of cash proceeds that the Company determines in good faith should 
be reserved for post-closing adjustments, it being understood and agreed 
that on the day that all such post-closing adjustments have been 
determined, the amount (if any) by which the reserved amount in respect of 
such Asset Sale exceeds the actual post-closing adjustments payable by the 
Company or any of its Restricted Subsidiaries shall constitute Net Proceeds 
on such date, (iv) any relocation expenses and pension, severance and 
shutdown costs incurred as a result thereof, and (v) any deduction or 
appropriate amounts to be provided by the Company or any of its Restricted 
Subsidiaries as a reserve in accordance with GAAP against any liabilities 
associated with the asset disposed of in such transaction and retained by 
the Company or such Restricted Subsidiary after such sale or other 
disposition thereof, including, without limitation, pension and other 
post-employment benefit liabilities and liabilities related to 
environmental matters or against any indemnification obligations associated 
with such transaction. 

      "New Credit Agreement" means the credit agreement, to be dated 
November 7, 1996, among M&G Industries, Inc., certain of its subsidiaries 
and the lenders party thereto in their capacities as lenders thereunder and 
Bankers Trust Company, as agent, together with all loan documents and 
instruments thereunder (including, without limitation, any guarantee 
agreements and security documents), in each case as such agreements may be 
amended (including any amendment and restatement thereof), supplemented or 
otherwise modified from time to time, including any agreement extending the 
maturity of, refinancing, replacing or otherwise restructuring (including, 
without limitation, increasing the amount of available borrowings 
thereunder, and all Obligations with respect thereto, in each case, to the 
extent permitted by Section 4.07, or adding Subsidiaries of the Company as 
additional borrowers or guarantors thereunder) all or any portion of the 
Indebtedness under such agreement or any successor or replacement agreement 
and whether by the same or any other agent, lender or group of lenders. 

      "Non-Restricted Subsidiary" means any Subsidiary of the Company other 
than a Restricted Subsidiary. 

      "Obligations" means, with respect to any Indebtedness, all principal, 
interest, premiums, penalties, fees, indemnities, expenses (including legal 
fees and expenses), reimbursement obligations and other liabilities payable 
to the holder of such Indebtedness under the documentation governing such 
Indebtedness, and any other claims of such holder arising in respect of 
such Indebtedness. 

      "Offering" means the offer and sale of the Senior Notes as 
contemplated by the Offering Memorandum. 

      "Offering Memorandum" means the Offering Memorandum, dated November 
1, 1996, relating to the Company's offering and placement of the Senior 
Notes. 

      "Officer" means, with respect to any Person, the Chairman of the 
Board, the Chief Executive Officer, the President, the Chief Operating 
Officer, the Chief Financial Officer, the Treasurer, any Assistant 
Treasurer, the Controller, the Secretary or any Vice-President of such 
Person.

      "Officer's Certificate" means a certificate signed on behalf of the 
Company by two Officers of the Company, one of whom must be the principal 
executive officer, the principal financial officer, the treasurer or the 
principal accounting officer of the Company, that meets the requirements of 
Section 10.04 hereof.

      "Opinion of Counsel" means an opinion from legal counsel who is 
reasonably acceptable to the Trustee, that meets the requirements of 
Section 10.05 hereof.  The counsel may be an employee of or counsel to the 
Company, any Subsidiary of the Company or the Trustee.

      "Other Permitted Indebtedness" means: (i) Indebtedness of the Company 
and its Restricted Subsidiaries existing as of the date of original 
issuance of the Senior Notes; (ii) Indebtedness of the Company and its 
Restricted Subsidiaries in respect of bankers acceptances and letters of 
credit (including, without limitation, letters of credit in respect of 
workers' compensation claims) issued in the ordinary course of business, or 
other Indebtedness in respect to reimbursement-type obligations regarding 
workers' compensation claims; (iii) Refinancing Indebtedness, provided 
that: (A) the principal amount of such Refinancing Indebtedness shall not 
exceed the outstanding principal amount of Indebtedness (including unused 
commitments) extended, refinanced, renewed, replaced, substituted or 
refunded plus any amounts incurred to pay premiums, fees and expenses in 
connection therewith, (B) the Refinancing Indebtedness shall have a 
Weighted Average Life to Maturity equal to or greater than the Weighted 
Average Life to Maturity of the Indebtedness being extended, refinanced, 
renewed, replaced, substituted or refunded; provided, however, that this 
limitation in this clause (B) does not apply to Refinancing Indebtedness of 
Senior Indebtedness, and (C) in the case of Refinancing Indebtedness of 
Subordinated Indebtedness, such Refinancing Indebtedness shall be 
subordinated to the Senior Notes at least to the same extent as the 
Subordinated Indebtedness being extended, refinanced, renewed, replaced, 
substituted or refunded; (iv) intercompany Indebtedness of and among the 
Company and its Restricted Subsidiaries (excluding guarantees by Restricted 
Subsidiaries of Indebtedness of the Company not issued in compliance with 
Section 4.15; (v) Indebtedness of the Company and its Restricted 
Subsidiaries incurred in connection with making permitted Restricted 
Payments under clauses (iii) or (iv), but only to the extent that such 
Indebtedness is provided by the Company or a Restricted Subsidiary, or (x) 
of Section 4.05(b); (vi) Indebtedness of any Non-Restricted Subsidiary 
created after the date of original issuance of the Senior Notes, provided 
that such Indebtedness is nonrecourse to the Company and its Restricted 
Subsidiaries and the Company and its Restricted Subsidiaries have no 
Obligations with respect to such Indebtedness; (vii) Indebtedness of the 
Company and its Restricted Subsidiaries under Hedging Obligations; (viii) 
Indebtedness of the Company and its Restricted Subsidiaries arising from 
the honoring by a bank or other financial institution of a check, draft or 
similar instrument inadvertently (except in the case of daylight 
overdrafts, which will not be, and will not be deemed to be, inadvertent) 
drawn against insufficient funds in the ordinary course of business; (ix) 
Indebtedness of any Person at the time it is acquired as a Restricted 
Subsidiary, provided that such Indebtedness was not issued by such Person 
in connection with or in anticipation of such acquisition; (x) guarantees 
by Restricted Subsidiaries of Indebtedness of any Restricted Subsidiary if 
such Indebtedness so guaranteed is permitted under the Indenture; (xi) 
guarantees by a Restricted Subsidiary of Indebtedness of the Company if the 
Indebtedness so guaranteed is permitted under the Indenture and the Senior 
Notes are guaranteed by such Restricted Subsidiary to the extent required 
by Section 4.15; (xii) guarantees by the Company of Indebtedness of any 
Restricted Subsidiary if the Indebtedness so guaranteed is permitted under 
the Indenture; (xiii) Indebtedness of the Company and its Restricted 
Subsidiaries in connection with performance, surety, statutory, appeal or 
similar bonds in the ordinary course of business; (xiv) Indebtedness of the 
Company and its Restricted Subsidiaries in connection with agreements 
providing for indemnification, purchase price adjustments and similar 
obligations in connection with the sale or disposition of any of their 
business, properties or assets; (xv) Indebtedness of the Restricted 
Subsidiaries in respect of the Junior Seller Note; (xvi) Indebtedness of 
the Restricted Subsidiaries in respect of the MK Installment Note and the 
MK Installment Note LC Facility; and (xvii) Indebtedness of the Company and 
its Restricted Subsidiaries in respect of the Contingent Earnout Agreement. 

      "Parent" means Motors and Gears Holdings, Inc., a Delaware 
corporation and corporate parent of the Company. 

      "Permitted Liens" means: 

      (a) with respect to the Company and its Restricted Subsidiaries, (i) 
Liens for taxes, assessments, governmental charges or claims which are 
being contested in good faith by appropriate proceedings promptly 
instituted and diligently conducted and if a reserve or other appropriate 
provision, if any, as shall be required in conformity with GAAP shall have 
been made therefor; (ii) statutory Liens of landlords and carriers', 
warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other 
like Liens arising in the ordinary course of business and with respect to 
amounts not yet delinquent or being contested in good faith by appropriate 
proceedings, if a reserve or other appropriate provision, if-any as shall 
be required in conformity with GAAP shall have been made therefor; (iii) 
Liens incurred on deposits made in the ordinary course of business in 
connection with workers' compensation, unemployment insurance and other 
types of social security; (iv) Liens incurred on deposits made to secure 
the performance of tenders, bids, leases, statutory obligations, surety and 
appeal bonds, government contracts, performance and return of money bonds 
and other obligations of a like nature incurred in the ordinary course of 
business (exclusive of obligations for the payment of borrowed money); (v) 
easements, rights-of-way, zoning or other restrictions, minor defects or 
irregularities in title and other similar charges or encumbrances not 
interfering in any material respect with the business of the Company or any 
of its Restricted Subsidiaries incurred in the ordinary course of business; 
(vi) Liens (including extensions, renewals and replacements thereof) upon 
property acquired (the "Acquired Property") after the date of original 
issuance of the Senior Notes, provided that: (A) any such Lien is created 
solely for the purpose of securing Indebtedness representing, or issued to 
finance, refinance or refund, the cost (including the cost of construction) 
of the Acquired Property, (B) the principal amount of the Indebtedness 
secured by such Lien does not exceed 100% of the cost of the Acquired 
Property, (C) such Lien does not extend to or cover any property other than 
the Acquired Property and any improvements on such Acquired Property, and 
(D) the issuance of the Indebtedness to purchase the Acquired Property is 
permitted by Section 4.07; (vii) Liens in favor of customs and revenue 
authorities arising as a matter of law to secure payment of customs duties 
in connection with the importation of goods; (viii) judgment and attachment 
Liens not giving rise to an Event of Default; (ix) leases or subleases 
granted to others not interfering in any material respect with the business 
of the Company or any of its Restricted Subsidiaries; (x) Liens securing 
Indebtedness under Hedging Obligations; (xi) Liens encumbering deposits 
made to secure obligations arising from statutory, regulatory, contractual 
or warranty requirements; (xii) Liens arising out of consignment or similar 
arrangements for the sale of goods entered into by the Company or its 
Restricted Subsidiaries in the ordinary course of business; (xiii) any 
interest or title of a lessor in property subject to any capital lease 
obligation or operating lease; (xiv) Liens arising from filing Uniform 
Commercial Code financing statements regarding leases; (xv) Liens existing 
on the date of original issuance of the Senior Notes and any extensions, 
refinancings, renewals, replacements, substitutions or refundings thereof; 
(xvi) any Lien granted to the Trustee and any substantially equivalent Lien 
granted to any trustee or similar institution under any indenture for 
Senior Indebtedness permitted by the terms of the Indenture; (xvii) Liens 
securing Indebtedness under the MK Installment Note LC Facility; and 
(xviii) additional Liens at any one time outstanding in respect of 
properties or assets where aggregate fair market value does not exceed 
$10,000,000 (the fair market value to be determined on the date such Lien 
is granted on such properties or assets); 

      (b) with respect to the Restricted Subsidiaries, (i) Liens securing 
Restricted Subsidiaries' reimbursement Obligations with respect to letters 
of credit that encumber documents and other property relating to such 
letters of credit and the products and proceeds thereof; (ii) Liens 
securing Indebtedness issued by Restricted Subsidiaries if such 
Indebtedness is (A) under the Credit Agreement or New Credit Agreement, or 
(B) permitted by Section 4.07(a), clauses (i), (ii), (iii) or (iv) of 
Section 4.07(b), or clauses (i), (iii) (to the extent the Indebtedness 
subject to such Refinancing Indebtedness was subject to Liens), (vi), 
(vii), (ix), (x) or (xvi) of the definition of Other Permitted 
Indebtedness; (iii) Liens securing intercompany Indebtedness issued by any 
Restricted Subsidiary to the Company or another Restricted Subsidiary; and 
(iv) Liens securing guarantees by Restricted Subsidiaries of Indebtedness 
issued by the Company if such guarantees permitted by clause (xi) (but only 
in respect of the property, rights and assets of the Restricted 
Subsidiaries issuing such guarantees) of the definition of Other Permitted 
Indebtedness; 

      (c) with respect to the Company, (i) Liens securing Indebtedness 
issued by the Company if such Indebtedness is (A) under the Credit 
Agreement or the New Credit Agreement, or (B) if such Indebtedness is 
permitted by Section 4.07 (including, but not limited to, Indebtedness 
issued by the Company under the Credit Agreement or the New Credit 
Agreement pursuant to clause (i) and/or clause (iv) of Section 4.07(b)); 
(ii) Liens securing Indebtedness of the Company if such Indebtedness is 
permitted by clauses (i), (iii) (to the extent the Indebtedness subject to 
such Refinancing Indebtedness was subject to Liens) or (vii) of the 
definition of Other Permitted Indebtedness; (iii) Liens securing guarantees 
by the Company of Indebtedness issued by Restricted Subsidiaries if such 
Indebtedness is permitted by Section 4.07 (including, but not limited to, 
Indebtedness issued by Restricted Subsidiaries under the Credit Agreement 
or the New Credit Agreement pursuant to clause (i) and/or clause (iv) of 
Section 4.07(b)) and if such guarantees are permitted by clause (xii) (but 
only in respect of Indebtedness issued by the Restricted Subsidiaries under 
the Credit Agreement or the New Credit Agreement pursuant to Section 4.07) 
of the definition of Other Permitted Indebtedness; and (iv) Liens securing 
the Company's reimbursement obligations with respect to letters of credit 
that encumber documents and other property relating to such letters of 
credit and the products and proceeds thereof 

provided, however, that, notwithstanding any of the foregoing, the 
Permitted Liens referred to in clause (c) of this definition shall not 
include any Lien on Capital Stock of Restricted Subsidiaries held directly 
by the Company (as distinguished from Liens on Capital Stock of Restricted 
Subsidiaries held by other Restricted Subsidiaries) other than Liens 
securing (A) Indebtedness of the Company issued under the Credit Agreement 
or the New Credit Agreement pursuant to Section 4.07 and any permitted 
Refinancing Indebtedness of such Indebtedness, and (B) guarantees by the 
Company of Indebtedness issued by Restricted Subsidiaries under the Credit 
Agreement or the New Credit Agreement pursuant to Section 4.07 and any 
permitted Refinancing Indebtedness of such Indebtedness. 

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

      "Pro Forma Basis" means, for purposes of determining Consolidated Net 
Income in connection with the Cash Flow Coverage Ratio (including in 
connection with Section 4.05, Section 4.16, Section 5.01, the incurrence of 
Indebtedness pursuant to Section 4.07(a) and Consolidated Net Worth for 
purposes of Section 5.01, giving pro forma effect to (x) any acquisition or 
sale of a Person, business or asset, related incurrence, repayment or 
refinancing of Indebtedness or other related transactions, including any 
Restructuring Charges which would otherwise be accounted for as an 
adjustment permitted by Regulation S-X under the Securities Act or on a pro 
forma basis under GAAP, or (y) any incurrence, repayment or refinancing of 
any Indebtedness and the application of the proceeds therefrom, in each 
case, as if such acquisition or sale and related transactions, 
restructurings, consolidations, cost savings, reductions, incurrence, 
repayment or refinancing were realized on the first day of the relevant 
period permitted by Regulation S-X under the Securities Act or on a pro 
forma basis under GAAP. Furthermore, in calculating the Cash Flow Coverage 
Ratio, (1) interest on outstanding Indebtedness determined on a fluctuating 
basis as of the determination date and which will continue to be so 
determined thereafter shall be deemed to have accrued at a fixed rate per 
annum equal to the rate of interest on such Indebtedness in effect on the 
determination date; (2) if interest on any Indebtedness actually incurred 
on the determination date may optionally be determined at an interest rate 
based upon a factor of a prime or similar rate, a eurocurrency interbank 
offered rate, or other rates, then the interest rate in effect on the 
determination date will be deemed to have been in effect during the 
relevant period; and (3) notwithstanding clause (1) above, interest on 
Indebtedness determined on a fluctuating basis, to the extent such interest 
is covered by agreements relating to interest rate swaps or similar 
interest rate protection Hedging Obligations, shall be deemed to accrue at 
the rate per annum resulting after giving effect to the operation of such 
agreements. 

      "Receivables" means, with respect to any Person, all of the following 
property and interests in property of such Person, whether now existing or 
existing in the future or hereafter acquired or arising: (i) accounts, (ii) 
accounts receivable (including, without limitation, all rights to payment 
created by or arising from sales of goods, leases of goods or leased or the 
rendition of services rendered no matter how evidenced, whether or not 
earned by performance), (iii) all unpaid seller's or lessor's rights 
(including, without limitation, recession, replevin, reclamation and 
stoppage in transit, relating to any of the foregoing or arising 
therefrom), (iv) all rights to any goods or merchandise represented by any 
of the foregoing (including, without limitation, returned or repossessed 
goods), (v) all reserves and credit balances with respect to any such 
accounts receivable or account debtors, (vi) all letters of credit, 
security or guarantees of any of the foregoing, (vii) all insurance 
policies or reports relating to any of the foregoing, (viii) all collection 
or deposit accounts relating to any of the foregoing, (ix) all proceeds of 
any of the foregoing, and (x) all books and records relating to any of the 
foregoing. 

      "Receivables Financing" means (i) the sale, factoring or other 
disposition of Receivables that arise in the ordinary course of business, 
or (ii) the sale, factoring or other disposition of Receivables that arise 
in the ordinary course of business to a Receivables Subsidiary followed by 
a financing transaction in connection with such sale or disposition of such 
Receivables. 

      "Receivables Subsidiary" means any Subsidiary of the Company or any 
other corporation trust or entity that is exclusively engaged in 
Receivables Financings and activities reasonably related thereto. 

      "Redeemable Preferred Stock" means preferred stock that by its terms 
or otherwise is required to be redeemed or is redeemable at the option of 
the holder thereof on, or prior to, the maturity date of the Senior Notes. 

      "Refinancing Indebtedness" means (i) Indebtedness of the Company and 
its Restricted Subsidiaries issued or given in exchange for, or the 
proceeds of which are used to, extend, refinance, renew, replace, 
substitute or refund any Indebtedness permitted under this Indenture or any 
Indebtedness issued to so extend, refinance, renew, replace, substitute or 
refund such Indebtedness, (ii) any refinancings of Indebtedness issued 
under the New Credit Agreement, and (iii) any additional Indebtedness 
issued to pay premiums and fees in connection with clauses (i) and (ii). 

      "Refinancing Plan" means the Company's repayment of Indebtedness 
under the Credit Agreement and certain other Indebtedness with the net 
proceeds from the sale of the Senior Notes and borrowing under the New 
Credit Agreement as contemplated by the Offering Memorandum. 

      "Registration Rights Agreement" means the Registration Rights 
Agreement, dated as of November 7, 1996, by and among the Company and the 
Initial Purchasers.

      "Representative" means the agent or other representative in respect 
of the New Credit Agreement, with the Representative originally being 
Bankers Trust Company. 

      "Restricted Investment" means Investment in any Person, provided that 
Restricted Investments will not include: (i) Investments in marketable 
securities and other negotiable instruments permitted by this Indenture; 
(ii) any Incentive Arrangements; (iii) Investments in the Company; or (iv) 
Investments in any Restricted Subsidiary (provided that any Investment in a 
Restricted Subsidiary was made for fair market value (as determined by the 
Board of Directors in good faith)). The amount of any Restricted Investment 
shall be the amount of cash and the fair market value at the time of 
transfer of all other property (as determined by the Board of Directors in 
good faith) initially invested or paid for such Restricted Investment, plus 
all additions thereto, without any adjustments for increases or decreases 
in value of or write-ups, write-downs or write-offs with respect to, such 
Restricted Investment. 

      "Restricted Subsidiary" means: (i) any Subsidiary of the Company 
existing on the date of original issuance of the Senior Notes, and (ii) any 
other Subsidiary of the Company formed, acquired or existing after the date 
of original issuance of the Senior Notes that is designated as a 
"Restricted Subsidiary" by the Company pursuant to a resolution approved a 
majority of the Board of Directors, provided, however, that the term 
Restricted Subsidiary shall not include any Subsidiary of the Company that 
has been redesignated by the Company pursuant to a resolution approved by a 
majority of the Board of Directors as a Non-Restricted Subsidiary in 
accordance with Section 4.16 unless such Subsidiary shall have subsequently 
been redesignated a Restricted Subsidiary in accordance with clause (ii) of 
this definition. 

      "Restructuring Charges" means any charges or expenses in respect of 
restructuring or consolidating any business, operations or facilities, any 
compensation or headcount reduction, or any other cost savings, of any 
Persons or businesses either alone or together with the Company or any 
Restricted Subsidiary, as permitted by GAAP or Regulation S-X under the 
Securities Act. 

      "SEC" means the Securities and Exchange Commission. 

      "Securities Act" means the Securities Act of 1933, as amended.

      "Senior Indebtedness" means: (i) all Obligations (including any 
interest accruing subsequent to the filing of a petition of bankruptcy at 
the rate provided for in the documentation with respect thereto, whether or 
not such interest is an allowed claim under applicable law) on any 
Indebtedness of the Company, whether outstanding on the date of issuance of 
the Senior Notes or thereafter created, incurred or assumed, of the 
following types: (A) all Indebtedness of the Company (including without 
limitation the Senior Notes) for money borrowed, and (B) all Indebtedness 
evidenced by notes, debentures, bonds or other similar instruments for the 
payment of which the Company is responsible or liable; (ii) all capitalized 
lease obligations of the Company; (iii) all Obligations of the Company: (A) 
for the reimbursement of any obligor on any letter of credit, banker's 
acceptance or similar credit transaction, (B) all constituting Hedging 
Obligations, or (C) issued as the deferred purchase price of property and 
all conditional sale Obligations of the Company and all Obligations of the 
Company under any title retention agreement; (iv) all guarantees of the 
Company with respect to Obligations of other Persons of the type referred 
to in clauses (ii) and (iii) and with respect to the payment of dividends 
of other Persons; and (v) all Obligations of the Company consisting of 
modifications, renewals, extensions, replacements and refundings of any 
Obligations described in clauses (i), (ii), (iii) or (iv) unless, in the 
instrument creating or evidencing the same or pursuant to which the same is 
outstanding, it is expressly provided that such Obligations are 
subordinated or junior in right of payment to the Senior Notes; provided, 
however, that Senior Indebtedness shall not be deemed to include: (1) any 
Obligation of the Company to any Subsidiary, (2) any liability for federal, 
state, local or other taxes owed or owing by the Company, (3) any accounts 
payable or other liability to trade creditors arising in the ordinary 
course of business (including guarantees thereof or instruments evidencing 
such liabilities), (4) any Indebtedness, guarantee or Obligation of the 
Company that is contractually subordinated or junior in any respect to any 
other Indebtedness, guarantee or Obligation of the Company, or (5) any 
Indebtedness to the extent the same is incurred in violation of the 
Indenture. Senior Indebtedness shall include all Obligations in respect of 
the Senior Notes and the Indenture. 

      To the extent any payment on the Senior Notes, whether by or on 
behalf of the Company, as proceeds of security or enforcement of any right 
of setoff or otherwise, is declared to be fraudulent or preferential, set 
aside or required to be paid to a trustee, receiver or other similar party 
under any bankruptcy, insolvency, receivership or similar law, then if such 
payment is recovered by, or paid over to, such trustee, receiver or other 
similar party, the Senior Notes or part thereof originally intended to be 
satisfied by such payment shall be deemed to be reinstated and outstanding 
as if such payment had not occurred. 

      "Senior Notes" means the Series A Notes and the Series B Notes. 

      "Series A Notes" means the Company's 10  Series A Notes due 2006.

      "Series B Notes" means the Company's 10  Series B Notes due 2006.

      "SFAS 106" means Statement of Financial Accounting Standards No. 106. 

      "SFAS 109" means Statement of Financial Accounting Standards No. 109. 

      "Significant Subsidiary" means any Restricted Subsidiary of the 
Company that would be a "significant subsidiary" as defined in clause (2) 
of the definition of such term in Rule 1-02 of Regulation S-X under the 
Securities Act and the Exchange Act. 

      "Subordinated Indebtedness" means all Obligations of the type 
referred to in clauses (i) through (v) of the definition of Senior 
Indebtedness, if the instrument creating or evidencing the same, or 
pursuant to which the same is outstanding, designates such Obligations as 
subordinated or junior in right of payment to Senior Indebtedness. 

      "Subsidiary" of any Person means any entity of which the Equity 
Interests entitled to cast at least a majority of the votes that may be 
cast by all Equity Interests having ordinary voting power for the election 
of directors or other governing body of such entity are owned by such 
Person (regardless of whether such Equity Interests are owned directly by 
such Person or through one or more Subsidiaries). 

      "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code    
77aaa-77bbbb), as amended, as in effect on the date of original issuance of 
the Senior Notes.

      "TJC Agreement" means the Management Consulting Agreement, to be 
dated as of November 7, 1996, between the Company and TJC Management 
Corporation, as in effect on the date of original issuance of the Senior 
Notes. 

      "Transfer Restricted Senior Notes" means securities that bear or are 
required to bear the legend set forth in Section 2.06.

      "Trustee" means Fleet National Bank until a successor replaces it in 
accordance with the applicable provisions of this Indenture, and thereafter 
means the successor.

      "U.S. Government Obligations" means direct obligations of the Untied 
States of America for the payment of which the full faith and credit of the 
United States of America is pledged, provided that no U.S. Government 
Obligation shall be callable at the issuer's option.

      "Voting Stock" means any class or classes of Capital Stock pursuant 
to which the holders thereof have the general voting power under ordinary 
circumstances to elect the board of directors. 

      "Weighted Average Life to Maturity" means, when applied to any 
Indebtedness at any date, the number of years obtained by dividing (i) the 
then outstanding principal amount of such Indebtedness into (ii) the sum of 
the product(s) obtained by multiplying (a) the amount of each then 
remaining installment, sinking fund, serial maturity or other requirement 
payment of principal, including payment at final maturity, in respect 
thereof, by (b) the number of years (calculated to the nearest one-twelfth) 
which will elapse between such date and the making of such payment.


Section 1.02. Other Definitions.
                                                   Defined in
      Term                                            Section

      "Affiliate Transaction"............................4.08
      "Asset Sale Disposition Date"......................4.14
      "Asset Sale Trigger Date"..........................4.14
      "Change of Control Trigger Date"...................4.13
      "covenant defeasance option".......................8.01
      "Disposition"......................................5.01
      "DTC"..............................................2.03
      "Event of Default".................................6.01
      "Excess Proceeds"..................................4.14
      "legal defeasance option"..........................8.01
      "Notice of Default"................................6.01
      "Offer"............................................3.08
      "Other Indebtedness"...............................4.15
      "Other Indebtedness Guarantee".....................4.15
      "Paying Agent".....................................2.03
      "Purchase Date"....................................3.08
      "Registrar"........................................2.03
      "Restricted Payments"..............................4.05
      "Successor Corporation"............................5.01
      "Trustee Expenses".................................6.08

Section 1.03. Incorporation by Reference of Trust Indenture Act.

      Whenever this Indenture refers to a provision of the TIA, the 
provision is incorporated by reference in, and made a part of, this 
Indenture.  Any terms incorporated by reference in this Indenture that are 
defined by the TIA, defined by TIA reference to another statute or defined 
by SEC rule under the TIA have the meanings so assigned to them therein.

Section 1.04 Rules of Construction.

      Unless the context otherwise requires:

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

      (2)  an accounting term not otherwise defined herein has the meaning 
           assigned to it under GAAP;

      (3)  "or" is not exclusive;

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

      (5)  provisions apply to successive events and transactions.


                                ARTICLE 2
                            THE SENIOR NOTES

Section 2.01. Form and Dating.

      The Senior Notes and the Trustee's certificate of authentication 
shall be substantially in the form of Exhibit A, which is part of this 
Indenture.  The Senior Notes may have notations, legends or endorsements 
required by law, stock exchange rule or usage.  Each Senior Note shall be 
dated the date of its authentication.  The Senior Notes shall be in 
denominations of $1,000 and integral multiples thereof.

      The terms and provisions contained in the Senior Notes shall 
constitute, and are hereby expressly made, a part of this Indenture and, to 
the extent applicable, the Company and the Trustee, by their execution and 
delivery of this Indenture, expressly agree to such terms and provisions 
and to be bound thereby.

      Each Global Senior Note shall represent such of the outstanding 
Senior Notes as shall be specified therein and each shall provide that it 
shall represent the aggregate amount of outstanding Senior Notes from time 
to time endorsed thereon and that the aggregate amount of outstanding 
Senior Notes represented thereby may from time to time be reduced or 
increased, as appropriate, to reflect exchanges and redemptions.  Any 
endorsement of a Global Senior Note to reflect the amount of any increase 
or decrease in the amount of outstanding Senior Notes represented thereby 
shall be made by the Trustee or the Senior Note Custodian, at the direction 
of the Trustee, in accordance with instructions given by the Holder thereof 
as required by Section 2.06.

Section 2.02. Execution and Authentication.

      One Officer shall sign the Senior Notes for the Company by manual or 
facsimile signature.  The Company's seal shall be reproduced on the Senior 
Notes and may be in facsimile form.

      If an Officer whose signature is on a Senior Note no longer holds 
that office at the time a Senior Note is authenticated, the Senior Note 
shall nevertheless be valid.

      A Senior Note shall not be valid until authenticated by the manual 
signature of an authorized signatory of the Trustee, and the Trustee's 
signature shall be conclusive evidence that the Senior Note has been 
authenticated under this Indenture.  The form of Trustee's certificate of 
authentication to be borne by the Senior Notes shall be substantially as 
set forth in Exhibit A.

      The Trustee shall, upon a written order of the Company signed by two 
Officers directing the Trustee to authenticate the Senior Notes and 
certifying that all conditions precedent to the issuance of the Senior 
Notes contained herein have been complied with, authenticate Senior Notes 
for original issuance up to an aggregate principal amount stated in 
paragraph 4 of the Senior Notes (the aggregate principal amount of 
outstanding Senior Notes may not exceed that amount at any time, except as 
provided in Section 2.07).

      The Trustee may appoint an authenticating agent acceptable to the 
Company to authenticate Senior Notes.  Unless limited by the terms of such 
appointment, an authenticating agent may authenticate Senior Notes whenever 
the Trustee may do so.  Each reference in this Indenture to authentication 
by the Trustee includes authentication by such agent.  An authenticating 
agent has the same rights as an Agent to deal with the Company or an 
Affiliate of the Company.

Section 2.03. Registrar and Paying Agent.

      The Company shall maintain an office or agency (the "Registrar") 
where Senior Notes may be presented for registration of transfer or for 
exchange and an office or agency (the "Paying Agent") where Senior Notes 
may be presented for payment.  The Registrar shall keep a register of the 
Senior Notes and of their transfer and exchange.  The Company may appoint 
one or more co-registrars and one or more additional paying agents.  The 
term "Registrar" includes any co-registrar, and the term "Paying Agent" 
includes any additional paying agent.  The Company may change any Paying 
Agent or Registrar without prior notice to any Holder.  The Company shall 
notify in writing the Trustee and the Trustee shall notify the Holders in 
writing of the name and address of any Agent not a party to this Indenture.  
If the Company fails to appoint or maintain another entity as Registrar or 
Paying Agent, the Trustee shall act as such.  The Company shall enter into 
an appropriate agency agreement with any Agent not a party to this 
Indenture, and such agreement shall incorporate the TIA's provisions and 
implement the provisions of this Indenture that relate to such Agent.

      The Company initially appoints The Depository Trust Company ("DTC") 
to act as Depository with respect to the Global Senior Notes.

      The Company initially appoints the Trustee as Registrar, Paying Agent 
and agent for service of notices and demands in connection with the Senior 
Notes and as Senior Note Custodian with respect to the Global Senior Notes.  
The Company or any of its Subsidiaries may act as Paying Agent, Registrar 
or co-registrar.  If the Company fails to appoint or maintain a Registrar 
and Paying Agent, the Trustee shall act as such, and shall be entitled to 
appropriate compensation in accordance with Section 7.07.

Section 2.04. Paying Agent to Hold Money in Trust.

      The Company shall require each Paying Agent other than the Trustee to 
agree in writing that the Paying Agent will hold in trust for the Holders' 
benefit or the Trustee all money the Paying Agent holds for redemption or 
purchase of the Senior Notes or for the payment of principal of, or 
premium, if any, or interest on, or Liquidated Damages, if any, with 
respect to the Senior Notes, and will promptly notify the Trustee of any 
Default by the Company in providing the Paying Agent with sufficient funds 
to (i) purchase Senior Notes tendered pursuant to an Offer arising under 
Section 4.13, (ii) redeem Senior Notes called for redemption, or (iii) make 
any payment of principal, premium, interest or Liquidated Damages due on 
the Senior Notes.  While any such Default continues, the Trustee may 
require the Paying Agent to pay all money it holds to the Trustee and to 
account for any funds disbursed.  The Company at any time may require the 
Paying Agent to pay all money it holds to the Trustee and to account for 
any funds disbursed.  Upon payment over to the Trustee, the Paying Agent 
(if other than the Company or any of its Subsidiaries) shall have no 
further liability for the money it delivered to the Trustee.  If the 
Company or any of its Subsidiaries acts as Paying Agent, it shall segregate 
and hold in a separate trust fund for the Holders' benefit or the Trustee 
all money it holds as Paying Agent.

Section 2.05. Holder Lists.

      The Trustee shall preserve in as current a form as is reasonably 
practicable the most recent list available to it of the names and addresses 
of all Holders and shall otherwise comply with TIA   312(a).  If the 
Trustee is not the Registrar, the Company shall furnish to the Trustee at 
least seven Business Days before each interest payment date and at such 
other times as the Trustee may request in writing, a list in such form and 
as of such date as the Trustee may reasonably require that sets forth the 
names and addresses of, and the aggregate principal amount of Senior Notes 
held by, each Holder, and the Company shall otherwise comply with Section 
312(a) of the TIA.

Section 2.06. Transfer and Exchange.

      (a)  Transfer and Exchange of Definitive Senior Notes.  When 
Definitive Senior Notes are presented by a Holder to the Registrar with a 
request:

           (x)   to register the transfer of the Definitive Senior Notes; 
                 or

           (y)   to exchange such Definitive Senior Notes for an equal 
                 principal amount of Definitive Senior Notes of other 
                 authorized denominations,

the Registrar shall register the transfer or make the exchange as requested 
if its requirements for such transactions are met; provided, however, that 
the Definitive Senior Notes presented or surrendered for register of 
transfer or exchange:

           (i)   shall be duly endorsed or accompanied by a written 
                 instruction of transfer in form satisfactory to the 
                 Registrar duly executed by such Holder or by his attorney, 
                 duly authorized in writing; and

           (ii)  in the case of a Definitive Senior Note that is a Transfer 
                 Restricted Senior Note, such request shall be accompanied 
                 by the following additional information and documents, as 
                 applicable:

                 (A)  if such Transfer Restricted Senior Note is being 
                      delivered to the Registrar by a Holder for 
                      registration in the name of such Holder, without 
                      transfer, a certification to that effect from such 
                      Holder (in substantially the form of Exhibit B 
                      hereto); or

                 (B)  if such Transfer Restricted Senior Note is being 
                      transferred (1) to a "qualified institutional buyer" 
                      (as defined in Rule 144A under the Securities Act) in 
                      accordance with Rule 144A under the Securities Act or 
                      (2) pursuant to an exemption from registration in 
                      accordance with Rule 144 under the Securities Act 
                      (and based on an opinion of counsel if the Company so 
                      requests) or (3) pursuant to an effective 
                      registration statement under the Securities Act, a 
                      certification to that effect from such Holder (in 
                      substantially the form of Exhibit B hereto); 

                 (C)  if such Transfer Restricted Senior Note is being 
                      transferred to an institutional "accredited 
                      investor," within the meaning of Rule 501(a)(1), (2), 
                      (3) or (7) under the Securities Act pursuant to a 
                      private placement exemption from the registration 
                      requirements of the Securities Act (and based on an 
                      opinion of counsel if the Company so requests), a 
                      certification to that effect from such Holder (in 
                      substantially the form of Exhibit B hereto) and a 
                      certification from the applicable transferee (in 
                      substantially the form of Exhibit C hereto);

                 (D)  if such Transfer Restricted Senior Note is being 
                      transferred pursuant to an exemption from 
                      registration in accordance with Rule 904 under the 
                      Securities Act (and based on an opinion of counsel if 
                      the Company so requests), certifications to that 
                      effect from such Holder (in substantially the form of 
                      Exhibits B and D hereto); or

                 (E)  if such Transfer Restricted Senior Note is being 
                      transferred in reliance on another exemption from the 
                      registration requirements of the Securities Act (and 
                      based on an opinion of counsel if the Company so 
                      requests), a certification to that effect from such 
                      Holder (in substantially the form of Exhibit B 
                      hereto).

      (b)  Transfer of a Definitive Senior Note for a Beneficial Interest 
in a Global Senior Note.  A Definitive Senior Note may not be exchanged for 
a beneficial interest in a Global Senior Note except upon satisfaction of 
the requirements set forth below.  Upon receipt by the Trustee of a 
Definitive Senior Note, duly endorsed or accompanied by appropriate 
instruments of transfer, in form satisfactory to the Trustee, together 
with:

           (i)   if such Definitive Senior Note is a Transfer Restricted 
                 Senior Note, a certification from the Holder thereof (in 
                 substantially the form of Exhibit B hereto) to the effect 
                 that such Definitive Senior Note is being transferred by 
                 such Holder to a "qualified institutional buyer" (as 
                 defined in Rule 144A under the Securities Act) in 
                 accordance with Rule 144A under the Securities Act; and

           (ii)  whether or not such Definitive Senior Note is a Transfer 
                 Restricted Senior Note, written instructions from the 
                 Holder thereof directing the Trustee to make, or to direct 
                 the Senior Note Custodian to make, an endorsement on the 
                 Global Senior Note to reflect an increase in the aggregate 
                 principal amount of the Senior Notes represented by the 
                 Global Senior Note,

the Trustee shall cancel such Definitive Senior Note in accordance with 
Section 2.11 and cause, or direct the Senior Note Custodian to cause, in 
accordance with the standing instructions and procedures existing between 
the Depository and the Senior Note Custodian, the aggregate principal 
amount of Senior Notes represented by the Global Senior Note to be 
increased accordingly.  If no Global Senior Notes are then outstanding, the 
Company shall issue and, upon receipt of an authentication order in 
accordance with Section 2.02, the Trustee shall authenticate a new Global 
Senior Note in the appropriate principal amount.

      (c)  Transfer and Exchange of Global Senior Notes.  The transfer and 
exchange of Global Senior Notes or beneficial interests therein shall be 
effected through the Depository, in accordance with this Indenture and the 
procedures of the Depository therefor, which shall include restrictions on 
transfer comparable to those set forth herein to the extent required by the 
Securities Act.

      (d)  Transfer of a Beneficial Interest in a Global Senior Note for a 
           Definitive Senior Note.

           (i)   Any Person having a beneficial interest in a Global Senior 
                 Note may upon request exchange such beneficial interest 
                 for a Definitive Senior Note.  Upon receipt by the Trustee 
                 of written instructions or such other form of instructions 
                 as is customary for the Depository, from the Depository or 
                 its nominee on behalf of any Person having a beneficial 
                 interest in a Global Senior Note, and, in the case of a 
                 Transfer Restricted Senior Note, the following additional 
                 information and documents (all of which may be submitted 
                 by facsimile):

                 (A)  if such beneficial interest is being transferred to 
                      the Person designated by the Depository as being the 
                      beneficial owner, a certification to that effect from 
                      such Person (in substantially the form of Exhibit B 
                      hereto); or

                 (B)  if such beneficial interest is being transferred (1) 
                      to a "qualified institutional buyer" (as defined in 
                      Rule 144A under the Securities Act) in accordance 
                      with Rule 144A under the Securities Act or (2) 
                      pursuant to an exemption from registration in 
                      accordance with Rule 144 under the Securities Act 
                      (and based on an opinion of counsel if the Company so 
                      requests) or (3) pursuant to an effective 
                      registration statement under the Securities Act, a 
                      certification to that effect from the transferor (in 
                      substantially the form of Exhibit B hereto); or

                 (C)  if such beneficial interest is being transferred to 
                      an institutional "accredited investor," within the 
                      meaning of Rule 501(a)(1), (2), (3) or (7) under the 
                      Securities Act pursuant to a private placement 
                      exemption from the registration requirements of the 
                      Securities Act (and based on an opinion of counsel if 
                      the Company so requests), a certification to that 
                      effect from such Holder (in substantially the form of 
                      Exhibit B hereto) and a certification from the 
                      applicable transferee (in substantially the form of 
                      Exhibit C hereto);

                 (D)  if such beneficial interest is being transferred 
                      pursuant to an exemption from registration in 
                      accordance with Rule 904 under the Securities Act 
                      (and based on an opinion of counsel if the Company so 
                      requests), certifications to that effect from such 
                      Holder (in substantially the form of Exhibits B and D 
                      hereto); or

                 (E)  if such beneficial interest is being transferred in 
                      reliance on another exemption from the registration 
                      requirements of the Securities Act (and based on an 
                      opinion of counsel if the Company so requests), a 
                      certification to that effect from such Holder (in 
                      substantially the form of Exhibit B hereto).

                 the Trustee or the Senior Note Custodian, at the direction 
                 of the Trustee, shall, in accordance with the standing 
                 instructions and procedures existing between the 
                 Depository and the Senior Note Custodian, cause the 
                 aggregate principal amount of Global Senior Notes to be 
                 reduced accordingly and, following such reduction, the 
                 Company shall execute and, upon receipt of an 
                 authentication order in accordance with Section 2.02 
                 hereof, the Trustee shall authenticate and deliver to the 
                 transferee a Definitive Senior Note in the appropriate 
                 principal amount.

           (ii)  Definitive Senior Notes issued in exchange for a 
                 beneficial interest in a Global Senior Note pursuant to 
                 this Section 2.06(d) shall be registered in such names and 
                 in such authorized denominations as the Depository, 
                 pursuant to instructions from its direct or indirect 
                 participants or otherwise, shall instruct the Trustee.  
                 The Trustee shall deliver in accordance with the standard 
                 procedures of the Depository such Definitive Senior Notes 
                 to the Persons in whose names such Senior Notes are so 
                 registered.

      (e)  Restrictions on Transfer and Exchange of Global Senior Notes.  
Notwithstanding any other provision of this Indenture (other than the 
provisions set forth in subsection (f) of this Section 2.06), a Global 
Senior Note may not be transferred as a whole except by the Depository to a 
nominee of the Depository or by a nominee of the Depository to the 
Depository or another nominee of the Depository or by the Depository or any 
such nominee to a successor Depository or a nominee of such successor 
Depository.

      (f)  Authentication of Definitive Senior Notes in Absence of 
           Depository.  If at any time:

           (i)   the Depository for the Senior Notes notifies the Company 
                 that the Depository is unwilling or unable to continue as 
                 Depository for the Global Senior Notes and a successor 
                 Depository for the Global Senior Notes is not appointed by 
                 the Company within 90 days after delivery of such notice; 
                 or

           (ii)  The Company, at its sole discretion, notifies the Trustee 
                 in writing that it elects to cause the issuance of 
                 Definitive Senior Notes under this Indenture,

then the Company shall execute, and the Trustee shall, upon receipt of an 
authentication order in accordance with Section 2.02, authenticate and 
deliver, Definitive Senior Notes in an aggregate principal amount equal to 
the principal amount of the Global Senior Notes in exchange for such Global 
Senior Notes and registered in such names as the Depository shall instruct 
the Trustee or the Company in writing.

      (g)  Legends.

           (i)   Except for any Transfer Restricted Senior Note sold or 
                 transferred (including any Transfer Restricted Senior Note 
                 represented by a Global Senior Note) as described in (ii) 
                 below, each Senior Note certificate evidencing Global 
                 Senior Notes and Definitive Senior Notes (and all Senior 
                 Notes issued in exchange therefor or substitution thereof) 
                 shall bear legends in substantially the following form:

                 "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS 
                 ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM 
                 REGISTRATION UNDER SECTION 5 OF THE UNITED STATES 
                 SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE 
                 SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR 
                 OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION 
                 OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF 
                 THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE 
                 SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS 
                 OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A 
                 THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY 
                 AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH 
                 SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, 
                 ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE 
                 SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL 
                 BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) 
                 IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, 
                 (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 
                 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO 
                 A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS 
                 OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE 
                 WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS 
                 OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF 
                 COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR 
                 (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, 
                 IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES 
                 LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER 
                 APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH 
                 SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER 
                 FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE 
                 RESTRICTIONS SET FORTH IN (A) ABOVE."

           (ii)  Upon any sale or transfer of a Transfer Restricted Senior 
                 Note (including any Transfer Restricted Senior Note 
                 represented by a Global Senior Note) pursuant to an 
                 effective registration statement under the Securities Act, 
                 pursuant to Rule 144 under the Securities Act or pursuant 
                 to an opinion of counsel reasonably satisfactory to the 
                 Company and the Registrar that no legend is required:

                 (A)  in the case of any Transfer Restricted Senior Note 
                      that is a Definitive Senior Note, the Registrar shall 
                      permit the Holder thereof to exchange such Transfer 
                      Restricted Senior Note for a Definitive Senior Note 
                      that does not bear the legend set forth in (i) above 
                      and rescind any restriction on the transfer of such 
                      Transfer Restricted Senior Note; and

                 (B)  in the case of any Transfer Restricted Senior Note 
                      represented by a Global Senior Note, such Transfer 
                      Restricted Senior Note shall not be required to bear 
                      the legend set forth in (i) above if all other 
                      interests in such Global Senior Note have been or are 
                      concurrently being sold or transferred pursuant to 
                      Rule 144 under the Securities Act or pursuant to an 
                      effective registration statement under the Securities 
                      Act, but such Transfer Restricted Senior Note shall 
                      continue to be subject to the provisions of Section 
                      2.06(c); provided, however, that with respect to any 
                      request for an exchange of a Transfer Restricted 
                      Senior Note that is represented by a Global Senior 
                      Note for a Definitive Senior Note that does not bear 
                      the legend set forth in (i) above, which request is 
                      made in reliance upon Rule 144, the Holder thereof 
                      shall certify in writing to the Registrar that such 
                      request is being made pursuant to Rule 144 (such 
                      certification to be substantially in the form of 
                      Exhibit B hereto).

           (iii) Notwithstanding the foregoing, upon consummation of the 
                 Exchange Offer, the Company shall issue and, upon receipt 
                 of an authentication order in accordance with Section 
                 2.02, the Trustee shall authenticate, Series B Senior 
                 Notes in exchange for Series A Senior Notes accepted for 
                 exchange in the Exchange Offer, which Series B Senior 
                 Notes shall not bear the legend set forth in (i) above, 
                 and the Registrar shall rescind any restriction on the 
                 transfer of such Senior Notes, in each case unless the 
                 Holder of such Series A Senior Notes is either (A) a 
                 broker-dealer, (B) a Person participating in the 
                 distribution of the Series A Senior Notes or (C) a Person 
                 who is an affiliate (as defined in Rule 144A) of the 
                 Company.  The Company shall identify to the Trustee such 
                 Holders of the Senior Notes in a written certification 
                 signed by an Officer of the Company and, absent 
                 certification from the Company to such effect, the Trustee 
                 shall assume that there are no such Holders.

      (h)  Cancellation and/or Adjustment of Global Senior Notes.  At such 
time as all beneficial interests in Global Senior Notes have been exchanged 
for Definitive Senior Notes, redeemed, repurchased or cancelled, all Global 
Senior Notes shall be returned to or retained and cancelled by the Trustee 
in accordance with Section 2.11.  At any time prior to such cancellation, 
if any beneficial interest in a Global Senior Note is exchanged for 
Definitive Senior Notes, redeemed, repurchased or cancelled, the principal 
amount of Senior Notes represented by such Global Senior Note shall be 
reduced accordingly and an endorsement shall be made on such Global Senior 
Note, by the Trustee or the Senior Notes Custodian, at the direction of the 
Trustee, to reflect such reduction.

      (i)  General Provisions Relating to Transfers and Exchanges.

           (i)   To permit registrations of transfers and exchanges, the 
                 Company shall execute and the Trustee shall authenticate 
                 Definitive Senior Notes and Global Senior Notes at the 
                 Registrar's request.

           (ii)  No service charge shall be made to a Holder for any 
                 registration of transfer or exchange, but the Company may 
                 require payment of a sum sufficient to cover any transfer 
                 tax or similar governmental charge payable in connection 
                 therewith (other than any such transfer taxes or similar 
                 governmental charge payable upon exchange or transfer 
                 pursuant to Sections 3.07, 4.13, 4.14 and 9.05).

           (iii) Neither the Company nor the Registrar shall be required to 
                 register the transfer of or exchange any Senior Note 
                 selected for redemption in whole or in part, except the 
                 unredeemed portion of any Senior Note being redeemed in 
                 part.

           (iv)  All Definitive Senior Notes and Global Senior Notes issued 
                 upon any registration of transfer or exchange of 
                 Definitive Senior Notes or Global Senior Notes in 
                 accordance with this Indenture (including any increase in 
                 the aggregate principal amount of the Senior Notes 
                 represented by the Global Senior Note pursuant to 
                 subsection (b) above) shall be the valid obligations of 
                 the Company, evidencing the same debt, and entitled to the 
                 same benefits under this Indenture, as the Definitive 
                 Senior Notes or Global Senior Notes surrendered upon such 
                 registration of transfer or exchange.

           (v)   The Company shall not be required to issue Senior Notes 
                 and the Registrar shall not be required to register the 
                 transfer of or to exchange Senior Notes during a period 
                 beginning at the opening of business 15 days before the 
                 day of any selection of Senior Notes for redemption under 
                 Section 3.02 and ending at the close of business on the 
                 day of selection, or to register the transfer of or to 
                 exchange a Senior Note between a record date and the next 
                 succeeding interest payment date.

           (vi)  Prior to due presentment for the registration of a 
                 transfer of any Senior Note, the Trustee, any Agent and 
                 the Company may deem and treat the Person in whose name 
                 any Senior Note is registered as the absolute owner of 
                 such Senior Note for the purpose of receiving payment of 
                 principal of, premium, if any, accrued and unpaid 
                 interest, and Liquidated Damages, if any, on such Senior 
                 Notes, and neither the Trustee, any Agent nor the Company 
                 shall be affected by notice to the contrary.

           (vii) The Trustee shall authenticate Definitive Senior Notes and 
                 Global Senior Notes in accordance with the provisions of 
                 Section 2.02.

Section 2.07. Replacement Senior Notes.

      If any mutilated Senior Note is surrendered to the Trustee, or the 
Company and the Trustee receive evidence to their satisfaction of the 
destruction, loss or theft of any Senior Note, the Company shall issue and 
the Trustee, upon the Company's written order signed by two Officers, shall 
authenticate a replacement Senior Note if the Trustee's requirements are 
met.  If the Trustee or the Company requires it, the Holder must supply an 
indemnity bond that is sufficient in the judgment of the Trustee and the 
Company to protect the Company, the Trustee, any Agent or any 
authenticating agent from any loss that any of them may suffer if a Senior 
Note is replaced.  The Company and the Trustee may charge for their 
expenses in replacing a Senior Note.  Every replacement Senior Note is an 
additional Obligation of the Company.

Section 2.08. Outstanding Senior Notes.

      The Senior Notes outstanding at any time are all the Senior Notes the 
Trustee has authenticated except for those it has cancelled, those 
delivered to it for cancellation, those representing reductions in the 
interest in a Global Senior Note effected by the Trustee in accordance with 
the provisions hereof, and those described in this Section as not 
outstanding.

      If a Senior Note is replaced pursuant to Section 2.07, it ceases to 
be outstanding unless the Trustee receives proof satisfactory to it that a 
bona fide purchaser holds the replaced Senior Note.

      If the entire principal of, and premium, if any, and accrued interest 
on, and Liquidated Damages, if any, with respect to any Senior Note is 
considered paid under Section 4.01, it ceases to be outstanding and 
interest and Liquidated Damages on it cease to accrue.

      Subject to Section 2.09, a Senior Note does not cease to be 
outstanding because the Company or an Affiliate holds the Senior Note.

Section 2.09. Treasury Senior Notes.

      In determining whether the Holders of the required principal amount 
of Senior Notes have concurred in any direction, waiver or consent, Senior 
Notes owned by the Company or an Affiliate shall be considered as though 
not outstanding, except that for the purposes of determining whether the 
Trustee shall be protected in relying on any such direction, waiver or 
consent, only Senior Notes that a Trust Officer of the Trustee knows are so 
owned shall be so disregarded.  Notwithstanding the foregoing, Senior Notes 
that the Company or an Affiliate offers to purchase or acquires pursuant to 
an Offer, exchange offer, tender offer or otherwise shall not be deemed to 
be owned by the Company or an Affiliate until legal title to such Senior 
Notes passes to the Company or such Affiliate, as the case may be.

Section 2.10. Temporary Senior Notes.

      Until Definitive Senior Notes are ready for delivery, the Company may 
prepare and the Trustee shall authenticate temporary Senior Notes.  
Temporary Senior Notes shall be substantially in the form of Definitive 
Senior Notes but may have variations that the Company considers appropriate 
for temporary Senior Notes.  Without unreasonable delay, the Company shall 
prepare and the Trustee, upon receipt of the Company's written order signed 
by two Officers which shall specify the amount of temporary Senior Notes to 
be authenticated and the date on which the temporary Senior Notes are to be 
authenticated, shall authenticate Definitive Senior Notes and deliver them 
in exchange for temporary Senior Notes.  Until such exchange, Holders of 
temporary Senior Notes shall be entitled to the same rights, benefits and 
privileges as Definitive Senior Notes.

Section 2.11. Cancellation.

      The Company at any time may deliver Senior Notes to the Trustee for 
cancellation.  The Registrar and the Paying Agent shall forward to the 
Trustee any Senior Notes surrendered to them for registration of transfer, 
exchange, replacement, payment (including all Senior Notes called for 
redemption and all Senior Notes accepted for payment pursuant to an Offer) 
or cancellation, and the Trustee shall cancel all such Senior Notes and 
shall destroy all cancelled Senior Notes (subject to the Exchange Act's 
record retention requirements) and deliver a certificate of their 
destruction to the Company unless by written order, signed by two Officers 
of the Company, the Company shall direct that cancelled Senior Notes be 
returned to it.  The Company may not issue new Senior Notes to replace any 
Senior Notes that have been cancelled by the Trustee or that have been 
delivered to the Trustee for cancellation.  If the Company or an Affiliate 
acquires any Senior Notes (other than by redemption or pursuant to an 
Offer), such acquisition shall not operate as a redemption or satisfaction 
of the Indebtedness represented by such Senior Notes unless and until such 
Senior Notes are delivered to the Trustee for cancellation.

Section 2.12. Defaulted Interest.

      If the Company defaults in a payment of interest on the Senior Notes, 
it shall pay the defaulted interest in any lawful manner plus, to the 
extent lawful, interest payable on the defaulted interest, to Holders on a 
subsequent special record date, in each case at the rate provided in the 
Senior Notes and in Section 4.01.  The Company shall fix or cause to be 
fixed each such special record date and payment date.  As early as 
practicable prior to the special record date,  the Company (or the Trustee, 
in the name of and at the expense of the Company) shall mail a notice that 
states the special record date, the related payment date and the amount of 
interest to be paid.

Section 2.13. Record Date.

      The record date for purposes of determining the identity of Holders 
of Senior Notes entitled to vote or consent to any action by vote or 
consent authorized or permitted under this Indenture shall be determined as 
provided for in section 316(c) of the TIA.

Section 2.14. CUSIP Number.

      A "CUSIP" number shall be printed on the Senior Notes, and the 
Trustee shall use the CUSIP number in notices of redemption, purchase or 
exchange as a convenience to Holders, provided that any such notice may 
state that no representation is made as to the correctness or accuracy of 
the CUSIP number printed in the notice or on the Senior Notes and that 
reliance may be placed only on the other identification numbers printed on 
the Senior Notes.  The Company shall promptly notify the Trustee of any 
change in the CUSIP number.


                                ARTICLE 3
          OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE

Section 3.01. Notices to Trustee.

      If the Company elects to redeem Senior Notes pursuant to Section 
3.07, it shall furnish to the Trustee, at least 40 days prior to the 
redemption date and at least 10 days prior to the date that notice of the 
redemption is to be mailed by the Company to Holders, an Officers' 
Certificate stating that the Company has elected to redeem Senior Notes 
pursuant to Section 3.07(a) or 3.07(b), as the case may be, the date notice 
of redemption is to be mailed to Holders, the redemption date, the 
aggregate principal amount of Senior Notes to be redeemed, the redemption 
price for such Senior Notes and the amount of accrued and unpaid interest 
on and Liquidated Damages, if any, with respect to such Senior Notes as of 
the redemption date.  If the Trustee is not the Registrar, the Company 
shall, concurrently with delivery of its notice to the Trustee of a 
redemption, cause the Registrar to deliver to the Trustee a certificate 
(upon which the Trustee may rely) setting forth the name of, and the 
aggregate principal amount of Senior Notes held by, each Holder.

      If the Company is required to offer to purchase Senior Notes pursuant 
to Section 4.13 or 4.14, it shall furnish to the Trustee, at least 2 
Business Days before notice of the Offer is to be mailed to Holders, an 
Officers' Certificate setting forth that the Offer is being made pursuant 
to Section 4.13 or 4.14, as the case may be, the Purchase Date, the maximum 
principal amount of Senior Notes the Company is offering to purchase 
pursuant to the Offer, the purchase price for such Senior Notes, and the 
amount of accrued and unpaid interest on and Liquidated Damages, if any, 
with respect to such Senior Notes as of the Purchase Date.

      The Company will also provide the Trustee with any additional 
information that the Trustee reasonably requests in connection with any 
redemption or Offer.

Section 3.02. Selection of Senior Notes to be Redeemed or Purchased.

      If less than all outstanding Senior Notes are to be redeemed or if 
less than all Senior Notes tendered pursuant to an Offer are to be accepted 
for payment, the Trustee shall select the outstanding Senior Notes to be 
redeemed or accepted for payment pro rata, by lot or by a method that 
complies with the requirements of any stock exchange on which the Senior 
Notes are listed and that the Trustee considers fair and appropriate.  If 
the Company elects to mail notice of a redemption to Holders, the Trustee 
shall at least 5 business days prior to the date notice of redemption is to 
be mailed, (i) select the Senior Notes to be redeemed from Senior Notes 
outstanding not previously called for redemption and (ii) notify the 
Company of the names of each Holder of Senior Notes selected for 
redemption, the principal amount of Senior Notes held by each such Holder 
and the principal amount of such Holder's Senior Notes that are to be 
redeemed.  If less than all Senior Notes tendered pursuant to an Offer on 
the Purchase Date are to be accepted for payment, the Trustee shall select 
on or promptly after the Purchase Date the Senior Notes to be accepted for 
payment.  The Trustee shall select for redemption or purchase Senior Notes 
or portions of Senior Notes in principal amounts of $1,000 or integral 
multiples of $1,000; except that if all of the Senior Notes of a Holder are 
selected for redemption or purchase, the aggregate principal amount of the 
Senior Notes held by such Holder, even if not a multiple of $1,000, shall 
be redeemed or purchased.  Except as provided in the preceding sentence, 
provisions of this Indenture that apply to Senior Notes called for 
redemption or tendered pursuant to an Offer also apply to portions of 
Senior Notes called for redemption or tendered pursuant to an Offer.  The 
Trustee shall notify the Company promptly of the Senior Notes or portions 
of Senior Notes to be called for redemption or selected for purchase.

Section 3.03. Notice of Redemption.

      At least 30 days but not more than 60 days before a redemption date, 
the Company shall mail a notice of redemption to each Holder of Senior 
Notes or portions thereof that are to be redeemed.

      The notice shall identify the Senior Notes or portions thereof to be 
      redeemed and shall state:

           (1)   the redemption date;

           (2)   the redemption price for the Senior Notes and separately 
                 stating the amount of unpaid and accrued interest on, and 
                 Liquidated Damages, if any, with respect to, such Senior 
                 Notes as of the date of redemption;

           (3)   if any Senior Note is being redeemed in part, the portion 
                 of the principal amount of such Senior Notes to be 
                 redeemed and that, after the redemption date, upon 
                 surrender of such Senior Note, a new Senior Note or Senior 
                 Notes in principal amount equal to the unredeemed portion 
                 will be issued;

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

           (5)   that Senior Notes called for redemption must be 
                 surrendered to the Paying Agent to collect the redemption 
                 price for, and any accrued and unpaid interest on, and 
                 Liquidated Damages, if any, with respect to such Senior 
                 Notes;

           (6)   that, unless the Company defaults in making such 
                 redemption payment, interest on Senior Notes called for 
                 redemption ceases to accrue on and after the redemption 
                 date;

           (7)   the paragraph of the Senior Notes pursuant to which the 
                 Senior Notes called for redemption are being redeemed; and

           (8)   the CUSIP number; provided that no representation is made 
                 as to the correctness or accuracy of the CUSIP number 
                 listed in such notice and printed on the Senior Notes.

      At the Company's request, the Trustee shall (at the Company's 
expense) give the notice of redemption in the Company's name at least 30 
but not more than 60 days before a redemption; provided, however, that the 
Company shall deliver to the Trustee, at least 45 days prior to the 
redemption date and at least 10 days prior to the date that notice of the 
redemption is to be mailed to Holders, an Officers' Certificate that (i) 
requests the Trustee to give notice of the redemption to Holders, (ii) sets 
forth the information to be provided to Holders in the notice of 
redemption, as set forth in the preceding paragraph, (iii) states that the 
Company has elected to redeem Senior Notes pursuant to Section 3.07(a) or 
3.07(b), as the case may be, and (iv) sets forth the aggregate principal 
amount of Senior Notes to be redeemed and the amount of accrued and unpaid 
interest and Liquidated Damages, if any, thereon as of the redemption date.  
If the Trustee is not the Registrar, the Company shall, concurrently with 
any such request, cause the Registrar to deliver to the Trustee a 
certificate (upon which the Trustee may rely) setting forth the name of, 
the address of, and the aggregate principal amount of Senior Notes held by, 
each Holder.

Section 3.04. Effect of Notice of Redemption.

      Once notice of redemption is mailed, Senior Notes called for 
redemption become due and payable on the redemption date at the price set 
forth in the Senior Note.  Upon surrender to the Trustee or Paying Agent, 
such Senior Notes called for redemption shall be paid at the redemption 
price (which shall include accrued interest thereon to the redemption date) 
but installments of interest, the maturity of which is on or prior to the 
redemption date, shall be payable to Holders of record at the close of 
business on the relevant record dates.

Section 3.05. Deposit of Redemption Price.

      On or prior to any redemption date, the Company shall deposit with 
the Trustee or with the Paying Agent money sufficient to pay the redemption 
price of, and accrued interest on, and Liquidated Damages, if any, with 
respect to all Senior Notes to be redeemed on that date.  The Trustee or 
the Paying Agent shall return to the Company any money that the Company 
deposited with the Trustee or the Paying Agent in excess of the amounts 
necessary to pay the redemption price of, and accrued interest on, and 
Liquidated Damages, if any, with respect to all Senior Notes to be 
redeemed.

      If the Company complies with the preceding paragraph, interest on the 
Senior Notes to be redeemed will cease to accrue on such Senior Notes on 
the applicable redemption date, whether or not such Senior Notes are 
presented for payment.  If a Senior Note is redeemed on or after an 
interest record date but on or prior to the related interest payment date, 
then any accrued and unpaid interest and Liquidated Damages, if any, shall 
be paid to the Person in whose name such Senior Note was registered at the 
close of business on such record date.  If any Senior Note called for 
redemption shall not be so paid upon surrender for redemption because of 
the failure of the Company to comply with the preceding paragraph, interest 
will be paid on the unpaid principal, premium, if any, interest and 
Liquidated Damages, if any, from the redemption date until such principal, 
premium, interest and Liquidated Damages, if any, is paid, at the rate of 
interest provided in the Senior Notes and Section 4.01.

Section 3.06.Senior Notes Redeemed in Part.

      Upon surrender of a Senior Note that is redeemed in part, the Company 
shall issue and the Trustee shall authenticate for the Holder at the 
Company's expense a new Senior Note equal in principal amount to the 
unredeemed portion of the Senior Note surrendered.

Section 3.07.Optional Redemption Provisions.

      (a)  Except as provided in Section 3.07(b), the Senior Notes may not 
be redeemed at the option of the Company prior to November 15, 2001.  
During the twelve (12) month period beginning on November 15 of the years 
indicated below, the Senior Notes will be redeemable at the option of the 
Company, in whole or in part, on at least 30 but not more than 60 days' 
notice to each Holder of Senior Notes to be redeemed, at the redemption 
prices (expressed as percentages of the principal amount) set forth below, 
plus any accrued and unpaid interest and Liquidated Damages, if any, to the 
redemption date:

      Year                                       Percentage             
      ----                                       ----------
      2001............................................105.375%          
      2002............................................103.583%          
      2003............................................101.792%          
      2004 and thereafter.............................100.000%          

      (b)  Notwithstanding the foregoing, prior to November 15, 1999, the 
Company may (but shall not have the obligation to) redeem up to 35% of the 
original aggregate principal amount of the Senior Notes at a redemption 
price of 109.750% of the principal amount thereof, plus accrued and unpaid 
interest and Liquidated Damages, if any, to the redemption date, with the 
net proceeds of one or more Equity Offerings; provided that at least 65% of 
the aggregate principal amount of Senior Notes originally issued remain 
outstanding immediately after the occurrence of any such redemption; and 
provided, further, that any such redemption shall occur within 60 days of 
the date of the closing of any such Equity Offering.  

SECTION 3.08. MANDATORY PURCHASE PROVISIONS.

      (a)  Within 30 days after any Change of Control Trigger Date or Asset 
Sale Trigger Date, the Company shall mail a notice to each Holder at such 
Holder's registered address stating (i) that an offer ("Offer") is being 
made pursuant to Section 4.13 or Section 4.14, as the case may be, the 
length of time the Offer shall remain open and the maximum aggregate 
principal amount of Senior Notes that will be accepted for payment pursuant 
to such Offer; (ii) the purchase price for the Senior Notes (as set forth 
in Section 4.13 or Section 4.14, as the case may be), the amount of accrued 
and unpaid interest on, and Liquidated Damages, if any, with respect to, 
such Senior Notes as of the purchase date, and the purchase date (which 
shall be no earlier than 30 days and no later than 40 days from the date 
such notice is mailed (the "Purchase Date")); (iii) that any Senior Note 
not accepted for payment will continue to accrue interest and Liquidated 
Damages, if any; (iv) that, unless the Company fails to deposit with the 
Paying Agent on the Purchase Date an amount sufficient to purchase all 
Senior Notes accepted for payment, interest shall cease to accrue on such 
Senior Notes after the Purchase Date; (v) that Holders electing to tender 
any Senior Note or portion thereof will be required to surrender their 
Senior Note, with a form entitled "Option of Holder to Elect Purchase" 
completed, to the Paying Agent at the address specified in the notice prior 
to the close of business on the Business Day preceding the Purchase Date, 
provided that Holders electing to tender only a portion of any Senior Note 
must tender a principal amount of $1,000 or integral multiples thereof; 
(vi) that Holders will be entitled to withdraw their election to tender 
Senior Notes, if the Paying Agent receives, not later than the close of 
business on the third Business Day preceding the Purchase Date, a telegram, 
telex, facsimile transmission or letter setting forth the name of the 
Holder, the principal amount of Senior Notes delivered for purchase, and a 
statement that such Holder is withdrawing his election to have such Senior 
Note purchased; and (vii) that Holders whose Senior Notes are accepted for 
payment in part will be issued new Senior Notes equal in principal amount 
to the unpurchased portion of Senior Notes surrendered; provided that only 
Senior Notes in a principal amount of $1,000 or integral multiples thereof 
will be accepted for payment in part.

      (b)  On the Purchase Date for any Offer, the Company shall, to the 
extent required by this Indenture and such Offer, (i) in the case of an 
Offer resulting from a Change of Control, accept for payment all Senior 
Notes or portions thereof tendered pursuant to such Offer and, in the case 
of an Offer resulting from an Asset Sale, accept for payment the maximum 
principal amount of Senior Notes or portions thereof tendered pursuant to 
such Offer that can be purchased out of Excess Proceeds from such Asset 
Sale Trigger Date, (ii) deposit with the Paying Agent the aggregate 
purchase price of all Senior Notes or portions thereof accepted for payment 
and any accrued and unpaid interest and Liquidated Damages, if any, on such 
Senior Notes as of the Purchase Date, and (iii) deliver or cause to be 
delivered to the Trustee all Senior Notes tendered pursuant to the Offer.

      (c)  With respect to any Offer, if less than all of the Senior Notes 
tendered pursuant to an Offer are to be purchased by the Company, the 
Trustee shall select on the Purchase Date the Senior Notes or portions 
thereof to be accepted for payment pursuant to Section 3.02.

      (d)  Promptly after consummation of an Offer, (i) the Paying Agent 
shall mail (or cause to be transferred by book entry) to each Holder of 
Senior Notes or portions thereof accepted for payment an amount equal to 
the purchase price for, plus any accrued and unpaid interest on, and 
Liquidated Damages, if any, with respect to such Senior Notes, (ii) with 
respect to any tendered Senior Note not accepted for payment in whole or in 
part, the Trustee shall return such Senior Note to the Holder thereof, and 
(iii) with respect to any Senior Note accepted for payment in part, the 
Trustee shall authenticate and mail to each such Holder a new Senior Note 
equal in principal amount to the unpurchased portion of the tendered Senior 
Note.

      (e)  The Company will publicly announce the results of the Offer on 
or as soon as practicable after the Purchase Date.

      (f)  The Company shall comply with any tender offer rules under the 
Exchange Act which may then be applicable, including Rule 14e-1, in 
connection with an Offer required to be made by the Company to repurchase 
the Senior Notes as a result of a Change of Control Trigger Date or an 
Asset Sale Trigger Date.  To the extent that the provisions of any 
securities laws or regulations conflict with provisions of this Indenture, 
the Company shall comply with the applicable securities laws and 
regulations and shall not be deemed to have breached its obligations under 
this Indenture by virtue thereof.

      (g)  With respect to any Offer, if the Company deposits prior to 10 
a.m. New York City time with the Paying Agent on the Purchase Date an 
amount in available funds sufficient to purchase all Senior Notes accepted 
for payment, interest shall cease to accrue on such Senior Notes after the 
Purchase Date; provided, however, that if the Company fails to deposit such 
amount on the Purchase Date, interest shall continue to accrue on such 
Senior Notes until such deposit is made.


                                ARTICLE 4
                                COVENANTS

Section 4.01. Payment of Senior Notes.

      The Company shall pay the principal of, and premium, if any, and 
accrued and unpaid interest on the Senior Notes on the dates and in the 
manner provided in the Senior Notes.  Holders of Senior Notes must 
surrender their Senior Notes to the Paying Agent to collect principal 
payments.  Principal of, premium, if any, and accrued and unpaid interest, 
and Liquidated Damages, if any, shall be considered paid on the date due if 
the Paying Agent (other than the Company or any of its Subsidiaries), the 
Global Senior Note Holder or each Holder that has specified an account, 
holds, as of 10:00 a.m. New York City time, money the Company deposited in 
immediately available funds designated for and sufficient to pay in cash 
all principal, premium, if any, and accrued and unpaid interest on, and 
Liquidated Damages, if any, then due; provided that, to the extent that the 
Holders have not specified accounts, such amounts shall be considered paid 
on the date due if the Company mails a check for such amounts on such date.  
The Paying Agent shall return to the Company, no later than five days 
following the date of payment, any money (including accrued interest) that 
exceeds the amount of principal, premium, if any, accrued and unpaid 
interest, and Liquidated Damages, if any, paid on the Senior Notes.  The 
Company shall pay all Liquidated Damages, if any, in the same manner on the 
dates and in the amounts set forth in the Registration Rights Agreement.  
If any Liquidated Damages become payable, the Company shall not later than 
3 Business Days prior to the date that any payment of Liquidated Damages is 
due (i) deliver an Officers' Certificate to the Trustee setting forth the 
amount of Liquidated Damages payable to Holders and (ii) instruct the 
Paying Agent to pay such amount of Liquidated Damages to Holders entitled 
to receive such Liquidated Damages.

      To the extent lawful, the Company shall pay interest (including 
Post-Petition Interest) on (i) overdue principal and premium at the rate 
equal to 2% per annum in excess of the then applicable interest rate on the 
Senior Notes, compounded semiannually and (ii) overdue installments of 
interest and Liquidated Damages (without regard to any applicable grace 
period) at the same rate as set forth in clause (i), compounded 
semiannually.

Section 4.02. SEC Reports.

      (a)  The Company shall file with the Trustee, within 15 days after it 
files them with the SEC, copies of the annual reports and of the 
information, documents and other reports (or copies of such portions of any 
of the foregoing as the SEC may by rules and regulations prescribe) that 
the Company is required to file with the SEC pursuant to Section 13 or 
15(d) of the Exchange Act.  If the Company is not subject to the 
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall 
file with the Trustee, within 15 days after it would have been required to 
file with the SEC, financial statements, including any notes thereto (and 
with respect to annual reports, an auditor's report by a firm of 
established national reputation), and a "Management's Discussion and 
Analysis of Financial Condition and Results of Operations," both comparable 
to that which the Company would have been required to include in such 
annual reports, information, documents or other reports if the Company were 
subject to the requirements of Section 13 or 15(d) of the Exchange Act.  
Subsequent to the qualification of this Indenture under the TIA, the 
Company also shall comply with the provisions of section 314(a) of the TIA.

      (b)  If the Company is required to furnish annual or quarterly 
reports to its stockholders pursuant to the Exchange Act, the Company shall 
cause any annual report furnished to its stockholders generally and any 
quarterly or other financial reports it furnishes to its stockholders 
generally to be filed with the Trustee and the Company shall mail to the 
Holders at their addresses appearing in the register of Senior Notes 
maintained by the Registrar.  If the Company is not required to furnish 
annual or quarterly reports to its stockholders pursuant to the Exchange 
Act, the Company shall cause its financial statements referred to in 
Section 4.02(a), including any notes thereto (and with respect to annual 
reports, an auditors' report by a firm of established national reputation), 
and a "Management's Discussion and Analysis of Financial Condition and 
Results of Operations," to be so mailed to the Holders within 120 days 
after the end of each of the Company's fiscal years and within 60 days 
after the end of each of the first three fiscal quarters of each year.  The 
Company shall cause to be disclosed in a statement accompanying any annual 
report or comparable information as of the date of the most recent 
financial statements in each such report or comparable information the 
amount available for payments pursuant to Section 4.05.  As of the date 
hereof, the Company's fiscal year ends on December 31.

      (c)  If the Company is not subject to the requirements of Section 13 
or 15(d) of the Exchange Act, for so long as any Senior Notes remain 
outstanding, the Company shall furnish to the Holders and prospective 
investors, upon their request, the information required to be delivered 
pursuant to Rule 144A(d)(4) under the Securities Act.

Section 4.03. Compliance Certificate.

      The Company shall deliver to the Trustee, within 120 days after the 
end of each fiscal year of the Company, an Officers' Certificate stating 
that a review of the activities of the Company and its Subsidiaries during 
the preceding fiscal year has been made under the supervision of the 
signing Officers with a view to determining whether the Company has kept, 
observed, performed and fulfilled its obligations under this Indenture, and 
further stating, as to each such Officer signing such certificate, that, to 
the best of his or her knowledge, the Company has kept, observed, performed 
and fulfilled each and every covenant contained in this Indenture and is 
not in default in the performance or observance of any of the terms, 
provisions and conditions hereof (or, if a Default or Event of Default 
shall have occurred, describing all such Defaults or Events of Default of 
which he or she may have knowledge and what action the Company has taken or 
proposes to take with respect thereto) and that, to the best of his or her 
knowledge no event has occurred and remains in existence by reason of which 
payments on account of the principal of, premium, if any, and accrued and 
unpaid interest on, and Liquidated Damages, if any, with respect to the 
Senior Notes are prohibited or if such event has occurred, a description of 
the event and what action the Company is taking or proposes to take with 
respect thereto.

      So long as not contrary to the then current recommendations of the 
American Institute of Certified Public Accountants, the financial 
statements delivered pursuant to Section 4.02 shall be accompanied by a 
written statement of the Company's independent public accountants (who 
shall be a firm of established national reputation reasonably satisfactory 
to the Trustee) that in making the examination necessary for certification 
of such financial statements nothing has come to their attention that would 
lead them to believe that the Company has violated any provisions of 
Section 4.01, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 
4.15 or 4.16 or of Article 5 or, if any such violation has occurred, 
specifying the nature and period of existence thereof, it being understood 
that such accountants shall not be liable directly or indirectly to any 
Person for any failure to obtain knowledge of any such violation.

      The Company shall, so long as any of the Senior Notes are 
outstanding, deliver to the Trustee, forthwith upon any Officer becoming 
aware of any Default or Event of Default, an Officers' Certificate 
specifying such Default or Event of Default and what action the Company is 
taking or proposes to take with respect thereto.

Section 4.04. Stay, Extension and Usury Laws.

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

Section 4.05. Limitation on Restricted Payments.

      (a)  The Company shall not, and shall not permit any Restricted 
Subsidiary to, directly or indirectly, (i) declare or pay any dividend or 
make any distribution on account of the Company's or such Restricted 
Subsidiary's Capital Stock or other Equity Interests (other than dividends 
or distributions payable in Capital Stock or other Equity Interests (other 
than Disqualified Stock) of the Company or a Restricted Subsidiary and 
other than dividends or distributions payable by a Restricted Subsidiary to 
another Restricted Subsidiary or to the Company); (ii) purchase, redeem or 
otherwise acquire or retire for value any Capital Stock or other Equity 
Interests of the Company or any of its Restricted Subsidiaries (other than 
any such Equity Interest purchased from the Company or any Restricted 
Subsidiary for fair market value (as determined by the Board of Directors 
in good faith); (iii) voluntarily prepay Subordinated Indebtedness, whether 
any such Subordinated Indebtedness is outstanding on, or issued after, the 
date of original issuance of the Senior Notes except as specifically 
permitted by the covenants of this Indenture; (iv) make any Restricted 
Investment (all such dividends, distributions, purchases, redemptions, 
acquisitions, retirements, prepayments and Restricted Investments, being 
collectively referred to as "Restricted Payments"), if, at the time of such 
Restricted Payment:

      (A)  a Default or Event of Default shall have occurred and be 
           continuing or shall occur as a consequence thereof, or 

      (B)  immediately after such Restricted Payment and after giving 
           effect thereto on a Pro Forma basis, the Company shall not be 
           able to issue $1.00 of additional Indebtedness pursuant to 
           Section 4.07(a), or 

      (C)  such Restricted Payment, together with the aggregate of all 
           other Restricted Payments made after the date of original 
           issuance of the Senior Notes, without duplication, exceeds the 
           sum of (1) 50% of the aggregate Consolidated Net Income 
           (including, for this purpose, gains from Asset Sales and, to the 
           extent not included in Consolidated Net Income, any gain from a 
           sale or disposition of a Restricted Investment) of the Company 
           (or, in case such aggregate is a loss, 100% of such loss) for 
           the period (taken as one accounting period) from the beginning 
           of the first fiscal quarter commencing immediately after the 
           date of original issuance of the Senior Notes and ended as of 
           the Company's most recently ended fiscal quarter at the time of 
           such Restricted Payment, plus (2) 100% of the aggregate net cash 
           proceeds and the fair market value of any property or securities 
           (as determined by the Board of Directors in good faith) received 
           by the Company from the issue or sale of Capital Stock or other 
           Equity Interests of the Company subsequent to the date of 
           original issuance of the Senior Notes (other than (x) Capital 
           Stock or other Equity Interests issued or sold to a Restricted 
           Subsidiary and (y) the issuance or sale of Disqualified Stock), 
           plus (3) $5,000,000, plus (4) the amount by which the principal 
           amount of and any accrued interest on either (x) Senior 
           Indebtedness of the Company or (y) any Indebtedness of any 
           Restricted Subsidiary is reduced on the Company's consolidated 
           balance sheet upon the conversion or exchange other than by a 
           Restricted Subsidiary subsequent to the date of original 
           issuance of the Senior Notes of any Indebtedness of the Company 
           or any Restricted Subsidiary (not held by the Company or any 
           Restricted Subsidiary) for Capital Stock or other Equity 
           Interests (other than Disqualified Stock) of the Company or any 
           Restricted Subsidiaries (less the amount of any cash, or the 
           fair market value of any other property or securities (as 
           determined by the Board of Directors in good faith), distributed 
           by the Company or any Restricted Subsidiary (to Persons other 
           than the Company or any other Restricted Subsidiary) upon such 
           conversion or exchange), plus (5) if any Non-Restricted 
           Subsidiary is redesignated as a Restricted Subsidiary, the value 
           of the deemed Restricted Payment resulting therefrom and 
           determined in accordance with the second sentence of Section 
           4.16; provided, however, that for purposes of this clause (5), 
           the value of any redesignated Non-Restricted Subsidiary shall be 
           reduced by the amount that any such redesignation replenishes or 
           increases the amount of Restricted Investments permitted to be 
           made pursuant to Section 4.05(b)(iii).

      (b)  Notwithstanding Section 4.05(a), the following Restricted 
Payments may be made: (i) the payment of any dividend within 60 days after 
the date of declaration thereof, if at said date of declaration such 
payment would comply with all the provisions hereof (including, but not 
limited to, this Section 4.05); (ii) making Restricted Investments at any 
time, and from time to time, in an aggregate outstanding amount of 
$10,000,000 after the date of original issuance of the Senior Notes (it 
being understood that if any Restricted Investment after the date of 
original issuance of the Senior Notes pursuant to this clause (ii) is sold, 
transferred or otherwise conveyed to any Person other than the Company or a 
Restricted Subsidiary, the portion of the net cash proceeds or fair market 
value of securities or properties paid or transferred to the Company and 
its Restricted Subsidiaries in connection with such sale, transfer or 
conveyance that relates or corresponds to the repayment or return of the 
original cost of such a Restricted Investment will replenish or increase 
the amount of Restricted Investments permitted to be made pursuant to this 
Section 4.05(b)(ii), so that up to $10,000,000 of Restricted Investments 
may be outstanding under this Section 4.05(b)(ii) at any given time; 
provided that any Restricted Investment in a Restricted Subsidiary made 
pursuant to this clause (ii) is made for fair market value (as determined 
by the Board of Directors in good faith); (iii) the repurchase, redemption, 
retirement or acquisition of the Company's stock from the executives, 
management, employees or consultants of the Company or its Subsidiaries 
pursuant to the terms of any subscription, stockholder or other agreement 
or plan, up to an aggregate amount not to exceed $5,000,000; (iv) any 
loans, advances, distributions or payments from the Company to its 
Restricted Subsidiaries, or any loans, advances, distributions or payments 
by a Restricted Subsidiary to the Company or to another Restricted 
Subsidiary, in each case pursuant to intercompany Indebtedness, 
intercompany management agreements and other intercompany agreements and 
obligations; (v) investments in marketable securities and other negotiable 
instruments through the William Penn Funds (including the William Penn 
Interest Income Fund); (vi) the purchase, redemption, retirement or other 
acquisition of (A) any Senior Indebtedness of the Company or any 
Indebtedness of a Restricted Subsidiaries required by its terms to be 
purchased, redeemed, retired or acquired with the net proceeds from asset 
sales (as defined in the instrument evidencing such Senior Indebtedness or 
Indebtedness) or upon a change of control (as defined in the instrument 
evidencing such Senior Indebtedness or Indebtedness) and (B) the Senior 
Notes pursuant to Sections 4.13 and 4.14; (vii) the payment of (A) 
consulting, financial and investment banking fees under the TJC Agreement, 
provided, that no Default or Event of Default shall have occurred and be 
continuing or shall occur as a consequence thereof, and the Company's 
Obligations to pay such fees under the TJC Agreement shall be subordinated 
expressly to the Company's Obligations in respect of the Senior Notes, and 
(B) indemnities, expenses and other amounts under the TJC Agreement; (viii) 
the payment of management, advisory and service fees, indemnities, expenses 
and other amounts under the JII Services Agreement; (ix) the redemption, 
repurchase, retirement or the acquisition of any Capital Stock or other 
Equity Interests of the Company or any Restricted Subsidiary in exchange 
for, or out of the proceeds of, the substantially concurrent sale (other 
than to a Subsidiary of the Company) of other Capital Stock or other Equity 
Interests of the Company or any Restricted Subsidiary (other than any 
Disqualified Stock); provided that any net cash proceeds that are utilized 
for any such redemption, repurchase, retirement or other acquisition, and 
any Net Income resulting therefrom, shall be excluded from this Section 
4.05(a)(iv)(c)(1) and (c)(2); (x) the defeasance, redemption or repurchase 
of pari passu or Subordinated Indebtedness with the net cash proceeds from 
an issuance of permitted Refinancing Indebtedness or the substantially 
concurrent sale (other than to a Subsidiary of the Company) of Capital 
Stock or other Equity Interests of the Company or of a Restricted 
Subsidiary (other than Disqualified Stock); provided that any net cash 
proceeds that are utilized for any such defeasance, redemption or 
repurchase, and any Net Income resulting therefrom, shall be excluded from 
this Section 4.05(a)(iv)(c)(1) and (c)(2); (xi) payments of fees, expenses 
and indemnities in respect of the Company's and its Subsidiaries' directors 
and such payments to Parent (and its parent companies) in respect of their 
directors, provided that the aggregate amount of such fees payable to all 
such directors does not exceed $250,000 in any fiscal year; (xii) payments 
to Parent (and its parent companies) in respect of accounting, legal or 
other professional or administrative expenses or reimbursements or 
franchise or similar taxes and governmental charges incurred by them 
relating to the business, operations or finances of the Company and its 
Subsidiaries and in respect of fees and related expenses associated with 
their registration statements filed with the Commission and subsequent 
ongoing public reporting requirements; (xiii) so long as Parent files 
consolidated income tax returns which include the Company, payments to 
Parent (and its parent companies) pursuant to the Tax Sharing Agreement; 
(xiv) payments in respect of the Junior Seller Note, the MK Installment 
Note and the MK Installment Note LC Facility; (xv) payments in connection 
with the Imperial Acquisitions, the Offering and the Refinancing Plan; 
(xvi) payments in respect of the Contingent Earnout Agreement; (xvii) 
Restricted Investments made or received in connection with the sale, 
transfer or disposition of any business, properties or assets of the 
Company or any Restricted Subsidiary, provided, that if such sale, transfer 
or disposition constitutes an Asset Sale, the Company complies with Section 
4.14; (xviii) any Restricted Investment constituting securities or 
instruments of a Person issued in exchange for trade or other claims 
against such Person in connection with a financial reorganization or 
restructuring of such Person; and (xix) any Restricted Investment 
constituting an equity investment in a Receivables Subsidiary. 

Section 4.06. Corporate Existence.

      Subject to Section 4.14 and Article 5, the Company shall do or cause 
to be done all things necessary to preserve and keep in full force and 
effect its corporate existence and the corporate, partnership or other 
existence of each of its Restricted Subsidiaries in accordance with the 
respective organizational documents of each of its Restricted Subsidiaries 
and the rights (charter and statutory), licenses and franchises of the 
Company and each of its Restricted Subsidiaries; provided, however, that 
the Company shall not be required to preserve any such right, license or 
franchise, or the corporate, partnership or other existence of any 
Restricted Subsidiary, if the Board of Directors shall determine that the 
preservation thereof is no longer desirable in the conduct of the business 
of the Company and its Restricted Subsidiaries taken as a whole, and that 
the loss thereof is not adverse in any material respect to the Holders.

Section 4.07. Limitation on Incurrence of Indebtedness.

      (a)  The Company shall not, and shall not permit any Restricted 
Subsidiary to, issue any Indebtedness (other than the Indebtedness 
represented by the Senior Notes) unless the Company's Cash Flow Coverage 
Ratio for its four full fiscal quarters next preceding the date such 
additional Indebtedness is issued would have been at least 2.00 to 1, if 
such date is on or prior to November 15, 1998, and 2.25 to 1 thereafter, in 
each case determined on a Pro Forma basis (including, for this purpose, any 
other Indebtedness incurred since the end of the applicable four quarter 
period) as if such additional Indebtedness and any other Indebtedness 
issued since the end of such four-quarter period had been issued at the 
beginning of such four-quarter period.

      (b)  Section 4.07(a) shall not apply to the issuance of (i) 
Indebtedness of the Company and/or its Restricted Subsidiaries as measured 
on such date of issuance in an aggregate principal amount outstanding on 
any such date of issuance not exceeding the greater of (A) $75,000,000 
aggregate principal amount pursuant to the New Credit Agreement and (B) an 
aggregate principal amount up to the sum of (1) 85% of the book value of 
the Receivables of the Company and its Restricted Subsidiaries on a 
consolidated basis and (2) 65% of the book value of the inventories of the 
Company and its Restricted Subsidiaries on a consolidated basis; provided 
that the aggregate principal amount of Indebtedness outstanding under this 
clause (i) together with the aggregate principal amount of Indebtedness 
outstanding under clause (iv) below shall not exceed $80.0 million in 
aggregate principal amount at any one time outstanding; (ii) Indebtedness 
of the Company and its Restricted Subsidiaries pursuant to any Receivables 
Financing; (iii) Indebtedness of the Company and its Restricted 
Subsidiaries in connection with capital leases, sale and leaseback 
transactions, purchase money obligations, capital expenditures or similar 
financing transactions relating to (A) their properties, assets and rights 
as of the date of original issuance of the Senior Notes up to $5,000,000 in 
aggregate principal amount or (B) their properties, assets and rights 
acquired after the date of original issuance of the Senior Notes, provided 
that the aggregate principal amount of such Indebtedness under this Section 
4.07(b)(iii)(B) does not exceed 100% of the cost of such properties, assets 
and rights; (iv) additional Indebtedness of the Company and its Restricted 
Subsidiaries in an aggregate principal amount up to $25,000,000 (all or any 
portion of which may be issued as additional Indebtedness under the New 
Credit Agreement); provided that the aggregate principal amount of 
Indebtedness outstanding under this clause (iv) together with the aggregate 
principal amount of Indebtedness outstanding under clause (i) above shall 
not exceed $80.0 million in aggregate principal amount at any one time 
outstanding; and (v) Other Permitted Indebtedness.

      (c)  Notwithstanding Sections 4.07(a) and (b), no Restricted 
Subsidiary shall under any circumstances issue a guarantee of any 
Indebtedness of the Company except for guarantees issued by Restricted 
Subsidiaries pursuant to Section 4.15, provided, however, that the 
foregoing will not limit or restrict guarantees issued by Restricted 
Subsidiaries in respect of Indebtedness of other Restricted Subsidiaries.

Section 4.08. Limitation on Transactions With Affiliates.

      (a)  Except as otherwise set forth herein, neither the Company nor 
any of its Restricted Subsidiaries shall make any loan, advance, guarantee 
or capital contribution to, or for the benefit of, or sell, lease, transfer 
or dispose of any properties or assets to, or for the benefit of, or 
purchase or lease any property or assets from, or enter into or amend any 
contract, agreement or understanding with, or for the benefit of, an 
Affiliate (each such transaction or series of related transactions that are 
part of a common plan, an "Affiliate Transaction"), except in good faith 
and on terms that are no less favorable to the Company or the relevant 
Restricted Subsidiary than those that would have been obtained in a 
comparable transaction on an arm's length basis from an unrelated Person.

      (b)  The Company shall not, and shall not permit any Restricted 
Subsidiary to, engage in any Affiliate Transaction involving aggregate 
payments or other transfers by the Company and its Restricted Subsidiaries 
in excess of $5,000,000 (including cash and non-cash payments and benefits 
valued at their fair market value by the Board of Directors of the Company 
in good faith), unless the Company delivers to the Trustee: (i) a 
resolution of the Board of Directors stating that the Board of Directors 
(including a majority of the disinterested directors, if any) has, in good 
faith, determined that such Affiliate Transaction complies with the 
provisions of this Indenture; and (ii)(A) with respect to any Affiliate 
Transaction involving the incurrence of Indebtedness, a written opinion of 
a nationally recognized investment banking or accounting firm experienced 
in the review of similar types of transactions, (B) with respect to any 
Affiliate Transaction involving the transfer of real property, fixed assets 
or equipment, either directly or by a transfer of 50% or more of the 
Capital Stock of a Restricted Subsidiary which holds any such real 
property, fixed assets or equipment, a written appraisal from a nationally 
recognized appraiser experienced in the review of similar types of 
transactions or (C) with respect to any Affiliate Transaction not otherwise 
described in (A) or (B) above, a written certification from a nationally 
recognized professional experienced in evaluating similar types of 
transactions, in each case, stating that the terms of such transaction are 
fair to the Company or such Restricted Subsidiary, as the case may be, from 
a financial point of view.

      (c)  Notwithstanding Sections 4.08(a) and (b), this Section 4.08 
shall not apply to (i) transactions between the Company and any Restricted 
Subsidiary or between Restricted Subsidiaries; (ii)  payments under the TJC 
agreement or the JII Services Agreement; (iii) payments under the 
Contingent Earnout Agreement; (iv) any other payments or transactions 
permitted pursuant to Section 4.05; (v) reasonable compensation paid to 
officers, employees or consultants of the Company or any Subsidiary as 
determined in good faith by the Company's Board of Directors or executives; 
(vi) transactions in connection with a Receivables Financing; or (vii) 
payments and transactions in connection with the Imperial Acquisitions, the 
Offering and the Refinancing Plan.

Section 4.09. Limitation on Liens.

      The Company shall not, and shall not permit any of its Restricted 
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to 
exist any Lien (other than Permitted Liens) upon any property or asset now 
owned or hereafter acquired by them, or any income or profits therefrom, or 
assign or convey any right to receive income therefrom; provided, however, 
that in addition to creating Permitted Liens on its properties or assets, 
the Company and any of its Restricted Subsidiaries may create any Lien upon 
any of their properties or assets (including, but not limited to, any 
Capital Stock of its Subsidiaries) if the Senior Notes are equally and 
ratably secured.

Section 4.10. Compliance With Laws, Taxes.

      The Company shall, and shall cause each of its Restricted 
Subsidiaries to, comply with all statutes, laws, ordinances, or government 
rules and regulations to which it is subject, the non-compliance with which 
would materially adversely affect the business, prospects, earnings, 
properties, assets or condition, financial or otherwise, of the Company and 
its Restricted Subsidiaries taken as a whole.

      The Company shall, and shall cause each of its Restricted 
Subsidiaries to, pay prior to delinquency all taxes, assessments and 
governmental levies, except those contested in good faith by appropriate 
proceedings.

Section 4.11. Limitation on Dividends and Other Payment Restrictions 
           Affecting Restricted Subsidiaries.

      (a)  The Company shall not, and shall not permit any of its 
Restricted Subsidiaries to, directly or indirectly, create or otherwise 
cause or suffer to exist or become effective, any encumbrance or 
restriction on the ability of any Restricted Subsidiary to (i) pay 
dividends or make any other distributions on its Capital Stock or any other 
interest or participation in, or measured by, its profits, owned by the 
Company or any Restricted Subsidiary, or pay any Indebtedness owed to, the 
Company or any Restricted Subsidiary; (ii) make loans or advances to the 
Company; or (iii) transfer any of its properties or assets to the Company, 
except for such encumbrances or restrictions existing under or by reason of 
(A) applicable law; (B) Indebtedness permitted (1) under Section 4.07(a), 
(2) under Sections 4.07(b)(i), (ii), (iii) and (iv) and clauses (i), (v), 
(vi), (vii), (ix), (x), (xi), (xv), (xvi) and (xvii) of the definition of 
Other Permitted Indebtedness, or (3) by agreements and transactions 
permitted under Section 4.05; (C) customary provisions restricting 
subletting or assignment of any lease or license of the Company or any 
Restricted Subsidiary; (D) customary provisions of any franchise, 
distribution or similar agreement; (E) any instrument governing 
Indebtedness or any other encumbrance or restriction of a Person acquired 
by the Company or any Restricted Subsidiary at the time of such 
acquisition, which encumbrance or restriction is not applicable to any 
Person, or the properties or assets of any Person, other than the Person, 
or the property or assets of the Person, so acquired; (F) Indebtedness or 
other agreements existing on the date of original issuance of the Senior 
Notes; (G) any Refinancing Indebtedness of Indebtedness described in 
Section 4.07(b) and clauses (i), (v), (vi), (vii), (ix), (x), (xi), (xv), 
(xvi) and (xvii) of the definition of Other Permitted Indebtedness; 
provided that the encumbrances and restrictions created in connection with 
such Refinancing Indebtedness are no more restrictive in any material 
respect with regard to the interests of the Holders of Senior Notes than 
the encumbrances and restrictions in the refinanced Indebtedness; (H) any 
restrictions, with respect to a Restricted Subsidiary, imposed pursuant to 
an agreement that has been entered into for the sale or disposition of the 
stock, business, assets or properties of such Restricted Subsidiary; (I) 
the terms of any Indebtedness of the Company incurred in connection with 
Section 4.07, provided that the terms of such Indebtedness constitute no 
greater encumbrance or restriction on the ability of any Restricted 
Subsidiary to pay dividends or make distributions, make loans or advances 
or transfer properties or assets than is otherwise permitted by this 
Section 4.11; and (J) the terms of purchase money obligations, but only to 
the extent such purchase money obligations restrict or prohibit the 
transfer of the property so acquired.  

      (b)  Nothing contained in this Section 4.11 shall prevent the Company 
from entering into any agreement or instrument providing for the incurrence 
of Permitted Liens or restricting the sale or other disposition of property 
or assets of the Company or any of its Restricted Subsidiaries that are 
subject to Permitted Liens.

Section 4.12.Maintenance of Office or Agencies.

      The Company shall maintain in the Borough of Manhattan, the City of 
New York an office or an agency (which may be an office of any Agent) where 
Senior Notes may be surrendered for registration of transfer or exchange 
and where notices and demands to or upon the Company in respect of the 
Senior Notes and this Indenture may be served.  The Company shall give 
prompt written notice to the Trustee of any change in the location of such 
office or agency.  If at any time the Company shall fail to furnish the 
Trustee with the address thereof, such presentations, surrenders, notices 
and demands may be made or served at the Corporate Trust Office.

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

      The Company hereby designates the Corporate Trust Office of the 
Trustee located at 14 Wall Street, 8th Floor, Window #2, New York, New York 
10005 as one such office or agency of the Company in accordance with 
Section 2.03.

Section 4.13. Change of Control.

      (a)  Upon the occurrence of a Change of Control (such date being the 
"Change of Control Trigger Date"), each Holder of Senior Notes shall have 
the right to require the Company to purchase all or any part (equal to 
$1,000 or an integral multiple thereof) of such Holder's Senior Notes 
pursuant to an Offer at a purchase price in cash equal to 101% of the 
aggregate principal amount thereof, plus any accrued and unpaid interest 
and Liquidated Damages, if any, to the date of purchase. Although the 
failure of the Company to purchase all Senior Notes tendered in such an 
Offer shall be a Default, if the Company is unable to purchase all Senior 
Notes tendered in such an Offer, the Company shall nevertheless purchase 
the maximum principal amount of Senior Notes that it is able to purchase at 
that time.

      (b)  Prior to the mailing of the notice referred to in Section 
3.08(a), but in any event within 30 days following any Change of Control 
Trigger Date, the Company shall (i) repay in full and terminate all 
commitments under Indebtedness under the New Credit Agreement and all other 
Senior Indebtedness the terms of which require repayment upon a Change of 
Control or offer to repay in full and terminate all commitments under all 
Indebtedness under the New Credit Agreement and all such other Senior 
Indebtedness and to repay the Indebtedness owed to each lender which has 
accepted such offer or (ii) obtain the requisite consents under the New 
Credit Agreement and all such other Senior Indebtedness to permit the 
repurchase of the Senior Notes as provided in Section 3.08(b).  The Company 
shall first comply with Section 4.13(b)(ii) before it shall be required to 
repurchase Senior Notes pursuant to the provisions in Section 3.08.  The 
Company's failure to comply with this Section 4.13(b) shall constitute an 
Event of default described in clause (iii) and not in clause (ii) under 
Section 6.01(a)

      (c)  In the event of a Change of Control, the Company shall not offer 
to purchase or redeem any Subordinated Indebtedness required or entitled by 
its terms to be redeemed or purchased until the Change of Control Offer for 
the Senior Notes has been consummated and all Senior Notes tendered 
pursuant to such Offer have been accepted for payment.

Section 4.14. Limitation on Asset Sales.

      (a)  The Company shall not, and shall not permit any Restricted 
Subsidiary to, directly or indirectly, consummate an Asset Sale (including 
the sale of any of the Capital Stock of any Restricted Subsidiary) 
providing for Net Proceeds in excess of $2,500,000 unless at least 75% of 
the Net Proceeds from such Asset Sale are applied (in any manner otherwise 
permitted by this Indenture) to one or more of the following purposes in 
such combination as the Company shall elect: (i) an investment in another 
asset or business in the same line of business as, or a line of business 
similar to that of, the line of business of the Company and its Restricted 
Subsidiaries at the time of the Asset Sale; provided that such investment 
occurs on or prior to the 365th day following the date of such Asset Sale 
(the "Asset Sale Disposition Date"), (ii) to reimburse the Company or its 
Subsidiaries for expenditures made, and costs incurred, to repair, rebuild, 
replace or restore property subject to loss, damage or taking to the extent 
that the Net Proceeds consist of insurance proceeds received on account of 
such loss, damage or taking, (iii) the purchase, redemption or other 
prepayment or repayment of outstanding Senior Indebtedness of the Company 
or Indebtedness of the Company's Restricted Subsidiaries on or prior to the 
365th day following the Asset Sale Disposition Date or (iv) an Offer 
expiring on or prior to the Purchase Date.

      (b)  The Company shall not, and shall not permit any Restricted 
Subsidiary to, directly or indirectly, consummate an Asset Sale unless at 
least 75% of the consideration thereof received by the Company or such 
Restricted Subsidiary is in the form of cash, cash equivalents or 
marketable securities; provided that, solely for purposes of calculating 
such 75% of the consideration, the amount of (i) any liabilities (as shown 
on the Company's or such Restricted Subsidiary's most recent balance sheet 
or in the notes thereto, excluding contingent liabilities and trade 
payables), of the Company or any Restricted Subsidiary (other than 
liabilities that are by their terms subordinated to the Senior Notes) that 
are assumed by the transferee of any such assets and (ii) any notes or 
other obligations received by the Company or any such Restricted Subsidiary 
from such transferee that are promptly, but in no event more than 30 days 
after receipt, converted by the Company or such Restricted Subsidiary into 
cash (to the extent of the cash received), shall be deemed to be cash and 
cash equivalents for purposes of this provision. Any Net Proceeds from any 
Asset Sale that are not applied or invested as provided in Section 4.14(a) 
shall constitute "Excess Proceeds."

      (c)  When the aggregate amount of Excess Proceeds exceeds $10,000,000 
(such date being an "Asset Sale Trigger Date"), the Company shall make an 
Offer to all Holders of Senior Notes to purchase the maximum principal 
amount of the Senior Notes then outstanding that may be purchased out of 
Excess Proceeds, at an offer price in cash in an amount equal to 100% of 
principal amount thereof plus any accrued and unpaid interest and 
Liquidated Damages, if any, to the Purchase Date in accordance with the 
procedures set forth in this Indenture.

      (d)  To the extent that any Excess Proceeds remain after completion 
of an Offer, the Company may use such remaining amount for general 
corporate purposes. 

      (e)  If the aggregate principal amount of Senior Notes surrendered by 
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall 
select the Senior Notes to be purchased on a pro rata basis, by lot or by a 
method that complies with the requirements of any stock exchange on which 
the Senior Notes are listed and that the Trustee considers fair and 
appropriate.

      (f)  Upon completion of an Asset Sale Offer, the amount of Excess 
Proceeds shall be reset at zero.

      (g)  Notwithstanding the foregoing, to the extent that any or all of 
the Net Proceeds of an Asset Sale is prohibited or delayed by applicable 
local law from being repatriated to the United States, the portion of such 
Net Proceeds so affected will not be required to be applied pursuant to 
Section 4.14, but may be retained for so long, but only for so long, as the 
applicable local law prohibits repatriation to the United States.  The 
Company will promptly take all reasonable actions required by the 
applicable local law to permit such repatriation, and once such 
repatriation of any affected Net Proceeds is not prohibited under 
applicable local law, such repatriation will be immediately effected and 
such repatriated Net Proceeds will be applied in the manner set forth above 
as if such Asset Sale have occurred on the date of repatriation.

Section 4.15  Limitation on Guarantees of Company Indebtedness by Restricted 
              Subsidiaries.

      (a)  The Company shall not permit any Restricted Subsidiary, directly 
or indirectly, to guarantee any Indebtedness of the Company other than the 
Senior Notes (the "Other Company Indebtedness") unless (i) such Restricted 
Subsidiary contemporaneously executes and delivers a supplemental indenture 
to the Indenture providing for a guarantee of payment of the Senior Notes 
then outstanding by such Restricted Subsidiary to the same extent as the 
guarantee of payment (the "Other Company Indebtedness Guarantee") of the 
Other Company Indebtedness (including waiver of subrogation, if any) and 
(ii) if the Other Company Indebtedness guaranteed by such Restricted 
Subsidiary is (A) Senior Indebtedness, the guarantee for the Senior Notes 
shall be pari passu in right of payment with the Other Company Indebtedness 
Guarantee and (B) Subordinated Indebtedness, the guarantee for the Senior 
Notes shall be senior in right of payment to the Other Company Indebtedness 
Guarantee; provided that the foregoing will not limit or restrict 
guarantees issued by Restricted Subsidiaries in respect of Indebtedness of 
other Restricted Subsidiaries. 

      (b)  Each guarantee of the Senior Notes created by a Restricted 
Subsidiary pursuant to Section 4.15(a) shall be in accordance with Section 
4.15(a), shall be delivered to the Trustee and shall provide, among other 
things, that it will be automatically and unconditionally released and 
discharged upon (i) any sale, exchange or transfer permitted by this 
Indenture of (A) all of the Company's Capital Stock in such Restricted 
Subsidiary or (B) the sale of all or substantially all of the assets of the 
Restricted Subsidiary and upon the application of the Net Proceeds from 
such sale in accordance with the requirements of Section 4.14 or (ii) the 
release or discharge of the Other Company Indebtedness Guarantee that 
resulted in the creation of such guarantee of the Senior Notes, except a 
discharge or release by or as a result of direct payment under such Other 
Company Indebtedness Guarantee.

Section 4.16  Designation of Restricted and Non-Restricted Subsidiaries.

      (a)  From and after the date of original issuance of the Senior 
Notes, the Company may designate any existing or newly formed or acquired 
Subsidiary as a Non-Restricted Subsidiary, provided that (i) either (A) the 
Subsidiary to be so designated has total assets of $1,000,000 or less or 
(B) immediately before and after giving effect to such designation on a Pro 
Forma Basis; (1) the Company could incur $1.00 of additional Indebtedness 
pursuant to Section 4.07(a) determined on a Pro Forma Basis; and (2) no 
Default or Event of Default shall have occurred and be continuing, and (ii) 
all transactions between the Subsidiary to be so designated and its 
Affiliates remaining in effect are permitted pursuant to Section 4.08. Any 
Investment made by the Company or any Restricted Subsidiary which is 
redesignated from a Restricted Subsidiary to a Non-Restricted Subsidiary 
shall thereafter be considered as having been a Restricted Payment (to the 
extent not previously included as a Restricted Payment) made on the day 
such Subsidiary is designated a Non-Restricted Subsidiary in the amount of 
the greater of (i) the fair market value (as determined by the Board of 
Directors of the Company in good faith) of the Equity Interests of such 
Subsidiary held by the Company and its Restricted Subsidiaries on such 
date, and (ii) the amount of the Investments determined in accordance with 
GAAP made by the Company and any of its Restricted Subsidiaries in such 
Subsidiary. 

      (b)  A Non-Restricted Subsidiary may be redesignated as a Restricted 
Subsidiary.  The Company shall not, and shall not permit any Restricted 
Subsidiary to, take any action or enter into any transaction or series of 
transactions that would result in a Person becoming a Restricted Subsidiary 
(whether through an acquisition, the redesignation of a Non-Restricted 
Subsidiary or otherwise, but not including through the creation of a new 
Restricted Subsidiary) unless, immediately before and after giving effect 
to such action, transaction or series of transactions on a Pro Forma Basis, 
(i) the Company could incur at least $1.00 of additional Indebtedness 
pursuant to Section 4.07(a) and (ii) no Default or Event of Default shall 
have occurred and be continuing.

      (c)  The designation of a Subsidiary as a Restricted Subsidiary or 
the removal of such designation is required to be made by a resolution 
adopted by a majority of the Board of Directors of the Company stating that 
the Board of Directors has made such designation in accordance with this 
Indenture, and the Company is required to deliver to the Trustee such 
resolution together with an Officers' Certificate certifying that the 
designation complies with this Indenture.  Such designation shall be 
effective as of the date specified in the applicable resolution, which may 
not be before the date the applicable Officers' Certificate is delivered to 
the Trustee.


                                ARTICLE 5
                               SUCCESSORS

Section 5.01. Merger or Consolidation.

      (a)  The Company shall not consolidate or merge with or into, or 
sell, lease, convey or otherwise dispose of all or substantially all of its 
assets to, any Person (any such consolidation, merger or sale being a 
"Disposition") unless (i) the successor corporation of such Disposition or 
the corporation to which such Disposition shall have been made is a 
corporation organized or existing under the laws of the United States, any 
state thereof or the District of Columbia; (ii) the successor corporation 
of such Disposition or the corporation to which such Disposition shall have 
been made expressly assumes the Obligations of the Company, pursuant to a 
supplemental indenture in a form reasonably satisfactory to the Trustee, 
under the Indenture and the Senior Notes; (iii) immediately after such 
Disposition, no Default or Event of Default shall exist; and (iv) the 
corporation formed by or surviving any such Disposition, or the corporation 
to which such Disposition shall have been made, shall (A) have Consolidated 
Net Worth (immediately after the Disposition but prior to giving any pro 
forma effect to purchase accounting adjustments or Restructuring Charges 
resulting from the Disposition) equal to or greater than the Consolidated 
Net Worth of the Company immediately preceding the Disposition, (B) be 
permitted immediately after the Disposition by the terms of this Indenture 
to issue at least $1.00 of additional Indebtedness determined on a Pro Form 
Basis, and (C) have a Cash Flow Coverage Ratio, for the four fiscal 
quarters immediately preceding the applicable Disposition, and determined 
on a Pro Forma Basis, equal to or greater than the actual Cash Flow 
Coverage Ratio of the Company for such four quarter period. The limitations 
in this Section 5.01(a) on the Company's ability to make a Disposition do 
not restrict the Company's ability to sell less than all or substantially 
all of its assets, such sales being governed by Section 4.14.

      (b)  Prior to the consummation of any proposed Disposition, the 
Company shall deliver to the Trustee an Officers' Certificate to the 
foregoing effect and an Opinion of Counsel stating that the proposed 
Disposition and such supplemental indenture comply with this Indenture.


Section 5.02. Successor Corporation Substituted.

      Upon any Disposition, the Successor Corporation resulting from such 
Disposition 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 has been named as the Company herein; provided, 
however, that neither the Company nor any Successor Corporation shall be 
released from its Obligation to pay the principal of, premium, if any, and 
accrued and unpaid interest on, and Liquidated Damages, if any, with 
respect to the Senior Notes.



                                ARTICLE 6
                          DEFAULTS AND REMEDIES

Section 6.01. Events of Default.

      (a)  An Event of Default is: 

           (i)   a default for 30 days in payment of interest on, or 
                 Liquidated Damages, if any, with respect to, the Senior 
                 Notes; 

           (ii)  a default in payment when due of principal or premium, if 
                 any, with respect to, the Senior Notes; 

           (iii) the failure of the Company to comply with any of its other 
                 agreements or covenants in, or provisions of, this 
                 Indenture or the Senior Notes outstanding and the Default 
                 continues for the period, if applicable, and after the 
                 notice specified in Section 6.01(b);

           (iv)  a default by the Company or any Restricted Subsidiary 
                 under any mortgage, indenture or instrument under which 
                 there may be issued or by which there may be secured or 
                 evidenced any Indebtedness for money borrowed by the 
                 Company or any Restricted Subsidiary (or the payment of 
                 which is guaranteed by the Company or any Restricted 
                 Subsidiary), whether such Indebtedness or guarantee now 
                 exists or shall be created hereafter, if (A) either (1) 
                 such default results from the failure to pay principal of 
                 or interest on any such Indebtedness at or after the final 
                 maturity thereof (after giving effect to any extension 
                 thereof) and such default continues for 30 days beyond any 
                 applicable grace period or (2) as a result of such default 
                 the maturity of such Indebtedness has been accelerated 
                 prior to its expressed maturity, and (B) the principal 
                 amount of such Indebtedness, together with the principal 
                 amount of any other such Indebtedness in default for 
                 failure to pay principal or interest thereon at final 
                 maturity, or because of the acceleration of the maturity 
                 thereof, aggregates in excess of $10,000,000; 

           (v)   a failure by the Company or any Restricted Subsidiary to 
                 pay final judgments (not covered by insurance) aggregating 
                 in excess of $10,000,000 which judgments a court of 
                 competent jurisdiction does not rescind, annul or stay 
                 within 45 days after their entry and the Default or Event 
                 of Default continues for the period and after the notice 
                 specified in Section 6.01(b); 

           (vi)  in existence when the Company or any Significant 
                 Subsidiary pursuant to or within the meaning of any 
                 Bankruptcy Law: 

                 (A)  commences a voluntary case,

                 (B)  consents to the entry of an order for relief against 
                      it in an involuntary case,

                 (C)  consents to the appointment of a Custodian of it or 
                      for all or substantially all of its property, or

                 (D)  makes a general assignment for the benefit of its 
                      creditors; and

           (vii) in existence when a court of competent jurisdiction enters 
                 an order or decree under any Bankruptcy Law that:

                 (A)  is for relief against the Company or any Significant 
                      Subsidiary in an involuntary case,

                 (B)  appoints a Custodian of the Company or any 
                      Significant Subsidiary or for all or substantially 
                      all of the property of the Company or any Significant 
                      Subsidiary, or

                 (C)  orders the liquidation of the Company or any 
                      Significant Subsidiary,

                 and any such order or decree remains unstayed and in 
effect for 60 days.

      (b)  A Default or Event of Default under Section 6.01(a)(iii) (other 
than an Event of Default arising under Section 5.01 which shall be an Event 
of Default with the notice but without the passage of time specified in 
this Section 6.01(b)) or Section 6.01(a)(v) is not an Event of Default 
under this Indenture until the Trustee or the Holders of at least 25% in 
principal amount of the Senior Notes then outstanding notify the Company of 
the Default and the Company does not cure the Default within 30 days after 
receipt of the notice.  The notice must specify the Default, demand that it 
be remedied, and state that the notice is a "Notice of Default."

      (c)  In the case of any Event of Default pursuant to Section 6.01(a) 
or Section 6.01(b) occurring by reason of any willful action (or inaction) 
taken (or not taken) by or on behalf of the Company with the intention of 
avoiding payment of the premium that the Company would have to pay if the 
Company then had elected to redeem the Senior Notes pursuant to paragraph 5 
of the Senior Notes, an equivalent premium shall also become and be 
immediately due and payable to the extent permitted by law, anything in 
this Indenture or in the Senior Notes contained to the contrary 
notwithstanding.

      (d)  The Trustee shall not be charged with knowledge of any Default 
or Event of Default unless written notice thereof shall have been given to 
a Trust Officer at the Corporate Trust Office of the Trustee by the Company 
or any other Person.

Section 6.02. Acceleration.

      (a)  Upon the occurrence of an Event of Default (other than an Event 
of Default under Section 6.01(a)(vii) or (viii)), the Trustee or the 
holders of at least 25% in principal amount of the then outstanding Senior 
Notes may declare all Senior Notes (i) to be due and payable immediately 
and, upon such declaration, the principal of, premium, if any, and any 
accrued and unpaid interest on, and Liquidated Damages, if any, with 
respect to all Senior Notes shall be due and payable immediately; or (ii) 
if there are any amounts outstanding under the New Credit Agreement, to be 
due and payable immediately upon the first to occur of (A) an acceleration 
under the New Credit Agreement or (B) five business days after receipt by 
the Company and the Representative under the New Credit Agreement of such 
notice of acceleration but only if such Event of Default is then 
continuing; provided, however, that if an Event of Default arises under 
Section 6.01(a)(vi) or (vii), the principal of, premium, if any, and any 
accrued and unpaid interest on, and Liquidated Damages, if any, with 
respect to all Senior Notes, shall ipso facto become and be immediately due 
and payable without any declaration or other act on the part of the Trustee 
or any Holders of Senior Notes.

      (b)  The holders of a majority in principal amount of the Senior 
Notes then outstanding, by notice to the Trustee, may rescind any 
declaration of acceleration of such Senior Notes and its consequences (if 
the rescission would not conflict with any judgment or decree) if all 
existing Events of Default (other than the nonpayment of principal of or 
interest on such Senior Notes that shall have become due by such 
declaration) shall have been cured or waived.  

      (c)  If there has been a declaration of acceleration of the Senior 
Notes because an Event of Default under Section 6.01(a)(iv) has occurred 
and is continuing, such declaration of acceleration shall be automatically 
annulled if the holders of the Indebtedness described in Section 
6.01(a)(iv) have rescinded the declaration of acceleration in respect of 
such Indebtedness within 30 Business Days thereof and if (i) the annulment 
of such acceleration would not conflict with any judgment or decree of a 
court of competent jurisdiction, (ii) all existing Events of Default, 
except non-payment of principal, premium, interest or Liquidated Damages 
that shall have become due solely because of the acceleration, have been 
cured or waived, and (iii) the Company has delivered an Officers' 
Certificate to the Trustee to the effect of clauses (i) and (ii) above.

Section 6.03. Other Remedies.

      If an Event of Default occurs and is continuing, the Trustee may 
pursue any available remedy to collect the payment of principal of, 
premium, if any, or any accrued and unpaid interest on, or Liquidated 
Damages, if any, with respect to the Senior Notes or to enforce the 
performance of any provision of the Senior Notes or this Indenture.

      The Trustee may maintain a proceeding even if it does not possess any 
of the Senior Notes or does not produce any of them in the proceeding.  A 
delay or omission by the Trustee or any Holder in exercising any right or 
remedy accruing upon an Event of Default shall not impair the right or 
remedy or constitute a waiver of or acquiescence in the Event of Default.  
All remedies are cumulative to the extent permitted by law.

Section 6.04. Waiver of Past Defaults.

      The holders of a majority in aggregate principal amount of the Senior 
Notes then outstanding by notice to the Trustee may on behalf of all 
Holders of Senior Notes waive any existing Default or Event of Default 
under this Indenture and its consequences, except a continuing Default in 
the payment of the principal of, premium, if any, and interest on, and 
Liquidated Damages, if any, with respect to such Senior Notes, which may 
only be waived with the consent of each Holder of Senior Notes affected. 
Upon any such waiver, such Default shall cease to exist, and any Event of 
Default arising therefrom shall be deemed to have been cured for every 
purpose of this Indenture; provided that no such waiver shall extend to any 
subsequent or other Default or impair any right consequent thereon.

Section 6.05. Control by Majority.

      Subject to Section 7.01(e), the Holders of a majority in principal 
amount of the then outstanding Senior Notes may direct the time, method and 
place of conducting any proceeding for any remedy available to the Trustee 
or exercising any trust or power conferred on it by this Indenture.  
However, the Trustee may refuse to follow any direction that conflicts with 
law or this Indenture, that the Trustee determines may be unduly 
prejudicial to the rights of other Holders or would involve the Trustee in 
personal liability.

Section 6.06. Limitation on Suits.

      A Holder may pursue a remedy with respect to this Indenture or the 
Senior Notes only if (i) the Holder gives to the Trustee notice of a 
continuing Event of Default; (ii) the Holders of at least 25% in principal 
amount of the then outstanding Senior Notes make a request to the Trustee 
to pursue the remedy; (iii) such Holder or Holders offer to the Trustee 
indemnity satisfactory to the Trustee against any loss, liability or 
expense; (iv) the Trustee does not comply with the request within 60 days 
after receipt of the request and the offer of indemnity; and (v) during 
such 60-day period the Holders of a majority in principal amount of the 
then outstanding Senior Notes do not give the Trustee a direction 
inconsistent with the request.

      A Holder may not use this Indenture to prejudice the rights of 
another Holder or to obtain a preference or priority over another Holder.

      Holders of the Senior Notes may not enforce this Indenture, except as 
provided herein.

Section 6.07. Rights of Holders to Receive Payment.

      Notwithstanding any other provision of this Indenture, the right of 
any Holder to receive payment of principal of, premium, if any, and any 
accrued and unpaid interest on, and Liquidated Damages, if any, with 
respect to a Senior Note, on or after a respective due date expressed in 
the Senior Note, or to bring suit for the enforcement of any such payment 
on or after such respective date, shall not be impaired or affected without 
the consent of the Holder.

Section 6.08. Collection Suit by Trustee.

      If an Event of Default specified in Section 6.01(a)(i) or (ii) occurs 
and is continuing, the Trustee is authorized to recover judgment in its own 
name and as trustee of an express trust against the Company for (i) the 
principal, premium and Liquidated Damages, if any, and interest remaining 
unpaid on the Senior Notes, (ii) interest on overdue principal and premium, 
if any, and, to the extent lawful, interest, and (iii) such further amount 
as shall be sufficient to cover the costs and expenses of collection, 
including the reasonable compensation, expenses, disbursements and advances 
of the Trustee, its agents and counsel ("Trustee Expenses").

Section 6.09. Trustee May File Proofs of Claim.

      The Trustee may file such proofs of claim and other papers or 
documents as may be necessary or advisable to have the claims of the 
Trustee (including any claim for Trustee Expenses) and the Holders allowed 
in any Insolvency or Liquidation Proceeding or other judicial proceeding 
relative to the Company (or any other obligor upon the Senior Notes), its 
creditors or its property and shall be entitled and empowered to collect, 
receive and distribute to Holders any money or other property payable or 
deliverable on any such claims and each Holder authorizes any Custodian in 
any such Insolvency or Liquidation Proceeding or other judicial proceeding 
to make such payments to the Trustee, and if the Trustee shall consent to 
the making of such payments directly to the Holders any such Custodian is 
hereby authorized to make such payments directly to the Holders, and to pay 
to the Trustee any amount due to it hereunder for Trustee Expenses, and any 
other amounts due the Trustee under Section 7.07. To the extent that the 
payment of any such Trustee Expenses, and any other amounts due the Trustee 
under Section 7.07 out of the estate in any such proceeding, shall be 
denied for any reason, payment of the same shall be secured by a Lien on, 
and shall be paid out of, any and all distributions, dividends, money, 
securities and other properties which the Holders may be entitled to 
receive in such proceeding, whether in liquidation or under any plan of 
reorganization or arrangement or otherwise.  Nothing herein contained shall 
be deemed to authorize the Trustee to authorize or consent to or accept or 
adopt on behalf of any Holder any plan of reorganization, arrangement, 
adjustment or composition affecting the Senior Notes or the rights of any 
Holder, or to authorize the Trustee to vote in respect of the claim of any 
Holder in any Insolvency or Liquidation Proceeding.

Section 6.10. Priorities.

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

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

      Second:    to Holders for amounts due and unpaid on the Senior Notes 
                 for principal, premium and Liquidated Damages, if any, and 
                 interest, ratably, without preference or priority of any 
                 kind, according to the amounts due and payable on the 
                 Senior Notes for principal, premium and Liquidated 
                 Damages, if any, and interest, respectively; and

      Third:     to the Company or to such party as a court of competent 
                 jurisdiction shall direct.

      The Trustee may fix a record date and payment date for any payment to 
      Holders.

Section 6.11. Undertaking for Costs.

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


                                ARTICLE 7
                                 TRUSTEE

Section 7.01. Duties of Trustee.

      (a)  If an Event of Default occurs (and has not been cured) the 
Trustee shall (i) exercise the rights and powers vested in it by this 
Indenture, and (ii) use the same degree of care and skill in exercising 
such rights and powers as a prudent man would exercise or use under the 
circumstances in the conduct of his own affairs.

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

           (i)   the Trustee's duties shall be determined solely by the 
                 express provisions of this Indenture and the Trustee need 
                 perform only those duties that are specifically set forth 
                 in this Indenture and no others, and no implied covenants 
                 or obligations shall be read into this Indenture against 
                 the Trustee; and

           (ii)  in the absence of bad faith on its part, the Trustee may 
                 conclusively rely, as to the truth of the statements and 
                 the correctness of the opinions expressed therein, upon 
                 certificates or opinions furnished to the Trustee and 
                 conforming to the requirements of this Indenture.  
                 However, the Trustee shall examine the certificates and 
                 opinions to determine whether they conform to this 
                 Indenture's requirements.

      (c)  The Trustee may not be relieved from liability for its own 
negligent action, its own negligent failure to act, or its own wilful 
misconduct, except that:

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

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

           (iii) the Trustee shall not be liable with respect to any action 
                 it takes or omits to take in good faith in accordance with 
                 a direction it receives pursuant to Section 6.05.

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

      (e)  No provision of this Indenture shall require the Trustee to 
expend or risk its own funds or incur any liability.  The Trustee shall be 
under no obligation to exercise any of its rights and powers under this 
Indenture at the request of any Holders unless such Holders shall have 
offered to the Trustee security and indemnity satisfactory to it against 
any loss, liability or expense.

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

Section 7.02. Rights of Trustee.

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

      (b)  Before the Trustee acts or refrains from acting, it may 
reasonably require an Officers' Certificate or an Opinion of Counsel, or 
both.  The Trustee shall not be liable for any action it takes or omits to 
take in good faith in reliance on such Officers' Certificate or Opinion of 
Counsel.  The Trustee may consult with counsel and advice of such counsel 
or any Opinion of Counsel shall be full and complete authorization and 
protection in respect of any action taken, suffered or omitted by it 
hereunder in good faith and in reliance thereon.

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

      (d)  The Trustee shall not be liable for any action it takes or omits 
to take, except to the extent that such action or omission to act 
constitutes negligence or wilful misconduct on the part of the Trustee. 

      (e)  Unless otherwise specifically provided in this Indenture, any 
demand, request, direction or notice from the Company shall be sufficient 
if signed by an Officer.

Section 7.03. Individual Rights of Trustee.

      The Trustee in its individual or any other capacity may become the 
owner or pledgee of Senior Notes and may otherwise deal with the Company or 
an Affiliate with the same rights it would have if it were not Trustee.  
However, if the Trustee acquires any conflicting interest it must eliminate 
such conflict within 90 days, apply to the Commission for permission to 
continue as Trustee or resign.  Any Agent may do the same with like rights.  
The Trustee is also subject to Sections 7.10 and 7.11.

Section 7.04. Trustee's Disclaimer.

      The Trustee shall not be responsible for and makes no representation 
as to the validity or adequacy of this Indenture or the Senior Notes, it 
shall not be accountable for the Company's use of the proceeds from the 
Senior Notes or for any money paid to the Company or upon the Company's 
direction under any provisions hereof, it shall not be responsible for the 
use or application of any money any Paying Agent other than the Trustee 
receives, and it shall not be responsible for any statement or recital 
herein or any statement in the Senior Notes or any other document furnished 
or issued in connection with the sale of the Senior Notes or pursuant to 
this Indenture, other than its certificate of authentication.

Section 7.05. Notice to Holders of Defaults and Events of Default.

      If a Default or Event of Default occurs and is continuing and if it 
is actually known to the Trustee, the Trustee shall mail to Holders a 
notice of the Default or Event of Default within 90 days after it occurs.  
Except in the case of a Default or Event of Default in payment on any 
Senior Note (including any failure to redeem Senior Notes called for 
redemption or any failure to purchase Senior Notes tendered pursuant to an 
Offer that are required to be purchased by the terms of this Indenture), 
the Trustee may withhold the notice if and so long as a committee of its 
Trust Officers in good faith determines that withholding the notice is in 
the Holders' interests.

Section 7.06. Reports by Trustee to Holders.

      Within 60 days after each August 1 beginning with August 1, 1996, the 
Trustee shall mail to Holders a brief report dated as of such reporting 
date that complies with section 313(a) of the TIA (but if no event 
described in section 313(a) of the TIA has occurred within the twelve 
months preceding the reporting date, no report need be transmitted).  The 
Trustee also shall comply with section 313(b)(2) of the TIA.  The Trustee 
shall also transmit by mail all reports as required by section 313(c) of 
the TIA.

      Commencing at the time this Indenture is qualified under the TIA, a 
copy of each report at the time of its mailing to Holders shall be filed 
with the SEC and each national securities exchange on which the Senior 
Notes are listed.  The Company shall notify the Trustee when the Senior 
Notes are listed on any national securities exchange.

Section 7.07. Compensation and Indemnity.

      The Company shall pay to the Trustee (in its capacities as Trustee, 
Paying Agent and/or Registrar) from time to time reasonable compensation 
for its services hereunder.  The Trustee's compensation shall not be 
limited by any law on compensation of a trustee of an express trust.  The 
Company shall reimburse the Trustee upon request for all reasonable 
disbursements, advances, fees and expenses it incurs or makes in addition 
to the compensation for its services.  Such expenses shall include the 
reasonable compensation, disbursements and expenses of the Trustee's agents 
and counsel.

      The Company shall indemnify and hold harmless the Trustee (in its 
capacities as Trustee, Paying Agent and/or Registrar) against any and all 
losses, liabilities or expenses the Trustee incurs arising out of or in 
connection with the acceptance or administration of its duties under this 
Indenture, except as set forth below.  The Trustee shall notify the Company 
promptly of any claim for which it may seek indemnity.  Failure by the 
Trustee to so notify the Company shall not relieve the Company of its 
Obligations hereunder.  The Company shall defend the claim and the Trustee 
shall reasonably cooperate in the defense.  The Trustee may have separate 
counsel and the Company shall pay the reasonable fees and expenses of such 
counsel.  The Company need not pay for any settlement made without its 
consent, which consent shall not be unreasonably withheld.

      The Company's Obligations under this Section 7.07 shall survive the 
satisfaction and discharge of this Indenture.

      The Company need not reimburse any expense or indemnify against any 
loss or liability the Trustee incurs through negligence or bad faith.

      To secure the Company's payment of its Obligations in this Section, 
the Trustee shall have a Lien prior to the Senior Notes on all money or 
property the Trustee holds or collects.  Such Lien shall survive the 
satisfaction and discharge of this Indenture.

      When the Trustee incurs expenses or renders services after an Event 
of Default specified in Section 6.01(a)(vii) or (viii) occurs, the expenses 
and the compensation for the services (including the fees and expenses of 
its agents and counsel) are intended to constitute administrative expenses 
under any Bankruptcy Law.

Section 7.08. Replacement of Trustee.

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

      The Trustee may resign and be discharged from the trust hereby 
created by so notifying the Company.  The Holders of a majority in 
principal amount of the then outstanding Senior Notes may remove the 
Trustee by so notifying the Trustee and the Company.  The Company may 
remove the Trustee if:

      (i)  the Trustee fails to comply with Section 7.10;

      (ii) the Trustee is adjudged a bankrupt or an insolvent or an order 
           for relief is entered with respect to the Trustee under any 
           Bankruptcy Law;

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

      (iv) the Trustee becomes incapable of acting.

      If the Trustee resigns or is removed or if a vacancy exists in the 
office of Trustee for any reason, the Company shall promptly appoint a 
successor Trustee, provided that the Holders of a majority in principal 
amount of the then outstanding Senior Notes may appoint a successor Trustee 
to replace any successor Trustee appointed by the Company.

      If a successor Trustee does not take office within 60 days after the 
retiring Trustee resigns or is removed, the retiring Trustee, the Company 
or the Holders of at least 10% in principal amount of the then outstanding 
Senior Notes may petition any court of competent jurisdiction for the 
appointment of a successor Trustee.

      If the Trustee fails to comply with Section 7.10, any Holder may 
petition any court of competent jurisdiction for the removal of the Trustee 
and the appointment of a successor Trustee.

      A successor Trustee shall deliver a written acceptance of its 
appointment to the retiring Trustee and to the Company.  Thereupon, the 
resignation or removal of the retiring Trustee shall become effective and 
the successor Trustee shall have all the rights, powers and duties of the 
Trustee under this Indenture.  The successor Trustee shall mail a notice of 
its appointment to Holders.  The retiring Trustee shall promptly transfer 
all property it holds as Trustee to the successor Trustee, provided all 
sums owing to the retiring Trustee hereunder have been paid and subject to 
the Lien provided for in Section 7.07.  Notwithstanding replacement of the 
Trustee pursuant to this Section 7.08, the Company's obligations under 
Section 7.07 shall continue for the retiring Trustee's benefit with respect 
to expenses and liabilities it incurred prior to being replaced.

Section 7.09. Successor Trustee by Merger, Etc.

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

Section 7.10. Eligibility; Disqualification.

      The Trustee shall at all times (i) be a corporation organized and 
doing business under the laws of the United States of America, of any state 
thereof, or the District of Columbia authorized under such laws to exercise 
corporate trustee power, (ii) be subject to supervision or examination by 
federal or state authority, (iii) have a combined capital and surplus of at 
least $100,000,000 as set forth in its most recent published annual report 
of condition, and (iv) satisfy the requirements of sections 310(a)(1), (2) 
and (5) of the TIA.  The Trustee is subject to section 310(b) of the TIA.

Section 7.11.Preferential Collection of Claims Against the Company.

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



                                ARTICLE 8
                         DISCHARGE OF INDENTURE

Section 8.01. Discharge of Liability on Senior Notes; Defeasance.

      (a)  When (i) the Company delivers to the Trustee all outstanding 
Senior Notes (other than Senior Notes replaced pursuant to Section 2.07) 
for cancellation, or (ii) all outstanding Senior Notes have become due and 
payable and the Company irrevocably deposits with the Trustee funds 
sufficient to pay at maturity all outstanding Senior Notes, including 
interest, premium and Liquidated Damages thereon (other than Senior Notes 
replaced pursuant to Section 2.07), and if in either case the Company pays 
all other sums payable under this Indenture by the Company, then this 
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of 
further effect.

      (b)  Subject to Sections 8.01(c), 8.02, and 8.06, the Company at any 
time may terminate (i) all its obligations under the Senior Notes and this 
Indenture ("legal defeasance option") or (ii) its obligations under 
Sections 4.02, 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.13, 4.14, 
4.15, and 4.16, and the operation of Sections 5.01(a)(iii), 5.01(a)(iv), or 
6.01(a)(iii) through (a)(vi) ("covenant defeasance option").  The Company 
may exercise its legal defeasance option notwithstanding its prior exercise 
of its covenant defeasance option.

      If the Company exercises its legal defeasance option, payment of the 
Senior Notes may not be accelerated because of an Event of Default.  If the 
Company exercises its covenant defeasance option, payment of the Senior 
Notes shall not be accelerated because of an Event of Default specified in 
6.01(a)(iii) through (a)(vi) or because of the Company's failure to comply 
with Section 5.01(a)(iii) and 5.01(a)(iv).

      Upon satisfaction of the conditions set forth herein and upon the 
Company's request (and at the Company's expense), the Trustee shall 
acknowledge in writing the discharge of those obligations that the Company 
has terminated.

      (c)  Notwithstanding clauses (a) and (b) above, the Company's 
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 4.04, 7.07, 
7.08, 8.04, 8.05 and 8.06, and the Trustee's and the Paying Agent's 
obligations in Section 8.04 shall survive until the Senior Notes have been 
paid in full.  Thereafter, the Company's obligations in Sections 7.07 and 
8.05 and the Company's, the Trustee's and the Paying Agent's obligations in 
Section 8.04 shall survive.

Section 8.02. Conditions to Defeasance.

      The Company may exercise its legal defeasance option or its covenant 
defeasance option only if:

      (1)  the Company irrevocably deposits in trust (the "defeasance 
           trust") with the Trustee money or U.S. Government Obligations 
           sufficient for the payment in full of the principal of, premium, 
           if any, and any accrued and unpaid interest on, and Liquidated 
           Damages, if any, with respect to the Senior Notes then 
           outstanding, as of the maturity date, the redemption date or the 
           Purchase Date, as the case may be;

      (2)  the Company delivers to the Trustee a certificate from a 
           nationally recognized firm of independent accountants expressing 
           their opinion that the payments of principal and interest when 
           due and without reinvestment of the deposited U.S. Government 
           Obligations plus any deposited money without investment will 
           provide cash at such times and in such amounts as will be 
           sufficient to pay when due principal of, premium, if any, and 
           any accrued and unpaid interest on, and Liquidated Damages, if 
           any, with respect to all the Senior Notes to maturity or 
           redemption, as the case may be;

      (3)  since the Company's irrevocable deposit provided for in Section 
           8.02(1), 91 days have passed;

      (4)  no Default has occurred and is continuing on the date of such 
           deposit and after giving effect to it;

      (5)  the deposit does not constitute a default under any other 
           agreement binding on the Company;

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

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

      (8)  in the case of the covenant defeasance option, the Company shall 
           have delivered to the Trustee an Opinion of Counsel to the 
           effect that the Holders will not recognize income, gain or loss 
           for federal income tax purposes as a result of such deposit and 
           covenant defeasance and will be subject to federal income tax on 
           the same amount, in the same manner and at the same times as 
           would have been the case if such covenant defeasance had not 
           occurred (and, in the case of legal defeasance only, such 
           opinion of counsel must be based on a ruling of the Internal 
           Revenue Service or other change in applicable federal income tax 
           law); and

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

      Before or after a deposit, the Company may make arrangements 
satisfactory to the Trustee for the redemption or purchase of Senior Notes 
at a future date in accordance with Article 3.

Section 8.03. Application of Trust Money.

      The Trustee shall hold in trust money or U.S. Government Obligations 
deposited with it pursuant to this Article 8. It shall apply the deposited 
money and the money from U.S. Government Obligations through the Paying 
Agent and in accordance with this Indenture to the payment of principal of, 
premium, if any, and any accrued and unpaid interest on, and Liquidated 
Damages, if any, with respect to the Senior Notes.


Section 8.04. Repayment to the Company.

      After the Senior Notes have been paid in full, the Trustee and the 
Paying Agent shall promptly turn over to the Company any excess money or 
securities they hold.

      The Trustee and the Paying Agent shall pay to the Company upon 
written request by the Company any money they hold for the payment of 
principal, premium, interest or Liquidated Damages that remains unclaimed 
for 1 year after the date upon which such payment shall have become due; 
provided, however, that the Company shall have either caused notice of such 
payment to be mailed to each Holder entitled thereto no less than 30 days 
prior to such repayment or within such period shall have published such 
notice in a financial newspaper of widespread circulation published in The 
City of New York (including, without limitation, The Wall Street Journal).  
After payment to the Company, Holders entitled to the money must look to 
the Company for payment as general creditors unless an applicable abandoned 
property law designates another Person, and all liability of the Trustee 
and such Paying Agent with respect to such money shall cease.

Section 8.05. Indemnity for Government Obligations.

      The Company shall pay and shall indemnify the Trustee against any 
tax, fee or other charge imposed on or assessed against deposited U.S. 
Government Obligations or the principal and interest received on such U.S. 
Government Obligations.

Section 8.06. Reinstatement.

      If the Trustee or Paying Agent is unable to apply any money or U.S. 
Government Obligations in accordance with this Article 8 by reason of any 
legal proceeding or by reason of any order or judgment of any court or 
governmental authority enjoining, restraining or otherwise prohibiting such 
application, the Company's obligations under this Indenture and the Senior 
Notes shall be revived and reinstated as though no deposit had occurred 
pursuant to this Article 8 until such time as the Trustee or Paying Agent 
is permitted to apply all such money or U.S. Government Obligations in 
accordance with this Article 8; provided, however, that, if the Company has 
made any payment of principal of, premium, if any, and any accrued and 
unpaid interest on, and Liquidated Damages, if any, with respect to any 
Senior Notes because of the reinstatement of its Obligations, the Company 
shall be subrogated to the Holders' rights to receive such payment from the 
money or U.S. Government Obligations the Trustee or Paying Agent holds.


                                ARTICLE 9
                               AMENDMENTS

Section 9.01. Amendments and Supplements Permitted Without Consent of Holders.

      Notwithstanding Section 9.02, the Company and the Trustee may amend 
or supplement this Indenture or the Senior Notes without the consent of any 
Holder (a) to cure any ambiguity, defect or inconsistency; (b) to provide 
for uncertificated Senior Notes in addition to or in place of certificated 
Senior Notes; (c) to provide for the assumption by a Successor Corporation 
of the Company's Obligations to the Holders in the event of a Disposition 
pursuant to Article 5; (d) to comply with SEC's requirements to effect or 
maintain the qualification of this Indenture under the TIA; (e) to provide 
for additional Guarantees with respect to the Senior Notes; or (f) to make 
any change that does not materially adversely affect any Holder's legal 
rights under this Indenture.

      Upon the Company's request, after receipt by the Trustee of a 
resolution of the Board of Directors authorizing the execution of any 
amended or supplemental indenture, the documents described in Section 9.06, 
the Trustee shall join with the Company in the execution of any amended or 
supplemental indenture authorized or permitted by the terms of this 
Indenture and to make any further appropriate agreements and stipulations 
that may be contained in any such amended or supplemental indenture, but 
the Trustee shall not be obligated to enter into an amended or supplemental 
indenture that affects its own rights, duties or immunities under this 
Indenture or otherwise.

Section 9.02. Amendments and Supplements Requiring Consent of Holders.

      Subject to Section 6.07, the Company and the Trustee may amend or 
supplement this Indenture or the Senior Notes with the written consent of 
the Holders of at least a majority in principal amount of the then 
outstanding Senior Notes (including consents obtained in connection with a 
tender offer or exchange offer for the Senior Notes).  Subject to Sections 
6.04 and 6.07, the Holders of a majority in principal amount of the Senior 
Notes then outstanding (including consents obtained in connection with a 
tender offer or exchange offer for the Senior Notes) may also waive any 
existing Default or Event of Default (other than a payment Default) and its 
consequences or compliance in a particular instance by the Company with any 
provision of this Indenture or the Senior Notes.

      Upon the Company's request and after receipt by the Trustee of a 
resolution of the Board of Directors authorizing the execution of any 
supplemental indenture, evidence of the Holders' consent, and the documents 
described in Section 9.06, the Trustee shall join with the Company in the 
execution of such amended or supplemental indenture unless such amended or 
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 not be obligated to, enter into such amended or 
supplemental indenture.

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

      After an amendment or waiver under this Section becomes effective, 
the Company shall mail to each Holder affected thereby a notice briefly 
describing the amendment, supplement or waiver.  Any failure of the Company 
to mail such notice, or any defect therein, shall not, however, in any way 
impair or affect the validity of any such amended or supplemental indenture 
or waiver.  Without the consent of each Holder affected, an amendment, 
supplement or waiver under this Section may not (1) reduce the principal 
amount of Senior Notes whose Holders must consent to an amendment, 
supplement or waiver; (2) reduce the rate of or change the time for payment 
of interest, including default interest as set forth in Section 4.01, or 
Liquidated Damages on any Senior Note or alter the redemption or purchase 
provisions with respect thereto or the price at which the Company is 
required to offer to purchase any Senior Note; (3) reduce the principal of 
or change the fixed maturity of any Senior Note; (4) make any Senior Note 
payable in money other than that stated in the Senior Note; (5) make any 
change in Section 6.04 or 6.07 or in this sentence of this Section 9.02; or 
(6) waive a default in the payment of the principal of, or premium, if any, 
or any accrued and unpaid interest on, or Liquidated Damages, if any, with 
respect to, or redemption or purchase payment with respect to, any Senior 
Note (except a rescission of acceleration of the Senior Notes by the 
Holders of at least a majority in aggregate principal amount of the then 
outstanding Senior Notes and a waiver of the payment default that resulted 
from such acceleration).

Section 9.03. Compliance with TIA.

      Every amendment or supplement to this Indenture or the Senior Notes 
shall be set forth in an amended supplemental indenture that complies with 
the TIA as then in effect.

Section 9.04. Revocation and Effect of Consents.

      Until an amendment, supplement or waiver becomes effective, a consent 
to it by a Holder of a Senior Note is a continuing consent by the Holder 
and every subsequent Holder of a Senior Note or portion of a Senior Note 
that evidences the same Indebtedness as the consenting Holder's Senior 
Note, even if notation of the consent is not made on any Senior Note.  
However, any such Holder or subsequent Holder may revoke the consent as to 
his or her Senior Note or portion of a Senior Note if the Trustee receives 
the notice of revocation before the date on which the Trustee receives an 
Officer's Certificate certifying that the Holders of the requisite 
principal amount of Senior Notes have consented to the amendment or waiver.

      The Company may, but shall not be obligated to, fix a record date for 
the purpose of determining the Holders of Senior Notes entitled to consent 
to any amendment or waiver.  If a record date is fixed, then, 
notwithstanding the provisions of the immediately preceding paragraph, 
those Persons who were Holders of Senior Notes at such record date (or 
their duly designated proxies), and only those Persons, shall be entitled 
to consent to such amendment or waiver or to revoke any consent previously 
given, whether or not such Persons continue to be Holders of Senior Notes 
after such record date.  No consent shall be valid or effective for more 
than 90 days after such record date unless consents from Holders of the 
principal amount of Senior Notes required hereunder for such amendment or 
waiver to be effective shall have also been given and not revoked within 
such 90-day period.

      After an amendment or waiver becomes effective it shall bind every 
Holder, unless it is of the type described in any of clauses (1) through 
(6) of Section 9.02. In such case, the amendment or waiver shall bind each 
Holder who has consented to it and every subsequent Holder of a Senior Note 
that evidences the same debt as the consenting Holder's Senior Note.

Section 9.05. Notation on or Exchange of Senior Notes.

      The Trustee may (at the Company's expense) place an appropriate 
notation about an amendment, supplement or waiver on any Senior Note 
thereafter authenticated.  The Company in exchange for all Senior Notes may 
issue and the Trustee shall authenticate new Senior Notes that reflect the 
amendment, supplement or waiver.

      Failure to make the appropriate notation or issue a new Senior Note 
shall not affect the validity and effect of such amendment, supplement or 
waiver.

Section 9.06. Trustee Protected.

      The Trustee shall sign any amendment or supplemental indenture 
authorized pursuant to this Article 9 if the amendment does not adversely 
affect the rights, duties, liabilities or immunities of the Trustee.  If it 
does, the Trustee may, but need not, sign it.  In signing such amendment or 
supplemental indenture, the Trustee shall be entitled to receive and, 
subject to Section 7.01, shall be fully protected in relying upon, an 
Officers' Certificate and Opinion of Counsel as conclusive evidence that 
such amendment or supplemental indenture is authorized or permitted by this 
Indenture, that it is not inconsistent herewith, and that it will be valid 
and binding upon the Company in accordance with its terms.  The Company may 
not sign an amendment or supplemental indenture until the Board of 
Directors approves it.


                               ARTICLE 10
                              MISCELLANEOUS

Section 10.01.   Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies, or conflicts 
with the duties imposed by operation of section 318(c) of the TIA, the 
imposed duties shall control.

Section 10.02.   Notices.

      Any notice or communication by the Company or the Trustee to the 
other is duly given if in writing and delivered in person, mailed by 
registered or certified mail, postage prepaid, return receipt requested or 
delivered by telecopier or overnight air courier guaranteeing next day 
delivery to the other's address:

      If to the Company:

           Motors and Gears, Inc.
           ArborLake Centre, Suite 550
           1751 Lake Cook Road
           Deerfield, Illinois 60015
           Attention:  Chief Financial Officer
           Telecopier No.: (708) 945-5698

      with a copy to:  

           Mayer, Brown & Platt
           1675 Broadway
           New York, New York  10019
           Attention:  James B. Carlson, Esq.
           Telecopier No.:  (212) 262-1910


      If to the Trustee:

           Fleet National Bank
           777 Main Street
           Hartford, Connecticut 06115
           Attention: Corporate Trust Administration CTMO0238
           Telecopier No.: (860) 986-7920

      The Company or the Trustee by notice to the other may designate 
additional or different addresses for subsequent notices or communications.

      All notices and communications (other than those sent to Holders) 
shall be deemed to have been duly given:  at the time delivered by hand, if 
personally delivered; the date receipt is acknowledged, if mailed by 
registered or certified mail; when answered back, if telecopied; and the 
next Business Day after timely delivery to the courier, if sent by 
overnight air courier guaranteeing next day delivery.

      Any notice or communication to a Holder shall be mailed by 
first-class mail to his or her address shown on the register kept by the 
Registrar.  Failure to mail a notice or communication to a Holder or any 
defect in it shall not affect its sufficiency with respect to other 
Holders.

      If a notice or communication is mailed in the manner provided above 
within the time prescribed, it is duly given, whether or not the addressee 
receives it.

      If the Company mails a notice or communication to Holders, it shall 
mail a copy to the Trustee and each Agent at the same time.

Section 10.03.   Communication by Holders with Other Holders.

      Holders may communicate pursuant to section 312(b) of the TIA with 
other Holders with respect to their rights under this Indenture or the 
Senior Notes.  The Company, the Trustee, the Registrar and any other Person 
shall have the protection of section 312(c) of the TIA.

Section 10.04.   Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company to the Trustee to take 
any action under this Indenture, the Company shall furnish to the Trustee:

      (a)  an Officers' Certificate (which shall include the statements set 
           forth in Section 10.05) stating that, in the opinion of the 
           signers, all conditions precedent and covenants, if any, 
           provided for in this Indenture relating to the proposed action 
           have been complied with; and

      (b)  an Opinion of Counsel (which shall include the statements set 
           forth in Section 10.05) stating that, in the opinion of such 
           counsel, all such conditions precedent provided for in this 
           Indenture relating to the proposed action have been complied 
           with.

Section 10.05.   Statements Required in Certificate or Opinion.

      Each certificate or opinion with respect to compliance with a 
condition or covenant provided for in this Indenture (other than a 
certificate provided pursuant to section 314(a)(4) of the TIA) 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 complied with; and

      (4)  a statement as to whether, in such Person's opinion, such 
           condition or covenant has been complied with.

Section 10.06.   Rules by Trustee and Agents.

      The Trustee may make reasonable rules for action by or at a meeting 
of Holders.  The Registrar or Paying Agent may make reasonable rules and 
set reasonable requirements for its functions.

Section 10.07.   Legal Holidays.

      If a payment date is a Legal Holiday at a place of payment, payment 
may be made at that place on the next succeeding day that is not a Legal 
Holiday, and no interest shall accrue for the intervening period.

Section 10.08.   No Recourse Against Others.

      No officer, employee, director, stockholder or Subsidiary of the 
Company shall have any liability for any Obligations of the Company under 
the Senior Notes or this Indenture, or for any claim based on, in respect 
of, or by reason of, such Obligations or the creation of any such 
Obligation, except, in the case of a Subsidiary, for an express guarantee 
or an express creation of any Lien by such Subsidiary of the Company's 
Obligations under the Senior Notes.  Each Holder by accepting a Senior Note 
waives and releases all such liability, and such waiver and release is part 
of the consideration for the issuance of the Senior Notes.  The foregoing 
waiver may not be effective to waive liabilities under the Federal 
securities law and the Commission is of the view that such a waiver is 
against public policy.

Section 10.09.   Counterparts.

      This Indenture may be executed in any number of counterparts and by 
the parties hereto in separate counterparts, each of which when so executed 
shall be deemed to be an original and all of which taken together shall 
constitute one and the same agreement.

Section 10.10.   Variable Provisions.

      The Company initially appoints the Trustee as Paying Agent, Registrar 
      and authenticating agent.

      The first compliance certificate to be delivered by the Company to 
the Trustee pursuant to Section 4.03 shall be for the fiscal year ending on 
December 31, 1996.

Section 10.11.   Governing Law.

      The internal laws of the State of New York shall govern this 
Indenture and the Senior Notes, without regard to the conflict of laws 
provisions thereof.

Section 10.12.   No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret another indenture, loan 
or debt agreement of the Company or any of its Subsidiaries, and no other 
indenture, loan or debt agreement may be used to interpret this Indenture.

Section 10.13.   Successors.

      All agreements of the Company in this Indenture and the Senior Notes 
shall bind its successor.  All agreements of the Trustee in this Indenture 
shall bind its successor.

Section 10.14.   Severability.

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

Section 10.15.   Table of Contents, Headings, Etc.

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

                    [NEXT PAGE IS THE SIGNATURE PAGE]



Dated as of November 7, 1996           MOTORS AND GEARS, INC.



                                       By:  /s/ Jonathan F. Boucher
                                          ---------------------------
                                            Name: Jonathan F. Boucher
                                            Title:   Vice President





Dated as of November 7, 1996           FLEET NATIONAL BANK,
                                            as Trustee



                                       By:  /s/ Michael M. Hopkins
                                          --------------------------
                                            Name: Michael M. Hopkins
                                            Title:   Vice President



                                       By:  /s/ Dennis Fisher     
                                          -------------------------
                                            Name: Dennis Fisher
                                            Title:  Assistant Vice President





                            TABLE OF CONTENTS

                                ARTICLE 1
               DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01.Definitions.............................................  1
Section 1.02.Other Definitions....................................... 14
Section 1.03.Incorporation by Reference of Trust Indenture Act....... 15
Section 1.04.Rules of Construction................................... 15

                                ARTICLE 2
                            THE SENIOR NOTES
Section 2.01.Form and Dating......................................... 15
Section 2.02.Execution and Authentication............................ 16
Section 2.03.Registrar and Paying Agent.............................. 16
Section 2.04.Paying Agent to Hold Money in Trust..................... 17
Section 2.05.Holder Lists............................................ 17
Section 2.06.Transfer and Exchange................................... 17
Section 2.07.Replacement Senior Notes................................ 23
Section 2.08.Outstanding Senior Notes................................ 24
Section 2.09.Treasury Senior Notes................................... 24
Section 2.10.Temporary Senior Notes.................................. 24
Section 2.11.Cancellation............................................ 24
Section 2.12.Defaulted Interest...................................... 25
Section 2.13.Record Date............................................. 25
Section 2.14.CUSIP Number............................................ 25

                                ARTICLE 3
          OPTIONAL REDEMPTION AND MANDATORY OFFERS TO PURCHASE
Section 3.01.Notices to Trustee...................................... 25
Section 3.02.Selection of Senior Notes to be Redeemed or Purchased... 26
Section 3.03.Notice of Redemption.................................... 26
Section 3.04.Effect of Notice of Redemption.......................... 27
Section 3.05.Deposit of Redemption Price............................. 27
Section 3.06.Senior Notes Redeemed in Part........................... 28
Section 3.07.Optional Redemption Provisions.......................... 28
Section 3.08.Mandatory Purchase Provisions........................... 28

                                ARTICLE 4
                                COVENANTS
Section 4.01.Payment of Senior Notes................................. 30
Section 4.02.SEC Reports............................................. 30
Section 4.03.Compliance Certificate.................................. 31
Section 4.04.Stay, Extension and Usury Laws.......................... 32
Section 4.05.Limitation on Restricted Payments....................... 32
Section 4.06.Corporate Existence..................................... 35
Section 4.07.Limitation on Incurrence of Indebtedness................ 35
Section 4.08.Limitation on Transactions With Affiliates.............. 36
Section 4.09.Limitation on Liens..................................... 36
Section 4.10.Compliance With Laws, Taxes............................. 37
Section 4.11.Limitation on Dividends and Other Payment 
           Restrictions Affecting Restricted Subsidiaries............ 37
Section 4.12.Maintenance of Office or Agencies....................... 38
Section 4.13.Change of Control....................................... 38
Section 4.14.Limitation on Asset Sales............................... 38
Section 4.15Designation of Restricted and Non-Restricted Subsidiaries. 40

                                ARTICLE 5
                               SUCCESSORS
Section 5.01.Merger or Consolidation................................. 41
Section 5.02.Successor Corporation Substituted....................... 41

                                ARTICLE 6
                          DEFAULTS AND REMEDIES
Section 6.01.Events of Default....................................... 43
Section 6.02.Acceleration............................................ 44
Section 6.03.Other Remedies.......................................... 45
Section 6.04.Waiver of Past Defaults................................. 45
Section 6.05.Control by Majority..................................... 45
Section 6.06.Limitation on Suits..................................... 45
Section 6.07.Rights of Holders to Receive Payment.................... 46
Section 6.08.Collection Suit by Trustee.............................. 46
Section 6.09.Trustee May File Proofs of Claim........................ 46
Section 6.10.Priorities.............................................. 47
Section 6.11.Undertaking for Costs................................... 47

                                ARTICLE 7
                                 TRUSTEE
Section 7.01.Duties of Trustee....................................... 47
Section 7.02.Rights of Trustee....................................... 48
Section 7.03.Individual Rights of Trustee............................ 49
Section 7.04.Trustee's Disclaimer.................................... 49
Section 7.05.Notice to Holders of Defaults and Events of Default..... 49
Section 7.06.Reports by Trustee to Holders........................... 49
Section 7.07.Compensation and Indemnity.............................. 49
Section 7.08.Replacement of Trustee.................................. 50
Section 7.09.Successor Trustee by Merger, Etc........................ 51
Section 7.10.Eligibility; Disqualification........................... 51
Section 7.11.Preferential Collection of Claims Against the Company... 51

                                ARTICLE 8
                         DISCHARGE OF INDENTURE
Section 8.01.Discharge of Liability on Senior Notes; Defeasance...... 51
Section 8.02.Conditions to Defeasance................................ 52
Section 8.03.Application of Trust Money.............................. 53
Section 8.04.Repayment to the Company................................ 53
Section 8.05.Indemnity for Government Obligations.................... 54
Section 8.06.Reinstatement........................................... 54

                                ARTICLE 9
                               AMENDMENTS
Section 9.01.Amendments and Supplements Permitted Without Consent of 
           Holders................................................... 54
Section 9.02.Amendments and Supplements Requiring Consent of Holders. 55
Section 9.03.Compliance with TIA..................................... 55
Section 9.04.Revocation and Effect of Consents....................... 56
Section 9.05.Notation on or Exchange of Senior Notes................. 56
Section 9.06.Trustee Protected....................................... 56


                               ARTICLE 10
                              MISCELLANEOUS
Section 10.01.Trust Indenture Act Controls........................... 57
Section 10.02.Notices................................................ 57
Section 10.03.Communication by Holders with Other Holders............ 58
Section 10.04.Certificate and Opinion as to Conditions Precedent..... 58
Section 10.05.Statements Required in Certificate or Opinion.......... 58
Section 10.06.Rules by Trustee and Agents............................ 58
Section 10.07.Legal Holidays......................................... 59
Section 10.08.No Recourse Against Others............................. 59
Section 10.09.Counterparts........................................... 59
Section 10.10.Variable Provisions.................................... 59
Section 10.11.Governing Law.......................................... 59
Section 10.12.No Adverse Interpretation of Other Agreements.......... 59
Section 10.13.Successors............................................. 59
Section 10.14.Severability........................................... 59
Section 10.15.Table of Contents, Headings, Etc....................... 60

                                EXHIBITS

Exhibit A  Form of Senior Note ......................................A-1
Exhibit B  Certificate of Transferor ................................B-1
Exhibit C  Certificate of Institutional Accredited Investor .........C-1
Exhibit D  Certificate of Regulation S Transferor ...................D-1




<PAGE>
 
                                                        EXHIBIT 10.3
 





                                                                   
=============================================================================

                               CREDIT AGREEMENT


                                    among


                        MOTORS AND GEARS INDUSTRIES, INC.,



                                 VARIOUS BANKS, 


                                     and


                            BANKERS TRUST COMPANY,
                                   as AGENT


                      __________________________________


                        Dated as of November 7, 1996

                      __________________________________
                                    
                      
===============================================================================



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

SECTION 1.  Amount and Terms of Credit........................  1
      1.01  The Commitments...................................  1
      1.02  Minimum Amount of Each Borrowing..................  3
      1.03  Notice of Borrowing...............................  4
      1.04  Disbursement of Funds.............................  5
      1.05  Notes.............................................  5
      1.06  Conversions.......................................  6
      1.07  Pro Rata Borrowings...............................  7
      1.08  Interest..........................................  7
      1.09  Interest Periods..................................  8
      1.10  Increased Costs, Illegality, etc..................  9
      1.11  Compensation...................................... 11
      1.12  Change of Lending Office.......................... 12
      1.13  Replacement of Banks.............................. 12

SECTION 2.  Letters of Credit................................. 14
      2.01  Letters of Credit................................. 14
      2.02  Minimum Stated Amount............................. 15
      2.03  Letter of Credit Requests......................... 15
      2.04  Letter of Credit Participations................... 16
      2.05  Agreement to Repay Letter of Credit Drawings...... 18
      2.06  Increased Costs................................... 19

SECTION 3.  Fees; Reductions of Commitment.................... 20
      3.01  Fees.............................................. 20
      3.02  Voluntary Termination of Unutilized Commitments... 21
      3.03  Mandatory Reduction of Commitments................ 22

SECTION 4.  Prepayments; Payments; Taxes...................... 24
      4.01  Voluntary Prepayments............................. 24
      4.02  Mandatory Repayments and Cash Collateralizations.. 25
      4.03  Method and Place of Payment....................... 26
      4.04  Net Payments; Taxes............................... 26

SECTION 5.  Conditions Precedent to Credit Events on the Initial
              Borrowing Date.................................. 28
      5.01  Execution of Agreement; Notes..................... 28
      5.02  Officer's Certificate............................. 28
      5.03  Fees, etc......................................... 29
      5.04  Opinions of Counsel............................... 29
      5.05  Corporate Documents; Proceedings; etc............. 29
      5.06  Employee Benefit Plans; Shareholders' Agreements; 
             Management Agreements; Employment Agreements; 
             Collective Bargaining Agreements; Debt Agreements; 
             Tax Sharing Agreements; Material Contracts....... 30
      5.07  Adverse Change.................................... 31
      5.08  Litigation........................................ 31
      5.09  Approvals, etc.................................... 31
      5.10  Issuance of Senior Unsecured Notes................ 32
      5.11  Consummation of the Acquisition and the Merger.... 32
      5.12  Refinancing of Existing Credit Agreement.......... 33
      5.13  Pledge Agreement.................................. 34
      5.14  Security Agreement................................ 34
      5.15  Subsidiary Guaranty............................... 35
      5.16  Stockholders' Agreement, Subscription Agreements, 
             Consulting Agreements, Affiliate Leases, etc..... 35
      5.17  Consent Letter.................................... 36
      5.18  Solvency Certificate; Environmental Assessments; 
             and Insurance Certificates....................... 36
      5.19  Existing Indebtedness............................. 36
      5.20  Financial Statements; Pro Forma Financial 
             Information; Projections......................... 37
      5.21  Existing Tax Sharing Agreement.................... 37
      5.22  Existing Seller Letter of Credit Agreement........ 38
      5.23  Intercompany Notes................................ 38

SECTION 6.  Conditions Precedent to All Credit Events......... 38
      6.01  No Default; Representations and Warranties........ 38
      6.02  Adverse Change, etc............................... 39
      6.03  Litigation........................................ 39
      6.04  Notice of Borrowing; Letter of Credit Request..... 39

SECTION 7.  Representations and Warranties.................... 39
      7.01  Corporate Status.................................. 40
      7.02  Corporate Power and Authority..................... 40
      7.03  No Violation...................................... 40
      7.04  Governmental Approvals............................ 41
      7.05  Financial Statements; Financial Condition; 
             Undisclosed Liabilities; Projections; etc........ 41
      7.06  Litigation........................................ 44
      7.07  True and Complete Disclosure...................... 44
      7.08  Use of Proceeds; Margin Regulations............... 45
      7.09  Tax Returns and Payments.......................... 45
      7.10  Compliance with ERISA............................. 45
      7.11  Security Documents................................ 46
      7.12  Representations and Warranties in Documents....... 47
      7.13  Properties........................................ 47
      7.14  Capitalization.................................... 47
      7.15  Subsidiaries...................................... 48
      7.16  Compliance with Statutes, etc..................... 48
      7.17  Investment Company Act............................ 48
      7.18  Public Utility Holding Company Act................ 48
      7.19  Environmental Matters............................. 49
      7.20  Labor Relations................................... 49
      7.21  Patents, Licenses, Franchises and Formulas........ 50
      7.22  Indebtedness...................................... 50
      7.23  Transaction....................................... 50
      7.24  Special Purpose Corporations...................... 51
      7.25  Subordinated Notes................................ 51
      7.26  Insurance......................................... 51

SECTION 8.  Affirmative Covenants............................. 51
      8.01  Information Covenants............................. 52
      8.02  Books, Records and Inspections.................... 55
      8.03  Maintenance of Property; Insurance................ 56
      8.04  Corporate Franchises.............................. 57
      8.05  Compliance with Statutes, etc..................... 57
      8.06  Compliance with Environmental Laws................ 57
      8.07  ERISA............................................. 58
      8.08  End of Fiscal Years; Fiscal Quarters.............. 59
      8.09  Performance of Obligations........................ 59
      8.10  Payment of Taxes.................................. 59
      8.11  Additional Security; Further Assurances; etc...... 60
      8.12  Maintenance of Corporate Separateness............. 63
      8.13  Use of Proceeds................................... 63
      8.14  UCC Searches...................................... 63
      8.15  Permitted Transactions............................ 63
      8.16  Foreign Subsidiaries Security..................... 67
      8.17  Receivables Facility Transaction.................. 68

SECTION 9.  Negative Covenants................................ 68
      9.01  Liens............................................. 68
      9.02  Consolidation, Merger, Purchase or Sale of 
             Assets, etc...................................... 72
      9.03  Restricted Payments............................... 75
      9.04  Indebtedness...................................... 80
      9.05  Advances, Investments and Loans................... 83
      9.06  Transactions with Affiliates...................... 87
      9.07  Changes in Business............................... 89
      9.08  Consolidated Interest Coverage Ratio.............. 89
      9.09  Leverage Ratio.................................... 90
      9.10  Limitation on Modifications of Certain Indebtedness; 
             Modifications of Certificate of Incorporation, 
             By-Laws and Certain Agreements; etc.............. 90
      9.11  Limitation on Certain Restrictions on Subsidiaries 93
      9.12  Limitation on Issuance of Capital Stock........... 93
      9.13  Limitation on Creation of Subsidiaries............ 94

SECTION 10.  Events of Default................................ 94
      10.01  Payments......................................... 94
      10.02  Representations, etc............................. 94
      10.03  Covenants........................................ 95
      10.04  Default Under Other Agreements................... 95
      10.05  Bankruptcy, etc.................................. 96
      10.06  ERISA............................................ 96
      10.07  Security Documents............................... 97
      10.08  Guaranties....................................... 97
      10.09  Judgments........................................ 97
      10.10  Change of Control................................ 97
      10.11  Senior Unsecured Notes; Parent Subordinated 
              Intercompany Note............................... 98
      10.12  Certain Tax Payments............................. 98

SECTION 11.  Definitions and Accounting Terms................. 99
      11.01  Defined Terms.................................... 99

SECTION 12.  The Agent........................................145
      12.01  Appointment......................................145
      12.02  Nature of Duties.................................145
      12.03  Lack of Reliance on the Agent....................145
      12.04  Certain Rights of the Agent......................146
      12.05  Reliance.........................................146
      12.06  Indemnification..................................146
      12.07  The Agent in its Individual Capacity.............147
      12.08  Holders..........................................147
      12.09  Resignation by the Agent.........................147

SECTION 13.  Miscellaneous....................................148
      13.01  Payment of Expenses, etc.........................148
      13.02  Right of Setoff..................................149
      13.03  Notices..........................................149
      13.04  Benefit of Agreement.............................150
      13.05  No Waiver; Remedies Cumulative...................151
      13.06  Payments Pro Rata................................152
      13.07  Calculations; Computations.......................152
      13.08  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; 
             WAIVER OF JURY TRIAL.............................153
      13.09  Counterparts.....................................154
      13.10  Effectiveness....................................154
      13.11  Headings Descriptive.............................155
      13.12  Amendment or Waiver; etc.........................155
      13.13  Survival.........................................156
      13.14  Domicile of Loans................................156
      13.15  Confidentiality..................................157
      13.16  Register.........................................157


SCHEDULE I    Commitments
SCHEDULE II   Bank Addresses
SCHEDULE III  Real Property
SCHEDULE IV   Projections
SCHEDULE V    Subsidiaries
SCHEDULE VI   Scheduled Existing Indebtedness
SCHEDULE VII  Insurance
SCHEDULE VIII Existing Liens


EXHIBIT A     Form of Notice of Borrowing
EXHIBIT B-1   Form of Revolving Note
EXHIBIT B-2   Form of Swingline Note
EXHIBIT C     Form of Letter of Credit Request
EXHIBIT D     Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1   Form of Opinion of Mayer, Brown & Platt
EXHIBIT E-2   Form of Opinion of Bryan, Cave
EXHIBIT F     Form of Officers' Certificate
EXHIBIT G     Form of Pledge Agreement
EXHIBIT H     Form of Security Agreement
EXHIBIT I     Form of Subsidiary Guaranty
EXHIBIT J     Form of Consent Letter
EXHIBIT K     Form of Officer's Solvency Certificate
EXHIBIT L     Form of Non-Wholly-Owned Subsidiary Guaranty
EXHIBIT M     Form of Intercompany Note
EXHIBIT N     Form of Subordination Provisions
EXHIBIT O     Form of Existing Seller Subordinated Note
EXHIBIT P     Form of Assignment and Assumption Agreement
EXHIBIT Q     Form of Existing Seller Installment Note
EXHIBIT R     Form of Shareholder Subordinated Note
EXHIBIT S     Form of Parent Subordinated Intercompany Note


 
           CREDIT AGREEMENT, dated as of November 7, 1996, among MOTORS AND 
GEARS INDUSTRIES, INC., a Delaware corporation (the "Borrower"), the Banks 
party hereto from time to time and BANKERS TRUST COMPANY, as Agent (all 
capitalized terms used herein and defined in Section 11 are used herein as 
therein defined).


                       W I T N E S S E T H :
                       - - - - - - - - - -
           WHEREAS, subject to and upon the terms and conditions set forth 
herein, the Banks are willing to make available the credit facility 
provided for herein;


           NOW, THEREFORE, IT IS AGREED:

           SECTION 1.  Amount and Terms of Credit.
                       --------------------------

           1.01  The Commitments.  (a)  Subject to and upon the terms and 
conditions set forth herein, each Bank severally agrees, at any time and 
from time to time on and after the Initial Borrowing Date and prior to the 
Final Maturity Date, to make a loan or loans (each, a "Revolving Loan" and, 
collectively, the "Revolving Loans") to the Borrower, which Revolving 
Loans:  

            (i)  shall, at the option of the Borrower, be incurred and 
      maintained as, and/or converted into, Base Rate Loans or Eurodollar 
      Loans, provided that (x) except as otherwise specifically provided in 
      Section 1.10(b), all Revolving Loans comprising the same Borrowing 
      shall at all times be of the same Type and (y) unless the Agent has 
      determined that the Syndication Date has occurred, no more than one 
      Borrowing of Revolving Loans to be maintained as Eurodollar Loans may 
      be incurred (whether pursuant to this Section 1.01(a) or by way of 
      conversion pursuant to Section 1.06) prior to the 60th day after the 
      Initial Borrowing Date (which Borrowing of Eurodollar Loans may only 
      have an Interest Period of one month, and which Borrowing may only be 
      made on a single date occurring on or prior to the fifth day 
      following the Initial Borrowing Date);

           (ii)  may be repaid and reborrowed in accordance with the 
      provisions hereof; and

          (iii)  shall not exceed for any Bank at any time outstanding that 
      aggregate principal amount which, when added to the product of (x) 
      such Bank's Percentage and (y) the sum of (I) the aggregate amount of 
      all Letter of Credit Outstandings (exclusive of Unpaid Drawings which 
      are repaid with the proceeds of, and simultaneously with the 
      incurrence of, the respective incurrence of Revolving Loans) at such 
      time and (II) the aggregate principal amount of all Swingline Loans 
      (exclusive of Swingline Loans which are repaid with the proceeds of, 
      and simultaneously with the incurrence of, the respective incurrence 
      of Revolving Loans) then outstanding, equals the Available Commitment 
      of such Bank at such time.

Notwithstanding anything to the contrary contained above, the aggregate 
principal amount of Revolving Loans incurred on the Initial Borrowing Date 
may not exceed $5,000,000.

           (b)  Subject to and upon the terms and conditions set forth 
herein, the Swingline Bank agrees to make at any time and from time to time 
after the Initial Borrowing Date and prior to the Swingline Expiry Date, a 
loan or loans (each, a "Swingline Loan" and, collectively, the "Swingline 
Loans") to the Borrower, which Swingline Loans:

            (i)  shall be made and maintained as Base Rate Loans;

           (ii)  may be repaid and reborrowed in accordance with the 
      provisions hereof;

          (iii)  shall not exceed in aggregate principal amount at any time 
      outstanding, when combined with (x) the aggregate principal amount of 
      all Revolving Loans then outstanding and (y) the amount of all Letter 
      of Credit Outstandings at such time, an amount equal to the Total 
      Available Commitment at such time (after giving effect to any 
      reductions thereto on such date); and 

           (iv)  shall not exceed in aggregate principal amount at any time 
      outstanding the Maximum Swingline Amount. 

The Swingline Bank shall not be obligated to make any Swingline Loans at a 
time when a Bank Default exists unless the Swingline Bank has entered into 
arrangements satisfactory to it to eliminate the Swingline Bank's risk with 
respect to the Bank which is subject of such Bank Default, including by 
cash collateralizing such Bank's Percentage of the outstanding Swingline 
Loans.  Notwithstanding anything to the contrary contained in this Section 
1.01(b), the Swingline Bank shall not make any Swingline Loan after 
receiving a written notice from the Borrower or the Required Banks stating 
that a Default or an Event of Default exists and is continuing until such 
time as the Swingline Bank shall have received written notice of (i) 
rescission of all such notices from the party or parties originally 
delivering such notice, (ii) the waiver of such Default or Event of Default 
by the Required Banks or (iii) the Agent in good faith believes that such 
Default or Event of Default has ceased to exist.  

           (c)  On any Business Day, the Swingline Bank may, in its sole 
discretion, give notice to the Banks that its outstanding Swingline Loans 
shall be funded with a Borrowing of Revolving Loans (provided that such 
notice shall be deemed to have been automatically given upon the occurrence 
of a Default or an Event of Default under Section 10.05 or upon the 
exercise of any of the remedies provided in the last paragraph of Section 
10), in which case a Borrowing of Revolving Loans constituting Base Rate 
Loans (each such Borrowing, a "Mandatory Borrowing") shall be made on the 
immediately succeeding Business Day from all Banks (without giving effect 
to any terminations and/or reductions thereto pursuant to the last 
paragraph of Section 10) pro rata on the basis of their respective 
Percentages (determined before giving effect to any termination of the 
Commitments pursuant to the last paragraph of Section 10) and the proceeds 
thereof shall be applied directly to the Swingline Bank to repay the 
Swingline Bank for such outstanding Swingline Loans.  Each such Bank hereby 
irrevocably agrees to make Revolving Loans upon one Business Day's notice 
pursuant to each Mandatory Borrowing in the amount and in the manner 
specified in the preceding sentence and on the date specified in writing by 
the Swingline Bank notwithstanding (i) that the amount of the Mandatory 
Borrowing may not comply with the minimum amount for Borrowings otherwise 
required hereunder, (ii) whether any conditions specified in Section 5 or 6 
are then satisfied, (iii) whether a Default or an Event of Default then 
exists, (iv) the date of such Mandatory Borrowing and (v) the amount of the 
Total Available Commitment at such time.  In the event that any Mandatory 
Borrowing cannot for any reason be made on the date otherwise required 
above (including, without limitation, as a result of the commencement of a 
proceeding under the Bankruptcy Code with respect to the Borrower), then 
each such Bank hereby agrees that it shall forthwith purchase (as of the 
date the Mandatory Borrowing would otherwise have occurred, but adjusted 
for any payments received from the Borrower on or after such date and prior 
to such purchase) from the Swingline Bank such participations in the 
outstanding Swingline Loans as shall be necessary to cause such Banks to 
share in such Swingline Loans ratably based upon their respective 
Percentages (determined before giving effect to any termination of the 
Commitments pursuant to the last paragraph of Section 10); provided, that 
(x) all interest payable on the Swingline Loans shall be for the account of 
the Swingline Bank until the date as of which the respective participation 
is required to be purchased and, to the extent attributable to the 
purchased participation, shall be payable to the participant from and after 
such date and (y) at the time any purchase of participations pursuant to 
this sentence is actually made, the purchasing Bank shall be required to 
pay the Swingline Bank interest on the principal amount of participation 
purchased for each day from and including the day upon which the Mandatory 
Borrowing would otherwise have occurred to but excluding the date of 
payment for such participation, at the rate otherwise applicable to 
Revolving Loans maintained as Base Rate Loans hereunder for each day 
thereafter.

           1.02  Minimum Amount of Each Borrowing.  The aggregate principal 
amount of each Borrowing of Loans under a respective Tranche shall not be 
less than the Minimum Borrowing Amount for such Tranche, provided that 
Mandatory Borrowings shall be in the amounts required by Section 1.01(c).  
More than one Borrowing may occur on the same date, but at no time shall 
there be outstanding more than six Borrowings of Eurodollar Loans.

           1.03  Notice of Borrowing.  (a)  Whenever the Borrower desires 
to make a Borrowing hereunder (excluding Borrowings of Swingline Loans and 
Mandatory Borrowings), the Borrower shall give the Agent at its Notice 
Office at least one Business Day's prior written notice (or telephonic 
notice promptly confirmed in writing) of each Base Rate Loan and at least 
three Business Days' prior written notice (or telephonic notice promptly 
confirmed in writing) of each Eurodollar Loan to be made hereunder, 
provided that any such notice shall be deemed to have been given on a 
certain day only if given before 11:00 A.M. (New York time) on such day.  
Each such written notice or written confirmation of telephonic notice 
(each, a "Notice of Borrowing"), except as otherwise expressly provided in 
Section 1.10, shall be irrevocable and shall be given by an Authorized 
Officer of the Borrower in the form of Exhibit A, appropriately completed 
to specify the aggregate principal amount of the Revolving Loans to be made 
pursuant to such Borrowing, the date of such Borrowing (which shall be a 
Business Day) and whether the Revolving Loans being made pursuant to such 
Borrowing are to be initially maintained as Base Rate Loans or Eurodollar 
Loans and, if Eurodollar Loans, the initial Interest Period to be 
applicable thereto.  The Agent shall promptly give each Bank notice of such 
proposed Borrowing, of such Bank's proportionate share thereof and of the 
other matters required by the immediately preceding sentence to be 
specified in the Notice of Borrowing.

           (b)  (i)  Whenever the Borrower desires to make a Borrowing of 
Swingline Loans hereunder, an Authorized Officer of the Borrower shall give 
the Swingline Bank not later than 1:00 P.M. (New York time) on the date 
that a Swingline Loan is to be made, written notice (or telephonic notice 
confirmed in writing) of each Swingline Loan to be made hereunder.  Each 
such notice shall be irrevocable and specify in each case (A) the date of 
Borrowing (which shall be a Business Day) and (B) the aggregate principal 
amount of Swingline Loans to be made pursuant to such Borrowing.

           (ii)  Mandatory Borrowings shall be made upon the notice 
specified in Section 1.01(c), with the Borrower irrevocably agreeing, by 
its incurrence of any Swingline Loan, to the making of the Mandatory 
Borrowings as set forth in Section 1.01(c).

           (c)  Without in any way limiting the obligation of the Borrower 
to confirm in writing any telephonic notice of any Borrowing of Loans, the 
Agent or the Swingline Bank, as the case may be, may act without liability 
upon the basis of telephonic notice of such Borrowing, believed by the 
Agent or the Swingline Bank, as the case may be, in good faith to be from 
an Authorized Officer of the Borrower prior to receipt of written 
confirmation.  In each such case, the Borrower hereby waives the right to 
dispute the Agent's and the Swingline Bank's record of the terms of such 
telephonic notice of such Borrowing of Loans.

           1.04  Disbursement of Funds.  No later than 12:00 Noon (New York 
time) on the date specified in each Notice of Borrowing (or (x) in the case 
of Swingline Loans, no later than the close of business on the date 
specified pursuant to Section 1.03(b)(i) or (y) in case of Mandatory 
Borrowings, not later than 12:00 Noon (New York time) on the date specified 
in Section 1.01(c)), each Bank will make available its pro rata portion 
(based on the Percentages of the Banks) of each Borrowing requested to be 
made on such date (or in the case of Swingline Loans, the Swingline Bank 
shall make available the full amount thereof).  All such amounts shall be 
made available in Dollars and in immediately available funds at the Payment 
Office of the Agent, and the Agent will make available to the Borrower at 
the Payment Office, in Dollars and in immediately available funds, the 
aggregate of the amounts so made available by the Banks (prior to 1:00 P.M. 
(New York time)) on such day, to the extent of funds actually received by 
the Agent prior to 12:00 Noon (New York time) on such day.  Unless the 
Agent shall have been notified by any Bank prior to the date of Borrowing 
that such Bank does not intend to make available  to the Agent such Bank's 
portion of any Borrowing to be made on such date, the Agent may assume that 
such Bank has made available such amount to the Agent on such date of 
Borrowing and the Agent may, in reliance upon such assumption, make 
available to the Borrower a corresponding amount.  If such corresponding 
amount is not in fact made available to the Agent by such Bank, the Agent 
shall be entitled to recover such corresponding amount on demand from such 
Bank.  If such Bank does not pay such corresponding amount forthwith upon 
the Agent's demand therefor, the Agent shall promptly notify the Borrower 
and the Borrower shall pay such corresponding amount to the Agent within 
three Business Days following such notice.  The Agent shall also be 
entitled to recover on demand from such Bank or the Borrower, as the case 
may be, interest on such corresponding amount in respect of each day from 
the date such corresponding amount was made available by the Agent to the 
Borrower until the date such corresponding amount is recovered by the 
Agent, at a rate per annum equal to (i) if recovered from such Bank, the 
overnight Federal Funds Rate and (ii) if recovered from the Borrower, the 
rate of interest applicable to the respective Borrowing, as determined 
pursuant to Section 1.08.  Nothing in this Section 1.04 shall be deemed to 
relieve any Bank from its obligation to make Revolving Loans hereunder or 
to prejudice any rights which the Borrower may have against any Bank as a 
result of any failure by such Bank to make Revolving Loans hereunder.

           1.05  Notes.(a)  The Borrower's obligation to pay the principal 
of, and interest on, the Loans made by each Bank shall be evidenced (i) if 
Revolving Loans, by a promissory note duly executed and delivered by the 
Borrower substantially in the form of Exhibit B-1, with blanks 
appropriately completed in conformity herewith (each, a "Revolving Note" 
and, collectively, the "Revolving Notes") and (ii) if Swingline Loans, by a 
promissory note duly executed and delivered by the Borrower substantially 
in the form of Exhibit B-2, with blanks appropriately completed in 
conformity herewith (the "Swingline Note").

           (b)  The Revolving Note issued to each Bank shall (i) be 
executed by the Borrower, (ii) be payable to the order of such Bank or its 
registered assigns and be dated the Initial Borrowing Date, (iii) be in a 
stated principal amount equal to the Commitment of such Bank and be payable 
in the principal amount of the Revolving Loans evidenced thereby from time 
to time, (iv) mature on the Final Maturity Date, (v) bear interest as 
provided in the appropriate clause of Section 1.08 in respect of the Base 
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby, 
(vi) be subject to voluntary repayment as provided in Section 4.01 and 
mandatory repayment as provided in Section 4.02 and (vii) be entitled to 
the benefits of this Agreement and the other Credit Documents.

           (c)  The Swingline Note issued to the Swingline Bank shall (i) 
be executed by the Borrower, (ii) be payable to the order of the Swingline 
Bank or its registered assigns and be dated the Initial Borrowing Date, 
(iii) be in a stated principal amount equal to the Maximum Swingline Amount 
and be payable in the principal amount of the outstanding Swingline Loans 
evidenced thereby from time to time, (iv) mature on the Swingline Expiry 
Date, (v) bear interest as provided in the appropriate clause of Section 
1.08 in respect of the Base Rate Loans evidenced thereby, (vi) be subject 
to voluntary repayment as provided in Section 4.01 and mandatory repayment 
as provided in Section 4.02 and (vii) be entitled to the benefits of this 
Agreement and the other Credit Documents.

           (d)  Each Bank will note on its internal records the amount of 
each Loan made by it and each payment in respect thereof and will prior to 
any transfer of any of its Notes endorse on the reverse side thereof the 
outstanding principal amount of Loans evidenced thereby.  Failure to make 
any such notation shall not affect the Borrower's obligations in respect of 
such Loans.

           1.06  Conversions.  The Borrower shall have the option to 
convert, on any Business Day occurring after the Initial Borrowing Date, 
all or a portion equal to at least the applicable Minimum Borrowing Amount 
of the outstanding principal amount of Loans made pursuant to one or more 
Borrowings of one or more Types of Loans into a Borrowing of another Type 
of Loan, provided that (i) except as otherwise provided in Section 1.10(b), 
Eurodollar Loans may be converted into Base Rate Loans only on the last day 
of an Interest Period applicable to the Loans being converted and no 
partial conversion of a Borrowing of Eurodollar Loans shall reduce the 
outstanding principal amount of such Eurodollar Loans made pursuant to a 
single Borrowing to less than the Minimum Borrowing Amount applicable 
thereto, (ii) Base Rate Loans may only be converted into Eurodollar Loans 
if no Default under Sections 10.01 or 10.05 and no Event of Default is in 
existence on the date of conversion, (iii) unless the Agent has determined 
that the Syndication Date has occurred, prior to the 60th day after the 
Initial Borrowing Date, conversions of Base Rate Loans into Eurodollar 
Loans may only be made within 5 days after the Initial Borrowing Date and 
so long as any such conversion is effective on the first day of the first 
Interest Period referred to in clause (y) of Section 1.01(a)(i) and so long 
as such conversion does not result in a greater number of Borrowings of 
Eurodollar Loans prior to the 60th day after the Initial Borrowing Date as 
are permitted under Section 1.01(a)(i), (iv) no conversion pursuant to this 
Section 1.06 shall result in a greater number of Borrowings of Eurodollar 
Loans than is permitted under Section 1.02 and (v) Swingline Loans may not 
be converted pursuant to this Section 1.06.  Each such conversion shall be 
effected by the Borrower by giving the Agent at its Notice Office prior to 
11:00 A.M. (New York time) at least three Business Days' prior written 
notice (each, a "Notice of Conversion") specifying the Revolving Loans to 
be so converted, the Borrowing(s) pursuant to which such Revolving Loans 
were made and, if to be converted into Eurodollar Loans, the Interest 
Period to be initially applicable thereto.  The Agent shall give each Bank 
prompt notice of any such proposed conversion affecting any of its 
Revolving Loans.

           1.07  Pro Rata Borrowings.  All Borrowings of Revolving Loans 
under this Agreement shall be incurred from the Banks pro rata on the basis 
of their Commitments; provided that all Borrowings of Revolving Loans made 
pursuant to a Mandatory Borrowing shall be incurred by the Borrower from 
the Banks pro rata on the basis of their Percentages.  It is understood 
that no Bank shall be responsible for any default by any other Bank of its 
obligation to make Revolving Loans hereunder and that each Bank shall be 
obligated to make the Revolving Loans provided to be made by it hereunder, 
regardless of the failure of any other Bank to make its Revolving Loans 
hereunder.

           1.08  Interest.  (a)  The Borrower agrees to pay interest in 
respect of the unpaid principal amount of each Base Rate Loan made to the 
Borrower from the date the proceeds thereof are made available to the 
Borrower until the earlier of (i) the maturity (whether by acceleration or 
otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate 
Loan to a Eurodollar Loan pursuant to Section 1.06, at a rate per annum 
which shall be equal to the sum of the Applicable Margin plus the Base Rate 
in effect from time to time.

           (b)  The Borrower agrees to pay interest in respect of the 
unpaid principal amount of each Eurodollar Loan made to the Borrower from 
the date the proceeds thereof are made available to the Borrower until the 
earlier of (i) the maturity (whether by acceleration or otherwise) of such 
Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base 
Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate 
per annum which shall, during each Interest Period applicable thereto, be 
equal to the sum of the Applicable Margin plus the Eurodollar Rate for such 
Interest Period.

           (c)  Overdue principal and, to the extent permitted by law, 
overdue interest in respect of each Loan and any other overdue amount 
payable hereunder shall, in each case, bear interest at a rate per annum 
equal to the greater of (x) 2% per annum in excess of the rate otherwise 
applicable to Base Rate Loans from time to time and (y) the rate which is 
2% in excess of the rate then borne by such Loans, in each case with such 
interest to be payable on demand.

           (d)  Accrued (and theretofore unpaid) interest shall be payable 
(i) in respect of each Base Rate Loan, quarterly in arrears on each 
Quarterly Payment Date, (ii) in respect of each Eurodollar Loan, on the 
last day of each Interest Period applicable thereto and, in the case of an 
Interest Period in excess of three months, on each date occurring at three 
month intervals after the first day of such Interest Period and (iii) in 
respect of each Loan, on any repayment or prepayment (except voluntary and 
mandatory prepayments of Swingline Loans and Revolving Loans maintained as 
Base Rate Loans where the Total Commitment has not been, and is not then 
being, terminated (on the amount repaid or prepaid), at maturity (whether 
by acceleration or otherwise) and, after such maturity, on demand.

           (e)  Upon each Interest Determination Date, the Agent shall 
determine the Eurodollar Rate for the respective Interest Period or 
Interest Periods and shall promptly notify the Borrower and the Banks 
thereof.  Each such determination shall, absent manifest error, be final 
and conclusive and binding on all parties hereto.

           1.09  Interest Periods.  At the time it gives any Notice of 
Borrowing or Notice of Conversion in respect of the making of, or 
conversion into, any Eurodollar Loan (in the case of the initial Interest 
Period applicable thereto) or on the third Business Day prior to the 
expiration of an Interest Period applicable to such Eurodollar Loan (in the 
case of any subsequent Interest Period), the Borrower shall have the right 
to elect, by having an Authorized Officer of the Borrower give the Agent 
notice thereof, the interest period (each, an "Interest Period") applicable 
to such Eurodollar Loan, which Interest Period shall, at the option of the 
Borrower (but otherwise subject to the provisions of Section 1.01(a)(i)(y) 
and 1.06(iii)), be a one, two, three or six-month period or, to the extent 
approved by all Banks, a nine-month or twelve-month period; provided that:

            (i)  all Eurodollar Loans comprising a Borrowing shall at all 
      times have the same Interest Period;

           (ii)  the initial Interest Period for any Eurodollar Loan shall 
      commence on the date of Borrowing of such Eurodollar Loan (including 
      the date of any conversion thereto from a Revolving Loan of a 
      different Type) and each Interest Period occurring thereafter in 
      respect of such Eurodollar Loan shall commence on the day on which 
      the next preceding Interest Period applicable thereto expires;

          (iii)  if any Interest Period relating to a Eurodollar Loan 
      begins on a day for which there is no numerically corresponding day 
      in the calendar month at the end of such Interest Period, such 
      Interest Period shall end on the last Business Day of such calendar 
      month;

           (iv)  if any Interest Period would otherwise expire on a day 
      which is not a Business Day, such Interest Period shall expire on the 
      next succeeding Business Day; provided, however, that if any Interest 
      Period for a Eurodollar Loan would otherwise expire on a day which is 
      not a Business Day but is a day of the month after which no further 
      Business Day occurs in such month, such Interest Period shall expire 
      on the next preceding Business Day;

            (v)  no Interest Period may be selected at any time when a 
      Default under Section 10.01 or 10.05 or any Event of Default is then 
      in existence; and
 
           (vi)  no Interest Period in respect of any Borrowing of 
      Revolving Loans shall be selected which extends beyond the Final 
      Maturity Date. 

           If upon the expiration of any Interest Period applicable to a 
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not 
permitted to elect, a new Interest Period to be applicable to such 
Eurodollar Loans as provided above, the Borrower shall be deemed to have 
elected to convert such Eurodollar Loans into Base Rate Loans effective as 
of the expiration date of such current Interest Period.

           1.10  Increased Costs, Illegality, etc.  (a)  In the event that 
any Bank shall have determined (which determination shall, absent manifest 
error, be final and conclusive and binding upon all parties hereto but, 
with respect to clause (i) below, may be made only by the Agent):

            (i)  on any Interest Determination Date that, by reason of any 
      changes arising after the date of this Agreement affecting the 
      interbank Eurodollar market, adequate and fair means do not exist for 
      ascertaining the applicable interest rate on the basis provided for 
      in the definition of Eurodollar Rate; or

           (ii)  at any time, that such Bank shall incur increased costs or 
      reductions in the amounts received or receivable hereunder with 
      respect to any Eurodollar Loan because of (x) any change since the 
      date of this Agreement in any applicable law or governmental rule, 
      regulation, order, guideline or request (whether or not having the 
      force of law) or in the interpretation or administration thereof and 
      including the introduction of any new law or governmental rule, 
      regulation, order, guideline or request, such as, for example, but 
      not limited to:  (A) a change in the basis of taxation of payment to 
      any Bank of the principal of or interest on the Notes or any other 
      amounts payable hereunder (except for changes with respect to any tax 
      imposed on, or measured by, the net income or net profits of such 
      Bank pursuant to the laws of the jurisdiction in which such Bank is 
      organized or in which such Bank's principal office or applicable 
      lending office is located or any subdivision thereof or therein), or 
      (B) a change in official reserve requirements, but, in all events, 
      excluding reserves required under Regulation D to the extent included 
      in the computation of the Eurodollar Rate and/or (y) other 
      circumstances (other than an adverse change in the credit quality of 
      a given Bank) since the date of this Agreement affecting such Bank or 
      the interbank Eurodollar market or the position of such Bank in such 
      market; or

          (iii)  at any time, that the making or continuance of any 
      Eurodollar Loan has been made (x) unlawful by any law or governmental 
      rule, regulation or order, (y) impossible by compliance by any Bank 
      in good faith with any governmental request, order or guideline 
      (whether or not having force of law) or (z) impracticable as a result 
      of a contingency occurring after the date of this Agreement which 
      materially and adversely affects the interbank Eurodollar market;

then, and in any such event, such Bank (or the Agent, in the case of clause 
(i) above) shall promptly give notice (by telephone confirmed in writing) 
to the Borrower and, except in the case of clause (i) above, to the Agent 
of such determination (which notice the Agent shall promptly transmit to 
each of the other Banks).  Thereafter (x) in the case of clause (i) above, 
Eurodollar Loans shall no longer be available until such time as the Agent 
notifies the Borrower and the Banks that the circumstances giving rise to 
such notice by the Agent no longer exist, and any Notice of Borrowing or 
Notice of Conversion given by the Borrower with respect to Eurodollar Loans 
which have not yet been incurred (including by way of conversion) shall be 
deemed, in the case of a Notice of Borrowing, to instead constitute a 
Notice of Borrowing for a Borrowing of Base Rate Loans in a like principal 
amount as the Eurodollar Loans requested or, in the case of a Notice of 
Conversion, rescinded by the Borrower, (y) in the case of clause (ii) above 
the Borrower shall pay to such Bank, upon written demand therefor, such 
additional amounts (in the form of an increased rate of, or a different 
method of calculating, interest or otherwise as such Bank in its sole 
discretion shall determine) as shall be required to compensate such Bank 
for such increased costs or reductions in amounts received or receivable 
hereunder (a written notice as to the additional amounts owed to such Bank, 
showing the basis for the calculation thereof, submitted to the Borrower by 
such Bank in good faith shall, absent manifest error, be final and 
conclusive and binding on all the parties hereto, although the failure to 
give any such notice shall not release or diminish any of the Borrower's 
obligations to pay additional amounts pursuant to this Section 1.10(a) upon 
the subsequent receipt of such notice) and (z) in the case of clause (iii) 
above, the Borrower shall take one of the actions specified in Section 
1.10(b) as promptly as possible and, in any event, within the time period 
required by law.

           (b)   At any time that any Eurodollar Loan is affected by the 
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may 
(and in the case of a Eurodollar Loan affected by the circumstances 
described in Section 1.10(a)(iii) shall) either (x) if the affected 
Eurodollar Loan is then being made initially or pursuant to a conversion, 
cancel the respective Borrowing by giving the Agent telephonic notice 
(confirmed in writing) on the same date that the Borrower was notified by 
the affected Bank or the Agent pursuant to Section 1.10(a)(ii) or (iii), or 
(y) if the affected Eurodollar Loan is then outstanding, upon at least 
three Business Days' written notice to the Agent, require the affected Bank 
to convert such Eurodollar Loan into a Base Rate Loan, provided that, (i) 
any unaffected Bank shall continue to be obligated to extend its portion of 
the respective Borrowing as Eurodollar Loans (unless the respective 
Borrowing is cancelled or the Borrower elects to convert same into Base 
Rate Loans) and (ii) if more than one Bank is affected at any time, then 
all affected Banks must be treated the same pursuant to this Section 
1.10(b).

           (c)  If at any time any Bank determines that the introduction 
after the date of this Agreement of, or any change after the date of this 
Agreement in, any applicable law or governmental rule, regulation, order, 
guideline, directive or request (whether or not having the force of law) 
concerning capital adequacy, or any change in interpretation or 
administration thereof by any governmental authority, central bank or 
comparable agency, will have the effect of increasing the amount of capital 
required or expected to be maintained by such Bank or any corporation 
controlling such Bank based on the existence of such Bank's Commitment 
hereunder or its obligations hereunder, then the Borrower shall pay to such 
Bank, upon its written demand therefor, such additional amounts as shall be 
required to compensate such Bank or such other corporation for the 
increased cost to such Bank or such other corporation or the reduction in 
the rate of return to such Bank or such other corporation as a result of 
such increase of capital.  Each Bank, upon determining that any additional 
amounts will be payable pursuant to this Section 1.10(c), will give prompt 
written notice thereof to the Borrower (a copy of which shall be sent by 
such Bank to the Agent), which notice shall show the basis for calculation 
of such additional amounts, although the failure to give any such notice 
shall not release or diminish any of the Borrower's obligations to pay 
additional amounts pursuant to this Section 1.10(c) upon the subsequent 
receipt of such notice.  A Bank's reasonable good faith determination of 
compensation owing under this Section 1.10(c) shall, absent manifest error, 
be final and conclusive and binding on all the parties hereto.

           1.11  Compensation.  The Borrower shall compensate each Bank, 
upon its written request (which request shall set forth the basis for 
requesting such compensation), for all losses, expenses and liabilities 
(including, without limitation, any loss, expense or liability incurred by 
reason of the liquidation or reemployment of deposits or other funds 
required by such Bank to fund its Eurodollar Loans but excluding any loss 
of anticipated profit) which such Bank may sustain:  (i) if for any reason 
(other than a default by such Bank or the Agent) a Borrowing of, or 
conversion from or into, Eurodollar Loans does not occur on a date 
specified therefor in a Notice of Borrowing or Notice of Conversion 
(whether or not withdrawn by the Borrower or deemed withdrawn pursuant to 
Section 1.10(a)); (ii) if any repayment (including any repayment made 
pursuant to Section 4.01 or 4.02 or as a result of an acceleration of the 
Loans pursuant to Section 10 or as a result of a replacement of a Bank 
pursuant to Section 1.13 or 13.12(b)) or conversion of any of the 
Borrower's Eurodollar Loans occurs on a date which is not the last day of 
an Interest Period with respect thereto; (iii) if any prepayment of any of 
the Borrower's Eurodollar Loans is not made on any date specified in a 
notice of prepayment given by the Borrower; or (iv) as a consequence of (x) 
any other default by the Borrower to repay its Loans when required by the 
terms of this Agreement or any Note held by such Bank or (y) any election 
made pursuant to Section 1.10(b).  A Bank's basis for requesting 
compensation pursuant to this Section 1.11 and a Bank's calculation of the 
amount thereof, shall, absent manifest error, be final and conclusive and 
binding on all parties hereto.

           1.12  Change of Lending Office.  Each Bank agrees that on the 
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) 
or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to 
such Bank, it will, if requested by the Borrower, use reasonable efforts 
(subject to overall policy considerations of such Bank) to designate 
another lending office for any Revolving Loans or Letters of Credit 
affected by such event, provided that such designation is made on such 
terms that such Bank and its lending office suffer no economic, legal or 
regulatory disadvantage, with the object of avoiding the consequence of the 
event giving rise to the operation of such Section.  Nothing in this 
Section 1.12 shall affect or postpone any of the obligations of the 
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04.

           1.13  Replacement of Banks.  If any Bank (x) becomes a 
Defaulting Bank, (y) refuses to consent to certain proposed changes, 
waivers, discharges or terminations with respect to this Agreement which 
have been approved by the Required Banks as provided in Section 13.12(b) or 
(z) is owed increased costs under Section 1.10(a)(ii) or (iii), Section 
1.10(c), Section 2.06 or Section 4.04 in a material amount in excess of 
those being generally charged by the other Banks, the Borrower shall have 
the right, in accordance with the requirements of Section 13.04(b), if no 
Default or Event of Default will exist immediately after giving effect to 
the respective replacement, to either replace such Bank (the "Replaced 
Bank") with one or more Eligible Transferee or Eligible Transferees 
(collectively, the"Replacement Bank"), none of whom shall constitute a 
Defaulting Bank at the time of such replacement and each of whom shall be 
reasonably acceptable to the Agent; provided, that:

            (i)  at the time of any replacement pursuant to this Section 
      1.13, the Replacement Bank shall enter into one or more Assignment 
      and Assumption Agreements pursuant to Section 13.04(b) (and with all 
      fees payable pursuant to said Section 13.04(b) to be paid by the 
      Replacement Bank) pursuant to which the Replacement Bank shall 
      acquire the Commitment and all outstanding Revolving Loans of, and 
      participations in Letters of Credit by, the Replaced Bank and, in 
      connection therewith, shall pay to (x) the Replaced Bank in respect 
      thereof, an amount equal to the sum of (A) an amount equal to the 
      principal of, and all accrued interest on, all outstanding Revolving 
      Loans of the Replaced Bank, (B) an amount equal to all Unpaid 
      Drawings that have been funded by (and not reimbursed to) such 
      Replaced Bank, together with all then unpaid interest with respect 
      thereto at such time and (C) an amount equal to all accrued, but 
      theretofore unpaid, Fees owing to the Replaced Bank pursuant to 
      Section 3.01, (y) the respective Issuing Bank, an amount equal to 
      such Replaced Bank's Percentage (in each case for this purpose, 
      determined as if the adjustment described in clause (y) of the 
      immediately succeeding sentence had been made with respect to such 
      Replaced Bank) of any Unpaid Drawing (which at such time remains an 
      Unpaid Drawing) with respect to Letters of Credit issued by such 
      Issuing Bank to the extent such amount was not theretofore funded by 
      such Replaced Bank and (z) the Swingline Bank, an amount equal to 
      such Replaced Bank's Percentage (in each case for this purpose, 
      determined as if the adjustment described in clause (y) of the 
      immediately succeeding sentence had been made with respect to such 
      Replaced Bank) of any Mandatory Borrowing to the extent such amount 
      was not theretofore funded by such Replaced Bank; and

           (ii)  all obligations of the Borrower owing to the Replaced Bank 
      (other than those (a) specifically described in clause (i) above in 
      respect of which the assignment purchase price has been, or is 
      concurrently being, paid or (b) relating to the Revolving Loans 
      and/or the Commitment of the respective Replaced Bank which will 
      remain outstanding after giving effect to the respective replacement) 
      shall be paid in full to such Replaced Bank concurrently with such 
      replacement.

Upon the execution of the respective Assignment and Assumption Agreements, 
the payment of amounts referred to in clauses (i) and (ii) above, 
recordation of the assignment on the Register by the Agent pursuant to 
Section 13.16 and, if so requested by the Replacement Bank, delivery to the 
Replacement Bank of the appropriate Revolving Note or Revolving Notes 
executed by the Borrower, (x) the Replacement Bank shall become a Bank 
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder, 
except with respect to indemnification provisions under this Agreement 
(including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 
13.06), which shall survive as to such Replaced Bank and (y) the 
Percentages of the Banks shall be automatically adjusted at such time to 
give effect to such replacement.

           SECTION 2.  Letters of Credit.
                       -----------------
           2.01  Letters of Credit.  (a)  Subject to and upon the terms and 
conditions herein set forth, the Borrower may request an Issuing Bank, at 
any time and from time to time on and after the Initial Borrowing Date and 
prior to the third Business Day (or the 30th day in the case of Trade 
Letters of Credit) preceding the Final Maturity Date to issue, (x) for the 
account of the Borrower and for the benefit of any holder (or any trustee, 
agent or other similar representative for any such holders) of L/C 
Supportable Indebtedness, irrevocable standby letters of credit in a form 
customarily used by such Issuing Bank or in such other form as has been 
approved by such Issuing Bank (each such standby letter of credit, a 
"Standby Letter of Credit") in support of such L/C Supportable Indebtedness 
and (y) for the account of the Borrower and for the benefit of sellers of 
goods to the Borrower or any Subsidiary Guarantor in the ordinary course of 
business, irrevocable sight trade letters of credit in a form customarily 
used by such Issuing Bank or in such other form as has been approved by 
such Issuing Bank (each such trade letter of credit, a "Trade Letter of 
Credit", and each such Standby Letter of Credit and Trade Letter of Credit, 
a "Letter of Credit" and, collectively, the "Letters of Credit").  All 
Letters of Credit shall be denominated in Dollars.

           (b)  Subject to and upon the terms and conditions set forth 
herein, each Issuing Bank hereby agrees that it will, at any time and from 
time to time on and after the Initial Borrowing Date and prior to the third 
Business Day (or the 30th day in the case of Trade Letters of Credit) 
preceding the Final Maturity Date, following its receipt of the respective 
Letter of Credit Request, issue for the account of the Borrower one or more 
Letters of Credit, (x) in the case of Trade Letters of Credit, in support 
of trade obligations of the Borrower or any Subsidiary Guarantor that arise 
in the ordinary course of business or (y) in the case of Standby Letters of 
Credit, in support of such L/C Supportable Indebtedness as is permitted to 
remain outstanding without giving rise to a Default or Event of Default 
hereunder; provided that the respective Issuing Bank shall be under no 
obligation to issue any Letter of Credit if at the time of such issuance:

            (i)  any order, judgment or decree of any governmental 
      authority or arbitrator shall purport by its terms to enjoin or 
      restrain such Issuing Bank from issuing such Letter of Credit or any 
      requirement of law applicable to such Issuing Bank or any request or 
      directive (whether or not having the force of law) from any 
      governmental authority with jurisdiction over such Issuing Bank shall 
      prohibit, or request that such Issuing Bank refrain from, the 
      issuance of letters of credit generally or such Letter of Credit in 
      particular or shall impose upon such Issuing Bank with respect to 
      such Letter of Credit any restriction or reserve or capital 
      requirement (for which such Issuing Bank is not otherwise 
      compensated) not in effect on the date hereof, or any unreimbursed 
      loss, cost or expense which was not applicable, in effect or known to 
      such Issuing Bank as of the date hereof and which such Issuing Bank 
      in good faith deems material to it;

           (ii)  such Issuing Bank shall have received written notice from 
      the Required Banks prior to the issuance of such Letter of Credit of 
      the type described in the last sentence of Section 2.03(b); or

          (iii)  a Bank Default exists, unless such Issuing Bank has 
      entered into arrangements satisfactory to it and the Borrower to 
      eliminate such Issuing Bank's risk with respect to the Bank which is 
      the subject of the Bank Default, including by cash collateralizing 
      such Bank's Percentage of the Letter of Credit Outstandings.

           (c)  Notwithstanding the foregoing, (i) no Letter of Credit 
shall be issued the Stated Amount of which, when added to the Letter of 
Credit Outstandings (exclusive of Unpaid Drawings which are repaid on the 
date of, and prior to the issuance of, the respective Letter of Credit) at 
such time, would exceed either (x) $10,000,000 or (y) when added to the 
aggregate principal amount of all Revolving Loans and Swingline Loans then 
outstanding, an amount equal to the Total Available Commitment then in 
effect, (ii)(x) each Standby Letter of Credit shall by its terms terminate 
on or before the date which occurs 12 months after the date of the issuance 
thereof (although any such Standby Letter of Credit may be extendable for 
successive periods of up to 12 months, but not beyond the third Business 
Day preceding the Final Maturity Date, on terms acceptable to the 
respective Issuing Bank) and (y) each Trade Letter of Credit shall by its 
terms terminate on or before the date occurring not later than 360 days 
after such Trade Letter of Credit's date of issuance and (iii) (x) no 
Standby Letter of Credit shall have an expiry date occurring later than the 
third Business Day preceding the Final Maturity Date and (y) no Trade 
Letter of Credit shall have an expiry date occurring later than 30 days 
prior to the Final Maturity Date.

           2.02  Minimum Stated Amount.  The Stated Amount of each Letter 
of Credit shall be not less than $50,000 or such lesser amount as is 
acceptable to the respective Issuing Bank.

           2.03  Letter of Credit Requests.  (a)  Whenever the Borrower 
desires that a Letter of Credit be issued for its account, the Borrower 
shall give the Agent and the respective Issuing Bank at least 5 days' (or 
such shorter period as is acceptable to such Issuing Bank in any given 
case) written notice prior to the proposed date of issuance (which shall be 
a Business Day).  Each notice shall be in the form of Exhibit C (each, a 
"Letter of Credit Request").

           (b)  The making of each Letter of Credit Request shall be deemed 
to be a representation and warranty by the Borrower that such Letter of 
Credit may be issued in accordance with, and will not violate the 
requirements of, Section 2.01(c).  Unless the respective Issuing Bank has 
received notice from the Required Banks before it issues a Letter of Credit 
that one or more of the applicable conditions specified in Section 5 or 6, 
as the case may be, are not then satisfied, or that the issuance of such 
Letter of Credit would violate Section 2.01(c), then such Issuing Bank may 
issue the requested Letter of Credit for the account of the Borrower in 
accordance with such Issuing Bank's usual and customary practices. 

           2.04  Letter of Credit Participations.  (a)  Immediately upon 
the issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank 
shall be deemed to have sold and transferred to each Bank, other than such 
Issuing Bank (each such Bank, in its capacity under this Section 2.04, a 
"Participant"), and each such Participant shall be deemed irrevocably and 
unconditionally to have purchased and received from such Issuing Bank, 
without recourse or warranty, an undivided interest and participation, to 
the extent of such Participant's Percentage, in such Letter of Credit, each 
substitute letter of credit, each drawing made thereunder and the 
obligations of the Borrower under this Agreement with respect thereto, and 
any security therefor or guaranty pertaining thereto.  Upon any change in 
the Commitments or Percentages of the Banks pursuant to Section 1.13 or 
13.04, it is hereby agreed that, with respect to all outstanding Letters of 
Credit and Unpaid Drawings, there shall be an automatic adjustment to the 
participations pursuant to this Section 2.04 to reflect the new Percentages 
of the assignor and assignee Bank or of all Banks, as the case may be.

           (b)  In determining whether to pay under any Letter of Credit, 
such Issuing Bank shall have no obligation relative to the other Banks 
other than to confirm that any documents required to be delivered under 
such Letter of Credit appear to have been delivered and that they appear to 
substantially comply on their face with the requirements of such Letter of 
Credit.  Any action taken or omitted to be taken by any Issuing Bank under 
or in connection with any Letter of Credit issued by it if taken or omitted 
in the absence of gross negligence or willful misconduct, shall not create 
for such Issuing Bank any resulting liability to the Borrower or any Bank.

           (c)  In the event that any Issuing Bank makes any payment under 
any Letter of Credit issued by it and the Borrower shall not have 
reimbursed such amount in full to such Issuing Bank pursuant to Section 
2.05(a), such Issuing Bank shall promptly notify the Agent, which shall 
promptly notify each Participant of such failure, and each Participant 
shall promptly and unconditionally pay to the Agent for the account of such 
Issuing Bank the amount of such Participant's Percentage of such 
unreimbursed payment in Dollars and in same day funds.  If the Agent so 
notifies, prior to 11:00 A.M. (New York time) on any Business Day, any 
Participant required to fund a payment under a Letter of Credit, such 
Participant shall make available to the Agent at the Payment Office of the 
Agent for the account of the respective Issuing Bank in Dollars such 
Participant's Percentage of the amount of such payment on such Business Day 
in same day funds.  If and to the extent such Participant shall not have so 
made its Percentage of the amount of such payment available to the Agent 
for the account of the respective Issuing Bank, such Participant agrees to 
pay to the Agent for the account of such Issuing Bank, forthwith on demand 
such amount, together with interest thereon, for each day from such date 
until the date such amount is paid to the Agent for the account of such 
Issuing Bank at the overnight Federal Funds Rate.  The failure of any 
Participant to make available to the Agent for the account of the 
respective Issuing Bank its Percentage of any payment under any Letter of 
Credit issued by it shall not relieve any other Participant of its 
obligation hereunder to make available to the Agent for the account of such 
Issuing Bank its Percentage of any such Letter of Credit on the date 
required, as specified above, but no Participant shall be responsible for 
the failure of any other Participant to make available to the Agent for the 
account of such Issuing Bank such other Participant's Percentage of any 
such payment.

           (d)  Whenever any Issuing Bank receives a payment of a 
reimbursement obligation as to which the Agent has received for the account 
of such Issuing Bank any payments from the Participants pursuant to clause 
(c) above, such Issuing Bank shall pay to the Agent and the Agent shall 
promptly pay each Participant which has paid its Percentage thereof, in 
Dollars and in same day funds, an amount equal to such Participant's share 
(based on the proportionate aggregate amount funded by such Participant to 
the aggregate amount funded by all Participants) of the principal amount of 
such reimbursement obligation and interest thereon accruing after the 
purchase of the respective participations.

           (e)  Each Issuing Bank shall, promptly after each issuance of, 
or amendment or modification to, a Standby Letter of Credit issued by it, 
give the Agent, each Participant and the Borrower written notice of the 
issuance of, or amendment or modification to, such Letter of Credit, which 
notice shall be accompanied by a copy of such Standby Letter of Credit and 
each such amendment or modification thereto.

           (f)  Each Issuing Bank (other than BTCo) shall deliver to the 
Agent, promptly on the first Business Day of each week, by facsimile 
transmission, a report setting forth the aggregate daily Stated Amount 
available to be drawn under the outstanding Trade Letters of Credit issued 
by such Issuing Bank for the previous week.  The Agent shall, within 10 
days after the last Business Day of each calendar month, deliver to each 
Participant a report setting forth for such preceding calendar month the 
aggregate daily Stated Amount available to be drawn under all outstanding 
Trade Letters of Credit during such calendar month.

           (g)  The obligations of the Participants to make payments to the 
Agent for the account of the respective Issuing Bank with respect to 
Letters of Credit issued by it shall be irrevocable and not subject to any 
qualification or exception whatsoever and shall be made in accordance with 
the terms and conditions of this Agreement under all circumstances, 
including, without limitation, any of the following circumstances:

            (i)  any lack of validity or enforceability of this Agreement 
      or any of the Credit Documents;

           (ii)  the existence of any claim, setoff, defense or other right 
      which any Credit Party or any of its Subsidiaries may have at any 
      time against a beneficiary named in a Letter of Credit, any 
      transferee of any Letter of Credit (or any Person for whom any such 
      transferee may be acting), the Agent, any Bank, any Issuing Bank, any 
      Participant, or any other Person, whether in connection with this 
      Agreement, any Letter of Credit, the transactions contemplated herein 
      or any unrelated transactions (including any underlying transaction 
      between any Credit Party or any of its Subsidiaries and the 
      beneficiary named in any such Letter of Credit);

          (iii)  any draft, certificate or any other document presented 
      under any Letter of Credit proving to be forged, fraudulent, invalid 
      or insufficient in any respect or any statement therein being untrue 
      or inaccurate in any respect;

           (iv)  the surrender or impairment of any security for the 
      performance or observance of any of the terms of any of the Credit 
      Documents; or

            (v)  the occurrence of any Default or Event of Default.

           2.05  Agreement to Repay Letter of Credit Drawings.  (a)  The 
Borrower hereby agrees to reimburse the respective Issuing Bank, by making 
payment to the Agent in immediately available funds at the Payment Office 
(or by making the payment directly to such Issuing Bank at such location as 
may otherwise have been agreed upon by the Borrower and such Issuing Bank), 
for any payment or disbursement made by such Issuing Bank under any Letter 
of Credit issued by it (each such amount so paid until reimbursed, an 
"Unpaid Drawing"), not later than the second Business Day after the Agent 
or the Issuing Bank notifies the Borrower of such payment or disbursement, 
with interest on the amount so paid or disbursed by such Issuing Bank, to 
the extent not reimbursed prior to 12:00 Noon (New York time) on the date 
of such payment or disbursement, from and including the date paid or 
disbursed to but excluding the date such Issuing Bank is reimbursed by the 
Borrower therefor at a rate per annum which shall be the Base Rate in 
effect from time to time plus the Applicable Margin for Base Rate Loans, 
provided, however, to the extent such amounts are not reimbursed prior to 
12:00 Noon (New York time) on the third Business Day following notice to 
the Borrower by the Agent or the respective Issuing Bank of such payment or 
disbursement, interest shall thereafter accrue on the amounts so paid or 
disbursed by such Issuing Bank (and until reimbursed by the Borrower) at a 
rate per annum which shall be the Base Rate in effect from time to time 
plus the Applicable Margin for Base Rate Loans plus 2%, in each such case, 
with interest to be payable on demand; provided further, that it is 
understood and agreed, however, that the notices referred to above in this 
clause (a) and in the immediately preceding proviso shall not be required 
to be given if a Default or an Event of Default under Section 10.05 shall 
have occurred and be continuing (in which case the Unpaid Drawings shall be 
due and payable immediately without presentment, demand, protest or notice 
of any kind (all of which are hereby waived by each Credit Party) and shall 
bear interest at the rate provided in the foregoing proviso on and after 
the third Business Day following the respective Drawing).  The respective 
Issuing Bank shall give the Borrower prompt notice of each Drawing under 
any Letter of Credit, provided that the failure to give any such notice 
shall in no way affect, impair or diminish the Borrower's obligations 
hereunder.

           (b)  The obligation of the Borrower under this Section 2.05 to 
reimburse the respective Issuing Bank with respect to Unpaid Drawings 
(including, in each case, interest thereon) shall be absolute and 
unconditional under any and all circumstances and irrespective of any 
setoff, counterclaim or defense to payment which any Credit Party may have 
or have had against any Bank (including in its capacity as Issuing Bank or 
as Participant), including, without limitation, any defense based upon the 
failure of any drawing under a Letter of Credit (each, a "Drawing") to 
conform to the terms of such Letter of Credit or any nonapplication or 
misapplication by the beneficiary of the proceeds of such Drawing; the 
respective Issuing Bank's only obligation to the Borrower being to confirm 
that any documents required to be delivered under such Letter of Credit 
appear to have been delivered and that they appear to substantially comply 
on their face with requirements of such Letter of Credit; provided, 
however, that the Borrower shall not be obligated to reimburse such Issuing 
Bank for any wrongful payment made by such Issuing Bank under a Letter of 
Credit issued by it as a result of acts or omissions constituting willful 
misconduct or gross negligence on the part of such Issuing Bank.  Any 
action taken or omitted to be taken by any Issuing Bank under or in 
connection with any Letter of Credit if taken or omitted in the absence of 
gross negligence or willful misconduct, shall not create for such Issuing 
Bank any resulting liability to the Borrower.

           2.06  Increased Costs.  If at any time after the date of this 
Agreement any Issuing Bank or any Participant determines that the 
introduction of or any change in any applicable law, rule, regulation, 
order, guideline or request or in the interpretation or administration 
thereof by any governmental authority charged with the interpretation or 
administration thereof, or compliance by any Issuing Bank or any 
Participant with any request or directive by any such authority (whether or 
not having the force of law) shall either (i) impose, modify or make 
applicable any reserve, deposit, capital adequacy or similar requirement 
against Letters of Credit issued by any Issuing Bank or participated in by 
any Participant, or (ii) impose on any Issuing Bank or any Participant any 
other conditions relating, directly or indirectly, to this Agreement or any 
Letter of Credit, and the result of any of the foregoing is to increase the 
cost to any Issuing Bank or any Participant of issuing, maintaining or 
participating in any Letter of Credit, or reduce the amount of any sum 
received or receivable by any Issuing Bank or any Participant hereunder or 
reduce the rate of return on its capital with respect to Letters of Credit, 
then, upon demand to the Borrower by any Issuing Bank or any Participant (a 
copy of which demand shall be sent by such Issuing Bank or such Participant 
to the Agent), the Borrower shall pay to such Issuing Bank or such 
Participant such additional amount or amounts as will compensate such Bank 
for such increased cost or reduction in the amount receivable or reduction 
on the rate of return on its capital.  Any Issuing Bank or any Participant, 
upon determining that any additional amounts will be payable pursuant to 
this Section 2.06, will give prompt written notice thereof to the Borrower, 
which notice shall include a certificate submitted to the Borrower by such 
Issuing Bank or such Participant (a copy of which certificate shall be sent 
by such Issuing Bank or such Participant to the Agent), setting forth the 
basis for the calculation of such additional amount or amounts necessary to 
compensate such Issuing Bank or such Participant, although failure to give 
any such notice shall not release or diminish the Borrower's obligations to 
pay additional amounts pursuant to this Section 2.06.  The certificate 
required to be delivered pursuant to this Section 2.06 shall, absent 
manifest error, be final, conclusive and binding on the Borrower.

           SECTION 3.  Fees; Reductions of Commitment.
                       ------------------------------
           3.01  Fees.  (a)  The Borrower agrees to pay to the Agent for 
distribution to each Non-Defaulting Bank a commitment commission (the 
"Commitment Commission") for the period from the Effective Date to but not 
including the Final Maturity Date (or such earlier date as the Total 
Commitment shall have been terminated), computed at a rate equal to the 
Applicable Commitment Commission Percentage on the daily average Unutilized 
Commitment of such Non-Defaulting Bank as in effect from time to time.  
Accrued Commitment Commission shall be due and payable in arrears on each 
Quarterly Payment Date and on the Final Maturity Date or such earlier date 
upon which the Total Commitment is terminated.

           (b)  The Borrower agrees to pay to the Agent for distribution to 
each Non-Defaulting Bank with a Commitment (based on their respective 
Percentages) a fee in respect of each Letter of Credit issued hereunder 
(the "Letter of Credit Fee"), for the period from and including the date of 
issuance of such Letter of Credit to and including the date of termination 
of such Letter of Credit, computed at a rate per annum equal to (i) in the 
case of a Standby Letter of Credit, the Applicable Margin for Eurodollar 
Loans on the daily Stated Amount of such Standby Letter of Credit and (ii) 
in the case of a Trade Letter of Credit, the Trade L/C Percentage on the 
daily Stated Amount of such Trade Letter of Credit.  Accrued Letter of 
Credit Fees shall be due and payable quarterly in arrears on each Quarterly 
Payment Date and upon the termination of the Total Commitment or the first 
day thereafter upon which no Letters of Credit remain outstanding.

           (c)  The Borrower agrees to pay to the respective Issuing Bank, 
for its own account, upon each payment under, issuance of, or amendment to, 
any Letter of Credit, such amount as shall at the time of such event be the 
administrative charge which such Issuing Bank is generally imposing in 
connection with such occurrence with respect to letters of credit.

           (d)  The Borrower agrees to pay to the Agent, for its own 
account, such other fees as have been agreed to in writing by the Borrower 
and the Agent.

           3.02  Voluntary Termination of Unutilized Commitments.  (a)  
Upon at least three Business Days' prior notice to the Agent at its Notice 
Office (which notice the Agent shall promptly transmit to each of the 
Banks), the Borrower shall have the right, at any time or from time to 
time, without premium or penalty, to terminate the Total Unutilized 
Commitment, in whole or in part, provided that (i) any partial reduction to 
the Total Unutilized Commitment pursuant to this Section 3.02 shall be in 
an amount of at least $500,000, and, if greater, in an integral multiple of 
$100,000, (ii) any reduction to the Total Unutilized Commitment prior to 
the Initial Borrowing Date may only be made in connection with a 
termination in full of the Total Commitment, (iii) each such reduction 
shall apply proportionately to permanently reduce the Commitment of each 
Bank, and (iv) the reduction to the Total Unutilized Commitment shall in no 
case be in an amount which would cause the Commitment of any Bank to be 
reduced (as required by the preceding clause (iii)) by an amount which 
exceeds the remainder of (x) the Unutilized Commitment of such Bank as in 
effect immediately before giving effect to such reduction minus (y) such 
Bank's Percentage of the aggregate principal amount of Swingline Loans then 
outstanding.  If at the time of any reduction to the Total Unutilized 
Commitment pursuant to the preceding provisions of this Section 3.02(a) the 
amount of the Blocked Commitment is in excess of $0, the Borrower may 
specify (in its notice of the reduction to the Total Unutilized Commitment 
pursuant to this Section 3.02(a)) that the amount of the reduction shall 
also apply to reduce the amount of the Blocked Commitment as then in effect 
(in which case the amount of the Blocked Commitment shall be so reduced) by 
an amount equal to the lesser of (x) the amount of the Blocked Commitment 
as in effect prior to the reduction pursuant to this sentence and (y) the 
amount of the reduction to the Total Unutilized Commitment then being 
effected pursuant to this Section 3.02(a).

           (b)  In the event of certain refusals by a Bank to consent to 
certain proposed changes, waivers, discharges or terminations with respect 
to this Agreement which have been approved by the Required Banks as 
provided in Section 13.12(b), the Borrower may, upon five Business Days' 
written notice to the Agent at its Notice Office (which notice the Agent 
shall promptly transmit to each of the Banks) terminate all of the 
Commitment of such Bank so long as all Revolving Loans, together with 
accrued and unpaid interest, Fees and all other amounts owing to such Bank 
are repaid concurrently with the effectiveness of such termination (at 
which time Schedule I shall be deemed modified to reflect such changed 
amounts), and at such time, such Bank shall no longer constitute a "Bank" 
for purposes of this Agreement, except with respect to indemnifications 
under this Agreement (including, without limitation, Sections 1.10, 1.11, 
2.06, 4.04, 13.01 and 13.06), which shall survive as to such repaid Bank.

           3.03  Mandatory Reduction of Commitments.  (a)  The Total 
Commitment (and the Commitment of each Bank) shall terminate on November 
30, 1996 unless the Initial Borrowing Date has occurred on or before such 
date.

           (b)  In addition to any other mandatory commitment reductions 
pursuant to this Section 3.03, the Total Commitment (and the Commitment of 
each Bank) shall terminate in its entirety on the Final Maturity Date.

           (c)  In addition to any other mandatory commitment reductions 
pursuant to this Section 3.03, on each date after the Effective Date upon 
which the Borrower or any of its Subsidiaries receives any proceeds from 
any incurrence by the Borrower or any of its Subsidiaries of Indebtedness 
for borrowed money (other than Indebtedness for borrowed money permitted to 
be incurred pursuant to Section 9.04 as such Section is in effect on the 
Effective Date), the Total Commitment shall be reduced by an amount equal 
to 100% of the Net Cash Proceeds therefrom.

           (d)  In addition to any other mandatory commitment reductions 
pursuant to this Section 3.03, on each date on and after the Effective Date 
on which the Borrower or any of its Subsidiaries receives any proceeds from 
any Recovery Event, the Total Commitment shall be reduced by an amount 
equal to 100% of the proceeds of such Recovery Event (net of reasonable 
costs including, without limitation, reasonable legal costs and expenses, 
and the estimated marginal increase in income taxes which will be payable 
by the Borrower or any of its Subsidiaries in connection with such Recovery 
Event); provided that (x) so long as no Default under Section 10.01 or 
10.05 and no Event of Default then exists and such proceeds do not exceed 
$7,500,000, such proceeds shall not be required to be so applied on such 
date to the extent that an Authorized Officer of the Borrower has delivered 
a certificate to the Agent on or prior to such date stating that such 
proceeds shall be used or shall be committed to be used to replace or 
restore any properties or assets in respect of which such proceeds were 
paid within a period specified in such certificate not to exceed 180 days 
after the date of receipt of such proceeds with respect to such Recovery 
Event (which certificate shall set forth the estimates of the proceeds to 
be so expended) and (y) so long as no Default under Section 10.01 or 10.05 
and no Event of Default then exists and to the extent that (a) the amount 
of such proceeds exceeds $7,500,000, (b) the amount of such proceeds equals 
100% of the cost of replacement or restoration of the properties or assets 
in respect of which such proceeds were paid as determined by the Borrower 
and as supported by such estimates or bids from contractors or 
subcontractors or such other supporting information as the Agent may 
reasonably request, (c) an Authorized Officer of the Borrower has delivered 
to the Agent a certificate on or prior to the date the application would 
otherwise be required pursuant to this Section 3.03(d) in the form 
described in clause (x) above and also certifying its determination as 
required by preceding clause (b) and certifying the sufficiency of business 
interruption insurance as required by succeeding clause (d), and (d) an 
Authorized Officer of the Borrower has delivered to the Agent such evidence 
as the Agent may reasonably request in form and substance reasonably 
satisfactory to the Agent establishing that the Borrower has sufficient 
business interruption insurance and that the Borrower will be receiving 
regular payments thereunder in such amounts and at such times as are 
necessary to satisfy all obligations and expenses of the Borrower 
(including, without limitation, all debt service requirements, including 
pursuant to this Agreement) without any delay or extension thereof, for the 
period from the date of the respective casualty, condemnation or other 
event giving rise to the Recovery Event and continuing through the 
completion of the replacement or restoration of respective properties or 
assets, then the entire amount of the proceeds of such Recovery Event and 
not just the portion in excess of $7,500,000 shall be deposited with the 
Agent pursuant to a cash collateral arrangement reasonably satisfactory to 
the Agent whereby such proceeds shall be disbursed to the Borrower from 
time to time as needed to pay actual costs incurred by it in connection 
with the replacement or restoration of the respective properties or assets 
(pursuant to such certification requirements as may be established by the 
Agent), provided further that at any time while a Default exists under 
either of Sections 10.01 or 10.05 or any Event of Default has occurred and 
is continuing (other than an Event of Default existing solely as a result 
of the violation of either or both of Sections 9.08 and 9.09, but in each 
case only if, and to the extent, that the violation of said covenant has 
occurred as a result of the underlying event giving rise to the Recovery 
Event), the Required Banks may direct the Agent (in which case the Agent 
shall, and is hereby authorized by the Borrower to, follow said directions) 
to apply any or all proceeds then on deposit in such collateral account to 
the repayment of Obligations hereunder in the same manner as proceeds would 
be applied pursuant to the Security Agreement, and provided further, that 
if all or any portion of such proceeds not required to be applied to reduce 
the Total Commitment pursuant to the second preceding proviso (whether 
pursuant to clause (x) or (y) thereof) are either (A) not so used or 
committed to be so used within 180 days after the date of the respective 
Recovery Event or (B) if committed to be used within 180 days after the 
date of receipt of such net proceeds and not so used within 18 months after 
the date of the respective Recovery Event then, in either such case, such 
remaining portion not used or committed to be used in the case of preceding 
clause (A) and not used in the case of preceding clause (B) shall be 
applied on the date which is 180 days after the date of the respective 
Recovery Event in the case of clause (A) above or the date occurring 18 
months after the date of the respective Recovery Event in the case of 
clause (B) above as a mandatory reduction in the Total Commitment. 

           (e)  In addition to any other mandatory commitment reductions 
pursuant to this Section 3.03, the Total Commitment shall be reduced (x) on 
the Receivables Facility Transaction Date, by an amount equal to the 
Initial Receivables Facility Proceeds received on such date by the Borrower 
and the Designated Credit Parties and (y) on each date after the 
Receivables Facility Transaction Date upon which Attributed Receivables 
Facility Indebtedness is incurred, by the amount (if any) by which the 
aggregate Attributed Receivables Facility Indebtedness at such time exceeds 
the Receivables Facility Threshold Amount as then in effect.

           (f)  Each reduction to the Total Commitment pursuant to this 
Section 3.03 shall be applied proportionately to reduce the Commitment of 
each Bank.

           SECTION 4.  Prepayments; Payments; Taxes.
                       ----------------------------
           4.01  Voluntary Prepayments.  (a)  The Borrower shall have the 
right to prepay the Loans, without premium or penalty, in whole or in part 
at any time and from time to time on the following terms and conditions:

            (i)  an Authorized Officer of the Borrower shall give the Agent 
      prior to 12:00 Noon (New York time) at its Notice Office (x) at least 
      one Business Day's prior written notice (or telephonic notice 
      promptly confirmed in writing) of the Borrower's intent to prepay 
      Base Rate Loans (or, in the case of Swingline Loans, same day written 
      notice, so long as such notice is given prior to 1:00 P.M. (New York 
      time)) and (y) at least three Business Days' prior written notice (or 
      telephonic notice promptly confirmed in writing) of the Borrower's 
      intent to prepay Eurodollar Loans, whether Revolving Loans or 
      Swingline Loans shall be prepaid, the amount of such prepayment and 
      the Types of Loans to be prepaid and, in the case of Eurodollar 
      Loans, the specific Borrowing or Borrowings pursuant to which made, 
      which notice the Agent shall promptly transmit to each of the Banks;

           (ii)  each prepayment shall be in an aggregate principal amount 
      of at least $500,000 and, if greater, in an integral multiple of 
      $100,000 (or, in the case of Swingline Loans, $10,000 and, if 
      greater, in an integral multiple of $5,000), provided, that if any 
      partial prepayment of Eurodollar Loans made pursuant to any Borrowing 
      shall reduce the outstanding Eurodollar Loans made pursuant to such 
      Borrowing to an amount less than the Minimum Borrowing Amount 
      applicable thereto, then such Borrowing shall be converted at the end 
      of the then current Interest Period into a Borrowing of Base Rate 
      Loans and any election of an Interest Period with respect thereto 
      given by the Borrower shall have no force or effect;

          (iii)  each prepayment in respect of any Loans made pursuant to a 
      Borrowing shall, except as provided in clause (v) below and Section 
      4.01(b), be applied pro rata among such Loans;

           (iv)  any prepayment of Eurodollar Loans pursuant to this 
      Section 4.01(a) may only be made on the last day of an Interest 
      Period applicable thereto; and

            (v)  at the Borrower's election in connection with any 
      prepayment of Revolving Loans pursuant to this Section 4.01, such 
      prepayment shall not be applied to any Revolving Loan of a Defaulting 
      Bank.

           (b)  In the event of certain refusals by a Bank to consent to 
certain proposed changes, waivers, discharges or terminations with respect 
to this Agreement which have been approved by the Required Banks as 
provided in Section 13.12(b), the Borrower shall have the right, upon five 
Business Days' prior written notice to the Agent at its Notice Office 
(which notice the Agent shall promptly transmit to each of the Banks) to 
repay all Revolving Loans, together with accrued and unpaid interest, Fees, 
and other amounts owing to such Bank in accordance with, and subject to the 
requirements of, said Section 13.12(b), so long as (A) in the case of the 
repayment of Revolving Loans of any Bank pursuant to this Section 4.01(b), 
the Commitment of such Bank is terminated concurrently with such repayment 
(at which time Schedule I shall be deemed modified to reflect the changed 
Commitments) and (B) the consents required by Section 13.12(b) in 
connection with the repayment pursuant to this Section 4.01(b) have been 
obtained.

           4.02  Mandatory Repayments and Cash Collateralizations.  (a)  On 
any day on which the sum of the aggregate outstanding principal amount of 
the Revolving Loans, Swingline Loans and the Letter of Credit Outstandings 
exceeds the Total Available Commitment as then in effect, the Borrower 
shall prepay on such day principal of Swingline Loans and after the 
Swingline Loans have been repaid in full, the principal of Revolving Loans 
in an amount equal to such excess.  If, after giving effect to the 
prepayment of all outstanding Swingline Loans and all outstanding Revolving 
Loans, the aggregate amount of the Letter of Credit Outstandings exceeds 
the Total Available Commitment as then in effect, the Borrower shall pay to 
the Agent at the Payment Office on such date an amount of cash or Cash 
Equivalents equal to the amount of such excess (up to a maximum amount 
equal to the Letter of Credit Outstandings at such time), such cash or Cash 
Equivalents to be held as security for all obligations of the Borrower to 
Banks hereunder in a cash collateral account to be established by the 
Agent.

           (b)  With respect to each repayment of Loans required by this 
Section 4.02, the Borrower may designate the Types of Loans of the 
respective Tranche which are to be repaid and, in the case of Eurodollar 
Loans, the specific Borrowing or Borrowings of Revolving Loans pursuant to 
which made, provided that:  (i) repayments of Eurodollar Loans pursuant to 
this Section 4.02 may only be made on the last day of an Interest Period 
applicable thereto unless all Eurodollar Loans with Interest Periods ending 
on such date of required repayment and all Base Rate Loans of the 
respective Tranche have been paid in full; (ii) if any repayment of 
Eurodollar Loans made pursuant to a single Borrowing shall reduce the 
outstanding Eurodollar Loans made pursuant to such Borrowing to an amount 
less than the Minimum Borrowing Amount applicable thereto, such Borrowing 
shall be converted at the end of the then current Interest Period into a 
Borrowing of Base Rate Loans; and (iii) each repayment of Loans made 
pursuant to a Borrowing shall be applied pro rata among such Loans.  In the 
absence of a designation by the Borrower as described in the preceding 
sentence, the Agent shall, subject to the above, make such designation in 
its sole discretion.

           (c)  Notwithstanding anything to the contrary contained in this 
Agreement, (i) all then outstanding Swingline Loans shall be repaid in full 
on the Swingline Expiry Date and (ii) all Revolving Loans then outstanding 
shall be repaid in full on the Final Maturity Date.

           4.03  Method and Place of Payment.  Except as otherwise 
specifically provided herein, all payments under this Agreement or any Note 
shall be made to the Agent for the account of the Bank or Banks entitled 
thereto not later than 12:00 Noon (New York time) (or 1:00 P.M. (New York 
time) in the case of Swingline Loans) on the date when due and shall be 
made in Dollars in immediately available funds at the Payment Office of the 
Agent.  Whenever any payment to be made hereunder or under any Note shall 
be stated to be due on a day which is not a Business Day, the due date 
thereof shall be extended to the next succeeding Business Day and, with 
respect to payments of principal, interest shall be payable at the 
applicable rate during such extension.

           4.04  Net Payments; Taxes.  (a)  All payments made by any Credit 
Party hereunder or under any Note will be made without setoff, counterclaim 
or other defense.  Except as provided in Section 4.04(b), all such payments 
will be made free and clear of, and without deduction or withholding for, 
any present or future taxes, levies, imposts, duties, fees, assessments or 
other charges of whatever nature now or hereafter imposed by any 
jurisdiction or by any political subdivision or taxing authority thereof or 
therein with respect to such payments (but excluding, except as provided in 
the second succeeding sentence, any tax imposed on or measured by the net 
income or net profits of a Bank, pursuant to the laws of the jurisdiction 
in which it is organized or the jurisdiction in which the principal office 
or applicable lending office of such Bank is located or any subdivision 
thereof or therein) and all interest, penalties or similar liabilities with 
respect to such non-excluded taxes, levies, imposts, duties, fees, 
assessments or other charges (all such non-excluded taxes, levies, imposts, 
duties, fees, assessments or other charges being referred to collectively 
as "Taxes").  If any Taxes are so levied or imposed, the Borrower agrees to 
pay the full amount of such Taxes, and such additional amounts as may be 
necessary so that every payment of all amounts due under this Agreement or 
under any Note, after withholding or deduction for or on account of any 
Taxes, will not be less than the amount provided for herein or in such 
Note.  If any amounts are payable in respect of Taxes pursuant to the 
preceding sentence, the Borrower agrees to reimburse each Bank, upon the 
written request of such Bank, for taxes imposed on or measured by the net 
income or net profits of such Bank pursuant to the laws of the jurisdiction 
in which such Bank is organized or in which the principal office or 
applicable lending office of such Bank is located or under the laws of any 
political subdivision or taxing authority of any such jurisdiction in which 
such Bank is organized or in which the principal office or applicable 
lending office of such Bank is located and for any withholding of income or 
similar taxes as such Bank shall determine are payable by, or withheld 
from, such Bank in respect of such amounts so paid to or on behalf of such 
Bank pursuant to the preceding sentence and in respect of any amounts paid 
to or on behalf of such Bank pursuant to this sentence.  The Borrower will 
furnish to the Agent within 45 days after the date the payment of any Taxes 
is due pursuant to applicable law certified copies of tax receipts 
evidencing such payment by the Borrower.  The Borrower agrees to indemnify 
and hold harmless each Bank, and reimburse such Bank upon its written 
request, for the amount of any Taxes so levied or imposed and paid by such 
Bank.

           (b)  Each Bank that is not a United States person (as such term 
is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax 
purposes agrees to deliver to the Borrower and the Agent on or prior to the 
Effective Date, or in the case of a Bank that is an assignee or transferee 
of an interest under this Agreement pursuant to Section 1.13 or 13.04 
(unless the respective Bank was already a Bank hereunder immediately prior 
to such assignment or transfer), on the date of such assignment or transfer 
to such Bank, (i) two accurate and complete original signed copies of 
Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying 
to such Bank's entitlement to a complete exemption from United States 
withholding tax with respect to payments to be made under this Agreement 
and under any Note, or (ii) if the Bank is not a "bank" within the meaning 
of Section 881(c)(3)(A) of the Code and cannot deliver either Internal 
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a 
certificate substantially in the form of Exhibit D (any such certificate, a 
"Section 4.04(b)(ii) Certificate") and (y) two accurate and complete 
original signed copies of Internal Revenue Service Form W-8 (or successor 
form) certifying to such Bank's entitlement to a complete exemption from 
United States withholding tax with respect to payments of interest to be 
made under this Agreement and under any Note.  In addition, each Bank 
agrees that from time to time after the Effective Date, when a lapse in 
time or change in circumstances renders the previous certification obsolete 
or inaccurate in any material respect, it will deliver to the Borrower and 
the Agent two new accurate and complete original signed copies of Internal 
Revenue Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) 
Certificate, as the case may be, and such other forms as may be required in 
order to confirm or establish the entitlement of such Bank to a continued 
exemption from or reduction in United States withholding tax with respect 
to payments under this Agreement and any Note, or it shall immediately 
notify the Borrower and the Agent of its inability to deliver any such Form 
or Certificate, in which case such Bank shall not be required to deliver 
any such Form or Certificate pursuant to this Section 4.04(b).  
Notwithstanding anything to the contrary contained in Section 4.04(a), but 
subject to Section 13.04(b) and the immediately succeeding sentence, (x) 
the Borrower shall be entitled, to the extent it is required to do so by 
law, to deduct or withhold income or similar taxes imposed by the United 
States (or any political subdivision or taxing authority thereof or 
therein) from interest, Fees or other amounts payable hereunder for the 
account of any Bank which is not a United States person (as such term is 
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax 
purposes to the extent that such Bank has not provided to the Borrower U.S. 
Internal Revenue Service Forms that establish a complete exemption from 
such deduction or withholding and (y) the Borrower shall not be obligated 
pursuant to Section 4.04(a) to gross-up payments to be made to a Bank in 
respect of income or similar taxes imposed by the United States if (I) such 
Bank has not provided to the Borrower the Internal Revenue Service Forms 
required to be provided to the Borrower pursuant to this Section 4.04(b) or 
(II) in the case of a payment, other than interest, to a Bank described in 
clause (ii) above, to the extent that such Forms do not establish a 
complete exemption from withholding of such taxes.  Notwithstanding 
anything to the contrary contained in the preceding sentence or elsewhere 
in this Section 4.04 and except as set forth in Section 13.04(b), the 
Borrower agrees to pay additional amounts and to indemnify each Bank in the 
manner set forth in Section 4.04(a) (without regard to the identity of the 
jurisdiction requiring the deduction or withholding) in respect of any 
Taxes deducted or withheld by it as described in the immediately preceding 
sentence as a result of any changes after the Effective Date (or, if later, 
the date such Bank became party to this Agreement) in any applicable law, 
treaty, governmental rule, regulation, guideline or order, or in the 
interpretation thereof, relating to the deducting or withholding of such 
Taxes.

           (c)  If the Borrower pays any additional amount under this 
Section 4.04 to a Bank and such Bank determines in its sole discretion that 
it has actually received or realized in connection therewith any refund or 
any reduction of, or credit against, its Tax liabilities in or with respect 
to the taxable year in which the additional amount is paid, such Bank shall 
pay to the Borrower an amount that the Bank shall, in its sole discretion, 
determine is equal to the net benefit, after tax, which was obtained by the 
Bank in such year as a consequence of such refund, reduction or credit.

           SECTION 5.  Conditions Precedent to Credit Events on the Initial 
Borrowing Date.  The obligation of each Bank to make Revolving Loans and 
the Swingline Bank to make Swingline Loans, and the obligation of each 
Issuing Bank to issue Letters of Credit, on the Initial Borrowing Date, is 
subject at the time of the making of such Loans or the issuance of such 
Letters of Credit to the satisfaction of the following conditions:

           5.01  Execution of Agreement; Notes.  On or prior to the Initial 
Borrowing Date (i) the Effective Date shall have occurred and (ii) there 
shall have been delivered to (x) the Agent for the account of each of the 
Banks, the appropriate Revolving Note executed by the Borrower and (y) the 
Swingline Bank, the Swingline Note executed by the Borrower, in each case 
in the amount, maturity and as otherwise provided herein.

           5.02  Officer's Certificate.  On the Initial Borrowing Date, the 
Agent shall have received a certificate, dated the Initial Borrowing Date 
and signed on behalf of the Borrower by the President or any Vice President 
of the Borrower, stating all of the conditions in Sections 5.03, 5.07 
through 5.12, inclusive, 5.16, 5.21, 6.01, 6.02 and 6.03 have been 
satisfied on such date.

           5.03  Fees, etc.  On the Initial Borrowing Date, the Borrower 
shall have paid to the Agent and the Banks all costs, fees and expenses 
(including, without limitation, legal fees and expenses) payable to the 
Agent and the Banks to the extent then due.

           5.04  Opinions of Counsel.  On the Initial Borrowing Date, the 
Agent shall have received (i) from Mayer, Brown & Platt, special counsel to 
the Credit Parties, an opinion addressed to the Agent, the Collateral Agent 
and each of the Banks and dated the Initial Borrowing Date covering the 
matters set forth in Exhibit E-1 and such other matters incident to the 
transactions contemplated hereby as the Agent may reasonably request, (ii) 
from Bryan, Cave, special counsel to the Credit Parties, an opinion 
addressed to the Agent, the Collateral Agent and each of the Banks and 
dated the Initial Borrowing Date covering the matters set forth in Exhibit 
E-2 and such other matters incident to the transactions contemplated hereby 
as the Agent may reasonably request, (iii) from counsel rendering such 
opinions, reliance letters addressed to the Agent and each of the Banks and 
dated the Initial Borrowing Date with respect to all legal opinions 
delivered in connection with the Acquisition, with such legal opinions to 
be in form and substance satisfactory to the Agent and (iv) from local 
counsel satisfactory to the Agent, opinions each of which (x) shall be 
addressed to the Agent, the Collateral Agent and each of the Banks and 
dated the Initial Borrowing Date, (y) shall be required to be in form and 
substance satisfactory to the Agent and (z) shall cover the perfection of 
the security interests granted pursuant to the Security Documents and such 
other matters incident to the transactions contemplated herein as the Agent 
may reasonably request.

           5.05  Corporate Documents; Proceedings; etc.  (a)  On the 
Initial Borrowing Date, the Agent shall have received a certificate, dated 
the Initial Borrowing Date, signed by the President or any Vice President 
of each Credit Party, and attested to by the Secretary or any Assistant 
Secretary of such Credit Party, in the form of Exhibit F with appropriate 
insertions, together with copies of the certificate of incorporation and 
by-laws (or equivalent organizational documents) of such Credit Party and 
the resolutions of such Credit Party referred to in such certificate, and 
the foregoing shall be acceptable to the Agent and the Required Banks.

           (b)  All corporate and legal proceedings and all instruments and 
agreements in connection with the transactions contemplated by this 
Agreement and the other Documents shall be satisfactory in form and 
substance to the Agent and the Required Banks, and the Agent shall have 
received all information and copies of all documents and papers, including 
records of corporate proceedings, governmental approvals, good standing 
certificates and bring-down telegrams or facsimiles, if any, which the 
Agent may have requested in connection therewith, such documents and papers 
where appropriate to be certified by proper corporate or governmental 
authorities.

           (c)  On the Initial Borrowing Date and after giving effect to 
the Transaction, the capital structure (including, without limitation, the 
terms of any capital stock, options, warrants or other securities issued by 
Parent or any of its Subsidiaries) and management of Parent and its 
Subsidiaries shall be in form and substance satisfactory to the Agent and 
the Required Banks.

           5.06  Employee Benefit Plans; Shareholders' Agreements; 
Management Agreements; Employment Agreements; Collective Bargaining 
Agreements; Debt Agreements; Tax Sharing Agreements; Material Contracts.  
On or prior to the Initial Borrowing Date, there shall have been delivered 
to the Agent true and correct copies, certified as true and complete by an 
appropriate officer of the Borrower of:

            (i)  all "employee benefit plans" as defined in Section 3(3) of 
      ERISA, any profit sharing plans and deferred compensation plans, and 
      any other plans or arrangements for the benefit of employees of 
      Parent or any of its Subsidiaries (collectively, the "Employee 
      Benefit Plans");

           (ii)  all agreements (including, without limitation, 
      shareholders' agreements, subscription agreements and registration 
      rights agreements) entered into by Parent or any of its Subsidiaries 
      governing the terms and relative rights of its capital stock and any 
      agreements entered into by shareholders relating to any such entity 
      with respect to its capital stock (collectively, the "Shareholders' 
      Agreements");

          (iii)  all agreements with members of, or with respect to, the 
      management of Parent or any of its Subsidiaries (collectively, the 
      "Management Agreements");

           (iv)  any employment agreements entered into by Parent or any of 
      its Subsidiaries (collectively, the "Employment Agreements");

            (v)  all collective bargaining agreements applying or relating 
      to any employee of Parent or any of its Subsidiaries (collectively, 
      the "Collective Bargaining Agreements");

           (vi)  all agreements evidencing or relating to Indebtedness of 
      Parent or any of its Subsidiaries which is to remain outstanding 
      after giving effect to the incurrence of Loans on the Initial 
      Borrowing Date (collectively, the "Debt Agreements");

          (vii)  tax sharing, tax allocation and other similar agreements 
      entered into by Parent or any of its Subsidiaries, including, without 
      limitation, the Existing Tax Sharing Agreement (collectively, the 
      "Tax Sharing Agreements"); and

         (viii)  all other material contracts and licenses of Parent and 
      any of its subsidiaries (collectively, the "Material Contracts");

all of which Employee Benefit Plans, Shareholders' Agreements, Management 
Agreements, Employment Agreements, Collective Bargaining Agreements, Debt 
Agreements, Tax Sharing Agreements and Material Contracts shall be in form 
and substance satisfactory to the Agent and the Required Banks and shall be 
in full force and effect on the Initial Borrowing Date.

           5.07  Adverse Change.  Since December 31, 1995, nothing shall 
have occurred (and the Banks shall have become aware of no facts, 
conditions or other information not previously known) which the Agent or 
the Required Banks shall reasonably determine could have a material adverse 
effect as of the Initial Borrowing Date (i) on the Transaction, (ii) on the 
rights or remedies of the Agent or the Banks, or on the ability of any 
Credit Party to perform their respective obligations to the Agent and the 
Banks or (iii) on the performance, business, operations, property, assets, 
nature of assets, liabilities, condition (financial or otherwise) or 
prospects of the Acquired Business, Parent, the Borrower, Parent and its 
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as 
a whole.

           5.08  Litigation.  On the Initial Borrowing Date, no litigation 
by any entity (private or governmental) shall be pending or threatened with 
respect to (i) the Transaction, the making of the Loans, the issuance of 
Letters of Credit, this Agreement, the other Documents or any documentation 
executed in connection herewith or with respect to the Transaction or the 
transactions contemplated hereby or thereby or with respect to any Existing 
Indebtedness or (ii) which the Agent or the Required Banks shall reasonably 
determine could have a materially adverse effect on (x) the Transaction or 
on the rights or remedies of the Agent or the Banks, or on the ability of 
the Credit Parties to perform their respective obligations to the Agent and 
the Banks or (y) on the performance, business, operations, property, 
assets, nature of assets, liabilities, condition (financial or otherwise) 
or prospects of the Acquired Business, Parent, the Borrower, Parent and its 
Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken as 
a whole.

           5.09  Approvals, etc.  On or prior to the Initial Borrowing 
Date, (i) all necessary governmental (domestic and foreign) and third party 
approvals in connection with the Credit Documents and otherwise referred to 
herein or therein shall have been obtained and remain in full force and 
effect and evidence thereof shall have been provided to the Agent, (ii) all 
necessary material governmental (domestic and foreign) and third party 
approvals in connection with the Transaction, the transactions contemplated 
by the Documents (other than the Credit Documents) and otherwise referred 
to therein shall have been obtained and remain in full force and effect and 
evidence thereof shall have been provided to the Agent, and (iii) all 
applicable waiting periods shall have expired without any action being 
taken by any competent authority which restrains, prevents or imposes 
materially adverse conditions upon the consummation of the Transaction, the 
making of the Loans, the issuance of Letters of Credit and the transactions 
contemplated by the Documents or otherwise referred to herein or therein.  
Additionally, there shall not exist any judgment, order, injunction or 
other restraint issued or filed or a hearing seeking injunctive relief or 
other restraint pending or notified prohibiting or imposing materially 
adverse conditions upon the Transaction or the making of the Loans, the 
issuance of Letters of Credit or the transactions contemplated by the 
Documents.

           5.10  Issuance of Senior Unsecured Notes.  (a)  On or prior to 
the Initial Borrowing Date, (i) Parent shall have received gross cash 
proceeds of at least $170,000,000 from the issuance of the Senior Unsecured 
Notes (it being understood that such cash proceeds shall include all 
amounts directly applied to pay underwriting and placement commissions and 
discounts and related fees), (ii) Parent shall have loaned on a 
subordinated basis and pursuant to the Parent Subordinated Intercompany 
Note as referred to in Section 5.23, the amount of the net cash proceeds 
from the issuance of the Senior Unsecured Notes to the Borrower, (iii) the 
Borrower shall have utilized the full amount of the subordinated 
intercompany loan referred to in preceding clause (iii) to make payments 
owing in connection with the Transaction prior to, or concurrently with, 
the utilization of any proceeds of Loans for such purpose and (v) the 
amount of such proceeds from the issuance of the Senior Unsecured Notes, 
when aggregated with up to $5 million of Revolving Loans incurred on the 
Initial Borrowing Date, shall be sufficient to effect the Acquisition and 
the Refinancing and to pay all fees and expenses arising in connection with 
Transaction.

           (b)  On or prior to the Initial Borrowing Date, the Agent shall 
have received true and correct copies of the Senior Unsecured Note 
Documents, certified as such by an appropriate officer of the Borrower, 
each of which shall have been duly authorized, executed and delivered by 
all parties thereto and shall be in full force and effect and in form and 
substance satisfactory to the Agent and the Required Banks.  The terms and 
conditions of the Senior Unsecured Notes (including, without limitation, 
amortization, maturities, interest rates, limitations on cash interest 
payable, guaranty provisions, security therefor, covenants, defaults, 
remedies, redemption provisions and change of control provisions), shall be 
in form and substance satisfactory to the Agent and the Required Banks.

           5.11  Consummation of the Acquisition and the Merger.  (a)  On 
or prior to the Initial Borrowing Date, there shall have been delivered to 
the Agent and the Banks true and correct copies of all Acquisition 
Documents and all Merger Documents, certified as such by an officer of the 
Borrower, and all terms and conditions of the Acquisition Documents and all 
Merger Documents shall be in form and substance satisfactory to the Agent 
and the Required Banks and shall not be amended without the consent of the 
Required Banks.  Each of the Acquisition and the Merger, including all of 
the terms and conditions thereof, shall have been duly approved by the 
board of directors and (if required by applicable law) the shareholders of 
Parent, MK Group, the Borrower, Acquisition Corp., Imperial, Scott and 
Gear, and all Acquisition Documents and all Merger Documents shall have 
been duly executed and delivered by the parties thereto and shall be in 
full force and effect.  The representations and warranties set forth in the 
Acquisition Documents and the Merger Documents shall be true and correct in 
all material respects as if made on and as of the Initial Borrowing Date, 
and each of the conditions precedent to (i) Acquisition Corp.'s obligation 
to consummate the Acquisition as set forth in the Acquisition Documents and 
(ii) Parent's and MK Group's obligations to consummate the Merger shall 
have been satisfied to the satisfaction of the Agent and the Required Banks 
or waived with the consent of the Agent and the Required Banks.  

           (b)  On the Initial Borrowing Date and concurrently with the 
Credit Events then occurring, the Acquisition shall have been consummated 
in accordance with all applicable law and the Acquisition Documents 
(without giving effect to any amendment or modification thereof or waiver 
with respect thereto unless consented to by the Agent and the Required 
Banks).  The total consideration (excluding the payment of fees and 
expenses) in connection with the Acquisition shall not exceed the Purchase 
Price.  On the Initial Borrowing Date and immediately after giving effect 
to the Acquisition, Acquisition Corp. shall have contributed (as an equity 
contribution or in return for one or more Transaction Intercompany Notes as 
described in Section 5.23(b)) that portion of the Acquired Business 
acquired from Scott and Gear to Scott Acquisition Sub. and Gear Acquisition 
Sub., respectively, in accordance with all applicable law (the "Asset 
Contribution"). 

           (c)  On the Initial Borrowing Date and concurrently with the 
Credit Events then occurring, the Merger shall have been consummated in 
compliance with the Merger Documents and all applicable laws.  No cash 
consideration shall be payable in connection with the Merger.  
Additionally, on the Initial Borrowing Date, (i) the certificate of merger 
with respect to the Merger shall have been filed with the Secretaries of 
State of the States of Delaware and Illinois and (ii) Parent shall have 
contributed (as a common equity contribution) all of the capital stock of 
Merkle to the Borrower in accordance with all applicable law (the "MK Stock 
Contribution").

           5.12  Refinancing of Existing Credit Agreement.  (a)  On the 
Initial Borrowing Date and concurrently with the Credit Events then 
occurring, (i) the total commitments under the Existing Credit Agreement 
shall have been terminated, and all loans thereunder shall have been repaid 
in full, together with interest thereon, (ii) all other amounts owing 
pursuant to the Existing Credit Agreement shall have been repaid in full, 
(iii) the Existing Credit Agreement shall have been terminated and (iv) the 
Agent shall have received evidence in form, scope and substance 
satisfactory to it and the Required Banks that the matters set forth in 
this Section 5.12 have been satisfied on such date.  On the Initial 
Borrowing Date and concurrently with the Credit Events then occurring, the 
creditors under the Existing Credit Agreement shall have terminated and 
released all security interests and Liens on the capital stock of MK Group 
or any of its Subsidiaries, or any other assets owned by MK Group or any of 
its Subsidiaries granted in connection with the Existing Credit Agreement.  
The Agent shall have received such releases of security interests in and 
Liens on the capital stock of MK Group or any of its Subsidiaries, or any 
other assets owned by MK Group and its Subsidiaries, as may have been 
requested by the Agent or the Required Banks, which releases shall be in 
form and substance satisfactory to the Agent and the Required Banks.  
Without limiting the foregoing, there shall have been delivered (w) proper 
termination statements (Form UCC-3 or the appropriate equivalent) for 
filing under the UCC of each jurisdiction where a financing statement (Form 
UCC-1 or the appropriate equivalent) was filed with respect to MK Group or 
any of its Subsidiaries in connection with the security interests created 
with respect to the Existing Credit Agreement and the documentation related 
thereto, (x) termination or reassignment of any security interest in, or 
Lien on, any patents, trademarks, copyrights, or similar interests of MK 
Group or any of its Subsidiaries on which filings have been made, (y) 
terminations of all mortgages, leasehold mortgages and deeds of trust 
created with respect to property of MK Group or any of its Subsidiaries, in 
each case, to secure the obligations under the Existing Credit Agreement, 
all of which shall be in form and substance satisfactory to the Agent and 
the Required Banks, and (z) all collateral owned by MK Group or any of its 
Subsidiaries in the possession of Bankers Trust Company, in its capacity as 
agent under the Existing Credit Agreement or collateral agent under any 
related security document or any other agent, collateral agent or trustee 
for the creditors under the Existing Credit Agreement.

           5.13  Pledge Agreement.  On the Initial Borrowing Date, each of 
the Borrower and each Domestic Subsidiary of the Borrower shall have duly 
authorized, executed and delivered a Pledge Agreement in the form of 
Exhibit G (as modified, supplemented or amended from time to time, the 
"Pledge Agreement") and shall have delivered to the Collateral Agent, as 
Pledgee, all the Pledged Securities referred to therein then owned by such 
Credit Party, (x) endorsed in blank in the case of promissory notes 
constituting Pledged Securities and (y) together with executed and undated 
irrevocable stock powers, in the case of capital stock constituting Pledged 
Securities, and the Pledge Agreement shall be in full force and effect. 

           5.14  Security Agreement.  On the Initial Borrowing Date, each 
of the Borrower and each Domestic Subsidiary of the Borrower shall have 
duly authorized, executed and delivered a Security Agreement in the form of 
Exhibit H (as modified, supplemented or amended from time to time, the 
"Security Agreement") covering all of such Credit Party's present and 
future Security Agreement Collateral, in each case together with:

           (a)  proper Financing Statements (Form UCC-1 or the appropriate 
      local equivalent) fully executed for filing under the UCC or the 
      appropriate local equivalent of each jurisdiction as may be necessary 
      or, in the opinion of the Collateral Agent, desirable to perfect the 
      security interests purported to be created by the Security Agreement;

           (b)  certified copies of Requests for Information or Copies 
      (Form UCC-11), or equivalent reports, of a recent date listing all 
      effective financing statements that name any Credit Party, Imperial, 
      Scott or Gear or any division or other operating unit of such Credit 
      Party, Imperial, Scott or Gear, as debtor and that are filed in the 
      jurisdictions referred to in clause (a) above, together with copies 
      of such other financing statements (none of which shall cover the 
      Collateral except to the extent evidencing Permitted Liens or in 
      respect of which the Collateral Agent shall have received termination 
      statements (Form UCC-3 or the equivalent) or such other termination 
      statements as shall be required by local law) fully executed for 
      filing;

           (c)  evidence of the completion of all other recordings and 
      filings of, or with respect to, the Security Agreement as may be 
      necessary or, in the opinion of the Collateral Agent, desirable to 
      perfect the security interests intended to be created by the Security 
      Agreement; and

           (d)  evidence that all other actions necessary or, in the 
      opinion of the Collateral Agent, desirable to perfect and protect the 
      security interests purported to be created by the Security Agreement 
      have been taken;

and the Security Agreement shall be in full force and effect.

           5.15  Subsidiary Guaranty.  On the Initial Borrowing Date, each 
Domestic Subsidiary of the Borrower shall have duly authorized, executed 
and delivered the Subsidiary Guaranty in the form of Exhibit I hereto (as 
modified, supplemented or amended from time to time, the "Subsidiary 
Guaranty"), and the Subsidiary Guaranty shall be in full force and effect.

           5.16  Stockholders' Agreement, Subscription Agreements, 
Consulting Agreements, Affiliate Leases, etc.  On or prior to the Initial 
Borrowing Date, the Agent and the Banks shall have received true and 
correct copies of each of the JII Services Agreement, the Stockholders' 
Agreement, the Management Subscription Agreement, the Director Indemnity 
Agreement, each Intercompany Management Consulting Agreement, each M&G 
Holdings Management Consulting Agreement, each TJC Management Services 
Agreement and each Affiliate Lease, certified as such by an officer of the 
Borrower, each of which shall have been duly authorized, executed and 
delivered by the respective parties thereto and shall be in full force and 
effect and in form and substance satisfactory (including all terms and 
conditions thereof), satisfactory to the Agent and the Required Banks.

           5.17  Consent Letter.  On the Initial Borrowing Date, the Agent 
shall have received a letter from CT Corporation System, presently located 
at 1633 Broadway, New York, New York 10019, substantially in the form of 
Exhibit J, indicating its consent to its appointment by each Credit Party 
as its agent to receive service of process as specified in Section 13.08 
and, if applicable, in the Guaranties.

           5.18  Solvency Certificate; Environmental Assessments; and 
Insurance Certificates.  On or prior to the Initial Borrowing Date, there 
shall have been delivered to the Agent:

           (a)  a solvency certificate addressed to the Agent and each of 
      the Banks and dated the Initial Borrowing Date from any Authorized 
      Officer of the Borrower, which solvency certificate shall be in the 
      form of Exhibit K (appropriately completed), expressing opinions of 
      value and other appropriate factual information regarding the 
      solvency of the Borrower (on a stand-alone basis) and the Borrower 
      and its Subsidiaries (on a consolidated basis), in each case after 
      giving effect to the Transaction and the incurrence of all financings 
      contemplated herein;

           (b)  evidence of insurance (including, without limitation, 
      business interruption insurance) complying with the requirements of 
      Section 8.03 for the business and properties of the Borrower and its 
      Subsidiaries (including, without limitation, the Acquired Business), 
      in scope, form and substance satisfactory to the Agent and the 
      Required Banks and naming each of the Collateral Agent, the Agent and 
      each Bank as an additional insured and the Collateral Agent, on 
      behalf of the Secured Creditors, as mortgagee/secured party and loss 
      payee, and stating that such insurance shall not be cancelled or 
      materially changed without at least 30 days' prior written notice by 
      the insurer to the Collateral Agent.

           5.19  Existing Indebtedness.  On the Initial Borrowing Date and 
after giving effect to the Transaction and the Loans incurred on the 
Initial Borrowing Date, neither Parent nor any of its Subsidiaries shall 
have any preferred stock or Indebtedness outstanding except for (i) the 
Loans, (ii) the Senior Unsecured Notes (which shall constitute Indebtedness 
of Parent only), (iii) Indebtedness existing pursuant to the Earnout 
Agreement, (iv) Indebtedness of Merkle in an aggregate principal amount not 
to exceed $90 million represented by the Existing Seller Installment Note, 
(v) Indebtedness of Merkle in an aggregate principal amount not to exceed 
$5 million represented by the Existing Seller Subordinated Note, (vi) 
Indebtedness existing pursuant to the Existing Seller Letter of Credit, the 
Existing Seller Letter of Credit Collateral Agreement and the Existing 
Seller Letter of Credit Agreement, (vii) Indebtedness of the Borrower 
pursuant to the Parent Subordinated Intercompany Note, (viii) Indebtedness 
pursuant to one or more Transaction Intercompany Notes and (ix) certain 
intercompany indebtedness and other indebtedness as is listed on Schedule 
VI (with the Indebtedness described in this clause (x) being herein called 
"Scheduled Existing Indebtedness" and, together with the Indebtedness 
described in clauses, (iv), (v) and (vi) above being herein called the 
"Existing Indebtedness"), which Scheduled Existing Indebtedness shall not 
exceed $25,000,000 in aggregate principal amount.  On and as of the Initial 
Borrowing Date, all of the Existing Indebtedness shall remain outstanding 
after giving effect to the Transaction and the other transactions 
contemplated hereby without any default or events of default existing 
thereunder or arising as a result of the Transaction and the other 
transactions contemplated hereby (except to the extent amended or waived by 
the parties thereto on terms and conditions satisfactory to the Agent and 
the Required Banks), and there shall not be any amendments or modifications 
to the Debt Agreements other than as requested or approved by the Agent or 
the Required Banks.  On and as of the Initial Borrowing Date, the Agent and 
the Required Banks shall be satisfied with the amount of and the terms and 
conditions of all Existing Indebtedness.

           5.20  Financial Statements; Pro Forma Financial Information; 
Projections.  (a)  On or prior to the Initial Borrowing Date, the Banks 
shall have received all of the financial statements referred to in Section 
7.05(a) and such financial statements (i) shall be in form and substance 
satisfactory to the Agent and the Required Banks and (ii) shall not 
disclose any material adverse differences in the financial condition of the 
Acquired Business or Parent and its Subsidiaries taken as a whole from that 
previously disclosed to the Agent and the Required Banks.

           (b)  On or prior to the Initial Borrowing Date, the Banks shall 
have received detailed consolidated financial projections, certified by the 
Chief Financial Officer of the Borrower, for Parent and its Subsidiaries, 
which include the projected results of the Acquired Business, and after 
giving effect to the Transaction and the related financing therefor 
(including the Loans and the Senior Unsecured Notes) and the other 
transactions contemplated hereby, for the ten fiscal years ended after the 
Initial Borrowing Date (the "Projections"), which Projections, and the 
supporting assumptions and explanations thereto, shall be reasonably 
satisfactory in form and substance to the Agent and the Required Banks and 
shall be as set forth on Schedule IV hereto.

           5.21  Existing Tax Sharing Agreement.  On the Initial Borrowing 
Date, each of the Borrower, Acquisition Corp., Scott Acquisition Sub. and 
Gear Acquisition Sub. shall have executed and delivered a counterpart to 
the Existing Tax Sharing Agreement or an amendment thereto, in any such 
case so as to become a party to the Existing Tax Sharing Agreement and the 
Agent and the Banks shall have received true and correct copies of such 
counterparts or amendments (as well as the Existing Tax Sharing Agreement), 
certified as such by an officer of the Borrower, each of which shall be in 
full force and effect.

           5.22  Existing Seller Letter of Credit Agreement.  On or prior 
to the Initial Borrowing Date, Parent and Merkle shall have executed and 
delivered an amendment to the Existing Seller Letter of Credit Agreement in 
form and substance satisfactory to the Agent and the Required Banks.

           5.23  Intercompany Notes.  (a)  On the Initial Borrowing Date, 
the Borrower shall have executed and delivered to Parent a subordinated 
promissory note in the aggregate principal amount of $170 million in the 
form attached hereto as Exhibit S (the "Parent Subordinated Intercompany 
Note"), which promissory note shall (i) mature on November 15, 2006, (ii) 
be voluntarily prepayable by the Borrower at its option (except that any 
voluntary prepayment of the Parent Subordinated Intercompany Note to be 
used by Parent to repay the outstanding principal of the Senior Unsecured 
Notes shall be accompanied by the amount of premium to be used by Parent in 
connection with such principal repayment of outstanding Senior Unsecured 
Notes), (iii) contain no mandatory prepayment or acceleration provisions 
and (iv) bear interest at the same rate as is payable with respect to the 
Senior Unsecured Notes.

           (b)  In connection with the Transaction, and as consideration in 
connection therewith, each of Merkle, Scott Acquisition Sub., Gear 
Acquisition Sub., and/or Acquisition Corp. may execute and deliver to the 
Borrower (or to Acquisition Corp. in the case of the promissory notes 
issued by Scott Acquisition Sub. and Gear Acquisition Sub.) one or more 
promissory notes, in each case so long as the respective such promissory 
note is pledged to the Collateral Agent pursuant to the terms of the Pledge 
Agreement (with each such promissory note being herein called a 
"Transaction Intercompany Note" and, collectively, the "Transaction 
Intercompany Notes").

           SECTION 6.  Conditions Precedent to All Credit Events.  The 
obligation of each Bank to make Revolving Loans (including Revolving Loans 
made on the Initial Borrowing Date but excluding Mandatory Borrowings made 
thereafter, which shall be made as provided in Section 1.01(c)) and of the 
Swingline Bank to make Swingline Loans, and the obligation of an Issuing 
Bank to issue any Letter of Credit, is subject, at the time of each such 
Credit Event (except as hereinafter indicated), to the satisfaction of the 
following conditions:

           6.01  No Default; Representations and Warranties.  At the time 
of each such Credit Event and also after giving effect thereto (i) there 
shall exist no Default or Event of Default and (ii) all representations and 
warranties contained herein and in the other Credit Documents shall be true 
and correct in all material respects with the same effect as though such 
representations and warranties had been made on the date of the making of 
such Credit Event (it being understood and agreed that any representation 
or warranty which by its terms is made as of a specified date shall be 
required to be true and correct in all material respects only as of such 
specified date).

           6.02  Adverse Change, etc.  Nothing shall have occurred (and the 
Banks shall have become aware of no facts or conditions not previously 
known) which could reasonably be expected to have a material adverse effect 
on (x) the rights or remedies of the Banks or the Agent, (y) on the ability 
of the Borrower or any other Credit Party to perform its obligations to the 
Banks or (z) on the performance, business, operations, property, assets, 
nature of assets, liabilities, condition (financial or otherwise) or 
prospects of the Borrower, the Borrower and its Subsidiaries taken as a 
whole or the Parent and its Subsidiaries taken as a whole.

           6.03  Litigation.  At the time of each such Credit Event and 
also after giving effect thereto, no litigation by any entity (private or 
governmental) shall be pending or threatened with respect to this Agreement 
or any other Document or the transactions contemplated hereby or thereby or 
which could reasonably be expected to have a materially adverse effect on 
the performance, business, operations, property, assets, nature of assets, 
liabilities, condition (financial or otherwise) or prospects of the 
Borrower, the Borrower and its Subsidiaries taken as a whole or the Parent 
and its Subsidiaries taken as a whole.

           6.04  Notice of Borrowing; Letter of Credit Request.  (a)  Prior 
to the making of each Loan (other than a Swingline Loan or a Mandatory 
Borrowing), the Agent shall have received a Notice of Borrowing meeting the 
requirements of Section 1.03(a).  Prior to the making of each Swingline 
Loan, the Swingline Bank shall have received the notice referred to in 
Section 1.03(b)(i).

           (b)  Prior to the issuance of each Letter of Credit, the Agent 
and the respective Issuing Bank shall have received a Letter of Credit 
Request meeting the requirements of Section 2.03(a).

           The occurrence of the Initial Borrowing Date and the acceptance 
of the benefits or proceeds of each Credit Event shall constitute a 
representation and warranty by the Borrower to the Agent and each of the 
Banks that all the conditions specified in Section 5 and in this Section 6 
and applicable to such Credit Event exist as of that time.  All of the 
Notes, certificates, legal opinions and other documents and papers referred 
to in Section 5 and in this Section 6, unless otherwise specified, shall be 
delivered to the Agent at the Notice Office for the account of each of the 
Banks and, except for the Notes, in sufficient counterparts for each of the 
Banks and shall be in form and substance reasonably satisfactory to the 
Banks.

           SECTION 7.  Representations and Warranties.  In order to induce 
the Banks to enter into this Agreement and to make the Loans, and issue (or 
participate in) the Letters of Credit as provided herein, the Borrower 
makes the following representations, warranties and agreements, in each 
case after giving effect to the Transaction, all of which shall survive the 
execution and delivery of this Agreement and the Notes and the making of 
the Loans and issuance of the Letters of Credit, with the occurrence of 
each Credit Event on or after the Initial Borrowing Date being deemed to 
constitute a representation and warranty that the matters specified in this 
Section 7 are true and correct on and as of the Initial Borrowing Date and 
on the date of each such Credit Event (it being understood and agreed that 
any representation or warranty which by its terms is made as of a specified 
date shall be required to be true and correct in all material respects only 
as of such specified date):

           7.01  Corporate Status.  The Borrower and each of its 
Subsidiaries (i) is a duly organized and validly existing corporation in 
good standing under the laws of the jurisdiction of its organization, (ii) 
has the corporate power and authority to own its property and assets and to 
transact the business in which it is engaged and presently proposes to 
engage and (iii) is duly qualified and is authorized to do business and is 
in good standing in each jurisdiction where the conduct of its business 
requires such qualifications except for failures to be so qualified which, 
individually or in the aggregate, could not reasonably be expected to have 
a material adverse effect on the performance, business, operations, 
property, assets, nature of assets, liabilities, condition (financial or 
otherwise) or prospects of the Borrower or the Borrower and its 
Subsidiaries taken as a whole. 

           7.02  Corporate Power and Authority.  Each Credit Party has the 
corporate power and authority to execute, deliver and perform the terms and 
provisions of each of the Documents to which it is a party and has taken 
all necessary corporate action to authorize the execution, delivery and 
performance by it of each of such Documents.  Each Credit Party has duly 
executed and delivered each of the Documents to which it is a party, and 
each of such Documents constitutes the legal, valid and binding obligation 
of such Credit Party enforceable in accordance with its terms, except to 
the extent that the enforceability thereof may be limited by applicable 
bankruptcy, insolvency, fraudulent conveyance, reorganization or other 
similar laws generally affecting creditors' rights and by equitable 
principles (regardless of whether enforcement is sought in equity or at 
law).

           7.03  No Violation.  Neither the execution, delivery or 
performance by any Credit Party of the Documents to which it is a party, 
nor compliance by it with the terms and provisions thereof, nor 
consummation of the Transaction or the other transactions contemplated 
herein or therein, (i) will contravene any provision of any applicable law, 
statute, rule or regulation or any applicable order, writ, injunction or 
decree of any court or governmental instrumentality, (ii) will conflict or 
be inconsistent with or result in any breach of any of the terms, 
covenants, conditions or provisions of, or constitute a default under, or 
result in the creation or imposition of (or the obligation to create or 
impose) any Lien (except pursuant to the Security Documents and, after same 
have been entered into, the Receivables Facility Documents) upon any of the 
properties or assets of (x) the Borrower or any of its Subsidiaries 
pursuant to the terms of any indenture, mortgage, deed of trust, credit 
agreement or loan agreement, or any other agreement, contract or 
instrument, to which the Borrower or any of its Subsidiaries is a party 
(including, without limitation, the Existing Indebtedness) or by which it 
or any of its property or assets is bound or to which it may be subject or 
(y) Parent pursuant to the terms of any Senior Unsecured Note Document or 
(iii) will violate any provision of the certificate of incorporation or 
by-laws (or equivalent organizational documents) of Parent or any of its 
Subsidiaries. 

           7.04  Governmental Approvals.  (a)  No order, consent, approval, 
license, authorization or validation of, or filing, recording or 
registration with (except as have been obtained or made prior to the date 
when required and which remain in full force and effect), or exemption by, 
any governmental or public body or authority, or any subdivision thereof, 
is required to authorize, or is required in connection with, (i) the 
execution, delivery and performance of any Credit Document or (iii) the 
legality, validity, binding effect or enforceability of any such Credit 
Document.

           (b)  No material order, consent, approval, license, 
authorization or validation of, or filing, recording or registration with 
(except as have been obtained or made prior to the date when required and 
which remain in full force and effect), or exemption by, any governmental 
or public body or authority, or any subdivision thereof, is required to 
authorize, or is required in connection with, (i) the Transaction, (ii) the 
execution, delivery and performance of any Document (other than any Credit 
Document) or (iii) the legality, validity, binding effect or enforceability 
of any such Document (other than any Credit Document).

           7.05  Financial Statements; Financial Condition; Undisclosed 
Liabilities; Projections; etc.  (a) (I) Each of (i) the audited combined 
balance sheet of MK, Mercury and Elmco as of December 31, 1994 and the 
combined statements of income, cash flows and retained earnings for the 
fiscal years ended December 31, 1993 and 1994 and for the period commencing 
January 1, 1995 and ending September 22, 1995 and (ii) the unaudited 
combined balance sheet of MK, Mercury and Elmco at June 30, 1995 and the 
related combined statements of income, cash flows and retained earnings of 
MK, Mercury and Elmco for the six-month period ended as of said date, 
copies of which have heretofore been delivered to each Bank, present fairly 
the financial position of the respective entities on a combined basis at 
the dates of said statements and the results of operations for the periods 
covered thereby.  All financial statements referred to in the preceding 
sentence have been prepared in accordance with generally accepted 
accounting principles and practices consistently applied except, in the 
case of the financial statements for the periods ended September 22, 1995 
and June 30, 1995, for the absence of footnotes and reserves (other than 
those directly related to balance sheet assets) and normal year-end audit 
adjustments.  

           (II)  Each of (i) the audited balance sheets of the BCM Acquired 
Business as of March 31, 1995 and December 31, 1995 and the related 
statements of divisional operations and cash flows for the fiscal year or 
the nine-month period, as the case may be, ended as of said dates, which 
financial statements have been examined by Ernst & Young, certified public 
accountants, who delivered an unqualified opinion with respect thereto and 
(ii) the unaudited balance sheet of the BCM Acquired Business as of March 
8, 1996 and the unaudited statements of divisional operations and cash 
flows for the period commencing January 1, 1996 and ending March 8, 1996, 
copies of which financial statements have heretofore been delivered to each 
Bank, present fairly the financial position of the BCM Acquired Business at 
the dates of said statements and the results of operations for the periods 
covered thereby.  All financial statements referred to in the preceding 
sentence have been prepared in accordance with GAAP and practices 
consistently applied except, in the case of the financial statements for 
the period ended March 8, 1996, for the absence of footnotes and reserves 
(other than those directly related to balance sheet assets) and normal 
year-end audit adjustments.  

           (III)  The audited consolidated balance sheets of Imperial for 
the fiscal years ended December 31, 1994 and 1995 and the unaudited 
consolidated balance sheet of Imperial at June 30, 1996 and the related 
consolidated statements of income, cash flows and shareholder's equity of 
Imperial for the fiscal years or six-month period, as the case may be, 
ended as of said dates, which annual financial statements have been 
examined by Ernst & Young LLP, certified public accountants, who delivered 
an unqualified opinion with respect thereto and copies of which have 
heretofore been delivered to each Bank, present fairly the financial 
position of the respective entities on a consolidated basis at the dates of 
said statements and the results of operations for the periods covered 
thereby.  All financial statements referred to in the preceding sentence 
have been prepared in accordance with generally accepted accounting 
principles and practices consistently applied except, in the case of the 
June 30, 1996 financial statements, for the absence of footnotes and 
reserves (other than those directly related to balance sheet assets) and 
normal year-end audit adjustments.

           (IV)  Each of (i) the audited consolidated balance sheet of 
Parent as of December 31, 1995 and the consolidated statements of income, 
cash flows and changes in shareholder's equity for the period commencing 
September 23, 1995 and ending December 31, 1995, which financial statements 
have been examined by Ernst & Young, certified public accountants, who 
delivered an unqualified opinion with respect thereto and (ii) the 
unaudited consolidated balance sheet of Parent at June 30, 1996 and the 
related consolidated statements of income, cash flows and changes in 
shareholder's equity for the six-month period ended as of said date, copies 
of which have heretofore been delivered to each Bank, present fairly the 
financial position of the Parent on a consolidated basis at the dates of 
said statements and the results of operations for the periods covered 
thereby.  All financial statements referred to in the preceding sentence 
have been prepared in accordance with generally accepted accounting 
principles and practices consistently applied except, in the case of the 
June 30, 1996 financial statements, for the absence of footnotes and 
reserves (other than those directly related to balance sheet assets) and 
normal year-end audit adjustments.

           (V)  Each of (i) the unaudited pro forma (both immediately 
before and after giving effect to the Transaction, the related financing 
thereof (including, without limitation, the Loans and the Senior Unsecured 
Notes) and the other transactions contemplated hereby and thereby) 
condensed balance sheet of Parent and its Subsidiaries as of June 30, 1996, 
prepared on a basis consistent with the Projections, and (ii) the pro forma 
condensed statement of operations of Parent and its Subsidiaries for (x) 
the fiscal years ended December 31, 1993, 1994 and 1995, (y) the six-month 
periods ended June 30, 1995 and 1996 and (z) the twelve-month period ended 
June 30, 1996, copies of which have heretofore been delivered to each Bank, 
present a good faith estimate of the pro forma financial condition of 
Parent and its Subsidiaries on a consolidated basis at the dates of said 
statements and the pro forma results of operations for the periods covered 
thereby (in each case both immediately before and after giving effect to 
the Transaction, and the related financing thereof (including the Loans and 
the Senior Unsecured Notes)).

           (VI)  As of the Initial Borrowing Date, since December 31, 1995 
(but after giving effect to the Transaction and the BCM Transaction as if 
same had occurred on such date), there has been no material adverse change 
in the performance, business, operations, property, assets, nature of 
assets, liabilities, condition (financial or otherwise) or prospects of the 
Acquired Business, the Borrower, the Borrower and its Subsidiaries taken as 
a whole or the Parent and its Subsidiaries taken as a whole.

           (b)  On and as of the Initial Borrowing Date, on a pro forma 
basis after giving effect to the Transaction and all other transactions 
contemplated by the Documents and to all Indebtedness (including, without 
limitation, the Loans) being incurred or assumed, and Liens created by each 
Credit Party in connection therewith, with respect to each of the Borrower 
(on a stand-alone basis) and the Borrower and its Subsidiaries (on a 
consolidated basis) (x) the sum of the assets, at a fair valuation, of each 
of the Borrower (on a stand-alone basis) and the Borrower and its 
Subsidiaries (on a consolidated basis) will exceed its debts, (y) it has 
not incurred and does not intend to incur, nor believes that it will incur, 
debts beyond its ability to pay such debts as such debts mature and (z) it 
will have sufficient capital with which to conduct its business.  For 
purposes of this Section 7.05(b) "debt" means any liability on a claim, and 
"claim" means (i) right to payment whether or not such a right is reduced 
to judgment, liquidated, unliquidated, fixed, contingent, matured, 
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or 
(ii) right to an equitable remedy for breach of performance if such breach 
gives rise to a payment, whether or not such right to an equitable remedy 
is reduced to judgment, fixed, contingent, matured, unmatured, disputed, 
undisputed, secured or unsecured. 

           (c)  Except as fully disclosed in the financial statements 
delivered pursuant to Section 7.05(a), there were as of the Initial 
Borrowing Date no material liabilities or obligations with respect to 
Parent or any of its Subsidiaries or the Acquired Business of any nature 
whatsoever (whether absolute, accrued, contingent or otherwise and whether 
or not due).  As of the Initial Borrowing Date, the Borrower knows of no 
basis for the assertion against it or Parent of any liability or obligation 
of any nature that is not fully disclosed in the financial statements 
delivered pursuant to Section 7.05(a) which, either individually or in the 
aggregate, could reasonably be expected to be material to the Acquired 
Business, Parent, the Borrower or the Borrower and its Subsidiaries taken 
as a whole.  As of the Initial Borrowing Date (and after giving effect to 
the Transaction and the other transactions contemplated by the Documents), 
none of Parent or any of its Subsidiaries will have any outstanding 
Indebtedness or preferred stock other than the Loans , the Senior Unsecured 
Notes, Indebtedness existing under the Earnout Agreement and the Existing 
Indebtedness.

           (d)  On and as of the Initial Borrowing Date, the Projections 
set forth on Schedule IV hereto, which include the projected results of the 
Acquired Business and the BCM Acquired Business and which have been 
delivered to the Agent and the Banks on or prior to the Initial Borrowing 
Date, have been prepared on a basis consistent with the pro forma financial 
statements referred to in Section 7.05(a)(V), and are based on good faith 
estimates and assumptions made by management of the Borrower, and there are 
no statements or conclusions in any of the Projections which are based upon 
or include information known to the Borrower or any of its Subsidiaries to 
be misleading or which fail to take into account material information 
regarding the matters reported therein.  On the Initial Borrowing Date, the 
Borrower believes that the Projections were reasonable and attainable.

           7.06  Litigation.  There are no actions, suits or proceedings 
pending or threatened (i) with respect to the Transaction or any Credit 
Document or (ii) that could reasonably be expected to materially and 
adversely affect (a) the performance, business, operations, property, 
assets, nature of assets, liabilities, condition (financial or otherwise) 
or prospects of the Borrower or the Borrower and its Subsidiaries taken as 
a whole or (b) the rights or remedies of the Agent or the Banks or on the 
ability of any Credit Party to perform its obligations to them hereunder 
and under the other Credit Documents to which it is, or will be, a party.  
Additionally, there does not exist any judgment, order or injunction 
prohibiting or imposing material adverse conditions upon the occurrence of 
any Credit Event.

           7.07  True and Complete Disclosure.  All factual information 
(taken as a whole) furnished by or on behalf of the Borrower or any of its 
Subsidiaries in writing to the Agent or any Bank (including, without 
limitation, all information contained in the Documents) for purposes of or 
in connection with this Agreement, the other Documents or any transaction 
contemplated herein or therein is, and all other such factual information 
(taken as a whole) hereafter furnished by or on behalf of any such Persons 
in writing to the Agent or any Bank will be, true and accurate in all 
material respects on the date as of which such information is dated or 
certified and not incomplete by omitting to state any fact necessary to 
make such information (taken as a whole) not misleading at such time in 
light of the circumstances under which such information was provided.

           7.08  Use of Proceeds; Margin Regulations.  (a)  Up to, but not 
more than, $5 million of the proceeds of Loans shall be utilized to effect 
the Acquisition and the Refinancing and to pay fees and expenses incurred 
in connection with the Transaction.  All other proceeds of Loans made 
pursuant to this Agreement may be utilized for the general corporate and 
working capital purposes of the Borrower and its Subsidiaries (including to 
finance Permitted Transactions in accordance with the requirements of 
Section 8.15).

           (b)  No part of any Credit Event (or the proceeds thereof) will 
be used to purchase or carry any Margin Stock or to extend credit for the 
purpose of purchasing or carrying any Margin Stock.  Neither the making of 
any Loan nor the use of the proceeds thereof nor the occurrence of any 
other Credit Event will violate or be inconsistent with the provisions of 
Regulation G, T, U or X of the Board of Governors of the Federal Reserve 
System.

           7.09  Tax Returns and Payments.  All Federal, state and other 
returns, statements, forms and reports for taxes (the "Returns") required 
to be filed by or with respect to the income, properties or operations of 
the Acquired Business and of the Borrower and/or any of its Subsidiaries 
have been timely filed with the appropriate taxing authority.  The Returns 
accurately reflect all liability for taxes of the Acquired Business and of 
the Borrower and its Subsidiaries, as the case may be, for the periods 
covered thereby.  The Acquired Business and the Borrower and each of its 
Subsidiaries have paid all taxes and assessments payable by them other than 
those which are not yet due and payable, and other than those contested in 
good faith by appropriate proceedings and for which adequate reserves have 
been established in accordance with GAAP.  There is no material action, 
suit, proceeding, investigation, audit, or claim now pending or threatened 
by any authority regarding any taxes relating to the Acquired Business or 
to the Borrower or any of its Subsidiaries.  As of the Initial Borrowing 
Date, neither the Acquired Business nor the Borrower or any of its 
Subsidiaries has entered into an agreement or waiver or been requested to 
enter into an agreement or waiver extending any statute of limitations 
relating to the payment or collection of taxes of the Acquired Business or 
the Borrower or any of its Subsidiaries, or is aware of any circumstances 
that would cause the taxable years or other taxable periods of the Acquired 
Business or the Borrower or any of its Subsidiaries not to be subject to 
the normally applicable statute of limitations.  Neither the Acquired 
Business nor the Borrower or any of its Subsidiaries has provided, with 
respect to itself or property held by it, any consent under Section 341 of 
the Code.  

           7.10  Compliance with ERISA.  Each Plan is in substantial 
compliance with ERISA and the Code; no Reportable Event has occurred with 
respect to a Plan; no Plan is insolvent or in reorganization; no Plan has 
an Unfunded Current Liability; no Plan has an accumulated or waived funding 
deficiency or has applied for an extension of any amortization period 
within the meaning of Section 412 of the Code; all contributions required 
to be made with respect to a Plan have been timely made; neither the 
Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has 
incurred any material liability to or on account of a Plan pursuant to 
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 
4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or 
expects to incur any liability (including any indirect, contingent, or 
secondary liability) under any of the foregoing Sections with respect to 
any Plan; no proceedings have been instituted to terminate or appoint a 
trustee to administer any Plan; no condition exists which presents a 
material risk to the Borrower or any Subsidiary of the Borrower or any 
ERISA Affiliate of incurring a liability to or on account of a Plan 
pursuant to the foregoing provisions of ERISA and the Code; using actuarial 
assumptions and computation methods consistent with Part 1 of subtitle E of 
Title IV of ERISA, the annual aggregate liabilities of the Borrower and its 
Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer 
plans (as defined in Section 4001(a)(3) of ERISA) in the event of a 
complete withdrawal therefrom, as of the close of the most recent fiscal 
year of each such Plan ended prior to the date of the most recent Credit 
Event, would not exceed $5,000,000; no lien imposed under the Code or ERISA 
on the assets of the Borrower or any Subsidiary of the Borrower or any 
ERISA Affiliate exists or is likely to arise on account of any Plan; and 
the Borrower and its Subsidiaries may cease contributions to or terminate 
any employee benefit plan maintained by any of them without incurring any 
material liability.

           7.11  Security Documents.  (a)  The provisions of the Security 
Agreement are effective to create in favor of the Collateral Agent for the 
benefit of the Secured Creditors a legal, valid and enforceable security 
interest in all right, title and interest of the Credit Parties in the 
Security Agreement Collateral described therein, and the Security Agreement 
creates a perfected first lien on, and security interest in, all right, 
title and interest in all of the Security Agreement Collateral described 
therein, subject to no other Liens (other than Permitted Liens).  The 
recordation of the Assignment of Security Interest in Certain U.S. Patents 
and Trademarks in the form attached to the Security Agreement in the United 
States Patent and Trademark Office, together with filings on Form UCC-1 
made pursuant to the Security Agreement, will be effective, under 
applicable law, to perfect the security interest granted to the Collateral 
Agent in the trademarks and patents covered by the Security Agreement and 
the recordation of the Assignment of Security Interest in Certain U.S. 
Copyrights in the form attached to the Security Agreement with the United 
States Copyright Office, together with filings on Form UCC-1 made pursuant 
to the Security Agreement, will be effective under federal law to perfect 
the security interest granted to the Collateral Agent in the copyrights 
covered by the Security Agreement.  Each of the Credit Parties party to the 
Security Agreement has good and valid title to all of its Security 
Agreement Collateral described therein, free and clear of all Liens except 
those described above in this clause (a).

           (b)  The security interests created in favor of the Collateral 
Agent, as Pledgee, for the benefit of the Secured Creditors under the 
Pledge Agreement constitute first priority perfected security interests in 
the Pledged Securities described in the Pledge Agreement, subject to no 
security interests of any other Person.  No filings or recordings are 
required in order to perfect (or maintain the perfection or priority of) 
the security interests created in the Pledged Securities and the proceeds 
thereof under the Pledge Agreement.

           (c)  On and after the execution and delivery thereof, each of 
the Additional Security Documents will create, as security for the 
obligations purported to be secured thereby, a valid and enforceable 
perfected security interest in and Lien on all of the Collateral subject 
thereto, in favor of the Collateral Agent (or such other trustee as may be 
required or desired under local law) for the benefit of the Secured 
Creditors, superior to and prior to the rights of all third persons and 
subject to no other Liens (other than Permitted Encumbrances and Permitted 
Liens).

           7.12  Representations and Warranties in Documents. All 
representations and warranties set forth in the other Documents were true 
and correct in all material respects at the time as of which such 
representations and warranties were made (or deemed made) and shall be true 
and correct in all material respects as of the Initial Borrowing Date as if 
such representations or warranties were made on and as of such date, unless 
stated to relate to a specific earlier date, in which case such 
representations or warranties shall be true and correct in all material 
respects as of such earlier date. 

           7.13  Properties.  The Borrower and each of its Subsidiaries has 
good and marketable title to, or a validly subsisting leasehold interest 
in, all properties owned or leased by it, including all property reflected 
in the consolidated balance sheets and the pro forma balance sheet referred 
to in Section 7.05(A)(V) (except as sold or otherwise disposed of since the 
date of such balance sheets in the ordinary course of business), free and 
clear of all Liens, other than (i) as referred to in the balance sheets or 
in the notes thereto or in the pro forma balance sheet or (ii) Permitted 
Liens.  On the Effective Date, Schedule III sets forth a true and complete 
description of all Real Property owned or leased by the Borrower and/or its 
Subsidiaries and sets forth the direct owner or lessee thereof and the type 
of interest therein held by the Borrower or such Subsidiary.

           7.14  Capitalization.  On the Initial Borrowing Date and after 
giving effect to the Transaction and the other transactions contemplated 
hereby, the authorized capital stock of the Borrower shall consist of 
10,000 shares of common stock, $0.01 par value per share (such authorized 
shares of common stock, together with any subsequently authorized shares of 
common stock of the Borrower, the "Borrower Common Stock"), of which 100 
shares are issued and outstanding and owned by Parent.  All such 
outstanding shares have been duly and validly issued, are fully paid and 
nonassessable and free of preemptive rights.  The Borrower does not have 
outstanding any securities convertible into or exchangeable for its capital 
stock or outstanding any rights to subscribe for or to purchase, or any 
options for the purchase of, or any agreement providing for the issuance 
(contingent or otherwise) of, or any calls, commitments or claims of any 
character relating to, its capital stock.

           7.15  Subsidiaries.  (a)  Prior to the consummation of the 
Transaction, (i) Parent has no Subsidiaries other than the Borrower and its 
Subsidiaries, (ii) MK Group has no Subsidiaries other than Merkle and its 
Subsidiaries, (iii) the Borrower has no Subsidiaries other than Acquisition 
Corp. and its Subsidiaries, (iv) Merkle has no Subsidiaries other than 
Barber-Colman and (v) Acquisition Corp. has no Subsidiaries other than 
Scott Acquisition Sub. and Gear Acquisition Sub.

           (b)  On and as of the Initial Borrowing Date and after giving 
effect to the consummation of the Transaction, Parent has no Subsidiaries 
other than the Borrower and its Subsidiaries, and the Borrower has no 
Subsidiaries other than those Subsidiaries listed on Schedule V.  Schedule 
V correctly sets forth, as of the Initial Borrowing Date and after giving 
effect to the Transaction, the percentage ownership (direct and indirect) 
of the Borrower in each class of capital stock of each of its Subsidiaries 
and also identifies the direct owner thereof.  All outstanding shares of 
capital stock of each Subsidiary of the Borrower have been duly and validly 
issued, are fully paid and non-assessable and have been issued free of 
preemptive rights.  No Subsidiary of the Borrower has outstanding any 
securities convertible into or exchangeable for its capital stock or 
outstanding any right to subscribe for or to purchase, or any options or 
warrants for the purchase of, or any agreement providing for the issuance 
(contingent or otherwise) of or any calls, commitments or claims of any 
character relating to, its capital stock or any stock appreciation or 
similar rights.

           7.16  Compliance with Statutes, etc.  Each of the Borrower and 
its Subsidiaries is in compliance with all applicable statutes, regulations 
and orders of, and all applicable restrictions imposed by, all governmental 
bodies, domestic or foreign, in respect of the conduct of its business and 
the ownership of its property (including applicable statutes, regulations, 
orders and restrictions relating to environmental standards and controls), 
except such noncompliances as could not, individually or in the aggregate, 
reasonably be expected to have a material adverse effect on the 
performance, business, operations, property, assets, nature of assets, 
liabilities, condition (financial or otherwise) or prospects of the 
Borrower or the Borrower and its Subsidiaries taken as a whole.

           7.17  Investment Company Act.  Neither the Borrower nor any of 
its Subsidiaries is an "investment company" or a company "controlled" by an 
"investment company," within the meaning of the Investment Company Act of 
1940, as amended.

           7.18  Public Utility Holding Company Act.  Neither the Borrower 
nor any of its Subsidiaries is a "holding company," or a "subsidiary 
company" of a "holding company," or an "affiliate" of a "holding company" 
or of a "subsidiary company" of a "holding company" within the meaning of 
the Public Utility Holding Company Act of 1935, as amended.

           7.19  Environmental Matters.  (a)  Each of the Borrower and its 
Subsidiaries has complied with, and on the date of each Credit Event will 
be in compliance with, all applicable Environmental Laws and the 
requirements of any permits issued under such Environmental Laws and 
neither the Borrower nor any of its Subsidiaries is liable for any material 
penalties, fines or forfeitures for failure to comply with any of the 
foregoing.  There are no pending, past or threatened Environmental Claims 
against the Borrower or any of its Subsidiaries or any Real Property owned 
or operated by the Borrower or any of its Subsidiaries.  There are no 
facts, circumstances, conditions or occurrences on any Real Property owned 
or operated by the Borrower or any of its Subsidiaries or on any property 
adjoining or in the vicinity of any such Real Property that could 
reasonably be expected (i) to form the basis of an Environmental Claim 
against the Borrower or any of its Subsidiaries or any such Real Property 
or (ii) to cause any such Real Property to be subject to any restrictions 
on the ownership, occupancy, use or transferability of such Real Property 
by the Borrower or any of its Subsidiaries under any applicable 
Environmental Law.

           (b)  Hazardous Materials have not at any time been generated, 
used, treated or stored on, or transported to or from, or Released on or 
from, any Real Property owned or operated by the Borrower or any of its 
Subsidiaries except in compliance with all applicable Environmental Laws 
and reasonably required in connection with the operation, use and 
maintenance of any such Real Property by the Borrower's or such 
Subsidiary's business.  There are not now and never have been any 
underground storage tanks located on any Real Property owned or operated by 
the Borrower or any of its Subsidiaries.

           (c)  Notwithstanding anything to the contrary in this Section 
7.19, the representations made in this Section 7.19 shall only be untrue if 
the aggregate effect of all failures and noncompliance of the types 
described above could reasonably be expected to have a material adverse 
effect on the performance, business, operations, property, assets, nature 
of assets, liabilities, condition (financial or otherwise) or prospects of 
the Borrower or the Borrower and its Subsidiaries taken as a whole. 

           7.20  Labor Relations.  Neither the Borrower nor any of its 
Subsidiaries is engaged in any unfair labor practice that could reasonably 
be expected to have a material adverse effect on the performance, business, 
operations, property, assets, nature of assets, liabilities, condition 
(financial or otherwise) or prospects of the Borrower or the Borrower and 
its Subsidiaries taken as a whole.  There is (i) no unfair labor practice 
complaint pending or threatened against the Borrower or any of its 
Subsidiaries before the National Labor Relations Board and no grievance or 
arbitration proceeding arising out of or under any collective bargaining 
agreement is so pending or threatened against the Borrower or any of its 
Subsidiaries, (ii) no strike, labor dispute, slowdown or stoppage is 
pending or threatened against the Borrower or any of its Subsidiaries and 
(iii) no union representation question exists with respect to the employees 
of the Borrower or any of its Subsidiaries, except (with respect to any 
matter specified in clause (i), (ii) or (iii) above, either individually or 
in the aggregate) such as could not reasonably be expected to have a 
material adverse effect on the performance, business, operations, property, 
assets, liabilities, condition (financial or otherwise) or prospects of the 
Borrower or the Borrower and its Subsidiaries taken as a whole. 

           7.21  Patents, Licenses, Franchises and Formulas.  Each of the 
Borrower and its Subsidiaries owns all patents, trademarks, permits, 
service marks, trade names, copyrights, licenses, franchises and formulas, 
or rights with respect to the foregoing, and has obtained assignments of 
all leases and other rights of whatever nature, in each case reasonably 
necessary for the present conduct of its business, without any known 
conflict with the rights of others which, or the failure to obtain which, 
as the case may be, would result in a material adverse effect on the 
performance, business, operations, property, assets, liabilities, condition 
(financial or otherwise) or prospects of the Borrower or of the Borrower 
and its Subsidiaries taken as a whole.

           7.22  Indebtedness.  Schedule VI sets forth a true and complete 
list of all Indebtedness of Parent and its Subsidiaries as of the Initial 
Borrowing Date and which is to remain outstanding after giving effect to 
the Transaction and the incurrence of Loans on such date (exclusive of 
Indebtedness pursuant to this Agreement, the Parent Subordinated 
Intercompany Note, the Transaction Intercompany Notes, the Senior Unsecured 
Notes, the Earnout Agreement, the Existing Seller Installment Note, the 
Existing Seller Letter of Credit, the Existing Seller Letter of Credit 
Collateral Agreement, the Existing Seller Letter of Credit Agreement and 
the Existing Seller Subordinated Note), which Scheduled Existing 
Indebtedness shall not exceed $25,000,000 and, in each case showing the 
aggregate principal amount thereof (and the aggregate amount of any undrawn 
commitments with respect thereto) and the name of the respective borrower 
and any other entity which directly or indirectly guaranteed such debt as 
of the Initial Borrowing Date.  None of the Existing Indebtedness was 
incurred in connection with, or in contemplation of, the Transaction or the 
other transactions contemplated hereby.

           7.23  Transaction.  At the time of consummation thereof, each 
element of the Transaction shall have been consummated in accordance with 
the terms of the Documents and all applicable laws.  At the time of 
consummation thereof, all material consents and approvals of, and filings 
and registrations with, and all other actions in respect of, all 
governmental agencies, authorities or instrumentalities required in order 
to make or consummate the Transaction in accordance with the terms of the 
Documents and all applicable laws have been obtained, given, filed or taken 
and are or will be in full force and effect (or effective judicial relief 
with respect thereto has been obtained).  All applicable waiting periods 
with respect thereto have or, prior to the time when required, will have, 
expired without, in all such cases, any action being taken by any competent 
authority, which restrains, prevents, or imposes material adverse 
conditions upon the consummation of any element of the Transaction.  
Additionally, there does not exist any judgment, order or injunction 
prohibiting or imposing material adverse conditions upon the consummation 
of any element of the Transaction, the occurrence of any Credit Event, or 
the performance by any Credit Party of its obligations under the Documents.  
All actions taken by any Credit Party pursuant to or in furtherance of the 
Transaction have been taken in all material respects in compliance with the 
respective Documents and all applicable laws.

           7.24  Special Purpose Corporations.  (a)  Parent was formed to 
effect the Transaction and, prior to the consummation thereof, had no 
significant assets or liabilities (other than the capital stock of the 
Borrower and those liabilities under the Merger Documents).

           (b)  The Borrower was formed to effect the Acquisition and the 
Refinancing and, prior to the consummation thereof, had no significant 
assets or liabilities (other than the capital stock of Acquisition Corp. 
and those liabilities under the Acquisition Documents).

           (c)  Acquisition Corp. was formed to effect the Acquisition and, 
prior to the consummation thereof, had no significant assets or liabilities 
(other than the capital stock of Scott Acquisition Sub. and Gear 
Acquisition Sub. and those liabilities under the Acquisition Documents).

           (d)  Scott Acquisition Sub. and Gear Acquisition Sub. were 
formed to effect the Asset Contribution and, prior to the consummation 
thereof, had no significant assets or liabilities.

           7.25  Subordinated Notes.  The subordination provisions of the 
Existing Seller Subordinated Note and of the Parent Subordinated 
Intercompany Note are enforceable against the holders thereof, and the 
Loans and all other Obligations hereunder (including, without limitation, 
pursuant to the Guaranties) and under the other Credit Documents are within 
the definition of "Senior Indebtedness" included in such subordination 
provisions.

           7.26  Insurance.  Set forth on Schedule VII hereto is a true, 
correct and complete summary of all insurance carried by each Credit Party 
on and as of the Initial Borrowing Date, with the amounts insured set forth 
therein.

           SECTION 8.  Affirmative Covenants.  The Borrower hereby 
covenants and agrees that on and after the Effective Date and until the 
Total Commitment and all Letters of Credit have terminated and the Loans, 
Notes and Unpaid Drawings, together with interest, Fees and all other 
Obligations incurred hereunder and thereunder, are paid in full:


           8.01  Information Covenants.  The Borrower will furnish to the 
Agent and each of the Banks: 

           (a)  Monthly Reports.  Within 30 days after the end of each 
      fiscal month of the Borrower, the consolidated balance sheet of the 
      Borrower and its consolidated Subsidiaries as at the end of such 
      month and the related consolidated statements of income for such 
      month and for the elapsed portion of the fiscal year ended with the 
      last day of such month, in each case, beginning with the monthly 
      financial statements delivered for January, 1997, setting forth 
      comparative figures for the corresponding month in the prior fiscal 
      year (provided that the comparative figures for the months ending 
      January, 1997 through and including December, 1997, will only include 
      a comparison of Consolidated EBITDA), all of which shall be certified 
      by an Authorized Officer of the Borrower, subject to the absence of 
      footnotes and reserves (other than those directly related to balance 
      sheet assets) and normal year-end audit adjustments.

           (b)  Quarterly Financial Statements.  Within 45 days after the 
      close of the first three quarterly accounting periods in each fiscal 
      year of the Borrower, (i) the consolidated balance sheets of Parent 
      and its consolidated Subsidiaries as at the end of such quarterly 
      accounting period and the related consolidated and consolidating 
      statements of income and consolidated statements of cash flows, in 
      each case for such quarterly accounting period and for the elapsed 
      portion of the fiscal year ended with the last day of such quarterly 
      accounting period, in each case, beginning with the quarterly 
      financial statements delivered for the first quarter of the fiscal 
      year ended in 1997, setting forth comparative figures for the related 
      periods in the prior fiscal year (provided that the comparative 
      figures, in the case of quarterly statements for the fiscal quarters 
      ending March, 1997, through and including December, 1997, will only 
      include a comparison of Consolidated EBITDA) and the budgeted figures 
      for such quarterly periods as set forth in the respective budget 
      delivered pursuant to Section 8.01(d), all of which shall be 
      certified by an Authorized Officer of the Borrower, subject to the 
      absence of footnotes and reserves (other than those directly related 
      to balance sheet assets) and normal year-end audit adjustments and 
      (ii) management's discussion and analysis of the important 
      operational and financial developments during the fiscal quarter and 
      year-to-date periods.

           (c)  Annual Financial Statements.  Within 120 days after the 
      close of each fiscal year of the Borrower, (i) the consolidated 
      balance sheets of Parent and its consolidated Subsidiaries as at the 
      end of such fiscal year and the related consolidated and 
      consolidating statements of income and consolidated statement of cash 
      flows and stockholder's equity for such fiscal year setting forth 
      comparative figures for the preceding fiscal year and comparative 
      budgeted figures for such fiscal year as set forth in the respective 
      budget delivered pursuant to Section 8.01(d), and certified, in the 
      case of the consolidated statements, by Ernst & Young LLP or such 
      other independent certified public accountants of recognized national 
      standing acceptable to the Agent, together with a signed opinion of 
      such accounting firm (which opinion shall not be qualified in any 
      respect) stating that such financial statements present fairly in all 
      material respects the financial position of Parent and its 
      consolidated Subsidiaries as at the dates indicated and the results 
      of its operations and changes in its financial position for the 
      periods indicated in conformity with GAAP applied on a basis 
      consistent with prior years and that the examination by such 
      accounting firm in connection with such financial statements has been 
      made in accordance with generally accepted auditing standards, and 
      that in the course of its regular audit of the financial statements 
      of Parent and its Subsidiaries, such accounting firm obtained no 
      knowledge of any Default or Event of Default under any of Sections 
      9.08 or 9.09 which has occurred or, if in the opinion of such 
      accounting firm such a Default or Event of Default has occurred and 
      is continuing, a statement as to the nature thereof, and (ii) 
      management's discussion and analysis of the important operational and 
      financial developments during such fiscal year.  

           (d)  Budgets.  No later than 60 days after the commencement of 
      each fiscal year of the Borrower, budgets in form satisfactory to the 
      Agent (including, in any event, budgeted statements of cash flow and 
      budgeted debt and cash balances) for such fiscal year prepared in 
      reasonable detail, of the Borrower and its Subsidiaries, accompanied 
      by the statement of an Authorized Officer of the Borrower to the 
      effect that the budget is a reasonable estimate for the period 
      covered thereby.

           (e)  Officer's Certificates.  At the time of the delivery of the 
      financial statements provided for in Sections 8.01(b) and (c), a 
      certificate of an Authorized Officer of the Borrower to the effect 
      that no Default or Event of Default has occurred and is continuing 
      or, if any Default or Event of Default has occurred and is 
      continuing, specifying the nature and extent thereof, which 
      certificate shall also set forth (A) the Leverage Ratio, together 
      with the calculations required to establish such ratio and (B) the 
      calculations required to establish whether the Borrower and its 
      Subsidiaries were in compliance with the provisions of Sections 3.03 
      and 9.02 through 9.10, inclusive, at the end of such fiscal quarter 
      or year, as the case may be.

           (f)  Notice of Default or Litigation.  Promptly, and in any 
      event within three Business Days after an officer of the Borrower or 
      any of its Subsidiaries obtains knowledge thereof, notice of (i) the 
      occurrence of any event which constitutes a Default or an Event of 
      Default, (ii) any litigation or governmental investigation or 
      proceeding pending or threatened (x) against the Borrower or any of 
      its Subsidiaries which could reasonably be expected to materially and 
      adversely affect the performance, business, operations, property, 
      assets, liabilities, condition (financial or otherwise) or prospects 
      of the Borrower or the Borrower and its Subsidiaries taken as a 
      whole, (y) with respect to any material Indebtedness of the Borrower 
      or any of its Subsidiaries or (z) with respect to any Document and 
      (iii) any other event which could reasonably be expected to 
      materially and adversely affect the performance, operations, 
      property, business, assets, liabilities, condition (financial or 
      otherwise) or prospects of the Borrower or the Borrower and its 
      Subsidiaries taken as a whole.

           (g)  Management Letters.  Promptly after receipt thereof by the 
      Borrower or any of its Subsidiaries, a copy of any "management 
      letter" received by the Borrower or any of its Subsidiaries from its 
      certified public accountants and the management's responses thereto. 

           (h)  Other Reports and Filings.  Promptly, copies of all 
      financial information, proxy materials and other information and 
      reports, if any, which the Parent or any of its Subsidiaries shall 
      file with the Securities and Exchange Commission or any successor 
      thereto (the "SEC") and copies of all notices and reports which 
      Parent or any of its Subsidiaries shall deliver to holders of its 
      Indebtedness (including any holder of the Existing Seller Installment 
      Note, the Existing Seller Subordinated Note or the Senior Unsecured 
      Notes) pursuant to the terms of the documentation governing such 
      Indebtedness (or any trustee, agent or other representative 
      therefor).

           (i)  Environmental Matters.  Promptly upon, and in any event 
      within ten Business Days after, an officer of the Borrower or any of 
      its Subsidiaries obtains knowledge thereof, notice of any of the 
      following environmental matters (including all reasonably related 
      claims or liabilities) which could reasonably be expected to result 
      in a remedial cost to the Borrower and its Subsidiaries in excess of 
      $3,500,000:

                  (i)  any pending or threatened Environmental Claim 
           against the Borrower or any of its Subsidiaries or any Real 
           Property owned or operated by the Borrower or any of its 
           Subsidiaries;

                 (ii)  any condition or occurrence on or arising from any 
           Real Property owned or operated by the Borrower or any of its 
           Subsidiaries that (a) results in non-compliance by the Borrower 
           or any of its Subsidiaries with any applicable Environmental Law 
           or (b) could reasonably be expected to form the basis of an 
           Environmental Claim against the Borrower or any of its 
           Subsidiaries or any such Real Property;

                (iii)  any condition or occurrence on any Real Property 
           owned or operated by the Borrower or any of its Subsidiaries 
           that could reasonably be expected to cause such Real Property to 
           be subject to any restrictions on the ownership, occupancy, use 
           or transferability by the Borrower or any of its Subsidiaries of 
           such Real Property under any Environmental Law; and 

                 (iv)  the taking of any removal or remedial action in 
           response to the actual or alleged presence of any Hazardous 
           Material on any Real Property owned or operated by the Borrower 
           or any of its Subsidiaries as required by any Environmental Law 
           or any governmental or other administrative agency; provided 
           that in any event the Borrower shall deliver to each Bank all 
           notices received by it or any of its Subsidiaries from any 
           government or governmental agency under, or pursuant to, 
           Environmental Law.

      All such notices shall describe in reasonable detail the nature of 
      the claim, investigation, condition, occurrence or removal or 
      remedial action and the Borrower's or such Subsidiary's response or 
      proposed response thereto.  In addition, the Borrower and any of its 
      Subsidiaries will provide the Agent with copies of all material 
      communications with any government or governmental agency relating to 
      Environmental Laws, all material communications with any Person 
      relating to Environmental Claims, and such detailed reports of any 
      Environmental Claim as may be requested by the Agent or the Required 
      Banks.

           (j)  Annual Meetings with Banks.  At the request of the Agent, 
      the Borrower shall within 120 days after the close of each fiscal 
      year of the Borrower, hold a meeting (at a mutually agreeable 
      location and time) with all of the Banks at which meeting shall be 
      reviewed the financial results of the previous fiscal year and the 
      financial condition of Parent and its Subsidiaries and the budgets 
      presented for the current fiscal year of the Borrower and its 
      Subsidiaries.

           (k)  Receivables Facility Transaction Date.  The Borrower shall 
      provide the Agent 15 Business Days' prior written notice of the 
      Receivables Facility Transaction Date.

           (l)  Other Information.  From time to time, such other 
      information or documents (financial or otherwise) with respect to 
      Parent or its Subsidiaries as the Agent or any Bank (through the 
      Agent) may reasonably request. 

           8.02  Books, Records and Inspections.  The Borrower will, and 
will cause each of its Subsidiaries to, keep proper books of record and 
account in which full, true and correct entries in conformity with GAAP and 
all requirements of law shall be made of all dealings and transactions in 
relation to its business and activities.  The Borrower will, and will cause 
each of its Subsidiaries to, permit officers and designated representatives 
of the Agent or any Bank to visit and inspect, at the Agent's or such 
Bank's own expense, as the case may be, during regular business hours, upon 
reasonable advance notice and under guidance of officers of the Borrower or 
such Subsidiary, any of the properties of the Borrower or any of its 
Subsidiaries, and to examine the books of account of the Borrower and any 
of its Subsidiaries and discuss the affairs, finances and accounts of the 
Borrower and any of its Subsidiaries with, and be advised as to the same 
by, its and their respective officers and independent accountants, all at 
such times and intervals and to such extent as the Agent or any Bank may 
reasonably request.

           8.03  Maintenance of Property; Insurance.  (a)  The Borrower 
will, and will cause each of its Subsidiaries to (i) keep all property 
necessary in its business in good working order and condition, (ii) 
maintain, with financially sound and reputable insurance companies, 
insurance on all its property (including all property acquired pursuant to 
the Acquisition but excluding property insurance on motor vehicles at any 
time owned by the Borrower and its Subsidiaries) in at least such amounts 
and against at least such risks as is consistent and in accordance with 
industry practice and (iii) furnish to the Agent and each Bank, upon 
written request, full information as to the insurance carried.  In addition 
to the requirements of the immediately preceding sentence, the Borrower 
will at all times cause insurance of the types described in Schedule VII to 
be maintained (with the same scope of coverage as that described in 
Schedule VII) at levels which are at least as great as the respective 
amount described opposite the respective type of insurance on Schedule VII 
under the column headed "Minimum Amount Required to Be Maintained".  
Subject to the exclusion for motor vehicles described above, such insurance 
shall include physical damage insurance on all real and personal property 
(whether now owned or hereafter acquired) on an all risk basis, covering 
the full repair and replacement costs of all such property and business 
interruption insurance for the actual loss sustained.  The provisions of 
this Section 8.03 shall be deemed supplemental to, but not duplicative of, 
the provisions of any Security Documents that require the maintenance of 
insurance.

           (b)  The Borrower will, and will cause each of its Subsidiaries 
to, at all times keep the respective property of the Borrower and its 
Subsidiaries insured in favor of the Collateral Agent, and all policies 
(including Mortgage Policies) or certificates with respect to such 
insurance (and any other insurance maintained by, or on behalf of, the 
Borrower or any Subsidiary of the Borrower) (i) shall be endorsed to the 
Collateral Agent's satisfaction for the benefit of the Collateral Agent 
(including, without limitation, by naming the Collateral Agent as 
mortgagee/secured party and loss payee in respect of casualty loss policies 
and naming the Collateral Agent, the Agent and each Bank as an additional 
insured with respect to all liability policies), (ii) shall state that such 
insurance policies shall not be cancelled or materially changed without at 
least 30 days' prior written notice thereof by the respective insurer to 
the Collateral Agent and (iii) shall be deposited with the Collateral 
Agent.

           (c)  If the Borrower or any of its Subsidiaries shall fail to 
maintain all insurance in accordance with this Section 8.03, or if the 
Borrower or any of its Subsidiaries shall fail to so name the Collateral 
Agent, the Agent and/or each Bank as an additional insured, mortgagee or 
loss payee, as the case may be, or so deposit all certificates with respect 
thereto, the Agent and/or the Collateral Agent shall have the right (but 
shall be under no obligation) to procure such insurance, and the Borrower 
agrees to reimburse the Agent or the Collateral Agent, as the case may be, 
for all costs and expenses of procuring such insurance.

           8.04  Corporate Franchises.  The Borrower will, and will cause 
each of its Subsidiaries to, do or cause to be done, all things necessary 
to preserve and keep in full force and effect its existence and its 
material rights, franchises, licenses and patents; provided, however, that 
nothing in this Section 8.04 shall prevent (i) transactions permitted in 
accordance with the applicable requirements of Section 9.02 or (ii) the 
withdrawal by the Borrower or any of its Subsidiaries of its qualification 
as a foreign corporation in any jurisdiction where such withdrawal could 
not reasonably be expected to have a material adverse effect on the 
performance, business, operations, property, assets, nature of assets, 
liabilities, condition (financial or otherwise) or prospects of the 
Borrower or the Borrower and its Subsidiaries taken as a whole. 

           8.05  Compliance with Statutes, etc.  The Borrower will, and 
will cause each of its Subsidiaries to, comply with all applicable 
statutes, regulations and orders of, and all applicable restrictions 
imposed by, all governmental bodies, domestic or foreign, in respect of the 
conduct of its business and the ownership of its property, except such 
noncompliances as could not, individually or in the aggregate, reasonably 
be expected to have a material adverse effect on the performance, business, 
operations, property, assets, liabilities, condition (financial or 
otherwise) or prospects of the Borrower or the Borrower and its 
Subsidiaries taken as a whole or a material adverse effect on the ability 
of any Credit Party to perform its obligations under any Credit Document to 
which it is a party.

           8.06  Compliance with Environmental Laws.  (a)  The Borrower 
will comply, and will cause each of its Subsidiaries to comply, in all 
material respects with all Environmental Laws applicable to the ownership 
or use of its Real Property now or hereafter owned or operated by the 
Borrower or any of its Subsidiaries, will promptly pay or cause to be paid 
all costs and expenses incurred in connection with such compliance, and 
will keep or cause to be kept all such Real Property free and clear of any 
Liens imposed pursuant to such Environmental Laws.  Neither the Borrower 
nor any of its Subsidiaries will generate, use, treat, store, Release or 
dispose of, or permit the generation, use, treatment, storage, Release or 
disposal of Hazardous Materials on any Real Property now or hereafter owned 
or operated by the Borrower or any of its Subsidiaries, or transport or 
permit the transportation of Hazardous Materials to or from any such Real 
Property except for Hazardous Materials used or stored at any such Real 
Properties in compliance (excluding non-compliances which, individually and 
in the aggregate, could not reasonably be expected to have a material 
adverse effect on the performance, business, operations, property, assets, 
nature of assets, liabilities, condition (financial or otherwise) or 
prospects of the Borrower or the Borrower and its Subsidiaries taken as a 
whole) with all applicable Environmental Laws and reasonably required in 
connection with the operation, use and maintenance of any such Real 
Property.

           (b)  At the written request of the Agent or the Required Banks, 
which request shall specify in reasonable detail the basis therefor, at any 
time and from time to time, the Borrower will provide, at its sole cost and 
expense, an environmental site assessment report concerning any Real 
Property now or hereafter owned or operated by the Borrower or any of its 
Subsidiaries, prepared by an environmental consulting firm approved by the 
Agent, addressing the matters in clause (i), (ii) or (iii) below which 
gives rise to such request (or, in the case of a request pursuant to 
following clause (i), addressing such matter as may be requested by the 
Agent or the Required Banks) and estimating the range of the potential 
costs of any removal, remedial or other corrective action in connection 
with any such matter, provided that in no event shall such request be made 
unless (i) an Event of Default has occurred and is continuing, (ii) the 
Banks receive notice under Section 8.01(i) for any event for which notice 
is required to be delivered for any such Real Property or (iii) the Agent 
or the Required Banks reasonably believe that there was a breach of any 
representation, warranty or covenant contained in Section 7.19 or 8.06(a).  
If the Borrower fails to provide the same within 60 days after such request 
was made, the Agent may order the same, and the Borrower shall grant and 
hereby grants, to the Agent and the Banks and their agents access to such 
Real Property and specifically grants, the Agent and the Banks and their 
agents an irrevocable non-exclusive license, subject to the rights of 
tenants, to undertake such an assessment, all at the Borrower's expense.

           8.07  ERISA.  As soon as possible and, in any event, within 10 
days after the Borrower, any Subsidiary of the Borrower or any ERISA 
Affiliate knows or has reason to know of the occurrence of any of the 
following, the Borrower will deliver to each of the Banks a certificate of 
the Chief Financial Officer of the Borrower setting forth details as to 
such occurrence and the action, if any, that the Borrower, such Subsidiary 
or such ERISA Affiliate is required or proposes to take, together with any 
notices required or proposed to be given to or filed with or by the 
Borrower, such Subsidiary, such ERISA Affiliate, the PBGC, a Plan 
participant or the Plan administrator with respect thereto: that a 
Reportable Event has occurred; that an accumulated funding deficiency has 
been incurred or an application may be or has been made to the Secretary of 
the Treasury for a waiver or modification of the minimum funding standard 
(including any required installment payments) or an extension of any 
amortization period under Section 412 of the Code with respect to a Plan; 
that a contribution required to be made to a Plan has not been timely made; 
that a Plan has been or may be terminated, reorganized, partitioned or 
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded 
Current Liability giving rise to a lien under ERISA or the Code; that 
proceedings may be or have been instituted to terminate or appoint a 
trustee to administer a Plan; that a proceeding has been instituted 
pursuant to Section 515 of ERISA to collect a delinquent contribution to a 
Plan; that the Borrower, any Subsidiary of the Borrower or any ERISA 
Affiliate will or may incur any liability (including any indirect, 
contingent, or secondary liability) to or on account of the termination of 
or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 
or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971, 
4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA; or 
that the Borrower, or any Subsidiary of the Borrower may incur any material 
liability pursuant to any employee welfare benefit plan (as defined in 
Section 3(1) of ERISA) that provides benefits to retired employees or other 
former employees (other than as required by Section 601 of ERISA) or any 
employee pension benefit plan (as defined in Section 3(2) of ERISA) (except 
for distributions under discretionary tax-qualified profit sharing plans).  
The Borrower will deliver to each of the Banks a complete copy of the 
annual report (Form 5500) of each Plan (including, to the extent required, 
the related financial and actuarial statements and opinions and other 
supporting statements, certifications, schedules and information) required 
to be filed with the Internal Revenue Service.  In addition to any 
certificates or notices delivered to the Banks pursuant to the first 
sentence hereof, copies of annual reports and any material notices received 
by the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with 
respect to any Plan shall be delivered to the Banks no later than 10 days 
after the date such report has been filed with the Internal Revenue Service 
or such notice has been received by the Borrower, such Subsidiary or such 
ERISA Affiliate, as applicable.

           8.08  End of Fiscal Years; Fiscal Quarters.  The Borrower shall 
cause (i) each of its, and its Parent's and each of its Subsidiaries', 
fiscal years to end on December 31, and (ii) each of its, and each of its 
Parent's and its Subsidiaries, to maintain fiscal quarters consistent 
therewith.

           8.09  Performance of Obligations.  The Borrower will, and will 
cause each of its Subsidiaries to, perform all of its obligations under the 
terms of each mortgage, deed of trust, indenture, loan agreement or credit 
agreement and each other material agreement, contract or instrument by 
which it is bound, except such non-performances as could not, individually 
or in the aggregate, reasonably be expected to have a material adverse 
effect on the performance, business, operations, property, assets, nature 
of assets, liabilities, condition (financial or otherwise) or prospects of 
the Borrower or the Borrower and its Subsidiaries taken as a whole.

           8.10  Payment of Taxes.  The Borrower will, and will cause each 
of its Subsidiaries to, pay and discharge all taxes, assessments and 
governmental charges or levies imposed upon it or upon its income or 
profits, or upon any properties belonging to it, in each case on a timely 
basis, and all lawful claims for sums that have become due and payable 
which, if unpaid, might become a lien or charge upon any properties of the 
Borrower or any such Subsidiary; provided that neither the Borrower nor any 
such Subsidiary shall be required to pay any such tax, assessment, charge, 
levy or claim which is being contested in good faith and by proper 
proceedings if it has maintained adequate reserves with respect thereto in 
accordance with GAAP.

           8.11  Additional Security; Further Assurances; etc.  (a)  The 
Borrower will, and will cause each of its Wholly-Owned Domestic 
Subsidiaries to, grant to the Collateral Agent, for the benefit of the 
Secured Creditors, security interests and mortgages in such assets and 
properties of the Borrower or such Wholly-Owned Domestic Subsidiary (other 
than Excluded Collateral) as are not covered by the Security Documents, and 
as may be requested from time to time by the Agent or the Required Banks 
(collectively, the "Additional Security Documents").  All such security 
interests and mortgages shall be granted pursuant to documentation 
reasonably satisfactory in form and substance to the Agent and shall 
constitute valid and enforceable perfected security interests and mortgages 
superior to and prior to the rights of all third Persons and subject to no 
other Liens except for Permitted Liens or Permitted Encumbrances.  The 
Additional Security Documents or instruments related thereto shall have 
been duly recorded or filed in such manner and in such places as are 
required by law to establish, perfect, preserve and protect the Liens in 
favor of the Collateral Agent required to be granted pursuant to the 
Additional Security Documents and all taxes, fees and other charges payable 
in connection therewith shall have been paid in full.  Notwithstanding the 
foregoing, this Section 8.11(a) shall not apply to (I) any Leasehold (other 
than any MK Leasehold) from any lessor if (i) the fair market value of such 
Leasehold (as determined in good faith by senior management of the 
Borrower) is less than $5,000,000 or (ii) the Borrower or such Wholly-Owned 
Subsidiary, as the case may be, shall be required to pay any consideration 
or expenses (other than de minimis amounts) or incur any material 
obligation or suffer any undue burden in connection with the grant of a 
security interest in such Leasehold and (II) any MK Leasehold which by its 
terms prevents the respective lessee from granting a security interest 
therein, provided that each of Merkle and BCM Holdings shall use its 
reasonable efforts to obtain memoranda of lease (in recordable form) and 
consents to leasehold mortgages in respect of the MK Leaseholds and, in the 
event Merkle or BCM Holdings is successful in its effort to obtain any such 
memorandum or consent, Merkle or BCM Holdings, as the case may be, shall 
deliver to the Collateral Agent (i) a fully executed counterpart of 
Mortgage in form and substance satisfactory to the Collateral Agent, 
together with evidence that a counterpart of such Mortgage has been 
delivered to the title insurance company insuring the lien on such Mortgage 
for recording in all places to the extent necessary or, in the opinion of 
the Collateral Agent, desirable to effectively create a valid and 
enforceable first priority mortgage lien on such MK Leasehold in favor of 
the Collateral Agent (or such other trustee as may be required or desired 
under local law) for the benefit of the Secured Creditors and (ii) a 
Mortgage Policy on such MK Leasehold issued by such title insurer 
satisfactory to the Collateral Agent in amounts satisfactory to the 
Collateral Agent, assuring the Collateral Agent that the Mortgage on such 
MK Leasehold is a valid and enforceable first priority mortgage lien on 
such MK Leasehold, free and clear of all defects and encumbrances except 
Permitted Encumbrances and such Mortgage Policy (w) shall otherwise be in 
form and substance satisfactory to the Collateral Agent, (x) shall include 
(as appropriate) an endorsement for future advances under this Agreement 
and the Notes and for any other matter that the Collateral Agent may 
request, (y) shall not include an exception for mechanics' liens or 
creditors' rights and (z) shall provide for affirmative insurance and such 
reinsurance (including direct access agreements) as the Collateral Agent 
may request.  The parties hereto agree and understand that if a security 
interest is not required to be granted in the respective Leasehold by 
reason of the provisions of the preceding sentence, no Default or Event of 
Default shall arise under this Agreement as a result of any failure to 
grant said security interest.

           (b)  The Borrower will, and will cause each of its Subsidiaries 
to, at the expense of the Borrower, make, execute, endorse, acknowledge, 
file and/ or deliver to the Collateral Agent from time to time such 
vouchers, invoices, schedules, confirmatory assignments, conveyances, 
financing statements, transfer endorsements, powers of attorney, 
certificates, real property surveys, reports and other assurances or 
instruments and take such further steps relating to the Collateral covered 
by any of the Security Documents as the Collateral Agent may reasonably 
require pursuant to this Section 8.11.  Furthermore, the Borrower shall 
cause to be delivered to the Collateral Agent such opinions of counsel, 
Required Appraisals satisfying the requirements of applicable law, mortgage 
policies, title insurance and other related documents as may be reasonably 
requested by the Collateral Agent to assure itself that this Section 8.11 
has been complied with.

           (c)  The Borrower agrees that each action required by preceding 
clauses (a) and (b) of this Section 8.11 shall be completed as soon as 
possible, but in no event later than 90 days of the date such action is 
requested to be taken by the Agent or the Required Banks.

           (d)  To the extent the Borrower (directly or indirectly) 
creates, establishes or acquires any Subsidiary after the Initial Borrowing 
Date in accordance with the other provisions of this Agreement (including, 
without limitation, pursuant to a Permitted Transaction), (w) each such new 
Wholly-Owned Domestic Subsidiary (and each Non-Wholly-Owned Domestic 
Subsidiary, to the extent same will be consolidated with the Borrower for 
federal income tax purposes) shall be required to become a party to the 
Existing Tax Sharing Agreement by executing a counterpart thereof or by 
entering into an amendment thereto satisfactory to the Agent, (x) each such 
Wholly-Owned Domestic Subsidiary (but including the Receivables Entity) 
shall be required to become a party to the Subsidiary Guaranty by executing 
a counterpart thereof or by entering into an amendment thereto satisfactory 
to the Agent, (y) each such Non-Wholly-Owned Domestic Subsidiary (but 
including the Receivables Entity) shall be required to become a party to 
the Non-Wholly-Owned Subsidiary Guaranty by executing a counterpart thereof 
or by entering into an amendment thereto satisfactory to the Agent and (z) 
each such Wholly-Owned Domestic Subsidiary shall be required to become a 
party to each of the Security Agreement and the Pledge Agreement by 
executing a counterpart thereof or by entering into an amendment thereto 
satisfactory to the Agent and all of the capital stock or other equity 
interests of such new Subsidiary owned by the Borrower or any of its 
Wholly-Owned Domestic Subsidiaries and all of the capital stock or other 
equity interests owned by such new Subsidiary (subject, in the case of the 
capital stock of a Foreign Subsidiary owned by such new Subsidiary, to the 
provisions of Section 8.16 and the terms of the Pledge Agreement which 
limit the percentage of voting stock of Foreign Subsidiaries required to be 
pledged) shall be pledged to the Collateral Agent for the benefit of the 
Secured Creditors pursuant to the Pledge Agreement.  In connection with the 
foregoing, to the extent requested by the Agent or the Collateral Agent, 
such Subsidiary shall be required to deliver such relevant documentation 
(including opinions of counsel, UCC-1 Financing Statements and officer's 
certificates) of the type described in Section 5 as the respective 
Subsidiary would have delivered if it were a Credit Party on the Initial 
Borrowing Date.  The Borrower agrees that each action required to be taken 
pursuant to this clause (d) shall be completed contemporaneously with the 
creation, establishment or acquisition of such Subsidiary.  In addition to 
the foregoing, all other Pledged Securities acquired after the Effective 
Date by any Credit Party which is a party to the Pledge Agreement shall, to 
the extent required by the Pledge Agreement, be delivered to the Collateral 
Agent for pledge pursuant to the Pledge Agreement.  All security interests 
created by each such new Subsidiary becoming party to the Security 
Documents shall (except as otherwise consented to by the Agent and the 
Banks) constitute valid and enforceable perfected security interests, 
subject to the provisions of the respective Security Document prior to the 
rights of all third Persons and subject to no other Liens except Permitted 
Liens.  The Security Documents and other instruments related thereto shall 
be duly recorded or filed in such manner and in such places as are required 
by law to establish, perfect, preserve and protect the Liens, in favor of 
the Collateral Agent for the benefit of the Secured Creditors, required to 
be granted pursuant to the respective Security Documents and all taxes, 
fees and other charges payable in connection therewith shall be paid in 
full by the Borrower.  

           (e)  At any time and from time to time to the extent that the 
Banks, the Agent or the Collateral Agent request in order to fulfill the 
requirements of any applicable statute, regulation or order of any 
governmental body, to preserve, protect, enforce or realize upon the 
security interests granted to the Secured Creditors pursuant to the 
Security Documents, the Borrower will, and will cause each of its 
Subsidiaries to, cooperate with and promptly take all actions necessary to 
assist the Banks, the Agent and the Collateral Agent, including, without 
limitation, to make, execute, acknowledge, file and/or deliver to the 
Banks, the Agent or the Collateral Agent, as the case may be, such 
information, documents, certificates, reports and other assurances or 
instruments, which the Banks, the Agent or the Collateral Agent, as the 
case may be, deems appropriate or advisable to comply with such statutes, 
regulations or orders so as to preserve, protect, enforce or realize upon 
such security interests granted to the Secured Creditors.

           (f)  In the event that the Agent or the Required Banks at any 
time after the Effective Date determine in their sole discretion (whether 
as a result of a position taken by an applicable bank regulatory agency or 
official, or otherwise) that real estate appraisals satisfying the 
requirements set forth in 12 C.F.R., Part 34-Subpart C, or any successor or 
similar statute, rule, regulation, guideline or order (any such appraisal a 
"Required Appraisal") are or were required to be obtained, or should be 
obtained, in connection with any Mortgaged Property or Mortgaged 
Properties, then, within 60 days after receiving written notice thereof 
from the Agent or the Required Banks, as the case may be, the Borrower 
shall cause such Required Appraisal to be delivered, at the expense of the 
Borrower, to the Agent, which Required Appraisal, and the respective 
appraiser, shall be satisfactory to the Agent.

           8.12  Maintenance of Corporate Separateness.  The Borrower will, 
and will cause each of its Subsidiaries to, satisfy customary corporate 
formalities, including the maintenance of corporate records.  Furthermore, 
neither the Borrower nor any of its Subsidiaries shall take any action, or 
conduct its affairs in a manner, which is likely to result in the corporate 
existence of the Borrower or any Subsidiary of the Borrower being ignored, 
or in the assets and liabilities of the Borrower or any Subsidiary of the 
Borrower being substantively consolidated with those of any other Person in 
a bankruptcy, reorganization or other insolvency proceeding.

           8.13  Use of Proceeds.  All proceeds of the Loans shall be used 
as provided in Section 7.08.

           8.14  UCC Searches.  On or prior to the 90th day following the 
Initial Borrowing Date, the Borrower shall, or shall cause its Subsidiaries 
to, deliver to the Agent (at the Borrower's own cost) copies of UCC-11's, 
or equivalent reports, verifying that all financing statements necessary 
or, in the opinion of the Collateral Agent desirable, to perfect the 
security interest purported to be created by the Security Documents shall 
have been properly recorded and filed.

           8.15  Permitted Transactions.  (a)  Subject to the provisions of 
this Section 8.15 applicable thereto and the requirements contained in the 
definition of Permitted Acquisition or Permitted Acquisition Investment, as 
the case may be, the Borrower and its Subsidiaries may from time to time 
after the Initial Borrowing Date effect Permitted Transactions, so long as:

            (i)  the Borrower or such Subsidiary shall have given the Agent 
      and the Banks at least 10 Business Days (or such shorter period as 
      the Required Banks may agree) prior written notice of any such 
      Permitted Transaction (each such notice, a "Permitted Transaction 
      Notice"), which notice shall (v) contain the estimated date such 
      Permitted Transaction is scheduled to be consummated, (w) attach a 
      true and correct copy of any theretofore executed purchase agreement, 
      letter of intent, or similar agreement executed by the Borrower or 
      such Subsidiary and the seller in connection with such Permitted 
      Transaction (or to the extent such agreements have not yet been 
      executed, drafts thereof to the extent then available in a form 
      suitable, as determined by the Borrower, for distribution to the 
      Banks), (x) contain the estimated purchase price of such Permitted 
      Transaction and the intended method of financing thereof, (y) contain 
      a description of the stock, assets, Permitted Earn-Out Debt, 
      Permitted Debt, Incentive Arrangements and/or Permitted Acquired Debt 
      expected to be incurred, acquired or assumed in connection with such 
      Permitted Transaction and (z) to the extent the Borrower is, at the 
      time the notice is given, in a position to make a reasonable estimate 
      thereof, contain the Borrower's estimate of any Restructuring Costs 
      anticipated to be incurred in connection with the respective 
      Permitted Transaction;

           (ii)  not later than 5 Business Days after the consummation of 
      the respective Permitted Transaction, the Borrower shall have 
      certified to the Agent and the Banks (u) the amount of cash to be 
      paid in respect of such Permitted Transaction, including for this 
      purpose any amounts to be placed in escrow or similar arrangements by 
      the Borrower or such Subsidiary and the amount of any post-closing 
      adjustment as then estimated by the Borrower which would increase the 
      amount of cash to be paid in respect of such Permitted Transaction 
      (but ignoring any post-closing adjustment which the Borrower 
      estimates will result in a reduction to the amount of cash to be 
      paid), and the sources thereof, (v) without duplication of the 
      amounts described in preceding clause (u), the Borrower's good faith 
      estimate of the amount of fees and expenses which will be payable by 
      the Borrower or such Subsidiary in respect of such Permitted 
      Transaction (including, without limitation, any amounts payable 
      pursuant to the TJC Management Services Agreements in connection 
      therewith), (w) the description of all Permitted Debt and/or 
      Permitted Acquired Debt to be incurred, acquired or assumed in 
      connection with such Permitted Transaction and the aggregate 
      principal amounts thereof, (x) the description of all Incentive 
      Arrangements and Permitted Earn-Out Debt to be issued in connection 
      with such Permitted Transaction, (y) the Borrower's estimate of the 
      maximum amount of all Restructuring Costs which it believes are 
      reasonably likely to be incurred in the 12 months following the 
      respective Permitted Transaction and as a result thereof or in 
      connection therewith (such amount, as certified with respect to any 
      Permitted Transaction, being herein called the "Certified 
      Restructuring Cost Reserve" with respect thereto) and (z) that, 
      except as described above, (A) there are no other amounts or 
      consideration which will be payable in connection with the respective 
      Permitted Transaction at the time of the consummation thereof, and 
      (B) there are no other material (in relation to the size of the 
      respective Permitted Transaction) amounts which could reasonably be 
      expected to be payable after the consummation of the respective 
      Permitted Transaction by the Borrower, such Subsidiary or any of 
      their respective Subsidiaries in connection with the respective 
      Permitted Transaction or pursuant to any of the documentation 
      executed in connection therewith;

          (iii)  with respect to each Permitted Acquisition, the Permitted 
      Transaction Cost thereof shall not exceed $25,000,000;

           (iv)  with respect to each Permitted Acquisition Investment, the 
      Permitted Transaction Cost thereof shall not exceed the Permitted 
      Investment Amount;

            (v)  with respect to each Permitted Transaction, the 
      consideration paid therefor shall consist solely of the items 
      described in preceding clause (ii) and the certificate delivered 
      pursuant thereto;

           (vi)  with respect to each Permitted Transaction, no Default or 
      Event of Default shall be in existence at the time of the 
      consummation of such Permitted Transaction or immediately after 
      giving effect thereto;

          (vii)  all representations and warranties contained herein and in 
      the other Credit Documents shall be true and correct in all material 
      respects with the same effect as though such representations and 
      warranties had been made on and as of the date of such Permitted 
      Transaction (both before and after giving effect thereto), unless 
      stated to relate to a specific earlier date, in which case such 
      representations and warranties shall be true and correct in all 
      material respects as of such earlier date;

         (viii)  as soon as available but not later than 5 days after the 
      execution thereof, a copy of the executed purchase agreement or 
      similar agreement with respect to such Permitted Transaction; 

           (ix)  the Borrower shall have certified to the Agent and the 
      Banks that the proposed Permitted Transaction shall not be reasonably 
      likely to result in material increased tax (after taking into account 
      payments to be received under the Existing Tax Sharing Agreement (and 
      the respective newly-acquired Subsidiary's ability to pay same)), 
      ERISA, environmental or other contingent liabilities (excluding 
      pursuant to Incentive Arrangements and Permitted Earn-Out Debt as 
      described in the certificate delivered pursuant to preceding clause 
      (ii) and Restructuring Costs consistent with the Certified 
      Restructuring Cost Reserve for the respective Permitted Transaction 
      as certified pursuant to preceding clause (ii)) on the Borrower or on 
      the Borrower and its Subsidiaries taken as a whole;

            (x)  recalculations are made by the Borrower of compliance with 
      the covenants contained in Sections 9.08 and 9.09 for the period of 
      four consecutive fiscal quarters (taken as one accounting period) 
      most recently ended prior to the date of such Permitted Transaction 
      (each, a "Calculation Period"), on a Pro Forma Basis as if the 
      respective Permitted Transaction (as well as all other Permitted 
      Transactions theretofore consummated after the first day of such 
      Calculation Period) had occurred on the first day of such Calculation 
      Period, and such recalculations shall show that all such covenants 
      would have been complied with if the Permitted Transaction had 
      occurred on the first day of such Calculation Period;

           (xi)  the Borrower in good faith believes, based on calculations 
      made by the Borrower, on a Pro Forma Basis after giving effect to the 
      respective Permitted Transaction, that the financial covenants 
      contained in such Sections 9.08 and 9.09 will continue to be met for 
      the one-year period following the date of the consummation of the 
      respective Permitted Transaction; and

          (xii)  not later than the date of the consummation of the 
      respective Permitted Transaction, the Borrower shall furnish the 
      Agent and the Banks an officer's certificate executed by an 
      Authorized Officer of the Borrower, certifying on behalf of the 
      Borrower as to compliance with the requirements of preceding clauses 
      (i) through (xi) and containing the pro forma calculations required 
      by preceding clauses (x) and (xi).  

           (b)  At the time of each Permitted Transaction involving the 
creation or acquisition of a Subsidiary, or the acquisition of capital 
stock or other equity interest of any Person, all capital stock or other 
equity interests thereof created or acquired in connection with such 
Permitted Transaction (to the extent owned by the Borrower or one or more 
of its Domestic Subsidiaries) shall be pledged to the Collateral Agent for 
the benefit of the Secured Creditors pursuant to the Pledge Agreement in 
accordance with requirements of Section 8.11.

           (c)  The Borrower shall cause each Subsidiary which is formed to 
effect, or is acquired pursuant to, a Permitted Transaction to comply with, 
and to execute and deliver, all of the documentation required by, Sections 
8.11 and 9.13, to the satisfaction of the Agent.

           (d)  The consummation of each Permitted Transaction shall be 
deemed to be a representation and warranty by the Borrower that the 
certifications by it (or by one or more of its Authorized Officers) 
pursuant to Section 8.15(a) are true and correct and that all conditions 
thereto have been satisfied and that same is permitted in accordance with 
the terms of this Agreement, which representation and warranty shall be 
deemed to be a representation and warranty for all purposes hereunder, 
including without limitation, Sections 6 and 10.

           8.16  Foreign Subsidiaries Security.  (a)  If following a change 
in the relevant sections of the Code or the regulations, rules, rulings, 
notices or other official pronouncements issued or promulgated thereunder, 
counsel for the Borrower acceptable to the Agent and the Required Banks 
does not within 30 days after a request from the Agent or the Required 
Banks deliver evidence, in form and substance satisfactory to the Agent and 
the Required Banks, with respect to any Foreign Subsidiary which has not 
already had all of its stock or promissory notes pledged pursuant to the 
Pledge Agreement, that a pledge (x) of 65% or more of the total combined 
voting power of all classes of capital stock of such Foreign Subsidiary 
entitled to vote and (y) of any promissory note issued by such Foreign 
Subsidiary to the Borrower or any of its Domestic Subsidiaries, in any such 
case would cause the undistributed earnings of such Foreign Subsidiary as 
determined for Federal income tax purposes to be treated as a deemed 
dividend to such Foreign Subsidiary's United States parent for Federal 
income tax purposes, then in the case of a failure to deliver the evidence 
described above, that portion of such Foreign Subsidiary's outstanding 
capital stock or any promissory notes so issued by such Foreign Subsidiary, 
in each case not theretofore pledged pursuant to the Pledge Agreement shall 
be pledged to the Collateral Agent for the benefit of the Secured Creditors 
pursuant to the Pledge Agreement (or another pledge agreement in 
substantially similar form, if needed).

           (b)  If following a change in the relevant sections of the Code 
or the regulations, rules, rulings, notices or other official 
pronouncements issued or promulgated thereunder, counsel for the Borrower 
acceptable to the Agent delivers evidence, in form and substance 
satisfactory to the Agent and the Required Banks, with respect to any 
Foreign Subsidiary which has had any portion of its stock or promissory 
notes pledged pursuant to the Pledge Agreement, that a pledge (x) of any 
portion of the total combined voting power of all classes of capital stock 
of such Foreign Subsidiary entitled to vote and (y) of any promissory note 
issued by such Foreign Subsidiary to the Borrower or any of its Domestic 
Subsidiaries, in any such case would cause the undistributed earnings of 
such Foreign Subsidiary as determined for Federal income tax purposes to be 
treated as a deemed dividend to such Foreign Subsidiary's United States 
parent for Federal income tax purposes, then the Collateral Agent shall 
release that portion of such Foreign Subsidiary's outstanding capital stock 
or any promissory notes so issued by such Foreign Subsidiary, in each case 
pledged pursuant to the Pledge Agreement, as may be required to ensure that 
the undistributed earnings of such Foreign Subsidiary shall not be treated 
as a deemed dividend to such Foreign Subsidiary's United States parent for 
Federal income tax purposes.

           8.17  Receivables Facility Transaction.  At any time after the 
Effective Date, the Borrower and/or one or more other Designated Credit 
Parties may enter into a Receivables Facility (which complies with the 
definition of Receivables Facility contained herein) to provide off-balance 
sheet financing to the Borrower for the sale of Receivables Facility Assets 
to a Receivables Entity (which shall be established in accordance with, and 
meet the requirements of, the definition of Receivables Entity contained 
herein), so long as (x) on the Receivables Facility Transaction Date all 
requirements of this Section 8.17 have been satisfied and the Receivables 
Facility and related transactions comply with the respective defined terms 
as used in this Section 8.17 and (y) in the case of any replacement or 
modification of the Receivables Facility after the entering into thereof, 
same shall satisfy the requirements of Section 9.10.  The Borrower hereby 
agrees that, at the time it initially establishes the Receivables Facility 
it shall (and that it shall only enter into the Receivables Facility if), 
on the Receivables Facility Transaction Date, (i) have caused to be 
delivered to the Agent and the Required Banks true and correct copies of 
all Receivables Facility Documents, certified as such by an officer of the 
Borrower, and all of the terms and conditions of the Receivables Facility 
Documents shall be in form and substance reasonably satisfactory to the 
Agent and the Required Banks, (ii) the Receivables Facility Transaction, 
including all of the terms and conditions thereof, shall have been duly 
approved by the board of directors of the Borrower, and all Receivables 
Facility Documents shall be in full force and effect, (iii) each of the 
conditions precedent to the consummation of the transactions contemplated 
by the Receivables Facility Documents shall have been satisfied and not 
waived except with the consent of the Agent and the Required Banks to the 
reasonable satisfaction of the Agent and the Required Banks, (iv) each of 
the representations and warranties of the Designated Credit Parties and the 
Receivables Entity contained in the Receivables Facility Documents shall be 
true and correct in all material respects, (v) the transactions 
contemplated by the Receivables Facility Documents shall have been 
consummated in all material respects in accordance with all applicable law 
and the Receivables Facility Documents, (vi) no Default or Event of Default 
shall be in effect upon the Receivables Facility Transaction Date (either 
before or after giving effect to the transactions contemplated by the 
Receivables Facility Documents) and (vii) the Borrower and/or the other 
Designated Credit Parties shall have received the Receivables Facility 
Proceeds and used the same to make any prepayment and/or satisfy any cash 
collateral requirement required under Section 4.02(a) as a result of the 
reduction to the Total Commitment on such date under Section 3.03(f).

           SECTION 9.  Negative Covenants.  The Borrower hereby covenants 
and agrees that on and after the Effective Date and until the Total 
Commitment and all Letters of Credit have terminated and the Loans, Notes 
and Unpaid Drawings, together with interest, Fees and all other Obligations 
incurred hereunder and thereunder, are paid in full:

           9.01  Liens.  The Borrower will not, and will not permit any of 
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon 
or with respect to any property or assets (real or personal, tangible or 
intangible) of the Borrower or any of its Subsidiaries, whether now owned 
or hereafter acquired, or sell any such property or assets subject to an 
understanding or agreement, contingent or otherwise, to repurchase such 
property or assets (including sales of accounts receivable with recourse to 
the Borrower or any Subsidiary of the Borrower), or assign any right to 
receive income or permit the filing of any financing statement under the 
UCC or any other similar notice of Lien under any similar recording or 
notice statute, provided that the provisions of this Section 9.01 shall not 
prevent the creation, incurrence, assumption or existence of the following 
(Liens described below are herein referred to as "Permitted Liens"): 

            (i)  inchoate Liens for taxes, assessments or governmental 
      charges or levies not yet due and payable or Liens for taxes, 
      assessments or governmental charges or claims being contested in good 
      faith and by appropriate proceedings for which adequate reserves, if 
      applicable, have been established in accordance with GAAP;

           (ii)  Liens in respect of property or assets of the Borrower or 
      any of its Subsidiaries imposed by law, which were incurred in the 
      ordinary course of business and do not secure Indebtedness for 
      borrowed money, such as carriers', warehousemen's, materialmen's and 
      mechanics' liens and other similar Liens arising in the ordinary 
      course of business, and (x) which do not in the aggregate materially 
      detract from the value of the Borrower's or such Subsidiary's 
      property or assets or materially impair the use thereof in the 
      operation of the business of the Borrower or such Subsidiary or (y) 
      which are being contested in good faith by appropriate proceedings, 
      which proceedings have the effect of preventing the forfeiture or 
      sale of the property or assets subject to any such Lien;

          (iii)  Liens in existence on the Effective Date which are listed, 
      and the property subject thereto described, in Schedule VIII, but 
      only to the respective date, if any, set forth in such Schedule VIII 
      for the removal and termination of any such Liens, but no renewals or 
      extensions of such Liens shall be permitted;

           (iv)  Permitted Encumbrances;

            (v)  Liens created pursuant to the Credit Documents;

           (vi)  Liens created by leases or subleases granted by the 
      Borrower or any of its Subsidiaries to other Persons in the ordinary 
      course of business not materially interfering with the conduct of the 
      business of the Borrower or any of its Subsidiaries; 

          (vii)  Liens upon assets of the Borrower or any of its 
      Subsidiaries subject to Capitalized Lease Obligations to the extent 
      such Capitalized Lease Obligations are permitted by Section 
      9.04(iii), provided that (x) such Liens only serve to secure the 
      payment of Indebtedness arising under such Capitalized Lease 
      Obligation and (y) the Lien encumbering the asset giving rise to the 
      Capitalized Lease Obligation does not encumber any other asset of the 
      Borrower or any of its Subsidiaries;

         (viii)  Liens (including extensions, renewals and replacements 
      thereof) upon property acquired (the "Acquired Property") after the 
      Effective Date, provided that (w) any such Lien is created solely for 
      the purpose of securing Indebtedness representing, or issued to 
      finance, refinance or refund, the cost (including the cost of 
      construction) of the Acquired Property, (x) the principal amount of 
      the Indebtedness secured by such Lien does not exceed 100% of the 
      cost of the Acquired Property, (y) such Lien does not extend to or 
      cover any property other than the Acquired Property and any 
      improvements on such Acquired Property, and (z) the issuance of the 
      Indebtedness to purchase the Acquired Property is permitted under 
      Section 9.04(iii);

           (ix)  easements, rights-of-way, restrictions, encroachments and 
      other similar charges or encumbrances, and minor title deficiencies, 
      in each case not securing Indebtedness and not materially interfering 
      with the conduct of the business of the Borrower or any of its 
      Subsidiaries;

            (x)  Liens arising from precautionary UCC financing statement 
      filings regarding operating leases entered into by the Borrower or 
      any of its Subsidiaries in the ordinary course of business;

           (xi)  statutory and common law landlords' liens under leases to 
      which the Borrower or any of its Subsidiaries is a party;

          (xii)  Liens (other than Liens created or imposed under ERISA) on 
      the property of the Borrower or any of its Subsidiaries incurred or 
      deposits made in the ordinary course of business but not incurred in 
      connection with Indebtedness for borrowed money, in connection with 
      (x) workers' compensation, unemployment insurance and other types of 
      social security, or (y) securing the performance of tenders, 
      statutory obligations, surety bonds, bids, leases, statutory bonds, 
      government contracts, performance and return-of-money bonds, warranty 
      and other similar obligations incurred in the ordinary course of 
      business (exclusive of obligations in respect of the payment for 
      borrowed money) or (z) deposits made in the ordinary course of 
      business to secure liability for premiums to insurance carriers, 
      provided that the aggregate amount of deposits, cash and fair market 
      value of the property encumbered by liens described in clauses (y) 
      and (z) hereof at any time pursuant to this clause (xii) shall not 
      exceed $3,000,000 in the aggregate; 

         (xiii)  inchoate Liens arising from judgments, decrees or 
      attachments in circumstances not constituting an Event of Default 
      under Section 10.09, provided that no cash or other property shall be 
      pledged by the Borrower or any of its Subsidiaries as security 
      therefor; 

          (xiv)  Liens on property or assets acquired pursuant to a 
      Permitted Acquisition, or on property or assets of a Subsidiary of 
      the Borrower in existence at the time such Subsidiary is acquired 
      pursuant to a Permitted Transaction, in each case securing Permitted 
      Acquired Debt, provided that (x) such Liens do not attach to the 
      capital stock of any Subsidiary of the Borrower and (y) such Liens 
      existed prior to, and were not incurred in contemplation of, such 
      Permitted Transaction and do not attach to any other asset of the 
      Borrower or any of its Subsidiaries;

           (xv)  Liens created pursuant to the Existing Seller Letter of 
      Credit Collateral Agreement consisting of cash and Cash Equivalents 
      of Merkle in an amount not to exceed $90,000,000 and any investment 
      income with respect thereto (prior to the distribution of same 
      pursuant to the Existing Seller Letter of Credit Collateral 
      Agreement) securing the reimbursement obligations of Merkle in 
      respect of the Existing Seller Letter of Credit (with such collateral 
      being herein called the "Existing Seller Letter of Credit Cash 
      Collateral"); 

          (xvi)  Liens arising pursuant to Permitted Sale-Leaseback 
      Transactions to the extent permitted by Section 9.02(xi), so long as 
      such Liens do not attach to any assets of the Borrower or any of its 
      Subsidiaries other than those which are the subject of such Permitted 
      Sale-Leaseback Transaction; 

         (xvii)  Liens securing refinancing Indebtedness incurred pursuant 
      to Section 9.04(xvi), so long as such Indebtedness is incurred in 
      compliance with said Section, the Liens secure only the respective 
      issue of refinancing Indebtedness and the Liens extend only to the 
      property originally subject to Liens securing the Indebtedness being 
      refinanced or renewed pursuant to said Section 9.04(xvi);

        (xviii)  Liens created for the benefit of the MK Sellers in the 
      Elmco Refund;

          (xix)  Liens (x) granted by the Designated Credit Parties in 
      favor of the Receivables Entity consisting of UCC-1 financing 
      statements filed to effect the sale of Receivables Facility Assets 
      pursuant to the Receivables Facility Documents, (y) granted by the 
      Receivables Entity on those Receivables Facility Assets acquired by 
      it pursuant to the Receivables Facility Documents to the extent that 
      such Liens are created by the Receivables Facility Documents and (z) 
      consisting of the right of setoff granted to any financial 
      institution acting as a lockbox bank in connection with the 
      Receivables Facility;

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

          (xxi)  additional Liens incurred by the Borrower and its 
      Subsidiaries, so long as the value of the property subject to such 
      Liens, and any Indebtedness and other obligations secured thereby, do 
      not exceed $10,000,000.

           9.02  Consolidation, Merger, Purchase or Sale of Assets, etc.  
The Borrower will not, and will not permit any of its Subsidiaries to, wind 
up, liquidate or dissolve its affairs or enter into any transaction of 
merger or consolidation, or convey, sell, lease or otherwise dispose of all 
or any part of its property or assets, or enter into any partnerships, 
joint ventures, sale-leaseback transactions, or purchase or otherwise 
acquire (in one or a series of related transactions) any part of the 
property or assets (other than purchases or other acquisitions of 
inventory, materials and equipment in the ordinary course of business) of 
any Person or agree to do any of the foregoing at any future time, except 
that:

            (i)  Capital Expenditures (including payments in respect of 
      Capitalized Lease Obligations, but excluding Capital Expenditures 
      which may arise as a result of the purchase of any capital stock or 
      equity interests in any other Person or by means of a purchase of 
      assets constituting a business, division or product line of any 
      Person, which expenditures may only be made pursuant to Permitted 
      Transactions effected in accordance with the relevant provisions of 
      this Agreement) by the Borrower and its Subsidiaries shall be 
      permitted so long as same do not cause a violation of any of the 
      other provisions of this Agreement;

           (ii)  the Borrower and any of its Subsidiaries may sell, lease 
      (as lessor) or otherwise dispose of assets (other than in a Permitted 
      Sale-Leaseback Transaction and excluding capital stock of 
      Subsidiaries) which, in the reasonable opinion of such Person, are 
      obsolete, uneconomic or no longer useful in the conduct of such 
      Person's business, provided that (w) each such sale or disposition 
      shall be for an amount at least equal to the fair market value 
      thereof (as determined in good faith by senior management of the 
      Borrower), (x) each such sale results in consideration at least 75% 
      of which (taking the amount of cash and the fair market value, as 
      determined by the Borrower in good faith, of any non-cash 
      consideration, although in the case of any non-cash consideration 
      received in the form of indebtedness, the amount thereof shall be 
      deemed to be the greater of such fair market value thereof or 
      principal amount thereof) shall be in the form of cash (although, for 
      purposes of this clause (x), there shall be treated as cash 
      consideration the amount of any trade payables and the principal 
      amount of Indebtedness for borrowed money assumed by the respective 
      purchaser of assets), (y) the aggregate Net Cash Proceeds of all 
      assets sold or otherwise disposed of pursuant to this clause (ii) 
      after the Effective Date shall not exceed $5,000,000 in the aggregate 
      and (z) the Net Cash Proceeds from each Asset Sale pursuant to this 
      clause (ii) shall be used to make any prepayment under Section 4.02 
      as a result of the required reduction, if any, to the Total Available 
      Commitment or shall be reinvested to the extent permitted by the 
      terms of the definition of Blocked Commitment.

          (iii)  Investments may be made to the extent permitted by Section 
      9.05;

           (iv)  each of the Borrower and each of its Subsidiaries may 
      lease (as lessee) real or personal property in the ordinary course of 
      business so long as any such lease does not create a Capitalized 
      Lease Obligation, except to the extent permitted by clause (i) of 
      this Section 9.02;

            (v)  Restricted Payments may be paid to the extent permitted by 
      Section 9.03; 

           (vi)  the Acquisition, the Merger, the Asset Contribution and 
      the MK Stock Contribution shall be permitted; 

          (vii)  each of the Borrower and its Subsidiaries may make sales 
      of inventory in the ordinary course of business;

         (viii)  the Borrower and its Subsidiaries may effect Permitted 
      Transactions in accordance with the requirements of Section 8.15;

           (ix)  any Wholly-Owned Domestic Subsidiary of the Borrower 
      (other than the Receivables Entity) may be merged or consolidated 
      with and into, or be liquidated or dissolved voluntarily into, the 
      Borrower or any other Wholly-Owned Domestic Subsidiary of the 
      Borrower (other than the Receivables Entity); provided that (w) no 
      Default or Event of Default then exists or would result therefrom, 
      (x) the surviving corporation of any such merger with the Borrower is 
      the Borrower, (y) any such Wholly-Owned Domestic Subsidiary which is 
      so merged or consolidated with and into, or liquidated or dissolved 
      voluntarily into, the Borrower or another Wholly-Owned Domestic 
      Subsidiary of the Borrower shall not have any material indebtedness 
      or other material liabilities (contingent or otherwise), and (z) the 
      security interests, if any, granted to the Collateral Agent for the 
      benefit of the Secured Creditors pursuant to the Security Documents 
      in the assets of such Subsidiary so merged shall remain in full force 
      and effect and perfected (to at least the same extent as in effect 
      immediately prior to such merger, consolidation or liquidation);

            (x)  any Subsidiary of the Borrower may convey or otherwise 
      transfer all or any part of its business, properties or assets (but 
      not any indebtedness or other liabilities (contingent or otherwise)) 
      to the Borrower or any Wholly-Owned Domestic Subsidiary of the 
      Borrower (other than the Receivables Entity); provided that the 
      security interests granted to the Collateral Agent for the benefit of 
      the Secured Creditors pursuant to the Security Documents in the 
      assets so transferred shall remain in full force and effect and 
      perfected (to at least the same extent as in effect immediately prior 
      to such transfer);

           (xi)  the Borrower or any of its Subsidiaries may effect 
      Permitted Sale-Leaseback Transactions in accordance with the 
      definition thereof; provided that the sum (without duplication) of 
      (w) the aggregate amount of all proceeds received by the Borrower and 
      its Subsidiaries from all Permitted Sale-Leaseback Transactions 
      consummated on and after the Effective Date plus (x) the aggregate 
      outstanding amount of Indebtedness evidenced by all Capitalized Lease 
      Obligations (excluding Indebtedness evidenced by Capitalized Lease 
      Obligations arising from Permitted Sale-Leaseback Transactions the 
      proceeds of which were included pursuant to preceding clause (w)) 
      incurred on and after the Effective Date plus (y) the aggregate 
      outstanding principal amount of all purchase money Indebtedness 
      secured by Liens permitted under Section 9.01(viii) incurred on and 
      after the Effective Date, plus (z) the aggregate outstanding 
      principal amount of all Refinancing Indebtedness incurred in respect 
      of Indebtedness originally incurred pursuant to this clause (xi) or 
      any refinancing thereof, shall not exceed $10,000,000; 

          (xii)  on and after the Receivables Facility Transaction Date, 
      the Designated Credit Parties may (x) contribute cash to the 
      Receivables Entity the proceeds of which are used to acquire 
      Receivables Facility Assets from the Designated Credit Parties and 
      (y) transfer and reacquire Receivables Facility Assets to and from 
      the Receivables Entity, in each case pursuant to, and in accordance 
      with the terms of, the Receivables Facility Documents; 

         (xiii)  on and after the Receivables Facility Transaction Date, 
      the Receivables Entity may transfer and reacquire Receivables 
      Facility Assets (to the extent acquired from Designated Credit 
      Parties as provided in clause (xii) above) pursuant to, and in 
      accordance with the terms of, the Receivables Facility Documents;

          (xiv)  the surrender or waiver of contract rights or the 
      settlement, release or surrender of contract, tort or other claims of 
      any kind shall be permitted, in each case in the good faith business 
      judgment of the Borrower or its respective Subsidiary;

           (xv)  each of the Borrower and its Subsidiaries may sell assets 
      to any Person, provided that (x) the aggregate sale proceeds from all 
      assets subject to such sales pursuant to this clause (xv) shall not 
      exceed $5,000,000 in any fiscal year, (y) each such sale results in 
      consideration at least 75% of which (taking the amount of cash and 
      the fair market value, as determined by the Borrower in good faith, 
      of any non-cash consideration, although in the case of any non-cash 
      consideration received in the form of indebtedness, the amount 
      thereof shall be deemed to be the greater of such fair market value 
      thereof or principal amount thereof) shall be in the form of cash 
      (although, for purposes of this clause (x), there shall be treated as 
      cash consideration the amount of any trade payables and the principal 
      amount of Indebtedness for borrowed money assumed by the respective 
      purchaser of assets), and (z) the Net Cash Proceeds from each Asset 
      Sale pursuant to this clause (xiv) shall be used to make the 
      prepayment, if any, required by Section 4.02 as a result of the 
      reduction, if any, to the Total Available Commitment or shall be 
      reinvested to the extent permitted by the terms of the definition of 
      Blocked Commitment.

To the extent the Required Banks or all the Banks (as shall be required by 
Section 13.12) waive the provisions of this Section 9.02 with respect to 
the sale of any Collateral, or any Collateral is sold or otherwise disposed 
of (excluding transfers to the Borrower or a Subsidiary thereof, unless 
transferred to the Receivables Entity in accordance with preceding clauses 
(xii) and/or (xiii)) as permitted by this Section 9.02, (i) such Collateral 
shall be sold or otherwise transferred or disposed of free and clear of the 
Liens created by the Security Documents and (ii) if such Collateral 
includes all of the capital stock held by the Credit Parties in a 
Subsidiary of one or more of the Credit Parties, such capital stock shall 
be released from the Pledge Agreement and such Subsidiary, to the extent 
party to a Guaranty, shall be released therefrom, and the Agent and the 
Collateral Agent shall be authorized to take any actions deemed appropriate 
in order to effect the foregoing.

           9.03  Restricted Payments.  The Borrower will not, and will not 
permit any of its Subsidiaries to, authorize, declare, make or pay any 
Restricted Payment, except that the following shall be permitted (with 
calculations of compliance with this Section 9.03 to take into effect the 
provisions of Section 9.05(v)):

            (i)  any Subsidiary of the Borrower (x) may pay cash Dividends 
      to the Borrower or any Wholly-Owned Subsidiary of the Borrower and 
      (y) if such Subsidiary is a Non-Wholly-Owned Subsidiary of the 
      Borrower, may pay cash Dividends to its shareholders generally so 
      long as the Borrower or its respective Subsidiary which owns the 
      equity interest or interests in the Subsidiary paying the cash 
      Dividends receives at least its proportionate share thereof (based 
      upon its relative holdings of equity interests in the Subsidiary 
      paying such cash Dividends and taking into account the relative 
      preferences, if any, of the various classes of equity interests in 
      such Subsidiary);

           (ii)  the Borrower may pay cash Dividends to Parent for the 
      purpose of paying, so long as the proceeds thereof are promptly used 
      by Parent to pay, its normal operating expenses in the ordinary 
      course of business (including, without limitation, professional fees 
      and expenses) and other similar corporate overhead costs and 
      expenses;

          (iii)  on the Business Day immediately preceding the date on 
      which a scheduled principal and/or interest payment is due on any 
      outstanding Shareholder Subordinated Note originally issued to any 
      officer, former employee, employee or director (or their estates) of 
      Parent, the Borrower or any of the Borrower's Subsidiaries (or, in 
      the event that a Default or Event of Default shall then exist, on the 
      first Business Day when no Default or Event of Default shall be 
      continuing), the Borrower may make cash Dividends to Parent, which in 
      turn shall immediately utilize the full amount of such cash Dividends 
      to pay cash Dividends to M&G Holdings, in an amount not to exceed the 
      aggregate amount of the accrued and unpaid principal and/or interest 
      with respect to such scheduled payment date as provided in such 
      Shareholder Subordinated Notes, so long as (x) on the Business Day 
      immediately after the receipt of such cash Dividend, M&G Holdings 
      utilizes the full amount thereof to make such required principal 
      and/or interest payment on such Shareholder Subordinated Notes to the 
      extent then due and payable in accordance with the terms of such 
      Shareholder Subordinated Notes, (y) the aggregate amount of all cash 
      Dividends paid by the Borrower pursuant to this clause (iii) on and 
      after the Effective Date shall not exceed an amount equal to the 
      remainder of (1) $5,000,000 less (2) the aggregate amount of all cash 
      Dividends paid by the Borrower pursuant to Section 9.03(iv) on and 
      after the Effective Date and (z) no Default or Event of Default then 
      exists or would result therefrom; 

           (iv)  the Borrower may make cash Dividends to Parent, which in 
      turn shall immediately utilize the full amount of such cash Dividends 
      to pay cash Dividends to M&G Holdings, for the purpose of redeeming 
      or repurchasing, and so long as M&G Holdings promptly, and in any 
      event by the immediately succeeding Business Day, utilizes the full 
      amount of such cash Dividends to redeem or repurchase, M&G Holdings 
      Common Stock (or options or warrants to purchase such M&G Holdings 
      Common Stock) from officers, former employees, employees and 
      directors (or their estates) solely of Parent, the Borrower or any of 
      the Borrower's Subsidiaries upon the death, permanent disability, 
      retirement or termination of employment at the Parent and its 
      Subsidiaries of such Person to the extent required to be made in 
      accordance with the terms of the Management Subscription Agreement, 
      provided that (x) no Default or Event of Default then exists or would 
      result therefrom, (y) the amount of such cash Dividends shall not 
      exceed the amount necessary to make the required redemption or 
      repurchase payment in accordance with the terms of the Management 
      Subscription Agreement and (z) notwithstanding the preceding clause 
      (y), the aggregate amount of all cash Dividends paid by the Borrower 
      pursuant to this Section 9.03(iv) on and after the Effective Date 
      shall not exceed an amount equal to the remainder of (1) $5,000,000 
      less (2) the aggregate amount of all cash Dividends paid by the 
      Borrower pursuant to Section 9.03(iii) on and after the Effective 
      Date;

            (v)  the Borrower may make cash Dividends to (A) Parent, (B) 
      Parent, which in turn shall immediately utilize the full amount of 
      such cash Dividends to pay cash Dividends to M&G Holdings and/or (C) 
      Parent, which in turn shall immediately utilize the full amount of 
      such cash Dividends to pay cash Dividends to M&G Holdings, which in 
      turn shall immediately utilize the full amount of such cash Dividends 
      to pay cash Dividends to Jordan, in each case for the purpose of 
      paying, and so long as Parent, M&G Holdings or Jordan, as the case 
      may be, promptly utilizes the full amount of such cash Dividends to 
      pay, director fees of Parent, M&G Holdings or Jordan, provided that 
      such cash Dividends shall not exceed the Borrower's allocated share 
      of such director fees, such allocation to be determined in good faith 
      by the Borrower; provided further, that the aggregate amount of 
      Dividends payable under this clause (v) shall not exceed $250,000 in 
      any fiscal year of the Borrower;

           (vi)  the Borrower may make cash Dividends to (A) Parent, (B) 
      Parent, which in turn shall immediately utilize the full amount of 
      such cash Dividends to pay cash Dividends to M&G Holdings and (C) 
      Parent, which in turn shall immediately utilize the full amount of 
      such cash Dividends to pay cash Dividends to M&G Holdings, which in 
      turn shall immediately utilize the full amount of such cash Dividends 
      to pay cash Dividends to Jordan, in each case for the purpose of and 
      so long as Parent, M&G Holdings or Jordan, as the case may be, 
      promptly utilizes the full amount of such cash Dividends to (w) fund 
      indemnity payments  required by Parent's, M&G Holdings' or Jordan's 
      certificate of incorporation or by-laws or director indemnity 
      agreements of Parent, M&G Holdings or Jordan existing on the date 
      hereof, in each case to the extent then due and payable, (x) pay 
      filing, registration and reporting fees and expenses, and fees and 
      expenses associated with state qualifications and other state, 
      federal or regulatory compliance matters, in each case to the extent 
      then due and payable, (y) fund expense reimbursement and indemnity 
      payments under the Intercompany Management Consulting Agreements and 
      the TJC Management Services Agreement for TJC, in each case to the 
      extent then due and payable and (z) pay, or reimburse Parent, M&G 
      Holdings or Jordan for payment of, normal operating expenses incurred 
      in the ordinary course of business (including, without limitation, 
      accounting and insurance expenses) and not otherwise covered by this 
      Section 9.03(vi), in each case to the extent then due and payable; 
      provided that (x) the aggregate amount of cash Dividends paid by the 
      Borrower for the purposes described in clause (w) above and any 
      indemnity payment under clause (y) above in any fiscal year of the 
      Borrower shall not exceed $5,000,000 and (y) such cash Dividends 
      shall not exceed the Borrower's allocated share of such payments 
      owing pursuant to this Section 9.03(vi), such allocation to be 
      determined in good faith by the Borrower; 

          (vii)  whether or not same constitute Dividends, the payments 
      expressly permitted to be made pursuant to clauses (vi) through 
      (xii), inclusive, of Section 9.06(y) shall be permitted; 

         (viii)  the Borrower may repurchase, redeem or otherwise make 
      payments in respect of Incentive Arrangements established by the 
      Borrower after the Effective Date to its executives and/or officers 
      or to the sellers of a Permitted Acquired Business in connection with 
      a Permitted Transaction, in each case in accordance with the terms of 
      such Incentive Arrangements, provided that (x) no Default or Event of 
      Default then exists or would result therefrom, (y) the terms of each 
      such Incentive Arrangement provide that payments thereunder may only 
      be made to the extent not prohibited by the terms of this Agreement 
      (or any refinancing or successive refinancings hereof) as in effect 
      from time to time, and (z) the aggregate amount of all cash payments 
      paid by the Borrower pursuant to this Section 9.03(viii) shall not 
      exceed, in any fiscal year of the Borrower, the product of the 
      aggregate Acquired EBITDA of all Permitted Acquired Businesses 
      (theretofore acquired in Permitted Acquisitions effected before the 
      last day of such fiscal year) for such fiscal year (provided that if 
      the respective Permitted Acquired Business was acquired after the 
      first day of the respective fiscal year, the Acquired EBITDA related 
      thereto shall only be included for periods after the acquisition 
      thereof was consummated) multiplied by 3; provided that cash payments 
      of the type described in this clause (viii) may be made in excess of 
      the amounts otherwise provided above in this clause (viii) (as 
      determined without regard to this proviso), so long as the aggregate 
      amount of all cash payments made pursuant to this proviso after the 
      Effective Date does not exceed $5,000,000;

           (ix)  the Borrower may (I) make cash interest payments to Parent 
      under, and in respect of, the Parent Subordinated Intercompany Note 
      (at the rate provided therein), so long as the amount of interest so 
      paid does not exceed the amount of interest then owing with respect 
      to the Senior Unsecured Notes and so long as Parent promptly, and in 
      any event by the immediately succeeding Business Day, utilizes the 
      full amount of such cash interest payments to pay interest as and 
      when due with respect to the Senior Unsecured Notes then outstanding, 
      to the extent required to be made in accordance with the terms of the 
      Senior Unsecured Note Indenture, provided that (w) the amount of such 
      cash interest payments shall not exceed the amount necessary to make 
      the required interest payment in accordance with the terms of the 
      Senior Unsecured Note Indenture, (x) the aggregate principal amount 
      of the Senior Unsecured Notes at any time outstanding, and the 
      interest rate payable in respect thereof, shall not have increased 
      (excluding increases as a result of the accrual of Additional 
      Interest under, and in accordance with, the terms of the Senior 
      Unsecured Note Documents as originally in effect) from the respective 
      amount or rate, as the case may be, in effect on the Initial 
      Borrowing Date less, in the case of the principal amount outstanding, 
      the aggregate amount of repayments of principal of the Senior 
      Unsecured Notes made after the Initial Borrowing Date and (z) no such 
      payment may be made at any time following the occurrence and during 
      the continuance of any Event of Default under Section 10.01, 10.03 
      (due to a breach of Section 9.03, 9.08 or 9.09), 10.04, 10.05, 10.09 
      or 10.10 and (II) pay cash Dividends to Parent, which in turn shall 
      immediately use the full amount of such cash Dividends for the 
      purpose of paying the fees and expenses hereinafter described and so 
      long as Parent promptly, and in any event by the immediately 
      succeeding Business Day, utilizes the full amount of such cash 
      Dividends to pay fees and expenses (but not to make indemnity 
      payments) owing to the trustee and/or the paying agent under, and in 
      accordance with the terms of, the Senior Unsecured Note Indenture, 
      provided that no such payment shall be made at any time following the 
      occurrence and during the continuance of any Event of Default under 
      Section 10.01, 10.03 (due to a breach of Section 9.03, 9.08 or 9.09), 
      10.04, 10.05, 10.09 or 10.10;

            (x)  on and after April 30, 2001, the Borrower may make cash 
      Dividends to Parent, which in turn shall immediately utilize the full 
      amount of such cash Dividends for the purpose of paying, and so long 
      as Parent promptly, and in any event by the immediately succeeding 
      Business Day, utilizes the full amount of such cash Dividends to pay 
      amounts as and when due under the Earnout Agreement, to the extent 
      required to be made in accordance with the terms of the Earnout 
      Agreement, provided that the amount of such cash Dividend shall not 
      exceed the amount necessary to make the required payment in 
      accordance with the terms of Earnout Agreement; and

           (xi)  the Borrower may use the amount of any cash contribution 
      to its common equity capital received by it from Parent for such 
      purpose (so long as such amount is used within five Business Days 
      after the receipt thereof by the Borrower for such purpose) to make 
      repayments of principal (and payments of related premium, if any) on 
      the Parent Subordinated Intercompany Note, so long as the amount of 
      such payment made by the Borrower to Parent is promptly, and in any 
      event within five Business Days, utilized by Parent to make 
      repayments of the principal of Senior Unsecured Notes (and any 
      related required payment of premium in connection therewith) in 
      accordance with the provisions thereof, provided, that no such 
      payment may be made at any time following the occurrence and during 
      the continuance of any Event of Default under Section 10.01, 10.03 
      (due to a breach of Section 9.03, 9.08 or 9.09) 10.04, 10.05, 10.09 
      or 10.10; and

          (xii)  Borrower may declare and pay, or otherwise effect, 
      additional Dividends, provided, the aggregate amount of such 
      Dividends declared pursuant to this clause (xii) after the Effective 
      Date shall not exceed $2,500,000.

           9.04  Indebtedness.  The Borrower will not, and will not permit 
any of its Subsidiaries to, contract, create, incur, assume or suffer to 
exist any Indebtedness, except:

            (i)  Indebtedness incurred pursuant to this Agreement and the 
      other Credit Documents;

           (ii)  Scheduled Existing Indebtedness to the extent the same is 
      listed on Schedule VI, but no refinancings or renewals thereof;

          (iii)  Indebtedness of the Borrower or any of its Subsidiaries 
      (a) evidenced by Capitalized Lease Obligations entered into after the 
      Effective Date, so long as the Liens arising as a result thereof are 
      permitted pursuant to Section 9.01 and (b) incurred in connection 
      with purchase money Liens permitted under Section 9.01(viii), 
      provided that the sum (without duplication) of (w) the aggregate 
      outstanding amount of such Indebtedness evidenced by all Capitalized 
      Lease Obligations (excluding Indebtedness evidenced by Capitalized 
      Lease Obligations arising from Permitted Sale-Leaseback Transactions 
      the proceeds of which were included pursuant to following clause (y)) 
      incurred on and after the Effective Date plus (x) the aggregate 
      outstanding principal amount of all such purchase money Indebtedness 
      incurred on and after the Effective Date plus (y) the aggregate 
      amount of all proceeds received by the Borrower and its Subsidiaries 
      from all Permitted Sale-Leaseback Transactions consummated on and 
      after the Effective Date, plus (z) the aggregate outstanding 
      principal amount of all Refinancing Indebtedness incurred in respect 
      of Indebtedness originally incurred pursuant to this clause (iii) or 
      any refinancing thereof shall not exceed $10,000,000;

           (iv)  current liabilities of the Borrower and the Borrower's 
      Subsidiaries incurred in the ordinary course of business not incurred 
      through or in connection with (i) the borrowing of money or (ii) the 
      obtaining of credit except for credit on an open account basis 
      customarily extended and in fact extended in connection with normal 
      purchases of goods and services; 

            (v)  Indebtedness constituting Intercompany Loans to the extent 
      permitted by Section 9.05;

           (vi)  Indebtedness under Other Hedging Agreements providing 
      protection against fluctuations in currency values in connection with 
      the Borrower's or any of its Subsidiaries' operations so long as 
      management of the Borrower or such Subsidiary, as the case may be, 
      has determined that the entering into of such Other Hedging 
      Agreements are bona fide hedging activities (and are not for 
      speculative purposes) and are in the ordinary course of business and 
      consistent with their past practices;

          (vii)  Indebtedness of Merkle incurred under the Existing Seller 
      Subordinated Note in an aggregate principal amount not to exceed 
      $5,000,000 (as reduced by any repayments of principal thereof) plus 
      additional Indebtedness of Merkle incurred under the Existing Seller 
      Subordinated Note representing accrued and unpaid interest thereon in 
      accordance with the terms of the Existing Seller Subordinated Note;

         (viii)  prior to December 31, 1996 (or, if earlier, the maturity 
      date of the Existing Seller Installment Note (whether by acceleration 
      or otherwise)) Indebtedness of Merkle incurred under the Existing 
      Seller Installment Note in an aggregate principal amount not to 
      exceed $90,000,000 (as reduced by any repayments of principal 
      thereof);

           (ix)  prior to December 31, 1996 (or, if earlier, the 
      termination of the Existing Seller Letter of Credit), Indebtedness of 
      Merkle representing reimbursement obligations in respect of the 
      Existing Seller Letter of Credit;

            (x)  Permitted Acquired Debt of any Subsidiary of the Borrower 
      acquired pursuant to a Permitted Transaction, so long as (w) the 
      aggregate principal amount of such Permitted Acquired Debt was 
      reflected in the certification of the Permitted Transaction Cost of 
      such Permitted Transaction delivered pursuant to Section 8.15(a)(ii), 
      (x) the respective Permitted Transaction was effected in accordance 
      with the requirements of said Section 8.15, (y) the respective 
      Indebtedness meets the requirements of the definition of "Permitted 
      Acquired Debt" contained herein and (z) the aggregate principal 
      amount of all Permitted Acquired Debt and all Permitted Debt incurred 
      or acquired after the Effective Date at no time outstanding shall 
      exceed $5.0 million;

           (xi)  Permitted Earn-Out Debt of the Borrower incurred by it in 
      connection with any Permitted Transaction effected in accordance with 
      the requirements of Section 8.15, so long as such Indebtedness 
      conforms to the requirements of the definition of "Permitted Earn-Out 
      Debt" contained herein; 

          (xii)  Permitted Debt of the Borrower incurred in connection with 
      a Permitted Transaction, so long as (w) the aggregate principal 
      amount of such Permitted Debt was included within the Permitted 
      Transaction Cost as certified pursuant to Section 8.15(a)(ii), (x) 
      the respective Permitted Transaction was effected in accordance with 
      the requirements of said Section 8.15, (y) the Indebtedness meets the 
      requirements of the definition of "Permitted Debt" contained herein 
      and (z) the aggregate principal amount all Permitted Acquired Debt 
      and all Permitted Debt incurred or acquired after the Effective Date 
      at no time outstanding shall exceed $5.0 million;

         (xiii)  Indebtedness which may be deemed to exist as a result of 
      the Elmco Refund Obligation and/or the Net Asset Adjustment;

          (xiv)  Indebtedness which may be deemed to exist pursuant to any 
      performance, surety, statutory, appeal or similar bond obtained in 
      the ordinary course of business (so long as any such bond is obtained 
      by the Borrower or any of its Subsidiaries in respect of its own 
      obligations and such bond is not guaranteed by any other Person); 

           (xv)  Indebtedness of the Borrower or any of its Subsidiaries 
      which may be deemed to exist in connection with agreements providing 
      for indemnification, purchase price adjustments and similar 
      obligations in connection with acquisitions or sales of assets and/or 
      businesses effected in accordance with the requirements of this 
      Agreement (so long as any such obligations are those of the Person 
      making the respective acquisition or sale, and are not guaranteed by 
      any other Person); 

          (xvi)  Refinancing Indebtedness in respect of any Indebtedness 
      originally incurred as permitted by Section 9.04(iii), (x) or (xii) 
      so long as (a) such Indebtedness has a Weighted Average Life to 
      Maturity greater than the Weighted Average Life to Maturity of the 
      Indebtedness being refinanced, (b) such refinancing or renewal does 
      not (i) increase the amount of such Indebtedness outstanding 
      immediately prior to such refinancing or renewal or (ii) add 
      guarantors, obligors or security from that which applied to such 
      Indebtedness being refinanced or renewed, (c) such refinancing or 
      renewal Indebtedness has substantially the same subordination 
      provisions, if any, as applied to the Indebtedness being renewed or 
      refinanced, (d) in the case of Refinancing Indebtedness in respect of 
      Indebtedness originally incurred as permitted by Section 9.04(x), all 
      other terms of such refinancing or renewal (including, without 
      limitation, with respect to the amortization schedules, redemption 
      provisions, maturities, covenants, defaults and remedies), are not, 
      taken as a whole, materially less favorable to the respective 
      borrower than those previously existing with respect to the 
      Indebtedness being refinancing or renewed and (e) in the case of 
      Refinancing Indebtedness in respect of Indebtedness originally 
      incurred as permitted by Section 9.04(xii), such Refinancing 
      Indebtedness shall contain such terms and provisions as would be 
      required to qualify as Permitted Debt in accordance with the proviso 
      contained in the definition thereof;

         (xvii)  Indebtedness of the Borrower and its Subsidiaries 
      representing payment obligations pursuant to the Earnout Agreement; 
      and 

        (xviii)  Indebtedness which may be deemed to exist pursuant to the 
      Receivables Facility; 

          (xix)  unsecured Indebtedness of the Borrower pursuant to the 
      Parent Subordinated Intercompany Note, provided that the aggregate 
      principal amount thereof at no time exceeds either (x) $170 million 
      less the aggregate amount of principal repayments made in respect of 
      such promissory note after the Effective Date (which may only be made 
      in accordance with the provisions of Section 9.03(xi)) or (y) the 
      aggregate principal amount of outstanding Senior Unsecured Notes at 
      such time; 

           (xx)  Indebtedness evidenced by one or more Transaction 
      Intercompany Notes, so long as each such note is pledged pursuant to 
      the Pledge Agreement; and 

          (xxi)  additional Indebtedness of the Borrower and its 
      Subsidiaries not otherwise permitted hereunder and not exceeding 
      $15,000,000 in aggregate principal amount at any time outstanding.

           9.05  Advances, Investments and Loans.  The Borrower will not, 
and will not permit any of its Subsidiaries to, directly or indirectly, 
lend money or credit or make advances to any Person, or purchase or acquire 
any stock, obligations or securities of, or any other interest in, or make 
any capital contribution to, any other Person, or purchase or own a futures 
contract or otherwise become liable for the purchase or sale of currency or 
other commodities at a future date in the nature of a futures contract, or 
hold any cash or Cash Equivalents (each of the foregoing, an "Investment" 
and, collectively, "Investments"), except that the following shall be 
permitted:

            (i)  the Borrower and its Subsidiaries may acquire and hold 
      accounts receivables owing to any of them, if created or acquired in 
      the ordinary course of business and payable or dischargeable in 
      accordance with customary terms;

           (ii)  the Borrower and its Subsidiaries may acquire and hold 
      cash and Cash Equivalents; 

          (iii)  the Borrower may make intercompany loans and advances to 
      any of its 80%-Owned Subsidiaries that is a Subsidiary Guarantor, any 
      Subsidiary of the Borrower (other than the Receivables Entity) may 
      make intercompany loans and advances to the Borrower, and any 
      Subsidiary of the Borrower may make intercompany loans and advances 
      to any Wholly-Owned Subsidiary of the Borrower that is a Subsidiary 
      Guarantor; provided that (A) each Intercompany Loan made by a 
      Subsidiary of the Borrower (other than a Wholly-Owned Subsidiary 
      which is a Subsidiary Guarantor) to the Borrower or any Subsidiary 
      Guarantor shall contain the subordination provisions set forth on 
      Exhibit N, (B) each Intercompany Loan shall be evidenced by an 
      Intercompany Note, (C) each Intercompany Note (other than 
      Intercompany Notes issued by Foreign Subsidiaries to the Borrower or 
      any Wholly-Owned Subsidiary of the Borrower that is a Subsidiary 
      Guarantor, except to the extent otherwise required pursuant to 
      Section 8.16) shall be pledged to the Collateral Agent pursuant to 
      the Pledge Agreement to the extent required thereby and (D) each 
      Intercompany Loan made to a Subsidiary shall only be used for working 
      capital purposes and other general corporate purposes of such 
      Subsidiary;

           (iv)  the Acquisition, the Merger, the Asset Contribution and 
      the MK Stock Contribution shall be permitted in accordance with the 
      provisions of Section 5; 

            (v)  to the extent the Borrower is at any time permitted to pay 
      a cash Dividend for the respective purpose permitted pursuant to any 
      of Sections 9.03(ii), (iii), (iv), (v) or (vi), the Borrower may, in 
      lieu of making such payment by way of Dividend, make the respective 
      payment (so long as used for the same purpose and so long as such 
      payment would otherwise comply in all respects with the relevant 
      requirements of Section 9.03) by way of advance to the Person to whom 
      it would otherwise have paid the Dividend pursuant to relevant 
      provisions of Section 9.03; provided that for all purposes of this 
      Agreement (including for purposes of determining compliance with 
      Section 9.03), all payments made pursuant to this Section 9.05(v) 
      shall be deemed to be Dividends made pursuant to the relevant clause 
      of 9.03; 

           (vi)  the Borrower and its Subsidiaries (other than the 
      Receivables Entity) may enter into Other Hedging Agreements to the 
      extent permitted by Section 9.04(vi); 

          (vii)  the Borrower may make cash equity contributions to any 
      direct Wholly-Owned Subsidiary of the Borrower that is a Subsidiary 
      Guarantor and any Wholly-Owned Subsidiary of the Borrower may make 
      cash equity contributions to any of its respective direct 
      Wholly-Owned Subsidiaries that are Subsidiary Guarantors;

         (viii)  the Borrower and its Subsidiaries may acquire and hold 
      Investments consisting of non-cash consideration received from sales 
      of assets effected in accordance with the requirements of Sections 
      9.02(ii) and 9.02(xv); 

           (ix)  the Borrower may establish Subsidiaries to the extent 
      permitted by Section 9.13;

            (x)  the Borrower and any of its Subsidiaries (other than the 
      Receivables Entity) may effect Permitted Acquisitions in accordance 
      with the requirements of, and to the extent permitted by, Section 
      8.15 and the definition thereof;

           (xi)  the Borrower and any of its Subsidiaries (other than the 
      Receivables Entity) may make Permitted Acquisition Investments in 
      accordance with the requirements of, and to the extent permitted by, 
      Section 8.15 and the definition thereof;

          (xii)  the Borrower and its Subsidiaries (other than the 
      Receivables Entity) may make Permitted Investments in accordance with 
      the definition thereof; provided that (x) no Default or Event of 
      Default then exists or would result therefrom, (y) with respect to 
      each Permitted Investment, the aggregate amount of such Permitted 
      Investment (including for this purpose all cash contributed, loaned, 
      advanced or otherwise transferred by the Borrower or any Subsidiary 
      of the Borrower, as the case may be, in connection with such 
      Permitted Investment), made shall not exceed the Permitted Investment 
      Amount at such time (prior to giving effect to such Permitted 
      Investment) and (z) in addition to the requirements of preceding 
      clause (y), in no event shall the aggregate amount of Investments 
      outstanding pursuant to this clause (xii) at any time (calculated 
      without regard to any write-downs or write-offs thereof) exceed 
      $5,000,000 in the aggregate;

         (xiii)  transactions expressly permitted pursuant to Sections 9.02 
      and 9.03 shall, to the extent constituting Investments, be permitted 
      pursuant to this Section 9.05 to the extent provided in such Section 
      9.02 or 9.03, as the case may be;

          (xiv)  the Borrower may hold the Existing Seller Letter of Credit 
      Cash Collateral for the purpose permitted by Section 9.01(xv) in 
      accordance with such Section 9.01(xv) and the Existing Seller Letter 
      of Credit Collateral Agreement, and may make investments thereof from 
      time to time in accordance with the requirements of the Existing 
      Seller Letter of Credit Collateral Agreement as originally in effect;

           (xv)  the Borrower may extend credit to Management Investors of 
      Parent or any of its Subsidiaries for the sole purpose of such 
      Management Investors purchasing M&G Holdings Common Stock; provided 
      that (x) the aggregate amount of all extensions of credit made 
      pursuant to this Section 9.05(xv) shall not exceed at any time 
      outstanding $750,000 and (y) to the extent cash is loaned to one or 
      more Management Investors pursuant to this Section 9.05(xv), such 
      cash shall be immediately used to purchase shares of M&G Holdings 
      Common Stock, and M&G Holdings shall immediately use the proceeds 
      received by it to make a capital contribution to the Parent, which in 
      turn shall immediately contribute such amount to the Borrower; 

          (xvi)  the Borrower and its Subsidiaries may make loans and 
      advances in the ordinary course of business to their respective 
      employees for moving, travel and emergency expenses and other similar 
      expenses, so long as the aggregate principal amount thereof at any 
      time outstanding (determined without regard to any write-downs or 
      write-offs of such loans and advances) shall not exceed $1,000,000;

         (xvii)  any Investment which may be deemed to exist as a result of 
      (x) any Contingent Obligation expressly permitted pursuant to Section 
      9.04 or (y) as a result of any payments made pursuant to the Existing 
      Tax Sharing Agreement (so long as such payments are not made more 
      than 10 days in advance of the time when required to be made pursuant 
      to the Existing Tax Sharing Agreement) in accordance with Section 
      9.06(y)(vi);

        (xviii)  the Borrower and the other Designated Credit Parties may 
      make an initial cash capital contribution to the Receivables Entity 
      on the Receivables Facility Transaction Date as provided in the 
      Receivables Facility Documents, so long as the Receivables Entity 
      uses all of the proceeds of such contribution on such date to 
      purchase Receivables Facility Assets from the Borrower and the other 
      Designated Credit Parties, and the Borrower and/or such other 
      Designated Credit Parties may hold the capital stock of the 
      Receivables Entity issued to them so long as such capital stock has 
      been duly pledged and delivered to the Collateral Agent pursuant to 
      the Pledge Agreement; 

          (xix)  on or after the Receivables Facility Transaction Date, the 
      Receivables Entity may invest Receivables Facility Assets pursuant 
      to, and in accordance with the terms of, the Receivables Facility 
      Documents; and

           (xx)  the loans and advances evidenced by the Transaction 
      Intercompany Notes may be made, so long as each such Transaction 
      Intercompany Note is pledged to the Collateral Agent pursuant to the 
      terms of the Pledge Agreement.

            9.06  Transactions with Affiliates.  The Borrower will not, and 
will not permit any of its Subsidiaries to, enter into any transaction or 
series of related transactions with any Affiliate (other than the Borrower 
or a Wholly-Owned Subsidiary thereof) of Parent or any of its Subsidiaries, 
(x) other than in the ordinary course of business and on terms and 
conditions substantially as favorable to the Borrower or such Subsidiary as 
would reasonably be obtained by the Borrower or such Subsidiary at that 
time in a comparable arm's-length transaction with a Person other than an 
Affiliate; provided, however, that for a transaction or series of related 
transactions with an aggregate value of $2,500,000 or more, the board of 
directors of the Borrower shall have received an opinion from a nationally 
recognized investment banking firm that such transaction is on terms no 
less favorable than those that might reasonably have been obtained in a 
comparable transaction at such time on a arm's-length basis from a Person 
that is not an Affiliate and (y) except that the following transactions, 
whether or not such transactions would otherwise be permitted by this 
Section 9.06, shall be permitted: 

            (i)  Dividends may be paid to the extent provided in Section 
      9.03; 

           (ii)  loans may be made and other transactions may be entered 
      into by the Borrower and the Borrower's Subsidiaries to the extent 
      permitted by Sections 9.04 and 9.05; 

          (iii)  the Borrower and its Subsidiaries may enter into 
      employment arrangements with executive officers and senior management 
      employees in the ordinary course of business; 

           (iv)  customary fees, not to exceed $100,000 in the aggregate 
      during any fiscal year for all payments made pursuant to this clause 
      (iv), may be paid to directors of the Borrower and its Subsidiaries; 

            (v)  the Transaction shall be permitted in accordance with the 
      provisions of Section 5 and the Documents;

           (vi)  so long as the Borrower is a member of the same 
      consolidated group as Jordan for federal income tax purposes, 
      payments required pursuant to the Existing Tax Sharing Agreement, as 
      in effect on the Initial Borrowing Date and delivered to the Banks 
      pursuant to Section 5.21, and as entered into by each newly-acquired 
      or created Subsidiary in accordance with the requirements of Section 
      8.15 or 9.13, as the case may be, shall be permitted, in each case so 
      long as the respective such payment does not give rise to an Event of 
      Default pursuant to Section 10.12;

          (vii)  the Borrower may make a payment on behalf of Parent on the 
      Initial Borrowing Date, of a one-time consulting fee in connection 
      with the Transaction pursuant to Section 2(b) of the TJC Management 
      Services Agreement referred to in clause (i) of the definition 
      thereof, to TJC in an aggregate amount not to exceed $2,250,000;

         (viii)  the Borrower and its Subsidiaries may pay consulting fees, 
      on a quarterly basis, in arrears, in the amounts required pursuant to 
      the terms of (x) its respective Intercompany Management Consulting 
      Agreement to M&G Holdings and (y) the JII Services Agreement to 
      Jordan, in each case for providing consulting services to Parent and 
      its Subsidiaries under the Intercompany Management Consultant 
      Agreements, provided that the aggregate amount of such fees payable 
      with respect to any fiscal quarter shall not exceed an amount equal 
      to 1% of the Borrower's gross sales (as determined on a consolidated 
      basis for the Borrower and its consolidated Subsidiaries); 

           (ix)  so long as no Default under Section 10.01 or 10.05 and no 
      Event of Default under any of Sections 10.03 (as a result of a 
      violation of any of the covenants contained in Sections 9.08 and/or 
      9.09), 10.01 or 10.05 exists at the time of payment thereof or would 
      exist immediately after giving effect thereto, the Borrower and its 
      Subsidiaries may pay consulting fees in the amounts required pursuant 
      to the terms of each TJC Management Services Agreement to TJC for 
      providing investment services to Parent and its Subsidiaries under 
      the TJC Management Services Agreements when and as due, so long as 
      the aggregate amount of fees paid by the Borrower and its 
      Subsidiaries pursuant to this clause (ix) does not exceed the sum of 
      (x) 2% of the aggregate consideration paid or received by the 
      Borrower or any of its Subsidiaries in connection with any 
      acquisition or divestiture and (y) 1% of the amount of any financing 
      obtained by the Borrower and its Subsidiaries after the date hereof;

            (x)  the Borrower may enter into and make payments under the 
      Affiliate Leases as originally in effect or as modified from time to 
      time in accordance with the requirements of this Agreement;

           (xi)  the Borrower and its Subsidiaries may enter into and make 
      payments under the Directors Indemnity Agreement; and 

          (xii)  the Borrower and its Subsidiaries may pay the amounts 
      required to be paid pursuant to the terms of the Earnout Agreement 
      when and as due.

Without limiting the foregoing provisions of this Section 9.06, in no event 
shall any management, consulting or similar fees be paid or payable by the 
Borrower or any of its Subsidiaries to any Person except as specifically 
provided in this Section 9.06.

           9.07  Changes in Business.  (a)  The Borrower and its 
Subsidiaries will not engage in any business other than the business 
engaged in by the Acquired Business and Merkle and its Subsidiaries as of 
the Effective Date and Related Businesses.

           (b)  Notwithstanding anything to the contrary contained in this 
Agreement, prior to the consummation of the Transaction, none of the 
Borrower, Acquisition Corp., Scott Acquisition Sub. or Gear Acquisition 
Sub. shall engage in any business.

           (c)  Notwithstanding anything to the contrary contained in this 
Agreement, the Receivables Entity will not engage in any business other 
than purchasing Receivables Facility Assets from the Designated Credit 
Parties and the related transactions pursuant to the terms of the 
Receivables Facility Documents.

           9.08  Consolidated Interest Coverage Ratio.  The Borrower will 
not permit the Consolidated Interest Coverage Ratio for any Test Period 
ending during a period described below to be less than the ratio set forth 
opposite such period below:



                   Period                                         Ratio
                   ------                                         -----
From and including Initial Borrowing Date through 
and including December 30, 1997                                   1.35:1.0

From and including December 31, 1997 through and 
including December 30, 1998                                       1.45:1.0

From and including December 31, 1998 through and 
including December 30, 1999                                       1.55:1.0

From and including December 31, 1999 through and 
including December 30, 2000                                       1.65:1.0

Thereafter                                                        1.75:1.0


Notwithstanding anything contrary contained above or elsewhere in this 
Agreement, (i) all calculations of compliance with this Section 9.08 shall 
be made on a Pro Forma Basis for any Permitted Transactions effected during 
the relevant Test Period and (x) if the respective Test Period begins prior 
to the Initial Borrowing Date, for the Transaction as if same had occurred 
on the first day of the respective Test Period and (y) if the respective 
Test Period ends after January 1, 1996 and begins prior to the BCM 
Acquisition Date, for the consummation of the BCM Transaction as if same 
had occurred on the first day of the respective Test Period and (ii) in no 
event shall the Consolidated Interest Coverage Ratio be less than 1.5:1.0 
upon the consummation of, and after giving effect on a Pro Forma Basis to, 
any Permitted Transaction effected after the Initial Borrowing Date.

           9.09  Leverage Ratio.  The Borrower will not permit the Leverage 
Ratio as described on the last day of any Test Period ending during a 
period described below to exceed the ratio set forth opposite the 
respective period below:


                Period                                            Ratio
                ------                                            -----
From and including Initial Borrowing Date through 
and including December 30, 1997                                 6.15:1.0

From and including December 31, 1997 through and 
including December 30, 1998                                     6.10:1.0

From and including December 31, 1998 through and 
including December 30, 1999                                     5.95:1.0

From and including December 31, 1999 through and 
including December 30, 2000                                     5.60:1.0

Thereafter                                                      5.30:1.0


Notwithstanding anything contrary contained above or elsewhere in this 
Agreement, (i) all calculations of compliance with this Section 9.09 shall 
be made on a Pro Forma Basis for any Permitted Transactions effected during 
the relevant Test Period and (x) if the respective Test Period begins prior 
to the Initial Borrowing Date, for the Transaction as if same had occurred 
on the first day of the respective Test Period and (y) if the respective 
Test Period ends after January 1, 1996 and begins prior to the BCM 
Acquisition Date, for the consummation of the BCM Transaction as if same 
had occurred on the first day of the respective Test Period and (ii) in no 
event shall the Leverage Ratio be greater than 6.0:1.0 upon the 
consummation of, and after giving effect on a Pro Forma Basis to, any 
Permitted Transaction effected after the Initial Borrowing Date. 

           9.10  Limitation on Modifications of Certain Indebtedness; 
Modifications of Certificate of Incorporation, By-Laws and Certain 
Agreements; etc.  The Borrower will not, and will not permit any of its 
Subsidiaries to:

         (i) amend or modify (or permit the amendment or modification of) 
      any of the terms or provisions of (x) any Acquisition Document 
      (including the Earnout Agreement), any Merger Document, the Existing 
      Seller Subordinated Note, any Existing Seller Subordinated Note 
      Document, the Existing Seller Installment Note, the Existing 
      Indebtedness, any Debt Agreement, or any agreement (including, 
      without limitation, any purchase agreement, indenture, loan agreement 
      or security agreement) relating thereto, except for Permitted 
      Amendments or (y) the Parent Subordinated Intercompany Note;

        (ii) make (or give any notice in respect of) any voluntary or 
      optional payment or prepayment on or redemption or acquisition for 
      value (including, without limitation, by way of depositing with the 
      trustee with respect thereto monies or securities before due for the 
      purpose of paying when due) or exchange of, or any voluntary 
      prepayment of, or any redemption as a result of any equity issuance, 
      asset sale, change of control or similar event of, or set-off any 
      amounts against, any Existing Seller Subordinated Note;

       (iii) make any interest or principal or other payment with respect 
      to any Existing Seller Subordinated Note or the Parent Subordinated 
      Intercompany Note which is not permitted to be paid to the holder 
      thereof in accordance with the subordination provisions applicable 
      thereto or, in the case of the Parent Subordinated Intercompany Note, 
      violates the provisions of Section 9.03;

        (iv) amend, modify or change its Certificate of Incorporation 
      (including, without limitation, by the filing or modification of any 
      certificate of designation) (other than a certificate of merger with 
      respect to the Merger) or By-Laws, or similar organizational 
      document, except for such amendments to the Certificate of 
      Incorporation or By-Laws or such other organizational document of the 
      Borrower or any of its Subsidiaries which do not in any way adversely 
      affect the interests of any Bank in its capacity as such; 

         (v) amend, modify, change or terminate the Existing Tax Sharing 
      Agreement, except for such amendments, modifications or changes which 
      solely add new parties thereto, including, without limitation, new 
      Subsidiaries of the Borrower in accordance with Sections 8.11 and 
      9.13 or which are not adverse to the interests of any Bank, or enter 
      into any new Tax Sharing Agreement;

        (vi) enter into any new Management Agreement or amend, modify or 
      change the JII Services Agreement, any Intercompany Management 
      Consulting Agreement, the TJC Management Services Agreement or the 
      Directors Indemnity Agreement, except amendments, modifications or 
      changes to any such agreement which are not adverse to any Bank, do 
      not violate or breach, and are not inconsistent with, any of the 
      terms of this Agreement and which do not, and will not, involve the 
      payment by the Borrower or any of its Subsidiaries of any amounts 
      which could give rise to a violation of this Agreement and do not 
      result in the Borrower or any of its Subsidiaries incurring then or 
      at any time in the future any liability or monetary obligation which 
      could give rise to a violation of this Agreement or which is in 
      excess of that which is in existence on the Effective Date (it being 
      understood that new directors may be added as parties to the 
      Directors Indemnity Agreement);

       (vii) amend, modify, change or terminate any Affiliate Lease, except 
      for such amendments, modifications or changes which are not adverse 
      to any Bank in its capacity as such, do not violate or breach, and 
      are not inconsistent with, any of the terms of the Agreement;

      (viii) amend, modify or change any provision of, or any agreement 
      relating to, Permitted Acquired Debt, Permitted Debt or Permitted 
      Earn-Out Debt or alter the non-recourse nature of any such Permitted 
      Acquired Debt or provide for any guaranty or other direct or indirect 
      assurances of payment by the Borrower or any Subsidiary of the 
      Borrower or provide any security therefor (other then in connection 
      with Liens permitted under Section 9.01(xiv) securing Permitted 
      Acquired Debt) and, except for amendments, modifications or changes 
      which are not adverse to any Bank, and do not violate or breach, and 
      are not inconsistent with, any of the terms of this Agreement;

        (ix) amend, modify or change, terminate or enter into any new 
      Shareholders' Agreement, or any other agreement with respect to its 
      capital stock, including warrants and warrant agreements, except 
      amendments, modifications, changes, terminations and new agreements 
      which are not adverse to any Bank, do not violate or breach, and are 
      not inconsistent with, any of the terms of this Agreement and which 
      do not, and will not, involve the payment by the Borrower or any of 
      its Subsidiaries of any amounts which could give rise to a violation 
      of this Agreement and do not result in the Borrower or any of its 
      Subsidiaries incurring then or at any time in the future any 
      liability or monetary obligation which could give rise to a violation 
      of this Agreement; 

         (x) amend, modify or change, terminate or enter into any new 
      Employee Benefit Plan or Employment Agreement, except in the case of 
      this clause (x) if the aggregate cost to the Borrower and its 
      Subsidiaries as a result of such amendments, modifications, changes, 
      terminations and new agreements could not reasonably be expected to 
      have a material adverse effect on the performance, business, assets, 
      liabilities, operations, properties, condition (financial or 
      otherwise) or prospects of the Borrower or the Borrower and its 
      Subsidiaries taken as a whole; or

        (xi) at any time after the Receivables Facility Transaction Date, 
      amend or modify, or permit the amendment or modification of, any 
      provision of any Receivables Facility Document, in each case unless 
      the Receivables Amendment Conditions are satisfied in connection 
      therewith.

           9.11  Limitation on Certain Restrictions on Subsidiaries.  The 
Borrower will not, and will not permit any of its Subsidiaries to, directly 
or indirectly, create or otherwise cause or suffer to exist or become 
effective any encumbrance or restriction on the ability of any Subsidiary 
of the Borrower to (a) pay dividends or make any other distributions on its 
capital stock or any other interest or participation in its profits owned 
by the Borrower or any of its Subsidiaries, or pay any Indebtedness owed to 
the Borrower or any Subsidiary of the Borrower, (b) make loans or advances 
to the Borrower or any Subsidiary of the Borrower or (c) transfer any of 
its properties or assets to the Borrower or any Subsidiary of the Borrower, 
except in each case for such encumbrances or restrictions existing under or 
by reason of (i) applicable law, (ii) this Agreement and the other Credit 
Documents, (iii) customary provisions restricting subletting or assignment 
of any lease governing a leasehold interest of the Borrower or any 
Subsidiary of the Borrower, (iv) customary provisions restricting 
assignment of any agreement entered into by the Borrower or any Subsidiary 
of the Borrower in the ordinary course of business, (v) restrictions on the 
transfer of any assets subject to a Lien permitted by this Agreement, (vi) 
the Senior Unsecured Note Documents (as in effect on the Effective Date), 
(vii) any agreement or instrument governing Permitted Acquired Debt, which 
encumbrance or restriction is not applicable to any Person or the 
properties or assets of any Person, other than the Person or the properties 
or assets of the Person acquired pursuant to the respective Permitted 
Transaction and so long as the respective encumbrances or restrictions were 
not created (or made more restrictive) in connection with or in 
anticipation of the respective Permitted Transaction, and any refinancings 
of Permitted Acquired Debt permitted pursuant to Section 9.04(xvi) may 
contain restrictions or encumbrances which are not more restrictive than 
those contained in the Indebtedness being refinanced, (viii) any 
Indebtedness permitted by Section 9.04 (other than Permitted Acquired Debt) 
to the extent the restrictions contained in such Indebtedness are not more 
restrictive than those contained in this Agreement and (ix) restrictions on 
the Receivables Entity, and with respect to the Receivables and Receivables 
Related Assets, set forth in the Receivables Facility Documents.

           9.12  Limitation on Issuance of Capital Stock.  The Borrower 
will not, and will not permit any of its Subsidiaries to, issue (including 
by way of sales of treasury stock) any capital stock (including preferred 
stock), or any options or warrants to purchase, or securities convertible 
into, capital stock, except (i) for transfers and replacements of then 
outstanding shares of capital stock, (ii) for stock splits, stock dividends 
and additional issuances which do not decrease the percentage ownership of 
the Borrower or any of its Subsidiaries in any class of the capital stock 
of the Borrower or any of its Subsidiaries, (iii) the issuances of capital 
stock of an entity to the Borrower or any of its Subsidiaries in connection 
with the creation of a new Subsidiary created in compliance with Section 
9.13, (iv) other than with respect to the Borrower, to qualify directors to 
the extent required by applicable law and (v) any Subsidiary created to 
effect, or acquired pursuant to, a Permitted Acquisition may be, or become 
in connection with the respective Permitted Acquisition, an 80%-Owned 
Subsidiary, and in connection therewith such Subsidiary may issue capital 
stock to Persons other than the Borrower and its Subsidiaries so long as it 
remains such an 80%-Owned Subsidiary and such issuances do not violate any 
other provision of this Agreement.  All capital stock issued in accordance 
with this Section 9.12 shall be delivered to the Collateral Agent for 
pledge pursuant to a Pledge Agreement to the extent required thereby.

           9.13  Limitation on Creation of Subsidiaries.  The Borrower will 
not, and will not permit any of its Subsidiaries to, establish, create or 
acquire any Subsidiary; provided, that the Borrower and its Subsidiaries 
shall be permitted to (a) establish, create or acquire Subsidiaries in 
connection with Permitted Transactions to the extent otherwise permitted by 
this Agreement so long as in each such case, such new Subsidiary shall take 
all actions to the extent required pursuant to Section 8.11; and (b) 
establish or create any Wholly-Owned Domestic Subsidiary, in each such case 
so long as (i) the capital stock of such new Wholly-Owned Domestic 
Subsidiary held by the Borrower or a Wholly-Owned Domestic Subsidiary is 
pledged pursuant to, and to the extent required by, Section 8.11 and the 
Pledge Agreement and the certificates representing such stock, together 
with stock powers duly executed in blank, are delivered to the Collateral 
Agent, (ii) such new Wholly-Owned Domestic Subsidiary (except if such 
Person is the Receivables Entity) executes a counterpart of the Subsidiary 
Guaranty, the Pledge Agreement and the Security Agreement, (iii) such new 
Wholly-Owned Domestic Subsidiary executes a counterpart of the Existing Tax 
Sharing Agreement or enters into an amendment thereto in form satisfactory 
to the Agent, and (iv) such new Wholly-Owned Domestic Subsidiary shall take 
all other actions required pursuant to Section 8.11.  In addition, each 
such new Subsidiary shall execute and deliver, or cause to be executed and 
delivered, all other relevant documentation of the type described in 
Section 5 as such new Subsidiary (other than the Receivables Entity) would 
have had to deliver if such new Subsidiary were a Credit Party on the 
Effective Date.

           SECTION 10.  Events of Default.  Upon the occurrence of any of 
the following specified events (each, an "Event of Default"):

           10.01  Payments.  The Borrower shall (i) default in the payment 
when due of any principal of any Loan or any Note, (ii) default in the 
payment of any Unpaid Drawing for three or more Business Days after the 
date the respective Drawing was made or, if no Default or Event of Default 
exists pursuant to Section 10.05, for three or more Business Days after the 
receipt by the Borrower of notice of the respective Drawing by the Agent or 
the Issuing Bank or (iii) default, and such default shall continue 
unremedied for three or more Business Days, in the payment when due of any 
interest on any Loan or Note or Unpaid Drawing, or any Fees or any other 
amounts owing hereunder or under any other Credit Document; or

           10.02  Representations, etc.  Any representation, warranty or 
statement made by any Credit Party herein or in any other Credit Document 
or in any certificate delivered pursuant hereto or thereto shall prove to 
be untrue in any material respect on the date as of which made or deemed 
made; or

           10.03  Covenants.  Any Credit Party shall (i) default in the due 
performance or observance by it of any term, covenant or agreement 
contained in Section 8.01(f)(i), 8.08 or Section 9 or (ii) default in the 
due performance or observance by it of any other term, covenant or 
agreement contained in this Agreement and such default shall continue 
unremedied for a period of 30 days after written notice to the Borrower by 
the Agent or any Bank; or

           10.04  Default Under Other Agreements.  (a) (i) The Borrower or 
any of its Subsidiaries shall (x) default in any payment of any 
Indebtedness (other than the Obligations) beyond the period of grace, if 
any, provided in the instrument or agreement under which such Indebtedness 
was created, or (y) default in the observance or performance of any 
agreement or condition relating to any Indebtedness (other than the 
Obligations) 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) to cause (determined without 
regard to whether any notice is required), any such Indebtedness to become 
due prior to its stated maturity (with the occurrences described in 
preceding clause (y) to include any early amortization or termination event 
or other similar event with respect to the Receivables Facility if such 
occurrence has substantially the same effect as is otherwise provided above 
with respect to outstanding Indebtedness pursuant to this clause (y)), or 
(ii) any Indebtedness (other than the Obligations, but including Attributed 
Receivables Facility Indebtedness) of the Borrower or any of its 
Subsidiaries shall be declared to be due and payable, or required to be 
prepaid other than by a regularly scheduled required prepayment, prior to 
the stated maturity thereof, provided that it shall not be a Default or 
Event of Default under this Section 10.04(a) unless the aggregate principal 
amount of all Indebtedness as described in preceding clauses (i) and (ii) 
is at least $7,500,000; or (b) (i) Parent shall (x) default in any payment 
of any Indebtedness beyond the period of grace, if any, provided in the 
instrument or agreement under which such Indebtedness was created or (y) 
default in the observance or performance of any agreement or condition 
relating to any 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) to cause (determined 
without regard to whether any notice is required), any such Indebtedness to 
become due prior to its stated maturity, or (ii) any Indebtedness of Parent 
shall be declared to be due and payable, or required to be prepaid other 
than by a regularly scheduled required prepayment, prior to the stated 
maturity thereof, provided that it shall not be a Default or Event of 
Default under this Section 10.04(b) unless the aggregate principal amount 
of all Indebtedness as described in preceding clauses (i) and (ii) is at 
least $20,000,000; or

           10.05  Bankruptcy, etc.  M&G Holdings, Parent, Borrower or any 
of the Borrower's Subsidiaries (excluding Insignificant Subsidiaries) shall 
commence a voluntary case concerning itself under Title 11 of the United 
States Code entitled "Bankruptcy," as now or hereafter in effect, or any 
successor thereto (the "Bankruptcy Code") or shall consent to the filing of 
any petition against it under any such law; or an involuntary case is 
commenced against M&G Holdings, Parent, Borrower or any of the Borrower's 
Subsidiaries (excluding Insignificant Subsidiaries) and the petition is not 
controverted within 10 days, or is not dismissed within 60 days, after 
commencement of the case; or a custodian (as defined in the Bankruptcy 
Code) is appointed for, or takes charge of, all or substantially all of the 
property of M&G Holdings, Parent, Borrower or any of the Borrower's 
Subsidiaries (excluding Insignificant Subsidiaries); or M&G Holdings, 
Parent, Borrower or any of the Borrower's Subsidiaries (excluding 
Insignificant Subsidiaries) commences any other proceeding under any 
reorganization, arrangement, adjustment of debt, relief of debtors, 
dissolution, insolvency or liquidation or similar law of any jurisdiction 
whether now or hereafter in effect relating to M&G Holdings, Parent, 
Borrower or any of the Borrower's Subsidiaries (excluding Insignificant 
Subsidiaries); or there is commenced against M&G Holdings, Parent, Borrower 
or any of the Borrower's Subsidiaries (excluding Insignificant 
Subsidiaries) any such proceeding which remains undismissed for a period of 
60 days; or M&G Holdings, Parent, Borrower or any of the Borrower's 
Subsidiaries (excluding Insignificant Subsidiaries) is adjudicated 
insolvent or bankrupt; or any order of relief or other order approving any 
such case or proceeding is entered; or M&G Holdings, Parent, Borrower or 
any of the Borrower's Subsidiaries (excluding Insignificant Subsidiaries) 
suffers any appointment of any custodian or the like for it or any 
substantial part of its property to continue undischarged or unstayed for a 
period of 60 days; or M&G Holdings, Parent, Borrower or any of the 
Borrower's Subsidiaries (excluding Insignificant Subsidiaries) makes a 
general assignment for the benefit of creditors; or any partnership and/or 
corporate action is taken by M&G Holdings, Parent, Borrower or any of the 
Borrower's Subsidiaries (excluding Insignificant Subsidiaries) for the 
purpose of effecting any of the foregoing; or

           10.06  ERISA.  (a)  Any Plan shall fail to satisfy the minimum 
funding standard required for any plan year or part thereof or a waiver of 
such standard or extension of any amortization period is sought or granted 
under Section 412 of the Code, any Plan shall have had or is likely to have 
a trustee appointed to administer such Plan, any Plan is, shall have been 
or is likely to be terminated or to be the subject of termination 
proceedings under ERISA, any Plan shall have an Unfunded Current Liability, 
a contribution required to be made to a Plan has not been timely made, the 
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate has 
incurred or is likely to incur a liability to or on account of a Plan under 
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 
4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code, or the 
Borrower or any of its Subsidiaries has incurred or is likely to incur 
liabilities pursuant to one or more employee welfare benefit plans (as 
defined in Section 3(1) of ERISA) that provide benefits to retired 
employees or other former employees (other than as required by Section 601 
of ERISA) or employee pension benefit plans (as defined in Section 3(2) of 
ERISA); (b) there shall result from any such event or events the imposition 
of a lien, the granting of a security interest, or a liability or a 
material risk of incurring a liability; (c) which lien, security interest 
or liability, individually and/or in the aggregate, in the opinion of the 
Required Banks, will have a material adverse effect upon the business, 
operations, property, assets, nature of assets, liabilities, condition 
(financial or otherwise) or prospects of the Borrower and its Subsidiaries 
taken as a whole; or

           10.07  Security Documents.  At any time after the execution and 
delivery thereof, any of the Security Documents shall cease to be in full 
force and effect, or shall cease to give the Collateral Agent for the 
benefit of the Secured Creditors the Liens, rights, powers and privileges 
purported to be created thereby (including, without limitation, a perfected 
security interest in, and Lien on, all of the Collateral), in favor of the 
Collateral Agent, superior to and prior to the rights of all third Persons 
(except as permitted by Section 9.01), and subject to no other Liens 
(except as permitted by Section 9.01), or any Credit Party shall default in 
the due performance or observance of any term, covenant or agreement on its 
part to be performed or observed pursuant to any of the Security Documents 
and such default shall continue beyond any grace period specifically 
applicable thereto pursuant to the terms of such Security Document; or

           10.08  Guaranties.  Any Guaranty or any provision thereof shall 
cease to be in full force or effect as to the relevant Subsidiary 
Guarantor, or any Subsidiary Guarantor or Person acting by or on behalf of 
such Subsidiary Guarantor shall deny or disaffirm such Subsidiary 
Guarantor's obligations under the relevant Guaranty, or any Subsidiary 
Guarantor shall default in the due performance or observance of any term, 
covenant or agreement on its part to be performed or observed pursuant to 
the relevant Guaranty; or

           10.09  Judgments.  One or more judgments or decrees shall be 
entered against the Borrower or any of its Subsidiaries (excluding 
Insignificant Subsidiaries) involving in the aggregate for the Borrower and 
such Subsidiaries a liability (not fully covered by a reputable and solvent 
insurance company or not paid) and such judgments and decrees either shall 
be final and non-appealable or shall not be vacated, discharged or stayed 
or bonded pending appeal for any period of 60 consecutive days, and the 
aggregate amount of all such judgments exceeds $7,500,000; or

           10.10  Change of Control.  A Change of Control shall occur; or

           10.11  Senior Unsecured Notes; Parent Subordinated Intercompany 
Note.  At any time after the Effective Date and for any reason whatsoever 
(w) any amendment or modification, other than one or more Permitted 
Amendments, is made to the Senior Unsecured Note Documents, (x) any 
repayment of principal is made with respect to any Senior Unsecured Note 
unless, prior to such repayment, an amount of cash equal to the aggregate 
principal amount so repaid (and any premium related thereto) has been 
contributed by Parent to the common equity of the Borrower and then 
utilized by the Borrower to prepay the principal of the Parent Subordinated 
Intercompany Note (and any premium related thereto) in accordance with the 
provisions of Section 9.03(xi), (y) the aggregate principal amount of the 
Parent Subordinated Intercompany Note at any time exceeds, or for any 
period of 30 or more days is less than, the aggregate principal amount of 
Senior Unsecured Notes then outstanding or (z) any Person other than Parent 
owns, or otherwise acquires a beneficial interest in, the Parent 
Subordinated Intercompany Note; or

           10.12  Certain Tax Payments.  For any taxable year ending after 
the Effective Date with respect to which the Borrower and any of its 
Subsidiaries are included in a consolidated federal income tax return, or a 
consolidated, combined or unitary state or local tax return with any Person 
(including without limitation Jordan, M&G Holdings and/or Parent) other 
than the Borrower and its Subsidiaries, the Borrower and its Subsidiaries 
shall pay with respect to such year an amount of federal income tax or 
state or local tax, as the case may be, that exceeds, in the aggregate, the 
amount of such tax that the Borrower and its Subsidiaries would have been 
obligated to pay if the Borrower and its Subsidiaries had filed a separate 
consolidated federal income tax return or a separate consolidated, combined 
or unitary state or local tax return, as the case may be, for such year and 
all prior taxable years ending after the Effective Date (with the Borrower 
as the common parent of such affiliated group) and included in such 
separate consolidated, combined or unitary tax return, in addition to items 
of income, gain, loss, deduction and credit generated by such corporations, 
any and all deductions, losses and credits generated by Parent, but none of 
the income or gain generated by Parent, other than income from payments of 
interest, if any, from Borrower (to the extent offset by deductions, losses 
and credits generated by Parent); provided that notwithstanding the 
foregoing, there shall be no default under this Section 10.12 unless the 
aggregate amount of such excess payments outstanding at any time (i.e., 
theretofore paid and not reimbursed to the Borrower by Parent or one or 
more of the Parent's Affiliates (exclusive of the Borrower and its 
Subsidiaries and Persons controlled by the Borrower)) exceed $250,000;

then, and in any such event, and at any time thereafter, if any Event of 
Default shall then be continuing, the Agent, upon the written request of 
the Required Banks, shall by written notice to the Borrower, take any or 
all of the following actions, without prejudice to the rights of the Agent, 
any Bank or the holder of any Note to enforce its claims against any Credit 
Party (provided, that, if an Event of Default specified in Section 10.05 
shall occur with respect to the Borrower, the result which would occur upon 
the giving of written notice by the Agent to the Borrower as specified in 
clauses (i) and (ii) below shall occur automatically without the giving of 
any such notice):  (i) declare the Total Commitment terminated, whereupon 
all of the Commitments of each Bank shall forthwith terminate immediately 
and any Commitment Commission shall forthwith become due and payable 
without any other notice of any kind; (ii) declare the principal of and any 
accrued interest in respect of all Loans and the Notes and all Obligations 
(including Unpaid Drawings) owing hereunder and thereunder to be, whereupon 
the same shall become, forthwith due and payable without presentment, 
demand, protest or other notice of any kind, all of which are hereby waived 
by each Credit Party; (iii) terminate any Letter of Credit, which may be 
terminated, in accordance with its terms; (iv) direct the Borrower to pay 
(and the Borrower agrees that upon receipt of such notice, or upon the 
occurrence of an Event of Default specified in Section 10.05 with respect 
to the Borrower, it will pay) to the Agent at the Payment Office such 
additional amount of cash, to be held as security by the Agent, as is equal 
to the aggregate Stated Amount of all Letters of Credit issued for the 
account of the Borrower and then outstanding; (v) enforce, as Collateral 
Agent, any or all of the Liens and security interests created pursuant to 
the Security Documents; and (vi) apply any cash collateral as provided in 
Section 4.02.

           SECTION 11.  Definitions and Accounting Terms.
                        --------------------------------
           11.01  Defined Terms.  As used in this Agreement, the following 
terms shall have the following meanings (such meanings to be equally 
applicable to both the singular and plural forms of the terms defined):

           "Acquired Business" shall mean the businesses, assets and 
liabilities acquired by Acquisition Corp. from Imperial, Scott and Gear 
pursuant to the Acquisition Documents.

           "Acquired EBITDA" shall mean, for any period, that portion of 
the Consolidated EBITDA of the Borrower and its Subsidiaries for such 
period which, as determined in good faith by the Borrower, is attributable 
to Permitted Acquired Businesses theretofore acquired in Permitted 
Acquisitions effected prior to the date of the respective determination of 
such Acquired EBITDA; provided that Acquired EBITDA shall not include any 
amounts in respect of any Permitted Acquired Business for any period prior 
to the acquisition thereof in a Permitted Acquisition by the Borrower 
and/or one or more of its Subsidiaries.

           "Acquired Property" shall have the meaning provided in Section 
9.01(viii).

           "Acquisition" shall mean the acquisition by Acquisition Corp. of 
the Acquired Business from Imperial, Scott and Gear pursuant to, and in 
accordance with the terms of, the Acquisition Documents.

           "Acquisition Agreement" shall mean the Asset Purchase Agreement, 
dated as of November 7, 1996, among Acquisition Corp., Imperial, Scott and 
Gear, as amended to the Effective Date and as the same may be further 
modified, amended or supplemented from time to time in accordance with the 
terms hereof and thereof.

           "Acquisition Corp." shall mean The New Imperial Electric 
Company, a Delaware corporation and a Wholly-Owned Subsidiary of the 
Borrower.

           "Acquisition Documents" shall mean the Acquisition Agreement, 
the Earnout Agreement and all other agreements, instruments and documents 
entered into in connection with the Acquisition.

           "Additional Interest" shall mean the Liquidated Damages as 
defined in, and payable in accordance with the terms of, the Senior 
Unsecured Note Indenture.

           "Additional Security Documents" shall have the meaning provided 
in Section 8.11.

           "Adjusted Certificate of Deposit Rate" shall mean, on any day, 
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by 
dividing (x) the most recent weekly average dealer offering rate for 
negotiable certificates of deposit with a three-month maturity in the 
secondary market as published in the most recent Federal Reserve System 
publication entitled "Select Interest Rates," published weekly on Form H.15 
as of the date hereof, or if such publication or a substitute containing 
the foregoing rate information shall not be published by the Federal 
Reserve System for any week, the weekly average offering rate determined by 
the Agent on the basis of quotations for such certificates received by it 
from three certificate of deposit dealers in New York of recognized 
standing or, if such quotations are unavailable, then on the basis of other 
sources reasonably selected by the Agent, by (y) a percentage equal to 100% 
minus the stated maximum rate of all reserve requirements as specified in 
Regulation D applicable on such day to a three-month certificate of deposit 
of a member bank of the Federal Reserve System in excess of $100,000 
(including, without limitation, any marginal, emergency, supplemental, 
special or other reserves), plus (2) the then daily net annual assessment 
rate as estimated by the Agent for determining the current annual 
assessment payable by the Agent to the Federal Deposit Insurance 
Corporation for insuring three-month certificates of deposit.

           "Affiliate" shall mean, with respect to any Person, any other 
Person (i) directly or indirectly controlling (including, but not limited 
to, all directors, officers and partners of such Person) controlled by, or 
under direct or indirect common control with, such Person or (ii) that 
directly or indirectly owns more than 5% of any class of the voting 
securities or capital stock of or equity interests in such Person.  A 
Person shall be deemed to control another Person if such Person possesses, 
directly or indirectly, the power to direct or cause the direction of the 
management and policies of such other Person, whether through the ownership 
of voting securities, by contract or otherwise.  

           "Affiliate Leases" shall mean and include each of (i) the 
Industrial Building Lease, dated as of September 22, 1995, between FJM 
Realty, Inc. and the Borrower, with respect to the property located at 1776 
Winthrop Drive, Des Plaines, Illinois, (ii) the Industrial Building Lease, 
dated as of September 22, 1995 between Bradrock Realty, Inc. and the 
Borrower, with respect to the property located at 70 East Bradrock Drive, 
Des Plaines, Illinois, (iii) the Industrial Building Lease, dated as of 
September 22, 1995 between Ridge Industries, Inc. and the Borrower, with 
respect to the property located at 1300 Peebles Drive, Richland Center, 
Wisconsin, and (iv) the Industrial Building Lease, dated as of September 
22, 1995 between Bradrock Realty, Inc. and the Borrower, with respect to 
the property located at 72-74 East Bradrock Drive, Des Plaines, Illinois, 
in each case as such Affiliate Lease is in effect on the Original Effective 
Date and as the same may be amended, modified or supplemented from time to 
time in accordance with the terms hereof and thereof.

           "Agent" shall mean Bankers Trust Company, in its capacity as 
Agent for the Banks hereunder, and shall include any successor to the Agent 
appointed pursuant to Section 12.09.

           "Agreement" shall mean this Credit Agreement, as modified, 
supplemented, amended, restated, extended, renewed, refinanced or replaced 
from time to time.

           "Applicable Commitment Commission Percentage" shall mean, at any 
time, a percentage per annum equal to 1/2 of 1%; provided, that from and 
after the Start Date occurring after the last day of the first fiscal 
quarter of the Borrower ended at least one year after the Initial Borrowing 
Date to and including the corresponding End Date, the Applicable Commitment 
Commission Percentage shall be the respective percentage per annum set 
forth in clause (A) or (B) below if, but only if, as of the Test Date the 
following conditions in clause (A) or (B) below are met:

           (A)   3/8 of 1% if, but only if, as of the Test Date for such 
      Start Date the Leverage Ratio (calculated on a Pro Forma Basis for 
      all Permitted Transactions which actually occurred during the 
      relevant Test Period) for the Test Period ended on such Test Date 
      shall be equal to or greater than 4.75:1.0 but less than 5.0:1.0; or

           (B)   1/4 of 1% if, but only if, as of the Test Date for such 
      Start Date the Leverage Ratio (calculated on a Pro Forma Basis for 
      all Permitted Transactions which actually occurred during the 
      relevant Test Period) for the Test Period ended on such Test Date is 
      less than 4.75:1.0.

The Leverage Ratio shall be determined for the relevant Test Period, in 
each case taken as one accounting period, by delivery of an officer's 
certificate of the Borrower to the Banks pursuant to Section 8.01(e), which 
certificate shall set forth the calculation of the Leverage Ratio.  The 
Applicable Commitment Commission Percentage so determined shall apply, 
except as set forth below, from the date on which such officer's 
certificate is delivered to the Agent to the earlier of (x) the date on 
which the next certificate is delivered to the Agent pursuant to Section 
8.01(e) and (y) the 45th day following the first day of the fiscal quarter 
immediately following the delivery of such certificate to the Agent.  
Notwithstanding anything to the contrary contained above, the Applicable 
Commitment Commission Percentage shall be 1/2 of 1% if no officer's 
certificate has been delivered to the Banks pursuant to Section 8.01(e) 
which sets forth the Leverage Ratio for the relevant Test Period or the 
financial statements upon which any such calculations are based have not 
been delivered, until such a certificate and/or financial statements are 
delivered.  Notwithstanding anything to the contrary contained above in 
this definition, the Applicable Commitment Commission Percentage shall be 
1/2 of 1% per annum at any time that a Default under Section 10.01 or 10.05 
or any Event of Default shall exist.

           "Applicable Margin" shall mean a percentage equal to (i) in the 
case of Base Rate Loans, 1.50% less the then applicable Interest Reduction 
Discount and (ii) in the case of Eurodollar Loans, 2.50% less the then 
applicable Interest Reduction Discount.

           "Asset Contribution" shall have the meaning provided in Section 
5.11(b).

           "Asset Sale" shall mean any sale, transfer or other disposition 
by the Borrower or any of its Subsidiaries to any Person other than the 
Borrower or any of its Subsidiaries of any asset (including, without 
limitation, any capital stock, limited liability company interests, 
partnership interests or other securities of another Person) of the 
Borrower or any of its Subsidiaries other than (u) transfers of Receivables 
Facility Assets as permitted by Sections 9.02(xii) and (xiii), (v) any 
granting of licenses in the ordinary course of business of the Borrower and 
its Subsidiaries, (w) any surrender of claims not involving the sale of an 
asset, (x) any sale, transfer or disposition of Cash Equivalents, (y) any 
sale, transfer or disposition of inventory, Receivables and Receivables 
Related Assets in the ordinary course of business of the Borrower and its 
Subsidiaries and (z) any sale, transfer or disposition of assets generating 
Net Cash Proceeds from such transaction in an amount which does not exceed 
$1,000,000).

           "Asset Sale Calculation Period" shall have the meaning provided 
in Section 8.18.

           "Asset Sale Certificate" shall have the meaning provided in the 
definition of Blocked Commitment.

           "Assignment and Assumption Agreement" shall mean the Assignment 
and Assumption Agreement substantially in the form of Exhibit P 
(appropriately completed).

           "Attributed Receivables Facility Indebtedness" at any time shall 
mean the principal amount of Indebtedness which would be outstanding at 
such time under the Receivables Facility if same were structured as a 
secured lending agreement rather than a purchase agreement.

           "Authorized Officer" of any Credit Party shall mean, with 
respect to (i) the delivery of Notices of Borrowing, Notices of Conversion, 
Letter of Credit Requests and similar notices, any person or persons that 
have or have been authorized by the board of directors of the Borrower to 
deliver such notices pursuant to this Agreement and that has or have 
appropriate signature cards on file with the Agent, the Swingline Lender 
and each Issuing Bank and (ii) the delivery of financial information and 
officer's certificates pursuant to this Agreement, mean any of the Chief 
Executive Officer, the President, the Chief Financial Officer, any 
Vice-President or Treasurer of such Credit Party.  The Agent shall have no 
duty to ascertain whether any Person purporting to be an Authorized Officer 
has been authorized by the board of directors of any Credit Party and shall 
not, in the absence of gross negligence or willful misconduct on its part, 
be held liable for acting under this Agreement upon its belief that any 
such Person is as an Authorized Officer.  Furthermore, for purposes of this 
Agreement and the related Credit Documents, the actions of any Person 
believed to be an Authorized Officer by the Agent as discussed above shall 
be fully binding upon the Credit Parties.

           "Available Commitment" for each Bank shall mean, at any time, 
such Bank's Commitment less such Bank's Percentage of the Blocked 
Commitment, if any, at such time.  

           "Bank" shall mean each financial institution listed on Schedule 
I, as well as any Person which becomes a "Bank" hereunder pursuant to 
13.04(b).

           "Bank Default" shall mean (i) the refusal (which has not been 
retracted) of a Bank to make available its portion of any Borrowing 
(including a Mandatory Borrowing) or Unpaid Drawing in violation of this 
Agreement or (ii) a Bank having notified in writing the Borrower and/or the 
Agent that it does not intend to comply with its obligations under Section 
1.01(a), (b) or (c), or Section 2.04.

           "Bankruptcy Code" shall have the meaning provided in Section 
10.05.

           "Barber-Colman" shall mean BCM Holdings, Inc., an Illinois 
corporation and a Wholly-Owned Subsidiary of Merkle.

           "Base Rate" at any time shall mean the higher of (i) the rate 
which is   of 1% in excess of the Adjusted Certificate of Deposit Rate, 
(ii)   of 1% in excess of Federal Funds Rate and (iii) the Prime Lending 
Rate.

           "Base Rate Loan" shall mean (i) each Swingline Loan and (ii) 
each Revolving Loan designated or deemed designated as such by the Borrower 
at the time of the incurrence thereof or conversion thereto. 

           "BCM Acquired Business" shall have the meaning provided such 
term in the Existing Credit Agreement.

           "BCM Acquired Debt" shall have the meaning provided such term in 
the Existing Credit Agreement.

           "BCM Acquisition Date" shall mean the First Amendment Effective 
Date as such term is defined in the Existing Credit Agreement.

           "BCM Restructuring Costs" shall have the meaning provided such 
term in the Existing Credit Agreement.

           "BCM Transaction" shall have the meaning provided such term in 
the Existing Credit Agreement.

           "Blocked Commitment" shall mean initially, $0; provided that on 
each date on and after the Effective Date upon which the Borrower or any of 
its Subsidiaries receives Cash Proceeds from any Asset Sale, the Blocked 
Commitment shall be increased by an amount equal to 75% of the Net Cash 
Proceeds therefrom; provided further, that so long as no Default under 
Section 10.01 or 10.05 and no Event of Default then exists, if on the date 
of the receipt of the Net Cash Proceeds of the respective Asset Sale, the 
Borrower shall have furnished to the Agent an officer's certificate 
executed by an Authorized Officer of the Borrower (an "Asset Sale 
Certificate"), setting forth the calculations of the Leverage Ratio for the 
period of four consecutive fiscal quarters (taken as one accounting period) 
most recently ended prior to such Asset Sale (the "Asset Sale Calculation 
Period"), on a Pro Forma Basis as provided in the definition thereof 
contained herein (including, giving pro forma effect to the respective 
Asset Sale), and such calculations shall demonstrate a Leverage Ratio of 
less than 2.5:1, the Blocked Commitment shall not be required to be so 
increased by the Net Cash Proceeds of such Asset Sale; provided further, 
that, in circumstances where the immediately preceding proviso is not 
applicable, (x) so long as no Default under Section 10.01 or 10.05 and no 
Event of Default then exists, the Blocked Commitment shall not be required 
to be so increased by the Net Cash Proceeds of any Asset Sale pursuant to 
Section 9.02(ii) on the date of receipt thereof to the extent that the 
Borrower has delivered a certificate to the Agent on or prior to such date 
stating that it intends to reinvest such Net Cash Proceeds in like or 
substantially similar equipment, materials or tangible properties or assets 
within 180 days after the respective date of sale, provided, that if all or 
any portion of the Net Cash Proceeds of the respective Asset Sale are not 
in fact so utilized within 180 days after the respective date of sale, then 
on such 180th day after the date of the respective sale, the Blocked 
Commitment shall be increased by the amount of Net Cash Proceeds not 
actually applied for the purposes permitted by this clause (x) as otherwise 
required above by the first proviso to this definition without regard to 
this clause (x) and (y) so long as no Default under Section 10.01 or 10.05 
and no Event of Default then exists, the Blocked Commitment shall not be 
required to be so increased by the Net Cash Proceeds of any Asset Sale 
pursuant to Section 9.02(xv) on the date of receipt thereof to the extent 
that the Borrower has delivered a certificate to the Agent on or prior to 
such date stating that such Net Cash Proceeds shall be used to purchase 
assets used or to be used in the business referred to in Section 9.07(a) 
(including, without limitation, capital stock of a corporation engaged in 
any such business) within 540 days following the date of such Asset Sale 
(which certificate shall set forth the estimates of the proceeds to be so 
expended), provided that if all or any portion of the Net Cash Proceeds of 
the respective Asset Sale are not in fact so utilized within such 540 day 
period, then on such 540th day after the date of the respective Asset Sale, 
the Blocked Commitment shall be increased by the amount of Net Cash 
Proceeds not actually applied for the purposes permitted by this clause (y) 
as otherwise required above by the first proviso to this definition without 
regard to this clause (y).  Notwithstanding anything to the contrary 
contained above, the Blocked Commitment shall be reduced (but at no time to 
an amount less than $0) (x) from time to time as (and in the amounts) 
provided in the last sentence of Section 3.02(a) and (y) to $0 on any date, 
so long as no Default under Section 10.01 or 10.05 and no Event of Default 
exists on such date, if the Borrower delivers to the Agent a certificate 
executed by an Authorized Officer of the Borrower, setting forth the 
calculations of the Leverage Ratio for the period of four consecutive 
fiscal quarters (taking as one accounting period) most recently ended prior 
to the date of the delivery of such certificate, on a Pro Forma Basis as 
provided in the definition thereof contained herein (including, giving pro 
forma effect to all Asset Sales which have occurred prior to the delivery 
of such certificate), and such calculations demonstrate a Leverage Ratio of 
less than 2.5:1.

           "Borrower" shall mean the meaning provided in the first 
paragraph of this Agreement.

           "Borrower Common Stock" shall have the meaning provided in 
Section 7.14(b).

           "Borrowing" shall mean the borrowing of one Type of Loan from 
all the Banks having Commitments (or from the Swingline Bank, in the case 
of Swingline Loans) on a given date (or resulting from a conversion or 
conversions on such date) having in the case of Eurodollar Loans the same 
Interest Period, provided that Base Rate Loans incurred pursuant to Section 
1.10(b) shall be considered part of the related Borrowing of Eurodollar 
Loans.

           "BTCo" shall mean Bankers Trust Company in its individual 
capacity and any successor corporation thereto by merger, consolidation or 
otherwise.

           "Business Day" shall mean (i) for all purposes other than as 
covered by clause (ii) below, any day except Saturday, Sunday and any day 
which shall be in New York City or Chicago, Illinois a legal holiday or a 
day on which banking institutions are authorized or required by law or 
other government action to close and (ii) with respect to all notices and 
determinations in connection with, and payments of principal and interest 
on, Eurodollar Loans, any day which is a Business Day described in clause 
(i) above and which is also a day for trading by and between banks in the 
interbank Eurodollar market.

           "Calculation Period" shall have the meaning provided in Section 
8.15(a)(x).

           "Capital Expenditures" shall mean, with respect to any Person, 
all expenditures by such Person which should be capitalized in accordance 
with generally accepted accounting principles, including all such 
expenditures with respect to fixed or capital assets (including, without 
limitation, expenditures for maintenance and repairs which should be 
capitalized in accordance with generally accepted accounting principles) 
and the amount of Capitalized Lease Obligations incurred by such Person.

           "Capitalized Lease Obligations" of any Person shall mean all 
rental obligations which, under GAAP, are or will be required to be 
capitalized on the books of such Person, in each case taken at the amount 
thereof accounted for as indebtedness in accordance with GAAP.

           "Cash Equivalents" shall mean, as to any Person, (i) securities 
issued or directly and fully guaranteed or insured by the United States or 
any agency or instrumentality thereof (provided that the full faith and 
credit of the United States is pledged in support thereof) having 
maturities of not more than six months from the date of acquisition, (ii) 
time deposits, certificates of deposit and bankers' acceptances of any Bank 
or any commercial bank having, or which is the principal banking subsidiary 
of a bank holding company organized under the laws of the United States, 
any State thereof, the District of Columbia or any foreign jurisdiction 
having capital, surplus and undivided profits aggregating in excess of 
$500,000,000 and having a long-term unsecured debt rating of at least "A" 
or the equivalent thereof from S&P's or "A2" or the equivalent thereof from 
Moody's, with maturities of not more than six months from the date of 
acquisition by such Person, (iii) repurchase agreements with a term of not 
more than 30 days, involving securities of the types described in preceding 
clause (i), and entered into with commercial banks meeting the requirements 
of preceding clause (ii), (iv) commercial paper issued by any Person 
incorporated in the United States rated at least A-1 or the equivalent 
thereof by S&P's or at least P-1 or the equivalent thereof by Moody's and 
in each case maturing not more than six months after the date of 
acquisition by such Person, (v) investments in money market funds 
substantially all of whose assets are comprised of securities of the types 
described in clauses (i) through (iv) above and (vi) demand deposit 
accounts maintained in the ordinary course of business.

           "Cash Proceeds" shall mean, with respect to any Asset Sale, the 
aggregate cash payments (including any cash received by way of deferred 
payment, pursuant to a note, receivable or otherwise, in connection with 
such Asset Sale, but only as and when so received) received by the Borrower 
or any of the Borrower's Subsidiaries from such Asset Sale.

           "CERCLA" shall mean the Comprehensive Environmental Response, 
Compensation, and Liability Act of 1980, as the same may be amended from 
time to time, 42 U.S.C.   9601 et seq.

           "Certified BCM Restructuring Cost Reserve" shall have the 
meaning provided such term in the Existing Credit Agreement.

           "Certified Restructuring Cost Reserve" shall have the meaning 
provided in Section 8.15(a)(ii).  

           "Change of Control" shall mean and include the occurrence of any 
of the following events:  (i) at any time the Jordan Affiliates (x) shall 
cease to own directly at least 51% on a fully diluted basis of the Voting 
Stock of Jordan, (y) shall cease to own directly at least 51% on a fully 
diluted basis of all outstanding equity interests (excluding any Excluded 
Preferred Stock) of Jordan or (z) shall cease to have the power (or shall 
cease to exercise the power) to elect a majority of the board of directors 
of Jordan, (ii) at any time Jordan or Jordan Affiliates (w) shall cease to 
own directly at least 51% on a fully diluted basis of the Voting Stock of 
M&G Holdings, (x) shall cease to own directly at least 51% on a fully 
diluted basis of all outstanding equity interests (excluding any Excluded 
Preferred Stock) of M&G Holdings, (y) shall pledge, hypothecate, encumber 
or otherwise create, incur, assume or suffer to exist any Lien upon or with 
respect to any capital stock of M&G Holdings owned by it, or (z) shall 
cease to have the power (or shall cease to exercise the power) to elect a 
majority of the board of directors of M&G Holdings, (iii) at any time M&G 
Holdings (x) shall cease to own directly 51% on a fully diluted basis of 
the economic and voting interests in all of the capital stock of Parent, 
(y) shall pledge, hypothecate, encumber or otherwise create, incur, assume 
or suffer to exist any Lien upon or with respect to any capital stock of 
Parent, or (z) shall cease to have the power (or shall cease to exercise 
the power) to elect a majority of the board of directors of each of the 
Parent, (iv) the Parent shall (w) cease to have the power (directly or 
indirectly) to elect a majority of the board of directors of each of its 
Subsidiaries, (x) cease to own 100% on a fully diluted basis of the 
economic and voting interests in all of the capital stock of the Borrower, 
(y) cease to own the Parent Subordinated Intercompany Note or (z) pledge, 
hypothecate, encumber or otherwise create, incur or suffer to exist any 
Lien upon or with respect to any capital stock of the Borrower or the 
Parent Subordinated Intercompany Note, or (v) any "change of control" or 
similar provision or event under the Existing Seller Subordinated Note or 
the Senior Unsecured Note Indenture shall occur.

           "Claims" shall have the meaning provided in the definition of 
"Environmental Claims."

           "Code" shall mean the Internal Revenue Code of 1986, as amended 
from time to time, and the regulations promulgated and ruling issued 
thereunder.  Section references to the Code are to the Code, as in effect 
at the date of this Agreement, and to any subsequent provisions of the 
Code, amendatory thereof, supplemental thereto or substituted therefor.

           "Collateral" shall mean all property (whether real or personal) 
with respect to which any security interests have been granted (or 
purported to be granted) pursuant to any Security Document, including, 
without limitation, all Pledge Agreement Collateral, all Security Agreement 
Collateral, all Mortgaged Properties and all cash and Cash Equivalents 
delivered as collateral pursuant to any Credit Document.  Notwithstanding 
anything to the contrary contained above, Collateral shall not include any 
assets so long as same constitute Excluded Collateral in accordance with 
the definition thereof contained herein.

           "Collateral Agent" shall mean the Agent acting as collateral 
agent for the Secured Creditors pursuant to the Security Documents.

           "Collective Bargaining Agreements" shall have the meaning 
provided in Section 5.06.

           "Commitment" shall mean, for each Bank, the amount set forth 
opposite such Bank's name in Schedule I hereto directly below the column 
entitled "Commitment," as the same may be (x) reduced from time to time 
pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time 
as a result of assignments to or from such Bank pursuant to 1.13 or 
13.04(b).

           "Commitment Commission" shall have the meaning provided in 
Section 3.01(a). 

           "Consolidated EBITDA" shall mean, for any given period, the sum 
of, without duplication, Consolidated Net Income for such period, plus (a) 
any provision for taxes based on income or profits to the extent such 
income or profits were included in computing such Consolidated Net Income, 
plus (b) Consolidated Interest Expense, to the extent deducted in computing 
such Consolidated Net Income, plus (c) the amortization of all intangible 
assets, to the extent such amortization was deducted in computing such 
Consolidated Net Income (including, but not limited to, inventory 
write-ups, goodwill, debt and financing costs, and Incentive Arrangements), 
plus (d) any non-capitalized transaction costs incurred in connection with 
financings or acquisitions (including, but not limited to, financing and 
refinancing fees, to the extent deducted in computing such Consolidated Net 
Income, including those in connection with the Transaction), plus (e) all 
depreciation and all other non-cash charges (including, without limitation, 
those charges relating to purchase accounting adjustments and LIFO 
adjustments), to the extent deducted in computing such Consolidated Net 
Income, plus (f) any interest income, to the extent such income was not 
included in computing such Consolidated Net Income, plus (g) all dividend 
payments on preferred stock if paid in stock to the extent deducted in 
computing such Consolidated Net Income, plus (h) any extraordinary or 
non-recurring charge or expense arising out of the implementation of SFAS 
106 or SFAS 109 to the extent deducted in computing such Consolidated Net 
Income plus (i) the portion of Net Income attributable to the minority 
interests in Subsidiaries of the Borrower to the extent received in cash 
and not included in calculating Consolidated Net Income, plus (j) net 
losses in respect of any discontinued operations, to the extent deducted in 
computing Consolidated Net Income.  Notwithstanding anything to the 
contrary contained above, Consolidated EBITDA shall be adjusted (to the 
extent not already adjusted as provided above) (x) to exclude the effects 
of any extraordinary gains or losses or gains or losses from sales of 
assets other than inventory sold in the ordinary course of business, to the 
extent such amounts are otherwise included in Consolidated Net Income for 
such period and (y) shall not give effect to any other non-cash gains, 
losses or expenses otherwise included in such Consolidated Net Income.

           "Consolidated Indebtedness" shall mean, at any time, and without 
duplication, the sum of (A) the aggregate amount of Parent Indebtedness at 
such time and (B) all Indebtedness of the Borrower and its consolidated 
Subsidiaries for borrowed money, purchase money Indebtedness, all 
obligations evidenced by notes or bonds, and with respect to Capitalized 
Leases, as well as any other items which would be required to be accounted 
for as debt of the Borrower and its consolidated Subsidiaries on the 
Borrower's consolidated balance sheet in accordance with GAAP; provided, 
that (u) Indebtedness under the Earnout Agreement and any Incentive 
Arrangement shall not be included in Consolidated Indebtedness, (v) to the 
extent not already reflected pursuant to preceding clause (B), Consolidated 
Indebtedness shall be deemed to include all Attributed Receivables Facility 
Indebtedness then outstanding, (w) Indebtedness outstanding in respect of 
the Senior Unsecured Notes shall be excluded pursuant to preceding clause 
(A) to the extent Indebtedness pursuant to the Parent Subordinated 
Intercompany Note has already been included pursuant to preceding clause 
(B), (x) for purposes of calculating the Leverage Ratio, the amount of 
Consolidated Indebtedness shall be the amount thereof outstanding on the 
last day of the respective Test Period, except that the amount of Revolving 
Loans outstanding on any such date shall instead be deemed to be the daily 
average outstanding principal amount of Revolving Loans during the fiscal 
quarter ended on the respective Test Date (although if any Permitted 
Transactions were effected during said fiscal quarter and financed in whole 
or in part with Revolving Loans, the calculation of the average outstanding 
Revolving Loans during such fiscal quarter shall be made on a Pro Forma 
Basis), (y) to the extent the Existing Seller Installment Note is fully 
supported by the Existing Seller Letter of Credit, and so long as same is 
fully collateralized by the Existing Seller Letter of Credit Cash 
Collateral, the Existing Seller Installment Note and Existing Seller Letter 
of Credit shall not be included in Consolidated Indebtedness regardless of 
whether a different treatment is required in accordance with GAAP and (z) 
in any event the aggregate principal amount of all Loans (subject to 
preceding clause (x) in the case of Revolving Loans), the Existing Seller 
Subordinated Note, the Parent Subordinated Intercompany Note and any 
Permitted Acquired Debt or Permitted Debt shall be included in the 
Consolidated Indebtedness.  

           "Consolidated Interest Coverage Ratio" shall mean, for any 
period, the ratio of (x) Consolidated EBITDA for such period to (y) 
Consolidated Interest Expense for such period.

           "Consolidated Interest Expense" shall mean, for any period, the 
aggregate of the interest expense in respect of all Indebtedness of the 
Borrower and its Subsidiaries for such period, on a consolidated basis, 
determined in accordance with GAAP (including amortization of original 
issue discount of any such Indebtedness, all non-cash interest payments, 
the interest portion of any deferred payment obligation, the interest 
component of capital lease obligations and, except as otherwise provided 
below, the amortization of deferred financing fees if such amortization 
would otherwise be included in interest expense); provided that there shall 
be excluded from Consolidated Interest Expense the amortization of any 
deferred financing costs incurred in connection with this Agreement, the 
reimbursement agreement with respect to the Existing Seller Letter of 
Credit, the Existing Seller Installment Note, the Existing Seller 
Subordinated Note, the Parent Subordinated Intercompany Note and 
Indebtedness otherwise permitted under this Agreement, in each case to the 
extent included in such Consolidated Interest Expense.  Notwithstanding 
anything to the contrary contained above or required by GAAP, Consolidated 
Interest Expense shall also include (and, to the extent such amounts are 
not already included, Consolidated Interest Expense shall be increased by 
the amount of) the amount of all Dividends paid (or deemed paid) during the 
respective period pursuant to Section 9.03(iii) to the extent such 
Dividends are used to pay interest on Shareholder Subordinated Notes, (ii) 
the amount of Receivables Facility Financing Costs during the respective 
period and (iii) the amount of Parent Interest Expense during the 
respective period, to the extent in excess of the amount of interest 
expense of Borrower relating to the Parent Subordinated Intercompany Note 
already reflected in Consolidated Interest Expense for such period without 
regard to this sentence.

           "Consolidated Net Income" shall mean, for any period, the after 
tax Net Income (or loss) of the Borrower and its Subsidiaries for such 
period determined on a consolidated basis in accordance with GAAP; 
provided, however, that (A) there shall be excluded (without duplication) 
(i) income (or loss) of any Person (other than a consolidated Subsidiary of 
such Person) in which any other Person (other than such Person or any of 
its consolidated Subsidiaries) has a joint interest, except to the extent 
of the amount of dividends or other distributions actually paid to such 
Person or (subject to subclause (iii) below) any of its consolidated 
Subsidiaries by such other Person during such period, (ii) except as 
otherwise expressly required for calculations being made on a Pro Forma 
Basis, the income (or loss) of any Person during such period accrued prior 
to the date it becomes a consolidated Subsidiary of such Person or is 
merged into or consolidated with such Person or any of its consolidated 
Subsidiaries, (iii) the income of any consolidated Subsidiary of the 
Borrower to the extent attributable to minority interests held directly or 
indirectly therein by Persons other than the Borrower and its Wholly-Owned 
Subsidiaries, and (iv) the income of any consolidated Subsidiary of the 
Borrower during such period to the extent that the declaration or payment 
of dividends or similar distributions by that consolidated Subsidiary of 
such income is not at the time permitted by operation of the terms of its 
charter or any agreement, instrument, judgment, decree, order, statute, 
rule or governmental regulation applicable to that Subsidiary or the 
Borrower or any of its other Subsidiaries, (B) to the extent Consolidated 
Net Income for any period would otherwise be reduced by the amount of fees 
and expenses paid in connection with the Transaction, fees and expenses 
paid, and/or BCM Restructuring Costs incurred, in connection with the BCM 
Transaction, or fees and expenses and/or Restructuring Costs incurred with 
respect to any Permitted Transaction, such amounts shall be added back in 
determining Consolidated Net Income but, in the case of such items relating 
to Permitted Transactions, only to the extent such amounts do not exceed 
the respective amounts included within the Permitted Transaction Cost of 
the respective Permitted Transaction as certified by the Borrower in 
connection therewith pursuant to Section 8.15(a)(ii)(v) and (y) and, in the 
case of such items relating to the BCM Transaction, only to the extent such 
amounts do not exceed the respective amounts in connection therewith 
certified by Merkle pursuant to Section 9.02(xii)(c)(w) and (y) of the 
Existing Credit Agreement, (C) to the extent same have not already reduced 
Consolidated Net Income for the respective period, the amount of all 
Restricted Payments paid (or deemed paid) during the respective period 
pursuant to any of Sections 9.03(ii), (v), (vi), and (ix)(II) and all 
amounts paid during the respective period pursuant to any of Section 
9.06(y)(iv), (vi), (viii), (x) and (xi) shall be deducted, (D) 
notwithstanding any contrary treatment which would otherwise be required 
pursuant to GAAP, payments made pursuant to either of Sections 9.06(y)(vii) 
and/or (ix) shall not be deducted in determining Consolidated Net Income, 
(E) Parent Interest Expense (but only to the extent in excess of the 
interest expense of the Borrower in respect of the Parent Subordinated 
Intercompany Note to the extent already deducted in determining 
Consolidated Net Income) shall be deducted in determining Consolidated Net 
Income and (F) notwithstanding any contrary treatment which would otherwise 
be required pursuant to GAAP, extraordinary or nonrecurring charges 
relating to any premium or penalty paid, write-off or deferred financing 
costs or other financial recapitalization charges in connection with 
redeeming or retiring any Indebtedness prior to its stated maturity shall 
not be deducted in determining Consolidated Net Income.    

           "Contingent Obligation" shall mean, as to any Person, any 
obligation of such Person guaranteeing or intended to guarantee any 
Indebtedness, leases, dividends or other obligations ("primary 
obligations") of any other Person (the "primary obligor") in any manner, 
whether directly or indirectly, including, without limitation, any 
obligation of such Person, whether or not contingent, (i) to purchase any 
such primary obligation or any property constituting direct or indirect 
security therefor, (ii) to advance or supply funds (x) for the purchase or 
payment of any such primary obligation or (y) 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 holder of such primary obligation against loss in respect 
thereof; provided, however, that the term Contingent Obligation shall not 
include endorsements of instruments for deposit or collection in the 
ordinary course of business.  The amount of any Contingent Obligation shall 
be deemed to be an amount equal to the stated or determinable amount of the 
primary obligation in respect of which such Contingent Obligation is made 
or, if not stated or determinable, the maximum reasonably anticipated 
liability in respect thereof (assuming such Person is required to perform 
thereunder) as determined by such Person in good faith.

           "Credit Documents" shall mean this Agreement and, after the 
execution and delivery thereof pursuant to the terms of this Agreement, 
each Note, each Letter of Credit, each Security Document, each Guaranty, 
each Additional Security Document and each additional guaranty or security 
document or instrument executed pursuant to Sections 8.11, 8.15 and/or 
9.13.

           "Credit Event" shall mean the making of any Loan or the issuance 
of any Letter of Credit.

           "Credit Party" shall mean the Borrower and each Subsidiary 
Guarantor.

           "Debt Agreements" shall have the meaning provided in Section 
5.06.

           "Default" shall mean any event, act or condition which with 
notice or lapse of time, or both, would constitute an Event of Default.

           "Defaulting Bank" shall mean any Bank with respect to which a 
Bank Default is in effect.

           "Designated Credit Parties" shall mean the Borrower and those 
Subsidiary Guarantors that are from time to time party to the Receivables 
Facility Documents.

           "Director Indemnity Agreement" shall mean the Director 
Indemnification Agreement, dated as of November 7, 1996, by and among M&G 
Holdings, Parent, Merkle, the Borrower, Merkle, Acquisition Corp., Scott 
Acquisition Sub., Gear Acquisition Sub. and each of the indemnitees whose 
names are set forth therein, as in effect on the Effective Date and as 
amended, modified or supplemented from time to time in accordance with the 
terms hereof and thereof.

           "Dividends" with respect to any Person shall mean that such 
Person has declared or paid a dividend or returned any equity capital to 
its stockholders or partners or authorized or made any other distribution, 
payment or delivery of property (other than common stock of such Person) or 
cash to its stockholders or partners as such, or redeemed, retired, 
purchased or otherwise acquired, directly or indirectly, for a 
consideration any shares of any class of its capital stock or any 
partnership interests outstanding on or after the Effective Date (or any 
options or warrants issued by such Person with respect to its capital 
stock), or set aside any funds for any of the foregoing purposes, or shall 
have permitted any of its Subsidiaries to purchase or otherwise acquire for 
a consideration any shares of any class of the capital stock or any 
partnership interests of such Person outstanding on or after the Effective 
Date (or any options or warrants issued by such Person with respect to its 
capital stock).  Without limiting the foregoing, "Dividends" with respect 
to any Person shall also include all payments made or required to be made 
by such Person with respect to any Incentive Arrangements and any stock 
appreciation rights, "phantom" stock plans, equity incentive or achievement 
plans or any similar plans or setting aside of any funds for the foregoing 
purposes.

           "Documents" shall mean the Credit Documents, the Acquisition 
Documents, the Merger Documents, the Refinancing Documents, the Senior 
Unsecured Note Documents and, on and after the Receivables Facility 
Transaction Date, the Receivables Facility Documents. 

           "Dollars" and the sign "$" shall each mean freely transferable 
lawful money of the United States.

           "Domestic Subsidiary" shall mean each Subsidiary of the Borrower 
which is not a Foreign Subsidiary.

           "Drawing" shall have the meaning provided in Section 2.05.

           "Earnout" shall mean the contingent payment payable pursuant to 
the Earnout Agreement in an amount equal to 50% of the cumulative EBITDA 
(as defined in the Earnout Agreement) of Acquisition Corp., Scott 
Acquisition Sub. and Gear Acquisition Sub. earned during the five fiscal 
years ended December 31, 1996 through December 31, 2000 in excess of 
$50,000,000.

           "Earnout Agreement" shall mean the Earnout Agreement, dated as 
of November 7, 1996, among Jordan, Parent, the Borrower, Acquisition Corp., 
Scott Acquisition Sub. and Gear Acquisition Sub., as the same may be 
amended, modified or supplemented from time to time pursuant to the terms 
hereof and thereof. 

           "Effective Date" shall have the meaning provided in Section 
13.10.

           "80%-Owned Subsidiary" shall mean any Subsidiary of the Borrower 
which either (x) is a Wholly-Owned Subsidiary of the Borrower or (y) is not 
a Wholly-Owned Subsidiary of the Borrower, but is a Subsidiary wherein the 
Borrower and its Wholly-Owned Subsidiaries own at least 80% of the equity 
interests therein and in which no portion of the capital stock (or other 
equity interests) of such Subsidiary not owned by the Borrower or its 
Wholly-Owned Subsidiaries shall be owned by any Person other than Jordan, 
Jordan Affiliates and/or management of the respective such Subsidiary.

           "Eligible Transferee" shall mean and include a commercial bank, 
financial institution or other institutional "accredited investor" as 
defined in Regulation D of the Securities Act.

           "Elmco" shall mean Elmco Industries, Inc., an Illinois 
corporation.

           "Elmco Refund" shall mean the refund, or any right to receive 
the refund, of the payment Elmco made prior to the Original Effective Date 
pursuant to Code Section 7519(b), which refund is referenced in Section 
6.06(l) of the Acquisition Agreement (as defined in the Existing Credit 
Agreement).

           "Elmco Refund Obligation" shall mean the assignment by Merkle 
of, and the obligation of Merkle to pay the amount of the Elmco Refund 
actually received to, the MK Sellers pursuant to Section 6.06(l) of the 
Acquisition Agreement (as defined in the Existing Credit Agreement).

           "Employee Benefit Plans" shall have the meaning provided in 
Section 5.06.

           "Employment Agreements" shall have the meaning provided in 
Section 5.06.

           "End Date" shall have the meaning provided in the definition of 
Interest Reduction Discount.

           "Environmental Claims" shall mean any and all administrative, 
regulatory or judicial actions, suits, demands, demand letters, directives, 
claims, liens, notices of non-compliance or violation, investigations, 
orders or proceedings relating in any way to any Environmental Law or any 
permit issued, or any approval given, under any such Environmental Law 
(hereinafter, "Claims"), including, without limitation, (a) any and all 
Claims by governmental or regulatory authorities for enforcement, cleanup, 
removal, response, remedial or other actions or damages pursuant to any 
applicable Environmental Law, and (b) any and all Claims by any third party 
seeking damages, contribution, indemnification, cost recovery, compensation 
or injunctive relief resulting from Hazardous Materials or arising from 
alleged injury or threat of injury to health, safety or the environment.

           "Environmental Law" shall mean any applicable Federal, state, 
foreign or local statute, law, rule, regulation, ordinance, code, binding 
and enforceable guideline, binding and enforceable written policy and rule 
of common law now or hereafter in effect and in each case as amended, and 
any judicial or administrative interpretation thereof, including any 
judicial or administrative order, consent decree or judgment relating to 
the environment, employee health and safety or Hazardous Materials, 
including, without limitation, CERCLA; RCRA; the Federal Water Pollution 
Control Act, 33 U.S.C.   2601 et seq., the Clean Air Act, 42 U.S.C.   7401 
et seq.; the Safe Drinking Water Act, 42 U.S.C.   3803 et seq.; the Oil 
Pollution Act of 1990, 33 U.S.C.   2701 et seq.; the Emergency Planning and 
the Community Right-to-Know Act of 1986, 42 U.S.C.   11001 et seq., the 
Hazardous Material Transportation Act, 49 U.S.C.   1801 et seq. and the 
Occupational Safety and Health Act, 29 U.S.C.   651 et seq. (to the extent 
it regulates occupational exposure to Hazardous Materials); and any state 
and local or foreign counterparts or equivalents, in each case as amended 
from time to time.

           "Equity Financing Documents" shall have the meaning provided in 
the Existing Credit Agreement.

           "ERISA" shall mean the Employee Retirement Income Security Act 
of 1974, as amended from time to time, and the regulations promulgated and 
rulings issued thereunder.  Section references to ERISA are to ERISA, as in 
effect at the date of this Agreement and any subsequent provisions of 
ERISA, amendatory thereof, supplemental thereto or substituted therefor.

           "ERISA Affiliate" shall mean each person (as defined in Section 
3(9) of ERISA) which together with Parent or a Subsidiary of Parent or the 
Guarantors would be deemed to be a "single employer" (i) within the meaning 
of Section 414(b),(c), (m) or (o) of the Code or (ii) as a result of 
Parent, or a Subsidiary of Parent, or the Guarantors being or having been a 
general partner of such person.

           "Eurodollar Loan" shall mean each Loan designated as such by the 
Borrower at the time of the incurrence thereof or conversion thereto.

           "Eurodollar Rate" shall mean with respect to each Interest 
Period for a Eurodollar Loan, (a) the offered quotation to first-class 
banks in the interbank Eurodollar market by BTCo for Dollar deposits of 
amounts in immediately available funds comparable to the outstanding 
principal amount of the Eurodollar Loan of BTCo with maturities comparable 
to the Interest Period applicable to such Eurodollar Loan commencing two 
Business Days thereafter as of 10:00 A.M. (New York time) on the date which 
is two Business Days prior to the commencement of such Interest Period, 
divided (and rounded off to the nearest 1/16 of 1% or, if there is no 
nearest 1/16 of 1%, to the next highest 1/16 of 1%) by (b) a percentage 
equal to 100% minus the then stated maximum rate of all reserve 
requirements (including, without limitation, any marginal, emergency, 
supplemental, special or other reserves required by applicable law) 
applicable to any member bank of the Federal Reserve System in respect of 
Eurocurrency funding or liabilities as defined in Regulation D (or any 
successor category of liabilities under Regulation D).

           "Event of Default" shall have the meaning provided in Section 
10.

           "Exchange Act" shall mean the Securities Exchange Act of 1934, 
as amended, and the rules and regulations promulgated thereunder.

           "Excluded Collateral" shall mean and include each of (i) any 
Leasehold in which a security interest is not required to be granted by 
reason of the penultimate sentence of Section 8.11(a), (ii) Real Property 
owned by any Credit Party if the fair market value of such Real Property 
(as determined in good faith by senior management of the Borrower) is less 
than $5,000,000, (iii) motor vehicles and other equipment the ownership of 
which is evidenced by a "certificate of title" under relevant law owned by 
any Credit Party, (iv) any assets of a Foreign Subsidiary of the Borrower 
or otherwise located outside the United States (including its states and 
territories), (v) any capital stock of, or promissory notes payable by, a 
Foreign Subsidiary to the extent (and only to the extent) that such capital 
stock or promissory notes, as the case may be, are not required to be 
pledged pursuant to the exclusions contained in the Pledge Agreement as 
originally in effect, (vi) so long as the Existing Seller Letter of Credit 
remains outstanding, the Existing Seller Letter of Credit Cash Collateral 
and any investments from time to time made pursuant to the Existing Seller 
Letter of Credit Collateral Agreement, and (vii) the Elmco Tax Refund and 
any rights with respect thereto.

           "Excluded Preferred Stock" shall mean, with respect to any 
Person, any preferred stock issued by such Person which (i) is not Voting 
Stock of such Person, (ii) bears dividends at a contractually established 
rate, and does not participate with any class of common stock in the 
payment of dividends in excess of said stated rate, (iii) matures or is 
redeemable at the option of the issuer after a given period of time as 
provided therein and (iv) is not convertible into common stock or other 
Voting Stock.

           "Existing Credit Agreement" shall mean the Credit Agreement, 
dated as of September 22, 1995, among Parent, Merkle, the institutions from 
time to time party thereto, and Bankers Trust Company, as Agent, as in 
effect on the Effective Date.

           "Existing Indebtedness" shall have the meaning provided in 
Section 5.19.

           "Existing Seller Installment Note" shall mean the promissory 
note issued in connection with the Original Acquisition by Merkle to the MK 
Sellers as partial consideration for the Original Acquired Business having 
a principal amount not to exceed $90,000,000, in the form of Exhibit Q, and 
which promissory note shall mature no later than December 31, 1996 and be 
supported by the Existing Seller Letter of Credit.

           "Existing Seller Letter of Credit" shall mean a standby letter 
of credit issued by BTCo for the account of Merkle in support of the 
obligations of Merkle under the Existing Seller Installment Note issued by 
Merkle, which letter of credit shall have a face amount not to exceed 
$90,000,000. 

           "Existing Seller Letter of Credit Agreement" shall mean the 
Letter of Credit Agreement, dated as of September 22, 1995, between Parent, 
Merkle and BTCo, as amended, modified or supplemented from time to time.

           "Existing Seller Letter of Credit Cash Collateral" shall have 
the meaning provided in Section 9.01(xv).

           "Existing Seller Letter of Credit Collateral Agreement" shall 
mean the Letter of Credit Cash Collateral Agreement, dated as of September 
22, 1995, between Merkle and BTCo, as amended, modified or supplemented 
from time to time.

           "Existing Seller Subordinated Note" shall mean 9% Existing 
Seller Subordinated Note due December 31, 2003 issued by Merkle in favor of 
MK Sellers as partial consideration for the purchase price of the Original 
Acquired Business in an aggregate principal amount of $5,000,000, in the 
form attached hereto as Exhibit O, as in effect on the Original Effective 
Date and as the same may be amended, modified or supplemented from time to 
time pursuant to the terms hereof and thereof.

           "Existing Seller Subordinated Note Documents" shall mean and 
include the Existing Seller Subordinated Note and each of the other 
documents, instruments and other agreements entered into and relating to 
the issuance by Merkle of the Existing Seller Subordinated Note, as in 
effect on the Original Effective Date and as amended, modified or 
supplemented from time to time in accordance with the terms hereof and 
thereof.

           "Existing Tax Sharing Agreement" shall mean the Tax Sharing 
Agreement, dated as of June 28, 1994, among Jordan and each of the other 
parties thereto, as in effect on the Effective Date and as the same may be 
amended, modified or supplemented from time to time in accordance with the 
terms hereof and thereof, including, without limitation, as amended on the 
Initial Borrowing Date to add the Borrower, Acquisition Corp., Scott 
Acquisition Sub. and Gear Acquisition Sub. as parties thereto.

           "Federal Funds Rate" shall mean, for any period, a fluctuating 
interest rate equal for each day during such period to the weighted average 
of the rates on overnight Federal Funds transactions with members of the 
Federal Reserve System arranged by Federal Funds brokers, as published for 
such day (or, if such day is not a Business Day, for the next preceding 
Business Day) by the Federal Reserve Bank of New York, or, if such rate is 
not so published for any day which is a Business Day, the average of the 
quotations for such day on such transactions received by the Agent from 
three Federal Funds brokers of recognized standing selected by the Agent.

           "Fees" shall mean all amounts payable pursuant to or referred to 
in Section 3.01.

           "Final Maturity Date" shall mean the fifth anniversary of the 
Initial Borrowing Date.

           "Foreign Subsidiary" shall mean each Subsidiary of the Borrower 
that is incorporated under the laws of any jurisdiction other than the 
United States of America, any State thereof, or any territory thereof.

           "GAAP" shall have the meaning provided in section 13.07(a).

           "Gear" shall mean Gear Research, Inc., a Delaware corporation 
and a direct Wholly-Owned Subsidiary of Imperial.

           "Gear Acquisition Sub" shall mean New Gear Research, Inc., a 
Delaware corporation and a direct Wholly-Owned Subsidiary of Acquisition 
Corp. 

           "Gear Intercompany Note" shall have the meaning provided in 
Section 5.23(c).

           "Guaranty" shall mean the Subsidiary Guaranty and, after the 
execution and delivery thereof, the Non-Wholly-Owned Subsidiary Guaranty 
and each other guaranty executed pursuant to Sections 8.11, 8.15 and/or 
9.13.

           "Hazardous Materials" shall mean (a) oil as defined by the Oil 
Pollution Act of 1990, 33 U.S.C.   2701 et seq., (b) any petrochemical or 
petroleum products, radioactive materials, asbestos in any form that is or 
could become friable, urea formaldehyde foam insulation, transformers or 
other equipment that contain dielectric fluid containing levels of 
polychlorinated biphenyls, and radon gas; (c) any chemicals, materials or 
substances defined as or included in the definition of "hazardous 
substances," "hazardous wastes," "hazardous materials," "restricted 
hazardous materials," "extremely hazardous wastes," "restrictive hazardous 
wastes," "toxic substances," "toxic pollutants," "contaminants" or 
"pollutants," or words of similar meaning and regulatory effect under any 
applicable Environmental Law; or (d) any other chemical, material or 
substance, exposure to which is prohibited, limited or regulated by any 
governmental authority.

           "Imperial" shall mean Imperial Electric Company, an Ohio 
corporation and a direct Wholly-Owned Subsidiary of Jordan.

           "Incentive Arrangements" shall mean (x) any stock appreciation 
rights, "phantom" stock plans, employment agreements, non-competition 
agreements, earn out agreements and other equity incentive and bonus plans 
and similar arrangements made by the Borrower and its Subsidiaries in 
connection with a Permitted Transaction or the retention of executives or 
officers by the Borrower and its Subsidiaries and (y) all Permitted 
Earn-Out Debt issued in connection with Permitted Transactions. 

           "Indebtedness" shall mean, as to any Person, without 
duplication, (i) all indebtedness (including principal, interest, fees and 
charges) of such Person for borrowed money or for the deferred purchase 
price of property or services, (ii) the maximum amount available to be 
drawn under all letters of credit issued for the account of such Person and 
all unpaid drawings in respect of such letters of credit, (iii) all 
Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or 
(vii) of this definition secured by any Lien on any property owned by such 
Person, whether or not such Indebtedness has been assumed by such Person 
(to the extent of the value of the respective property), (iv) Capitalized 
Lease Obligations, (v) all obligations of such person to pay a specified 
purchase price for goods or services, whether or not delivered or accepted, 
i.e., take-or-pay and similar obligations, (vi) all Contingent Obligations 
of such Person, and (vii) all obligations under any Other Hedging Agreement 
or under any similar type of agreement or arrangement.  In addition, all 
Attributed Receivables Facility Indebtedness shall constitute Indebtedness.  

           "Initial Borrowing Date" shall mean the date occurring on or 
after the Effective Date on which the initial Borrowing of Loans hereunder 
occurs.

           "Initial Receivables Facility Proceeds" shall mean the amount of 
cash proceeds to be initially received by the Borrower and/or the other 
Designated Credit Parties from the sale of Receivables Facility Assets to 
the Receivables Entity pursuant to the Receivables Facility.

           "Insignificant Subsidiary" shall mean any Subsidiary of the 
Borrower which has assets of not greater than $5,000,000 in the aggregate 
and which, if aggregated with all other Subsidiaries of the Borrower with 
respect to which an event described under Section 10.05 and/or 10.09 has 
occurred and is continuing, would have assets of not greater than 
$5,000,000.

           "Intercompany Loan" shall mean any loan or advance made by the 
Borrower or any Subsidiary of the Borrower to the extent permitted by 
Section 9.05(iii).

           "Intercompany Management Consulting Agreements" shall mean and 
include each of (i) the Management Consulting Agreement, dated as of 
September 22, 1995, by and between M&G Holdings and Merkle, as in effect on 
the Original Effective Date and (ii) the Management Consulting Agreement, 
dated as of September 22, 1995, by and between M&G Holdings and Parent, as 
in effect on the Original Effective Date, in each case as the same may be 
amended, modified or supplemented from time to time in accordance with the 
terms hereof and thereof.

           "Intercompany Notes" shall mean promissory notes, in the form of 
Exhibit M, evidencing Intercompany Loans.

           "Interest Determination Date" shall mean, with respect to any 
Eurodollar Loan, the second Business Day prior to the commencement of any 
Interest Period relating to such Eurodollar Loan.

           "Interest Period" shall have the meaning provided in Section 
1.09.

           "Interest Rate Protection Agreement" shall mean any interest 
rate swap agreement, interest rate cap agreement, interest rate collar 
agreement, interest rate hedging agreement, interest rate floor agreement 
or other similar agreement or arrangement designed to protect a person 
against fluctuations in interest rates.

           "Interest Reduction Discount" shall mean initially zero and from 
and after the first day of any Margin Reduction Period (the "Start Date") 
to and including the last day of such Margin Reduction Period (the "End 
Date"), the Interest Reduction Discount shall be the respective percentage 
per annum set forth in clause (A) or(B) below if, but only if, as of the 
last day of the most recent Test Period of the Borrower ended immediately 
prior to such Start Date (the "Test Date") the conditions in clause (A) or 
(B) below are met:

           (A)  1/4 of 1% if, but only if, as of the Test Date for such 
      Start Date the  Leverage Ratio for the Test Period ended on such Test 
      Date shall be equal to or greater than 4.75:1.0 but less than 
      5.0:1.0; or

           (B)  1/2 of 1% if, but only if, as of the Test Date for such 
      Start Date the  Leverage Ratio for the Test Period ended on such Test 
      Date shall be less than 4.75:1.0. 

The Leverage Ratio shall be determined for the relevant Test Period, in 
each case taken as one accounting period, by delivery of an officer's 
certificate of the Borrower to the Banks pursuant to Section 8.01(e), which 
certificate shall set forth the calculation of the Leverage Ratio.  The 
Interest Reduction Discount so determined shall apply, except as set forth 
below, from the date on which such officer's certificate is delivered to 
the Agent to the earlier of (x) the date on which the next certificate is 
delivered to the Agent pursuant to Section 8.01(e) and (y) the 45th day 
following the first day of the fiscal quarter immediately following the 
delivery of such certificate to the Agent.  Notwithstanding anything to the 
contrary contained above, the Interest Reduction Discount shall be zero if 
no officer's certificate has been delivered to the Banks pursuant to 
Section 8.01(e) which sets forth the Leverage Ratio for the relevant Test 
Period or the financial statements upon which any such calculations are 
based have not been delivered, until such a certificate and/or financial 
statements are delivered.  Notwithstanding anything to the contrary above 
in this definition, the Interest Reduction Discount shall be zero at all 
times when there shall exist a Default under Section 10.01 or 10.05 or any 
Event of Default.  It is understood and agreed that the Interest Reduction 
Discount as provided above shall in no event be cumulative and only the 
Interest Reduction Discount available pursuant to either clause (A) or (B), 
if any, contained in this definition shall be applicable.

           "Investment" shall have the meaning provided in Section 9.05.

           "Issuing Bank" shall mean BTCo and any Bank which at the request 
of the Borrower and with the consent of the Agent agrees, in such Bank's 
sole discretion, to become an Issuing Bank for the purpose of issuing 
Letters of Credit pursuant to Section 2.  The sole Issuing Bank on the 
Initial Borrowing Date is BTCo.

           "JI Partners" shall mean the JI Partners, an Illinois general 
partnership.

           "JII Services Agreement" shall mean the Management Services and 
Administration Agreement, dated as of November 7, 1996, between Jordan and 
Parent, in the form delivered to the Agent and Banks on the Effective Date, 
as the same may be amended, modified or supplemented from time to time 
pursuant to the terms thereof and hereof.

           "Jordan" shall mean Jordan Industries, Inc., a Delaware 
corporation.

           "Jordan Affiliates" shall mean and include each of (i) TJC, 
Jordan/Zalaznick Capital Company, JI Partners Limited Partnership, Jordan, 
Mezzanine Capital Income Trust and Leucadia Investors, Inc.; (ii) partners, 
principals, directors, officers and employees of the Persons referred to in 
clause (i) hereof; (iii) The John W. Jordan II Revocable Trust, The Jordan 
Family Trust and/or any other trusts established by John W. Jordan II so 
long as the beneficiaries thereof include only his spouse, parents, 
siblings or direct lineal descendants and so long as John W. Jordan II 
possesses the power to direct or cause the direction of the voting of such 
trusts; and (iv) any other trust established by the Persons referred to in 
clause (ii) hereof, so long as the beneficiaries thereof include only the 
spouse, siblings, parents, or direct lineal descendants of such Person and 
such Person possesses the power to direct or cause the direction of the 
voting of such trust.

           "L/C Supportable Indebtedness" shall mean (i) obligations of any 
Credit Party incurred in the ordinary course of business with respect to 
insurance obligations and workers' compensation, surety bonds and other 
similar statutory obligations and (ii) such other obligations of the 
Borrower or any Subsidiary Guarantor as are permitted to remain outstanding 
hereunder without giving rise to any violation of this Agreement.

           "Leaseholds" of any Person means all the right, title and 
interest of such Person as lessee or licensee in, to and under leases or 
licenses of land, improvements and/or fixtures.

           "Letter of Credit" shall have the meaning provided in Section 
2.01(a).

           "Letter of Credit Fee" shall have the meaning provided in 
Section 3.01(b).

           "Letter of Credit Outstandings" shall mean, at any time, the sum 
of (i) the aggregate Stated Amount of all outstanding Letters of Credit and 
(ii) the amount of all Unpaid Drawings.

           "Letter of Credit Request" shall have the meaning provided in 
Section 2.03(a).

           "Leverage Ratio" shall mean, as determined on the last day of 
any fiscal quarter or fiscal year, the ratio of (x) Consolidated 
Indebtedness as determined on the last day of such fiscal quarter or fiscal 
year to (y) Consolidated EBITDA for the Test Period then last ended; 
provided that for purposes of any calculation of the Leverage Ratio in 
connection with the delivery of an Asset Sale Certificate or other 
certificate in accordance with the requirements of the definition of 
Blocked Commitment, Consolidated Indebtedness shall not include Parent 
Indebtedness and it shall not include Indebtedness pursuant to the Parent 
Subordinated Intercompany Note.  All calculations of the Leverage Ratio 
shall be made on a Pro Forma Basis.

           "Lien" shall mean any mortgage, pledge, hypothecation, 
assignment, deposit arrangement, encumbrance, lien (statutory or other) or 
other security agreement or preferential arrangement of any kind or nature 
whatsoever (including, without limitation, any conditional sale or other 
title retention agreement, any financing or similar statement or notice 
filed under the UCC or any other similar recording or notice statute, and 
any lease having substantially the same effect as any of the foregoing).

           "Loan" shall mean each Revolving Loan and each Swingline Loan.

           "M&G Holdings" shall mean Motors and Gears Holdings, Inc., a 
Delaware corporation and the surviving corporation of the merger of M&G 
Holdings, Inc. with and into same.

           "M&G Holdings Common Stock" shall mean the common stock, $.01 
par value per share, of M&G Holdings.

           "M&G Holdings Management Consulting Agreements" shall mean and 
include each of (i) the Management Consulting Agreement, dated as of 
September 22, 1995, between TJC, M&G Holdings and Parent, as amended on 
November 7, 1996 to include Parent as a party thereto, in the form 
delivered to the Agent and the Banks on the Effective Date and (ii) the 
Management Consulting Agreement, dated as of September 22, 1995, between 
Jordan and M&G Holdings, in the form delivered to the Agent and the Banks 
on the Original Effective Date. 

           "Management Agreements" shall have the meaning provided in 
Section 5.06.

           "Management Investors" shall mean (i) any officer or managerial 
employee of Parent or any of its Subsidiaries who acquires M&G Holdings 
Common Stock from M&G Holdings pursuant to the Management Subscription 
Agreement or the Stockholders' Agreement, (ii) the JI Partners and (ii) the 
directors of M&G Holdings.

           "Management Subscription Agreement" shall mean and include each 
of (i) the Management Subscription Agreement, dated as of September 22, 
1995, by and among M&G Holdings and the stockholders whose names are set 
forth therein, in the form delivered to the Agent and the Banks on the 
Initial Borrowing Date, provided that future Management Investors may 
become party thereto by executing a counterpart thereof after the Initial 
Borrowing Date and (ii) the Management Subscription Agreement, dated as of 
November 7, 1996, by and among M&G Holdings and Ron Sansom, in the form 
delivered to the Agent and the Banks on the Initial Borrowing Date.

           "Mandatory Borrowings" shall have the meaning provided in 
Section 1.01(c).

           "Margin Reduction Period" shall mean each period which shall 
commence on a date on which the officer's certificate is delivered to the 
Agent pursuant to Section 8.01(e) to the earlier of (x) the date on which 
the certificate for the next fiscal quarter is delivered to the Agent 
pursuant to Section 8.01(e) and (y) the 45th day following the first day of 
the fiscal quarter immediately following the delivery of such certificate 
to the Agent, provided that the first Margin Reduction Period shall 
commence no earlier than the date of the delivery of the financial 
statements pursuant to Section 8.01(b) for the first fiscal quarter of the 
Parent ended at least one year after the Initial Borrowing Date.

           "Margin Stock" shall have the meaning provided in Regulation U.

           "Material Contracts" shall have the meaning provided in Section 
5.06.

           "Maximum Swingline Amount" shall mean $2,000,000.

           "Mercury" shall have the meaning provided in the Existing Credit 
Agreement.

           "Merger" shall mean the merger of MK Group with and into Parent 
pursuant to the Merger Documents, with Parent as the surviving corporation 
of such merger, as the direct Wholly-Owned Subsidiary of M&G Holdings, 
Inc., an Illinois corporation.

           "Merger Documents" shall mean the Merger Agreement, dated as of 
November 1, 1996, between Parent and MK Group, the certificate of merger 
and all other agreements, instruments and documents entered into in 
connection with the Merger, as the same may be amended, modified or 
supplemented from time to time pursuant to the terms hereof and thereof.

           "Merkle" shall mean Merkle-Korff Industries, Inc., an Illinois 
corporation, and, prior to the consummation of the Merger and the MK Stock 
Contribution, a Wholly-Owned Subsidiary of MK Group and, after giving 
effect to the consummation of the Merger and the MK Stock Contribution, a 
Wholly-Owned Subsidiary of the Borrower. 

           "MK" shall mean Merkle as such term is defined in the Existing 
Credit Agreement. 

           "MK Group" shall mean MK Group, Inc., an Illinois corporation.

           "MK Leaseholds" shall mean and include the Leaseholds of (i) 
Merkle as lessee under the Affiliate Leases and (ii) BCM Holdings as lessee 
under [name lease].

           "MK Sellers" shall mean the Sellers as such term is defined in 
the Existing Credit Agreement.

           "MK Stock Contribution" shall have the meaning provided in 
Section 5.11(c).

           "Minimum Borrowing Amount" shall mean (i) for Revolving Loans 
(x) maintained as Base Rate Loans, $100,000 and, if greater, in integral 
multiples of $100,000 and (y) maintained as Eurodollar Loans, $1,000,000 
and, if greater, in integral multiples of $100,000 and (ii) for Swingline 
Loans, $10,000 and, if greater, in integral multiples of $5,000.

           "Moody's" shall mean Moody's Investors Service, Inc.

           "Mortgage" shall mean each mortgage, deed of trust or deed to 
secure debt required to be delivered with respect to any Real Property 
pursuant to the terms of this Agreement, together with any assignment of 
leases and rents to be executed in connection therewith.

           "Mortgage Policy" shall mean each mortgage title insurance 
policy (and all endorsements thereto) for each Mortgaged Property required 
to be delivered pursuant to this Agreement.

           "Mortgaged Property" shall mean each Real Property owned or 
leased by the Borrower or any of its Subsidiaries and required to be 
mortgaged pursuant to Section 8.11 of this Agreement.

           "Net Asset Adjustment" shall mean the adjustment to the Purchase 
Price (as defined in the Existing Credit Agreement) contained in Section 
1.06 of the Acquisition Agreement (as defined in the Existing Credit 
Agreement), so long as such adjustment in no event results in an increase 
to such Purchase Price of more than $2,500,000.

           "Net Cash Proceeds" shall mean, with (i) respect to any Asset 
Sale, the Cash Proceeds resulting therefrom net of (w) cash expenses of 
sale (including, without limitation, reasonable brokerage and attorneys' 
fees, if any, and payment of principal, premium and interest of 
Indebtedness other than the Loans required to be repaid as a result of such 
Asset Sale), (x) estimated marginal increase in income taxes paid or 
payable by the Borrower's consolidated group with respect to the fiscal 
year in which such sale occurs as a result thereof, (y) any amounts 
required to be escrowed in connection with the respective Asset Sale, 
provided that upon the release of any such escrowed amounts to the Borrower 
or any of its Subsidiaries, such released proceeds shall be treated as Net 
Cash Proceeds of the respective Asset Sale, and (z) any reserves and 
holdbacks in good faith established by the Borrower in connection with any 
liabilities assumed by it in connection with the respective Asset Sale, so 
long as determined in accordance with GAAP and reasonably expected to be 
utilized within the 12 months following the date of the respective Asset 
Sale, provided that on the date which occurs 12 months after the respective 
Asset Sale, to the extent any such reserves or holdbacks remain, the amount 
thereof shall be deemed to constitute Net Cash Proceeds from the respective 
Asset Sale, and (ii) with respect to any issuance of debt or equity, the 
cash proceeds (including any cash received by way of deferred payment 
pursuant to a promissory note, receivable or otherwise, but only as and 
when received) received from such event, net of transaction costs 
(including, as applicable, any underwriting, brokerage or other customary 
commissions and reasonable legal and other fees and expenses associated 
therewith) incurred in connection therewith.

           "Net Income" shall mean, with respect to any person, the net 
income (loss) of such person, determined in accordance with GAAP, 
excluding, however, any gain or loss, together with any related provision 
for taxes, realized in connection with any Asset Sale (including, without 
limitation, dispositions pursuant to sale and leaseback transactions).

           "Non-Defaulting Bank" shall mean and include each Bank other 
than a Defaulting Bank.

           "Non-Wholly-Owned Domestic Subsidiary" shall mean, as to any 
Person, any Non-Wholly-Owned Subsidiary of such Person which is a Domestic 
Subsidiary.

           "Non-Wholly-Owned Subsidiary" shall mean each Subsidiary other 
than a Wholly-Owned Subsidiary.

           "Non-Wholly-Owned Subsidiary Guaranty" shall mean, after the 
execution and delivery thereof, the Non-Wholly-Owned Subsidiary Guaranty 
entered into by each Non-Wholly-Owned Domestic Subsidiary of the Borrower 
pursuant to Section 8.11, in the form of Exhibit L hereto, as the same may 
be amended, modified or supplemented from time to time.

           "Note" shall mean each Revolving Note and the Swingline Note.

           "Notice of Borrowing" shall have the meaning provided in Section 
1.03.

           "Notice of Conversion" shall have the meaning provided in 
Section 1.06.

           "Notice Office" shall mean the office of the Agent located at 
130 Liberty Street, New York, New York  10006, Attention:  Mary Kay Coyle, 
or such other office as the Agent may hereafter designate in writing as 
such to the other parties hereto.

           "Obligations" shall mean all amounts, direct or indirect, 
contingent or absolute, of every type or description, and at any time 
existing, owing to the Agent, the Collateral Agent or any Bank pursuant to 
the terms of this Agreement or any other Credit Document.

           "Original Acquired Business" shall mean the Acquired Business as 
defined in the Existing Credit Agreement.

           "Original Acquisition" shall mean the Acquisition as defined in 
the Existing Credit Agreement.

           "Original Effective Date" shall mean the Effective Date under, 
and as defined in, the Existing Credit Agreement.

           "Other Hedging Agreements" shall mean any foreign exchange 
contracts, currency swap agreements, commodity agreements or other similar 
agreements or arrangements designed to protect against the fluctuations in 
currency values.

           "Parent" shall mean Motors & Gears, Inc., a Delaware 
corporation, as successor by Merger to MK Group.

           "Parent Indebtedness" shall mean, at any time, (x) all 
Indebtedness of Parent for borrowed money, purchase money Indebtedness, all 
obligations evidenced by notes or bonds and any other items which would be 
required to be accounted for as debt of Parent on Parent's consolidating 
balance sheet in accordance with GAAP and (y) all Contingent Obligations of 
Parent in respect of obligations of any other Persons (other than the 
Borrower and its Subsidiaries); provided that Parent Indebtedness shall not 
include Indebtedness of any Subsidiary of Parent with respect to which (x) 
Parent is neither a co-obligor nor has any Contingent Obligation or (y) the 
sole recourse to Parent is contractually limited to the Parent's equity 
interests in the respective Subsidiary of Parent (which may not be the 
Borrower) which has directly incurred the respective Indebtedness.

           "Parent Interest Expense" shall mean, for any period, the 
aggregate of the interest expense in respect of all  Indebtedness of the 
Parent (but not of its Subsidiaries except to the extent same also 
constitutes Indebtedness of the Parent) for such period, determined in 
accordance with GAAP (including amortization of original issue discount of 
any such Indebtedness, all non-cash interest payments, the interest portion 
of any deferred payment obligation, the interest component of capital lease 
obligations and, except as otherwise provided below, the amortization of 
deferred financing fees if such amortization would otherwise be included in 
interest expense); provided that there shall be excluded from Parent 
Interest Expense the amortization of any deferred financing costs incurred 
in connection with the Senior Unsecured Notes.  Notwithstanding anything to 
the contrary contained above or otherwise required by GAAP, Parent Interest 
Expense shall include all interest expense in respect of Senior Unsecured 
Notes.  

           "Parent Subordinated Intercompany Note" shall have the meaning 
provided in Section 5.23(a).

           "Participant" shall have the meaning provided in Section 2.04.

           "Payment Office" shall mean the office of the Agent located at 
130 Liberty Street, New York, New York 10006, or such other office as the 
Agent may hereafter designate in writing as such to the other parties 
hereto.

           "PBGC" shall mean the Pension Benefit Guaranty Corporation 
established pursuant to Section 4002 of ERISA, or any successor thereto.

           "Percentage" of any Bank at any time shall mean a fraction 
(expressed as a percentage) the numerator of which is the Commitment of 
such Bank at such time and the denominator of which is the Total Commitment 
at such time, provided that if the Percentage of any Bank is to be 
determined after the Total Commitment has been terminated, then the 
Percentages of the Banks shall be determined immediately prior (and without 
giving effect) to such termination.

           "Permitted Acquired Business" shall mean the business, division 
or product line of any Person, including the capital stock of any such 
Person, acquired in connection with a Permitted Transaction. 

           "Permitted Acquired Debt" shall mean Indebtedness of a 
Subsidiary of the Borrower acquired after the Initial Borrowing Date 
pursuant to a Permitted Transaction, to the extent such indebtedness was 
outstanding prior to the consummation of the Permitted Transaction and 
remains outstanding as Indebtedness of the respective Subsidiary after 
giving effect thereto, provided that (i) such Indebtedness was not incurred 
in connection with or in anticipation of such Permitted Transaction or the 
respective Person becoming Subsidiary of the Borrower, (ii) such 
Indebtedness does not constitute Indebtedness of the Borrower or any of 
their Subsidiaries other than the respective Subsidiary acquired pursuant 
to the respective Permitted Transaction and shall not be secured by any 
assets of any Person other than assets of the Subsidiary so acquired 
serving as security therefor at the time of the respective Permitted 
Transaction and (iii) no Person other than the respective Subsidiary shall 
have any liability (contingent or otherwise) with respect to any Permitted 
Acquired Debt. 

           "Permitted Acquisition" shall mean the acquisition by the 
Borrower or any 80%-Owned Subsidiary of the Borrower (other than the 
Receivables Entity) of assets constituting a business, division or product 
line of any Person not already a Subsidiary of the Borrower or such 
Subsidiary or at least 80% of the capital stock of any such Person, 
although any such acquisition shall only be a Permitted Acquisition so long 
as (A) the consideration therefor consists solely of cash (including from 
proceeds of Revolving Loans), Permitted Debt, Permitted Acquired Debt 
and/or Permitted Earn-Out Debt, (B) the assets acquired will be used solely 
in, or the business of the Person whose stock is acquired consists solely 
of, any or all of the same business lines permitted by Section 9.07, and 
(C) those acquisitions that are structured as stock acquisitions shall be 
effected through a purchase of no less than 80% of the capital stock of 
such Person by the Borrower or such Subsidiary or through a merger between 
such Person and a newly-formed direct Subsidiary of the Borrower or such 
Subsidiary, as the case may be, so that after giving effect to the 
respective acquisition the Permitted Acquired Business is owned by an 
80%-Owned Subsidiary and (D) all requirements of Section 8.15 with respect 
to Permitted Acquisitions are met with respect thereto.  Notwithstanding 
anything to the contrary contained above or in Section 8.15, an acquisition 
not otherwise meeting all the requirements set forth in the definition of 
Permitted Acquisition above or in Section 8.15 may be consummated as a 
"Permitted Acquisition" for all purposes of this Agreement, but only so 
long as the Required Banks specifically consent in writing to such 
acquisition and agree in writing that such acquisition shall constitute a 
Permitted Acquisition for purposes of this Agreement.

           "Permitted Acquisition Investment" shall mean the acquisition 
(not pursuant to a Permitted Acquisition) by the Borrower or any Subsidiary 
of the Borrower (other than the Receivables Entity) of common equity 
interests (or similar equity interests), constituting less than 80% of the 
outstanding common equity interests (or similar equity interests), of any 
Person not already a Subsidiary of the Borrower or such Subsidiary, 
although such acquisition shall only be a Permitted Acquisition Investment 
so long as (A) the consideration therefor consists solely of cash 
(including from proceeds from Revolving Loans), Permitted Debt, Permitted 
Acquired Debt and/or Permitted Earn-Out Debt and (B) the business of the 
Person whose common equity interests (or similar equity interests) are 
acquired, shall be one of the business lines permitted by Section 9.07.  
Notwithstanding anything to the contrary contained in the immediately 
preceding sentence, an investment shall be a Permitted Acquisition 
Investment only if all requirements of Section 8.15 applicable to Permitted 
Acquisition Investments are met with respect thereto.

           "Permitted Amendments" shall mean amendments to the Existing 
Indebtedness, the Debt Agreements, the Senior Unsecured Note Documents, the 
Acquisition Documents, the Merger Documents or the Equity Financing 
Agreements or any agreement relating to any of the foregoing (but not to 
the Existing Seller Subordinated Note, the Existing Seller Installment 
Note, the Earnout Agreement or any agreements relating thereto):  (i) to 
cure ambiguity, defect or inconsistency, (ii) to make changes that would 
provide additional benefits or rights to the Agent or the Banks or (iii) to 
make changes that would not otherwise adversely affect any Bank in its 
capacity as such.

           "Permitted Debt" shall mean subordinated Indebtedness of the 
Borrower incurred in connection with a Permitted Transaction and in 
accordance with Section 8.15 which Permitted Debt and all terms thereof 
shall be in form and substance reasonably satisfactory to the Agent,  
provided, that in any event, unless the Required Banks otherwise expressly 
consent in writing prior to the incurrence thereof, (i) no such 
Indebtedness shall be guaranteed by the Borrower or any of its 
Subsidiaries, (ii) no such Indebtedness shall be secured by any asset of 
the Borrower or any of its Subsidiaries, (iii) any such Indebtedness shall 
be subordinated to the Obligations at least to the same extent as the 
Existing Seller Subordinated Note is subordinated in accordance with the 
terms thereof and (iv) each issue of Permitted Debt shall contain terms 
which, in the aggregate, are at least as favorable to the Banks as those 
contained in the Existing Seller Subordinated Note.  The incurrence of 
Permitted Debt shall be deemed to be a representation and warranty by the 
Borrower that all conditions thereto have been satisfied and that same is 
permitted in accordance with the terms of this Agreement, which 
representation and warranty shall be deemed to be a representation and 
warranty for all purposes hereunder, including, without limitation, 
Sections 6 and 10.

           "Permitted Earn-Out Debt" shall mean Indebtedness of the 
Borrower or any of its Subsidiaries incurred in connection with a Permitted 
Transaction and in accordance with Sections 8.15 and 9.04(x), which 
Indebtedness is unguaranteed and not secured by any assets of the Borrower 
or any of its Subsidiaries (including, without limitation, the assets so 
acquired) and is only payable by the Borrower in the event certain future 
performance goals are achieved with respect to the assets acquired; 
provided that, such Indebtedness shall only constitute Permitted Earn-Out 
Debt to the extent the terms of such Indebtedness expressly provide that 
payments thereunder may only be made to the extent not prohibited by the 
terms of this Agreement or any refinancing (or successive refinancings 
hereof) as in effect from time to time.

           "Permitted Encumbrances" shall mean, with respect to any 
Mortgaged Property, such exceptions to title as are set forth in the 
Mortgage Policy or title commitment delivered with respect thereto, all of 
which exceptions must be acceptable on the date of delivery of such 
Mortgage Policy or title commitment to the Agent in its reasonable 
discretion.

           "Permitted Investment" shall mean any loans, advances or capital 
contributions made by the Borrower or any Subsidiary of the Borrower to any 
Subsidiary of the Borrower which is not an 80%-Owned Subsidiary.

           "Permitted Investment Amount" shall mean, at any time an amount 
which initially shall be $5,000,000 and which shall be decreased (without 
duplication) (x) on the date of the consummation of each Permitted 
Acquisition Investment, by the Permitted Transaction Cost thereof and (y) 
on the date of the making of each Permitted Investment, by the amount of 
the respective such Investment; provided that to the extent a Permitted 
Investment is reduced by cash returns received in respect thereof (but for 
purposes of this proviso not to exceed the original amount of the 
respective Permitted Investment), from and after the date of the receipt of 
any such cash returns, the Permitted Investment Amount shall be increased 
by the amount of cash so received.

           "Permitted Liens" shall have the meaning provided in Section 
9.01.

           "Permitted Sale-Leaseback Transaction" shall mean any sale by 
the Borrower or any of its Subsidiaries of which equipment or machinery 
first acquired by the Borrower or such Subsidiary after the Initial 
Borrowing Date which equipment or machinery, as the case may be, is then 
leased back to the respective seller, provided that (i) the proceeds of the 
respective sale shall be entirely cash and in an amount at least equal to 
75% of the aggregate amount expended by the Borrower and its Subsidiaries 
in so acquiring such equipment or machinery, (ii) such sale and leaseback 
is effected within 180 days of the acquisition by the Borrower or such 
Subsidiary of the Borrower of such equipment or machinery, and (iii) the 
respective transaction is otherwise effected in accordance with the 
applicable requirements of Section 9.02(xi).

           "Permitted Transaction" shall mean and include each Permitted 
Acquisition and each Permitted Acquisition Investment.

           "Permitted Transaction Cost" shall mean, with respect to any 
Permitted Transaction, the sum of (i) the amount of cash to be paid in 
respect thereof, as certified by the Borrower pursuant to Section 
8.15(a)(ii)(u) in connection with the respective Permitted Transaction, 
(ii) the aggregate amount of fees and expenses estimated by the Borrower to 
be payable in connection with the respective Permitted Transaction, as 
certified by the Borrower pursuant to Section 8.15(a)(ii)(v), (iii) the 
aggregate principal amount of all Permitted Debt and/or Permitted Acquired 
Debt incurred, acquired or assumed in connection with such Permitted 
Transaction and (iv) the Certified Restructuring Cost Reserve with respect 
to such Permitted Transaction.  

           "Permitted Transaction Notice" shall have the meaning set forth 
in Section 8.15(a)(i). 

           "Person" shall mean any individual, partnership, joint venture, 
firm, corporation, association, trust or other enterprise or any government 
or political subdivision or any agency, department or instrumentality 
thereof.

           "Plan" shall mean any multiemployer or single-employer plan as 
defined in Section 4001 of ERISA, which is maintained or contributed to by 
(or to which there is an obligation to contribute of), the Borrower or a 
Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for 
the five-year period immediately following the latest date on which, the 
Borrower or a Subsidiary of the Borrower or an ERISA Affiliate maintained, 
contributed to or had an obligation to contribute to such plan.

           "Pledge Agreement" shall have the meaning provided in Section 
5.13 and shall include after the execution and delivery thereof any pledge 
agreement required to be delivered pursuant to Sections 8.11, 8.15 and/or 
9.13.

           "Pledge Agreement Collateral" shall mean all "Collateral" as 
defined in the Pledge Agreement.

           "Pledged Securities" shall have the meaning provided in the 
Pledge Agreement.

           "Pledgee" shall have the meaning provided in the Pledge 
Agreement.

           "Prime Lending Rate" shall mean the rate which BTCo announces 
from time to time as its prime lending rate, the Prime Lending Rate to 
change when and as such prime lending rate changes.  The Prime Lending Rate 
is a reference rate and does not necessarily represent the lowest or best 
rate actually charged to any customer.  BTCo may make commercial loans or 
other loans at rates of interest at, above or below the Prime Lending Rate.

           "Pro Forma Basis" shall mean, in connection with any calculation 
of compliance with any financial covenant or financial term (whether 
pursuant to Section 8.15 or the respective financial covenant or financial 
term), the calculation thereof after giving effect on a pro forma basis to 
(w) if the relevant period to be tested includes any period occurring prior 
to the BCM Acquisition Date, the consummation of the BCM Transaction as if 
same had occurred on the first day of such period, (x) if the relevant 
period to be tested includes any period occurring prior to the Initial 
Borrowing Date, the consummation of the Transaction as if same had occurred 
on the first day of such period, (y) in the case of any calculation of the 
Consolidated Interest Coverage Ratio or the Leverage Ratio (except for 
purposes of Section 8.15), any Permitted Transaction which was consummated 
during the respective Test Period and (z) for purposes of all calculations 
pursuant to Section 8.15 and of the Blocked Commitment, the Permitted 
Transaction or Asset Sale, as the case may be, then being consummated as 
well as any other Permitted Transaction and/or Asset Sale consummated after 
the first day of the relevant Calculation Period and on or prior to the 
date of the respective Permitted Transaction or Asset Sale, as the case may 
be, then being effected, with the following rules to apply in connection 
therewith:

            (i)  all Indebtedness (including, without limitation, all 
      Permitted Acquired Debt, Permitted Debt, BCM Acquired Debt, the 
      Senior Unsecured Notes and Indebtedness evidenced by Loans) incurred 
      to finance any Permitted Transaction or, to the extent the respective 
      Calculation Period, Asset Sale Calculation Period or Test Period 
      includes periods prior to the Initial Borrowing Date or the BCM 
      Acquisition Date, to finance the Transaction or the BCM Transaction, 
      as the case may be, shall be deemed to have been incurred on the 
      first day of the respective Calculation Period, Asset Sale 
      Calculation Period or Test Period and remain outstanding through the 
      date of the consummation of the respective Permitted Transaction (and 
      thereafter in the case of projections pursuant to Section 
      8.15(a)(xi)) or Transaction or BCM Transaction;

           (ii)  all Indebtedness assumed to be outstanding pursuant to 
      preceding clause (i) shall be deemed to have borne interest at (x) 
      the rate applicable thereto, in the case of fixed rate Indebtedness, 
      or (y) at the rates which would have been applicable thereto during 
      the respective period when same was deemed outstanding, in the case 
      of floating rate Indebtedness (although interest expense with respect 
      to any Indebtedness for periods while same was actually outstanding 
      during the respective period shall be calculated using the actual 
      rates applicable thereto while same was actually outstanding); 
      provided that for purposes of calculations pursuant to Section 
      8.15(a)(xi), all Indebtedness (whether actually outstanding or deemed 
      outstanding) bearing interest at a floating rate of interest shall be 
      tested on the basis of the rates applicable at the time the 
      determination is made pursuant to said clause (xi); 

          (iii)  in making calculations pursuant to preceding clause (z) of 
      this definition, all Indebtedness permanently repaid (and in the case 
      of any repayment of revolving indebtedness, to the extent the 
      commitments with respect thereto have been permanently reduced) with 
      the proceeds of the respective Asset Sale shall be deemed to have 
      been repaid on the first day of the respective Calculation Period or 
      Asset Sale Calculation Period, as the case may be; 

           (iv)  in making any determination of Consolidated EBITDA, pro 
      forma effect shall be given to the Transaction, the BCM Transaction 
      and any Permitted Transaction or, in the case of determinations 
      pursuant to preceding clause (z), Asset Sale for the periods 
      described above, taking into account (x) fees payable as described in 
      Section 9.06(y)(viii) as if such fees were payable with respect to 
      pro forma net sales from the first day of the respective period, (y) 
      in the case of the BCM Transaction, cost savings and expenses which 
      would otherwise be accounted for as an adjustment pursuant to Article 
      11 of Regulation S-X under the Securities Act, as if such cost 
      savings and expenses were realized on the first day of the respective 
      period, but, in the case of any such cost savings, only so long as 
      the BCM Restructuring Costs incurred (or the anticipated BCM 
      Restructuring Costs if not yet incurred) to achieve such cost savings 
      are reasonably consistent with the Certified BCM Restructuring Cost 
      Reserve to be taken in connection with the BCM Transaction as 
      certified pursuant to Section 9.02(xii)(c) of the Existing Credit 
      Agreement and (z) in the case of any Permitted Transaction, cost 
      savings and expenses which would otherwise be accounted for as an 
      adjustment pursuant to Article 11 of Regulation S-X under the 
      Securities Act, as if such cost savings or expenses were realized on 
      the first day of the respective period, but, in the case of any such 
      cost savings, only so long as the Restructuring Costs incurred (or 
      the anticipated Restructuring Costs if not yet incurred) to achieve 
      such cost savings are reasonably consistent with the Certified 
      Restructuring Cost Reserve to be taken in connection with the 
      Permitted Transaction as certified pursuant to Section 8.15(a)(ii).

           "Projections" shall have the meaning provided in Section 
5.20(b).

           "Purchase Price" shall mean the sum of (i) cash in an amount not 
to exceed $75,000,000, subject to the adjustment of the purchase price 
provided in Sections 1.03 and 1.04 of the Acquisition Agreement plus (ii) 
the Earnout plus (iii) the assumption of liabilities in an aggregate 
principal amount not to exceed $10,000,000.

           "Quarterly Payment Date" shall mean the 15th day of each March, 
June, September and December commencing with December 15, 1996.

           "RCRA" shall mean the Resource Conservation and Recovery Act, as 
the same may be amended from time to time, 42 U.S.C.   6901 et seq.

           "Real Property" of any Person shall mean all the right, title 
and interest of such Person in and to land, improvements and fixtures, 
including Leaseholds.

           "Receivables" shall mean all accounts receivable (including, 
without limitation, all rights to payment created by or arising from sales 
of goods, leases of goods or the rendition of services rendered no matter 
how evidenced whether or not earned by performance).

           "Receivables Amendment Conditions" means, with respect to any 
amendment, modification, supplement, refinancing or replacement of the 
Receivables Facility or the respective Receivables Facility Documents, the 
requirements that the following shall be true after giving effect to such 
amendment, modification, supplement, refinancing or replacement:

           (a)   no such amendments, modifications, supplements, 
                 refinancing or replacement shall impose any condition or 
                 requirement on the Borrower or any of its Subsidiaries 
                 that is more restrictive in any material respect than 
                 those in existence on the Receivables Facility Transaction 
                 Date in the documentation originally approved pursuant to 
                 Section 8.17;

           (b)   such amendments, modifications, supplements, refinancing 
                 and/or replacement shall not be adverse to the interest of 
                 the Banks; and 

           (c)   all such amendments, modifications, supplements, 
                 refinancing or replacement shall otherwise be in form and 
                 substance reasonably satisfactory to the Agent.

           "Receivables Entity" shall mean a Wholly-Owned Subsidiary of the 
Borrower which engages in no activities other than in connection with the 
financing of accounts receivable of the Designated Credit Parties and which 
is designated (as provided below) as the Receivables Entity (a) no portion 
of the Indebtedness or any other obligations (contingent or otherwise) of 
which (i) is guaranteed by Parent or any other Subsidiary of Parent 
(excluding guarantees of obligations (other than the principal of, and 
interest on, Indebtedness)) pursuant to Standard Securitization 
Undertakings, (ii) is recourse to or obligates Parent or any other 
Subsidiary of Parent in any way other than pursuant to Standard 
Securitization Undertakings or (iii) subjects any property or asset of 
Parent or any other Subsidiary of Parent, directly or indirectly, 
contingently or otherwise, to the satisfaction thereof, other than pursuant 
to Standard Securitization Undertakings, (b) with which neither Parent nor 
any of its Subsidiaries has any contract, agreement, arrangement or 
understanding (other than pursuant to the Receivables Facility Documents 
(including with respect to fees payable in the ordinary course of business 
in connection with the servicing of accounts receivable and related 
assets)) on terms less favorable to Parent or such Subsidiary than those 
that might be obtained at the time from persons that are not Affiliates of 
Parent, and (c) to which neither Parent nor any other Subsidiary of Parent 
has any obligation to maintain or preserve such entity's financial 
condition or cause such entity to achieve certain levels of operating 
results.  Any such designation shall be evidenced to the Agent by filing 
with the Agent an officer's certificate of the Borrower certifying that, to 
the best of such officer's knowledge and belief after consultation with 
counsel, such designation complied with the foregoing conditions.

           "Receivables Facility" shall mean a facility providing for the 
sale by the Borrower and/or one or more other Designated Credit Parties of 
Receivables Facility Assets (thereby providing off-balance sheet financing 
to the Borrower and the respective Designated Credit Parties) to the 
Receivables Entity, which in turn shall sell interests in the respective 
Receivables Facility Assets to the third-party investors pursuant to the 
Receivables Facility Documents (with the Receivables Entity to issue 
investor certificates, purchased interest certificates or other similar 
documentation evidencing interests in the Receivables Facility Assets) in 
return for the cash used by the Receivables Entity to purchase the 
Receivables Facility Assets from the Borrower and/or the respective 
Designated Credit Parties.

           "Receivables Facility Assets" shall mean Receivables (whether 
now existing or arising in the future) of the Borrower and its Subsidiaries 
which are transferred to the Receivables Entity pursuant to the Receivables 
Facility and any related Receivables Related Assets which are also so 
transferred to the Receivables Entity and all proceeds thereof.

           "Receivables Facility Documents" shall mean all documents and 
agreements entered into in connection with the Receivables Facility, as 
such documents and agreements may be amended, modified, supplemented, 
refinanced or replaced from time to time so long as the Receivables 
Amendment Conditions are satisfied in connection therewith.

           "Receivables Facility Financing Costs" shall mean, for any 
period, the total consolidated interest and fee expense of the Borrower and 
its Subsidiaries which would have existed for such period pursuant to the 
Receivables Facility if same were structured as a secured lending 
arrangement rather than as a facility for the sale of Receivables Facility 
Assets.

           "Receivables Facility Threshold Amount" shall, on the 
Receivables Facility Transaction Date, equal the amount applied on such 
date to reduce the Total Commitment pursuant to Section 3.03(e)(x); 
provided that, on each date upon which a commitment reduction is required 
pursuant to Section 3.03(e)(y) as a result of the incurrence of Attributed 
Receivables Facility Indebtedness in excess of the Receivables Facility 
Threshold Amount as theretofore in effect, the Receivables Facility 
Threshold Amount shall be increased (on the date of, after giving effect 
to, the respective mandatory commitment reduction) by the amount of the 
commitment reduction required on such date pursuant to Section 3.03(e)(y) 
as a result of the respective incurrence of Attributed Receivables Facility 
Indebtedness.

           "Receivables Facility Transaction" shall mean the entering into 
of the Receivables Facility and the consummation of the related 
transactions contemplated by the Receivables Facility Documents. 

           "Receivables Facility Transaction Date" shall mean the date of 
the entering into of the Receivables Facility in accordance with the 
requirements of Section 8.17.

           "Receivables Related Assets" shall mean, with respect to any 
Person, all of the following property and interests in property of such 
Person, whether now existing or existing in the future or hereafter 
acquired or arising and in each case to the extent relating to the 
respective Receivables of such Person: (i) all unpaid seller's or lessor's 
rights (including, without limitation, recession, replevin, reclamation and 
stoppage in transit, relating to any of the foregoing or arising 
therefrom), (ii) all rights to any goods or merchandise represented by any 
of the foregoing (including, without limitation, returned or repossessed 
goods), (iii) all reserves and credit balances with respect to any such 
Receivable or the respective account debtor, (iv) all letters of credit, 
security or guarantees of any of the foregoing, (v) all insurance policies 
or reports relating to any of the foregoing, (vi) all collection or deposit 
accounts relating to any of the foregoing, (vii) all proceeds of any of the 
foregoing, and (viii) all books and records relating to any of the 
foregoing.

           "Recovery Event" shall mean the receipt by the Borrower or any 
of its Subsidiaries of any cash insurance proceeds or condemnation award 
(excluding the proceeds of any business interruption insurance) payable (i) 
by reason of theft, loss, physical destruction or damage or any other 
similar event with respect to any property or asset of the Borrower or any 
of its Subsidiaries, or (ii) by reason of any condemnation, taking, seizing 
or similar event with respect to any property or asset of the Borrower or 
any of its Subsidiaries or (iii) under any policy of property or casualty 
(or substantially similar) insurance required to be maintained under 
Section 8.03 with respect to any property or 
asset of the Borrower or any of its Subsidiaries.

           "Refinancing" shall mean the refinancing of the Existing Credit 
Agreement on the Initial Borrowing Date pursuant to the requirements of 
Section 5.12.

           "Refinancing Documents" shall mean the documents entered into in 
connection with the Refinancing.

           "Refinancing Indebtedness" shall mean (i) Indebtedness of the 
Borrower and its Subsidiaries issued or given in exchange for, or the 
proceeds of which are used to, extend, refinance, renew, replace, 
substitute or refund Indebtedness permitted under this Agreement or any 
Indebtedness issued to so extend, refinance, renew, replace, substitute or 
refund any such Indebtedness, and (ii) any additional Indebtedness issued 
to pay premiums and fees in connection with clause (i).

           "Register" shall have the meaning provided in Section 13.16.

           "Regulation D" shall mean Regulation D of the Board of Governors 
of the Federal Reserve System as from time to time in effect and any 
successor to all or a portion thereof establishing reserve requirements.

           "Regulation G" shall mean Regulation G of the Board of Governors 
of the Federal Reserve System as from time to time in effect and any 
successor to all or a portion thereof.

           "Regulation T" shall mean Regulation T of the Board of Governors 
of the Federal Reserve System as from time to time in effect and any 
successor to all or a portion thereof.

           "Regulation U" shall mean Regulation U of the Board of Governors 
of the Federal Reserve System as from time to time in effect and any 
successor to all or a portion thereof.

           "Regulation X" shall mean Regulation X of the Board of Governors 
of the Federal Reserve System as from time to time in effect and any 
successor to all or a portion thereof.

           "Related Business" means any business conducted by the Acquired 
Business and Merkle and its Subsidiaries on the Effective Date and any 
business in the motion control industry (including, without limitation, 
gears and gear drives, controls and sensors, drives and drive systems and 
couplings) and any and all related businesses in support of, or reasonably 
related or substantially similar to, any such business.

           "Release" shall mean disposing, discharging, injecting, 
spilling, pumping, leaking, leaching, dumping, emitting, escaping, 
emptying, seeping, placing, pouring and the like, into or upon any land or 
water or air, or otherwise entering into the indoor or outdoor environment 
or into or out of any Real Property, including the movement of Hazardous 
Materials through or in the air, soil, service water, ground water or 
property.

           "Replaced Bank" shall have the meaning provided in Section 1.13.

           "Replacement Bank" shall have the meaning provided in Section 
1.13.

           "Reportable Event" shall mean an event described in Section 
4043(c) of ERISA with respect to a Plan other than those events as to which 
the 30-day notice period is waived under subsection .13, .14, .16, .18, .19 
or .20 of PBGC Regulation Section 2615.

           "Required Appraisal" shall have the meaning provided in Section 
8.11.

           "Required Banks" shall mean Non-Defaulting Banks, the sum of 
whose Commitments (or after the termination thereof, outstanding Revolving 
Loans and Percentage of outstanding Swingline Loans and Letter of Credit 
Outstandings) represent an amount greater than 50% of the sum of all 
Commitments of all Non-Defaulting Banks (or after the termination thereof, 
the sum of the then total outstanding Revolving Loans of Non-Defaulting 
Banks and the aggregate Percentages of all Non-Defaulting Banks of the 
total outstanding Swingline Loans and Letter of Credit Outstandings at such 
time).

           "Restricted Payment" shall mean (i) the authorization, 
declaration or payment of any Dividend with respect to the Borrower or any 
of its Subsidiaries and (ii) the payment by the Borrower or any of its 
Subsidiaries of any principal, interest on, or any other amount owing with 
respect to, any advance or loan made by or owing by such Person to Parent 
or any Subsidiary (other than the Borrower and its Subsidiaries) of Parent.

           "Restructuring Costs" shall mean, as relates to any Permitted 
Transaction, nonrecurring charges arising out of the restructuring, 
consolidation, severance or discontinuance of the operations of any 
entities or businesses acquired pursuant to the respective Permitted 
Transactions either alone or together with the Borrower and its other 
Subsidiaries, in each case to the extent incurred within eighteen months 
following the respective Permitted Transaction.

           "Returns" shall have the meaning provided in Section 7.09.

           "Revolving Loans" shall have the meaning provided in Section 
1.01(a).

           "Revolving Note" shall have the meaning provided in Section 
1.05(a).

           "Sale/Leaseback Transaction" means an arrangement (including, 
without limitation, any Permitted Sale-Leaseback Transaction) relating to 
property now owned or hereafter acquired whereby the Borrower or a 
Subsidiary thereof, transfers such property to a Person and the Borrower or 
a Subsidiary thereof leases it from such Person.

           "S&P" shall mean Standard & Poor's Ratings Services, a division 
of McGraw-Hill, Inc.

           "Scheduled Existing Indebtedness" shall have the meaning 
provided in Section 5.19.

           "Scott" shall mean Scott Motors Company, a Delaware corporation 
and a direct Wholly-Owned Subsidiary of Imperial.

           "Scott Acquisition Sub" shall mean The New Scott Motors Company, 
a Delaware corporation and a direct Wholly-Owned Subsidiary of Acquisition 
Corp.

           "Scott Intercompany Note" shall have the meaning provided in 
Section 5.23(b).

           "SEC" shall have the meaning provided in Section 8.01(h).

           "Section 4.04(b)(ii) Certificate" shall have the meaning 
provided in Section 4.04(b).

           "Secured Creditors" shall have the meaning provided in the 
respective Security Documents.

           "Securities Act" shall mean the Securities Act of 1933, as 
amended, and the rules and regulations promulgated thereunder.

           "Security Agreement" shall have the meaning provided in Section 
5.14 and shall include after the execution and delivery thereof any 
security agreement required to be delivered pursuant to Sections 8.11, 8.15 
and/or 9.13.

           "Security Agreement Collateral" shall mean all "Collateral" as 
defined in the Security Agreement.

           "Security Documents" shall mean the Pledge Agreement, the 
Security Agreement, each Additional Security Document, if any (including, 
without limitation, each Mortgage, if any, executed and delivered pursuant 
to Section 8.11), and any other security documents executed and delivered 
pursuant to the requirements of Sections 8.11, 8.15 and/or 9.13.

           "Senior Unsecured Note Indenture" shall mean the Indenture, 
dated as of November 7, 1996, entered into by and between Parent and Fleet 
National Bank, as trustee thereunder, as in effect on the Initial Borrowing 
Date and as the same may be amended, modified or supplemented from time to 
time in accordance with the terms thereof.  

           "Senior Unsecured Notes" shall mean Parent's 10-3/4% Series A 
Senior Notes due 2006, as in effect on the Initial Borrowing Date and as 
the same may be amended, modified or supplemented from time to time 
pursuant to the terms thereof.

           "Senior Unsecured Note Documents" shall mean and included each 
of the documents and other agreements entered into (including, without 
limitation, the Senior Unsecured Note Indenture) relating to the issuance 
by the Parent of the Senior Unsecured Notes, as in effect on the Initial 
Borrowing Date and as the same may be entered into, modified, supplemented 
or amended from time to time pursuant to the terms thereof.

           "Shareholder Subordinated Note" shall mean an unsecured junior 
subordinated note issued by M&G Holdings (and not guaranteed or supported 
in any way by Parent or any Subsidiary of Parent) to Management Investors, 
in the form of Exhibit R, with such changes thereto as are satisfactory to 
the Agent and the Required Banks.  

           "Shareholders' Agreements" shall have the meaning provided in 
Section 5.06.

           "Standard Securitization Undertakings" means representations, 
warranties, covenants and indemnities entered into by Parent, the Borrower 
or any Subsidiary of the Borrower in connection with the Receivables 
Facility which are customary in an off-balance-sheet accounts receivable 
transaction.

           "Standby Letter of Credit" shall have the meaning provided in 
Section 2.01(a).

           "Start Date" shall have the meaning provided in the definition 
of Interest Reduction Discount.

           "Stated Amount" of each Letter of Credit shall, at any time, 
mean the maximum amount available to be drawn thereunder (in each case 
determined without regard to whether any conditions to drawing could then 
be met).

           "Stockholders' Agreement" shall mean the Stockholders' 
Agreement, dated as of September 22, 1995, by and among M&G Holdings, 
Jordan and the other Jordan Investors (as defined therein), in the form 
delivered to the Agent and the Banks on the Initial Borrowing Date; 
provided that future Management Investors may become party thereto by 
executing a counterpart thereof after the Initial Borrowing Date.

           "Subsidiary" shall mean, as to any Person, (i) any corporation 
more than 50% of whose stock of any class or classes having by the terms 
thereof ordinary voting power to elect a majority of the directors of such 
corporation (irrespective of whether or not at the time stock of any class 
or classes of such corporation shall have or might have voting power by 
reason of the happening of any contingency) is at the time owned by such 
Person and/or one or more Subsidiaries of such Person and (ii) any 
partnership, association, joint venture or other entity in which such 
Person and/or one or more Subsidiaries of such Person has more than a 50% 
equity interest at the time.  Unless the context otherwise requires, all 
references herein to "Subsidiaries" shall be to Subsidiaries of the 
Borrower.

           "Subsidiary Guarantor" shall mean each Domestic Subsidiary of 
the Borrower which is a party to the Subsidiary Guaranty or the 
Non-Wholly-Owned Subsidiary Guaranty.

           "Subsidiary Guaranty" shall have the meaning provided in Section 
5.15 and shall include, after the execution and delivery thereof, any 
similar guaranty required to be delivered pursuant to Sections 8.11, 8.15 
and/or 9.13.

           "Swingline Bank" shall mean BTCo, in its capacity as the lender 
of Swingline Loans.

           "Swingline Expiry Date" shall mean the date which is five 
Business Days prior to the Final Maturity Date.

           "Swingline Loans" shall have the meaning provided in Section 
      1.01(b).

           "Swingline Note" shall have the meaning provided in Section 
      1.05(a).

           "Syndication Date" shall mean that date upon which the Agent 
determines in its sole discretion (and notifies the Borrower) that the 
primary syndication (and resultant addition of institutions as Banks 
pursuant to Section 13.04) has been completed.

           "Tax Sharing Agreements" shall have the meaning provided in 
Section 5.06.

           "Taxes" shall have the meaning provided in Section 4.04(a).

           "Test Date" shall have the meaning provided in the definition of 
Interest Reduction Discount.

           "Test Period" shall mean each period of four consecutive fiscal 
quarters then last ended, in each case taken as one accounting period.  
Notwithstanding anything to the contrary contained above or otherwise 
required by GAAP, in the case of any Test Period ending prior to the first 
anniversary of the Initial Borrowing Date, such period shall be a one year 
period ending on the last day of a fiscal quarter ended after the Initial 
Borrowing Date, and such Test Period shall include (x) the actual results 
of the Borrower and its Subsidiaries from and after the date of the 
consummation of the Transaction and (y) the historical pro forma financial 
results of the Borrower and its Subsidiaries for that portion of the Test 
Period occurring prior to the Initial Borrowing Date, with said historical 
pro forma financial results to be consistent with the pro forma financial 
statements delivered pursuant to Section 7.05(a)(V) and taking into effect 
the pro forma adjustments for periods prior to the Initial Borrowing Date 
described in the definition of Pro Forma Basis contained herein.

           "TJC" shall mean TJC Management Corporation, a Delaware 
corporation.

           "TJC Management Services Agreements" shall mean and include each 
of (i) the Management Consulting Agreement, dated as of September 22, 1995, 
by and between TJC and Parent and (ii) the Management Consulting Agreement, 
dated as of September 22, 1995, by and between TJC and Merkle, in each case 
as in effect on the Initial Borrowing Date and as the same may be amended, 
modified or supplemented from time to time in accordance with the terms 
hereof and thereof.

           "Total Available Commitment" shall mean at any time, the Total 
Commitment less the Blocked Commitment, if any, at such time.

           "Total Commitment" shall mean, at any time, the sum of the 
Commitments of each of the Banks.

           "Total Unutilized Commitment" shall mean, at any time, an amount 
equal to the remainder of (x) the then Total Commitment then in effect, 
less (y) the sum of the aggregate principal amount of Revolving Loans and 
Swingline Loans then outstanding plus the then aggregate amount of Letter 
of Credit Outstandings.

           "Trade L/C Percentage" shall mean the remainder of the 
Applicable Margin for Eurodollar Loans less 1.00%.

           "Trade Letter of Credit" shall have the meaning set forth in 
Section 2.01(a).

           "Tranche" shall mean the respective facility and commitments 
utilized in making Loans hereunder, with there being two separate Tranches, 
i.e., Revolving Loans and Swingline Loans.

           "Transaction" shall mean, collectively, (i) the consummation of 
the Acquisition, (ii) the consummation of the Merger, (iii) the Asset 
Contribution, (iv) the MK Stock Contribution, (v) the issuance by Parent of 
the Senior Unsecured Notes, (vi) the Refinancing, (vii) the incurrence of 
the Loans and the issuance of Letters of Credit hereunder on the Initial 
Borrowing Date, (viii) the payment of Transaction Fees and Expenses in 
connection with the foregoing, (ix) the issuance by the Borrower of the 
Parent Subordinated Intercompany Note, (x) the issuance by Scott 
Acquisition Sub. and Gear Acquisition Sub. of the Scott Intercompany Note 
and the Gear Intercompany Note, respectively, and (xi) such other 
transactions contemplated by the Documents.

           "Transaction Fees and Expenses" shall mean all fees and expenses 
incurred in connection with and arising out of the Transaction.

           "Transaction Intercompany Note" shall have the meaning provided 
in Section 5.23(b).

           "Type" shall mean the type of Revolving Loan determined with 
regard to the interest option applicable thereto, i.e., whether a Base Rate 
Loan or a Eurodollar Loan.

           "UCC" shall mean the Uniform Commercial Code as from time to 
time in effect in the relevant jurisdiction.

           "Unfunded Current Liability" of any Plan means the amount, if 
any, by which the actuarial present value of the accumulated plan benefits 
under the Plan as of the close of its most recent plan year exceeds the 
fair market value of the assets allocable thereto, each determined in 
accordance with Statement of Financial Accounting Standards No. 35, based 
upon the actuarial assumptions used by the Plan's actuary in the most 
recent annual valuation of the Plan.

           "United States" and "U.S." shall each mean the United States of 
America.

           "Unpaid Drawing" shall have the meaning provided for in Section 
2.05.

           "Unutilized Commitment" with respect to any Bank, at any time, 
shall mean such Bank's Commitment at such time less the sum of (i) the 
aggregate outstanding principal amount of Revolving Loans made by such Bank 
and (ii) such Bank's Percentage of the total Letter of Credit Outstandings 
at such time.

           "Voting Stock" shall mean, with respect to any corporation, the 
outstanding stock of all classes (or equivalent interest) which ordinarily, 
in the absence of contingencies, entitles holders thereof to vote for the 
election of directors (or Persons performing similar functions) of such 
corporation, even though the right so to vote has been suspended by the 
happening of such a contingency.

           "Weighted Average Life to Maturity" shall mean, when applied to 
any Indebtedness at any date, the number of years obtained by dividing (i) 
the then outstanding principal amount of such Indebtedness into (ii) the 
sum of the product(s) obtained by multiplying (a) the amount of each then 
remaining installment, sinking fund, serial maturity or other required 
payment of principal, including payment at final maturity, in respect 
thereof, by (b) the number of years (calculated to the nearest one-twelfth) 
which will elapse between such date and the making of such payment.

           "Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any 
corporation 100% of whose capital stock (other than director's qualifying 
shares) is at the time owned by such Person and/or one or more Wholly-Owned 
Subsidiaries of such Person and (ii) any partnership, association, joint 
venture or other entity in which such Person and/or one or more 
Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such 
time.

           "Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, 
any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.

           "Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, 
any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.

           SECTION 12.  The Agent.
                        ---------
           12.01  Appointment.  The Banks hereby designate Bankers Trust 
Company as Agent (for purposes of this Section 12, the term "Agent" shall 
include BTCo in its capacity as Collateral Agent pursuant to the Security 
Documents) to act as specified herein and in the other Credit Documents.  
Each Bank hereby irrevocably authorizes, and each holder of any Note by the 
acceptance of such Note shall be deemed irrevocably to authorize, the Agent 
to take such action on its behalf under the provisions of this Agreement, 
the other Credit Documents and any other instruments and agreements 
referred to herein or therein and to exercise such powers and to perform 
such duties hereunder and thereunder as are specifically delegated to or 
required of the Agent by the terms hereof and thereof and such other powers 
as are reasonably incidental thereto.  The Agent may perform any of its 
duties hereunder by or through its respective officers, directors, agents, 
employees or affiliates. 

           12.02  Nature of Duties.  The Agent shall not have any duties or 
responsibilities except those expressly set forth in this Agreement and the 
Security Documents.  Neither the Agent nor any of its respective officers, 
directors, agents, employees or affiliates shall be liable for any action 
taken or omitted by it or them hereunder or under any other Credit Document 
or in connection herewith or therewith, unless caused by its or their gross 
negligence or willful misconduct.  The duties of the Agent shall be 
mechanical and administrative in nature; the Agent shall not have by reason 
of this Agreement or any other Credit Document a fiduciary relationship in 
respect of any Bank or the holder of any Note; and nothing in this 
Agreement or any other Credit Document, expressed or implied, is intended 
to or shall be so construed as to impose upon the Agent any obligations in 
respect of this Agreement or any other Credit Document except as expressly 
set forth herein or therein.

           12.03  Lack of Reliance on the Agent.  Independently and without 
reliance upon the Agent, each Bank and the holder of each Note, to the 
extent it deems appropriate, has made and shall continue to make (i) its 
own independent investigation of the financial condition and affairs of 
Parent and its Subsidiaries in connection with the making and the 
continuance of the Loans and the taking or not taking of any action in 
connection herewith and (ii) its own appraisal of the creditworthiness of 
Parent and its Subsidiaries and, except as expressly provided in this 
Agreement, the Agent shall not have any duty or responsibility, either 
initially or on a continuing basis, to provide any Bank or the holder of 
any Note with any credit or other information with respect thereto, whether 
coming into its possession before the making of the Loans or at any time or 
times thereafter.  Neither the Agent nor any of its affiliates nor any of 
their respective officers, directors, agents or employees shall be 
responsible to any Bank or the holder of any Note for, or be required or 
have any duty to ascertain, inquire or verify the accuracy of, (i) any 
recitals, statements, information, representations or warranties herein or 
in any document, certificate or other writing delivered in connection 
herewith, (ii) the execution, effectiveness, genuineness, validity, 
enforceability, perfection, collectibility, priority or sufficiency of this 
Agreement or any other Credit Document, (iii) the financial condition of 
Parent or any of its Subsidiaries, (iv) the performance or observance of 
any of the terms, provisions or conditions of this Agreement or any other 
Credit Document, (v) the satisfaction of any of the conditions precedent 
set forth in Section 5 or 6, or (vi) the existence or possible existence of 
any Default or Event of Default.

           12.04  Certain Rights of the Agent.  If the Agent shall request 
instructions from the Required Banks with respect to any act or action 
(including failure to act) in connection with this Agreement or any other 
Credit Document, the Agent shall be entitled to refrain from such act or 
taking such action unless and until the Agent shall have received 
instructions from the Required Banks, and the Agent shall not incur 
liability to any Person by reason of so refraining.  Without limiting the 
foregoing, no Bank or the holder of any Note shall have any right of action 
whatsoever against the Agent as a result of the Agent acting or refraining 
from acting hereunder or under any other Credit Document in accordance with 
the instructions of the Required Banks.

           12.05  Reliance.  The Agent shall be entitled to rely, and shall 
be fully protected (and shall have no liability to any person) in relying, 
upon any note, writing, resolution, notice, statement, certificate, telex, 
teletype or facsimile message, cablegram, radiogram, order or other 
document or telephone message signed, sent or made by any Person that the 
Agent believed to be the proper Person, and, with respect to all legal 
matters pertaining to this Agreement and any other Credit Document and its 
duties hereunder and thereunder, upon advice of counsel selected by the 
Agent.

           12.06  Indemnification.  To the extent the Agent is not 
reimbursed and indemnified by the Borrower or the Guarantors, the Banks 
will reimburse and indemnify the Agent, in proportion to their respective 
"percentages" as used in determining the Required Banks, for and against 
any and all liabilities, obligations, losses, damages, penalties, claims, 
actions, judgments, costs, expenses or disbursements of whatsoever kind or 
nature which may be imposed on, asserted against or incurred by the Agent 
in performing its respective duties hereunder or under any other Credit 
Document, in any way relating to or arising out of this Agreement or any 
other Credit Document; provided that no Bank shall be liable for any 
portion of such liabilities, obligations, losses, damages, penalties, 
actions, judgments, suits, costs, expenses or disbursements resulting from 
the Agent's gross negligence or willful misconduct.

           12.07  The Agent in its Individual Capacity.  With respect to 
its obligation to make Loans or issue or participate in Letter of Credit 
under this Agreement, the Agent shall have the rights and powers specified 
herein for a "Bank" and may exercise the same rights and powers as though 
it were not performing the duties specified herein; and the term "Banks," 
"Required Banks," "holders of Notes" or any similar terms shall, unless the 
context clearly otherwise indicates, include the Agent in its individual 
capacity.  The Agent may accept deposits from, lend money to, and generally 
engage in any kind of banking, trust or other business with any Credit 
Party or any Affiliate of any Credit Party as if they were not performing 
the duties specified herein, and may accept fees and other consideration 
from any Credit Party for services in connection with this Agreement and 
otherwise without having to account for the same to the Banks.

           12.08  Holders.  The Agent may deem and treat the payee of any 
Note as the owner thereof for all purposes hereof unless and until a 
written notice of the assignment, transfer or endorsement thereof, as the 
case may be, shall have been filed with the Agent.  Any request, authority 
or consent of any Person who, at the time of making such request or giving 
such authority or consent, is the holder of any Note shall be conclusive 
and binding on any subsequent holder, transferee, assignee or indorsee, as 
the case may be, of such Note or of any Note or Notes issued in exchange 
therefor.

           12.09  Resignation by the Agent.  (a)  The Agent may resign from 
the performance of all its functions and duties hereunder and/or under the 
other Credit Documents at any time by giving 15 Business Days' prior 
written notice to the Banks.  Such resignation shall take effect upon the 
appointment of a successor Agent pursuant to clauses (b) and (c) below or 
as otherwise provided below.

           (b)  Upon any such notice of resignation, the Required Banks 
shall appoint a successor Agent hereunder or thereunder who shall be a 
commercial bank or trust company reasonably acceptable to the Borrower.

           (c)  If a successor Agent shall not have been so appointed 
within such 15 Business Day period, the Agent, with the consent of the 
Borrower (which consent will not be unreasonably withheld or delayed), 
shall then appoint a commercial bank or trust company as successor Agent 
who shall serve as Agent hereunder or thereunder until such time, if any, 
as the Required Banks appoint a successor Agent as provided above.

           (d)  If no successor Agent has been appointed pursuant to clause 
(b) or (c) above by the 20th Business Day after the date such notice of 
resignation was given by the Agent, the Agent's resignation shall become 
effective and the Banks shall thereafter perform all the duties of the 
Agent hereunder and/or under any other Credit Document until such time, if 
any, as the Required Banks appoint a successor Agent as provided above.

           SECTION 13.  Miscellaneous.
                        -------------
           13.01  Payment of Expenses, etc.  The Borrower shall:  (i) 
whether or not the transactions herein contemplated are consummated, pay 
all reasonable out-of-pocket costs and expenses of the Agent (including, 
without limitation, the reasonable fees and disbursements of White & Case 
and local counsel and all appraisal fees, trustee's fees, documentary and 
recording taxes, title insurance and recording, filing and other expenses) 
in connection with the preparation, execution and delivery of this 
Agreement and the other Credit Documents and the documents and instruments 
referred to herein and therein and any amendment, waiver or consent 
relating hereto or thereto, of the Agent in connection with its syndication 
efforts with respect to this Agreement and of the Agent and each of the 
Banks in connection with the enforcement of this Agreement and the other 
Credit Documents and the documents and instruments referred to herein and 
therein (including, without limitation, the reasonable fees and 
disbursements of counsel for the Agent and, following and during the 
continuation of an Event of Default in connection with the enforcement of 
this Agreement and the other Credit Documents, for each of the Banks) and 
expenses incurred in connection with any reorganization or proposed 
reorganization of Parent or any of its Subsidiaries; (ii) pay and hold each 
of the Agent and each of the Banks harmless from and against any and all 
present and future stamp, excise and other similar taxes with respect to 
the foregoing matters and save each of the Agent and each of the Banks 
harmless from and against any and all liabilities with respect to or 
resulting from any delay or omission (other than to the extent attributable 
to such Bank) to pay such taxes; and (iii) indemnify the Agent and each 
Bank, and each of their respective officers, directors, employees, 
representatives and agents from and hold each of them harmless against any 
and all liabilities, obligations (including removal or remedial actions), 
losses, damages, penalties, claims, actions, judgments, suits, costs, 
expenses and disbursements (including attorneys' and consultants' fees and 
disbursements) incurred by, imposed on or assessed against any of them as a 
result of, or arising out of, or in any way related to, or by reason of, 
(a) any investigation, litigation or other proceeding (whether or not the 
Agent or any Bank is a party thereto) related to the entering into and/or 
performance of this Agreement or any other Credit Document or the use of 
any Letter of Credit or the proceeds of any Loans hereunder or the 
consummation of any transactions contemplated herein (including, without 
limitation, the Transaction) or in any other Credit Document or the 
exercise of any of their rights or remedies provided herein or in the other 
Credit Documents, or (b) the actual or alleged presence of Hazardous 
Materials in the air, surface water or groundwater or on the surface or 
subsurface of any Real Property owned, leased or at any time operated by 
any Credit Party or any of its Subsidiaries, the Release, generation, 
storage, transportation, handling or disposal of Hazardous Materials at any 
location, whether or not owned, leased or operated by any Credit Party or 
any of its Subsidiaries, the non-compliance of any Real Property with 
foreign, federal, state and local laws, regulations, and ordinances 
(including applicable permits thereunder) applicable to any Real Property, 
or any Environmental Claim asserted against any Credit Party, any of its 
Subsidiaries, its operations or any Real Property owned based or at any 
time operated by any Credit Party or any of its Subsidiaries, including, in 
each case, without limitation, the fees and disbursements of counsel and 
other consultants incurred in connection with any such investigation, 
litigation or other proceeding (but excluding any losses, liabilities, 
claims, damages or expenses to the extent incurred by reason of the gross 
negligence or willful misconduct of the Person to be indemnified).  To the 
extent that the undertaking to indemnify, pay or hold harmless the Agent or 
any Bank set forth in the preceding sentence may be unenforceable because 
it is violative of any law or public policy, the Borrower shall make the 
maximum contribution to the payment and satisfaction of each of the 
indemnified liabilities which is permissible under applicable law.

           13.02  Right of Setoff.  In addition to any rights now or 
hereafter granted under applicable law or otherwise, and not by way of 
limitation of any such rights, upon the occurrence and during the 
continuance of an Event of Default, each Bank is hereby authorized at any 
time or from time to time, without presentment, demand, protest or other 
notice of any kind to any Credit Party or any of its Subsidiaries or to any 
other Person, any such notice being hereby expressly waived, to set off and 
to appropriate and apply any and all deposits (general or special) and any 
other Indebtedness at any time held or owing by such Bank (including, 
without limitation, by branches and agencies of such Bank wherever located) 
to or for the credit or the account of any Credit Party or any of its 
Subsidiaries against and on account of the Obligations and liabilities of 
such Credit Party or such Subsidiary to such Bank under this Agreement or 
under any of the other Credit Documents, including, without limitation, all 
interests in Obligations purchased by such Bank pursuant to Section 
13.06(b), and all other claims of any nature or description arising out of 
or connected with this Agreement or any other Credit Document, irrespective 
of whether or not such Bank shall have made any demand hereunder and 
although said Obligations, liabilities or claims, or any of them, shall be 
contingent or unmatured.

           13.03  Notices.  Except as otherwise expressly provided herein, 
all notices and other communications provided for hereunder shall be in 
writing (including telegraphic, telex, telecopier or cable communication) 
and mailed, telegraphed, telexed, telecopied, cabled or delivered:  if to 
the Borrower, at such Person's address specified opposite its signature 
below; if to any Bank, at its address specified opposite its name on 
Schedule II below; and if to the Agent, at its Notice Office; or, as to any 
Credit Party or the Agent, at such other address as shall be designated by 
such party in a written notice to the other parties hereto and, as to each 
Bank, at such other address as shall be designated by such Bank in a 
written notice to the Borrower and the Agent.  All such notices and 
communications shall, when mailed, telegraphed, telexed, telecopied, or 
cabled or sent by overnight courier, be effective when deposited in the 
mails, delivered to the telegraph company, cable company or overnight 
courier, as the case may be, or sent by telex or telecopier, except that 
notices and communications to the Agent shall not be effective until 
received by the Agent.

           13.04  Benefit of Agreement.  (a)  This Agreement shall be 
binding upon and inure to the benefit of and be enforceable by the 
respective successors and assigns of the parties hereto; provided, however, 
no Credit Party may assign or transfer any of its rights, obligations or 
interest hereunder or under any other Credit Document without the prior 
written consent of the Banks and, provided further, that, although any Bank 
may transfer, assign or grant participations in its rights hereunder, such 
Bank shall remain a "Bank" for all purposes hereunder (and may not transfer 
or assign all or any portion of its Commitments hereunder except as 
provided in Section 13.04(b)) and the transferee, assignee or participant, 
as the case may be, shall not constitute a "Bank" hereunder and, provided 
further, that no Bank shall transfer or grant any participation under which 
the participant shall have rights to approve any amendment to or waiver of 
this Agreement or any other Credit Document except to the extent such 
amendment or waiver would (i) extend the final scheduled maturity of any 
Loan, Note or Letter of Credit (unless such Letter of Credit is not 
extended beyond the Final Maturity Date) in which such participant is 
participating, or reduce the rate or extend the time of payment of interest 
or Fees thereon (except in connection with a waiver of applicability of any 
post-default increase in interest rates) or reduce the principal amount 
thereof, or increase the amount of the participant's participation over the 
amount thereof then in effect (it being understood that a waiver of any 
Default or Event of Default or of a mandatory reduction in the Total 
Commitment shall not constitute a change in the terms of such 
participation, and that an increase in any Commitment or Loan shall be 
permitted without the consent of any participant if the participant's 
participation is not increased as a result thereof), (ii) consent to the 
assignment or transfer by the Borrower of any of its rights and obligations 
under this Agreement or (iii) release all or substantially all of the 
Collateral under all of the Security Documents (except as expressly 
provided in the Credit Documents) supporting the Obligations hereunder in 
which such participant is participating.  In the case of any such 
participation, the participant shall not have any rights under this 
Agreement or any of the other Credit Documents (the participant's rights 
against such Bank in respect of such participation to be those set forth in 
the agreement executed by such Bank in favor of the participant relating 
thereto) and all amounts payable by the Borrower hereunder shall be 
determined as if such Bank had not sold such participation.

           (b)  Notwithstanding the foregoing, any Bank (or any Bank 
together with one or more other Banks) may (x) assign all or a portion of 
its Commitment (and related outstanding Obligations hereunder) to its 
parent company and/or any affiliate of such Bank which is at least 50% 
owned by such Bank or its parent company or to one or more Banks or (y) 
assign all, or if less than all, a portion equal to at least $5,000,000 in 
the aggregate for the assigning Bank or assigning Banks, of such 
Commitments (and related outstanding Obligations hereunder) to one or more 
Eligible Transferees, each of which assignees shall become a party to this 
Agreement as a Bank by execution of an Assignment and Assumption Agreement, 
provided that, (i) at such time Schedule I shall be deemed modified to 
reflect the Commitments of such new Bank and of the existing Banks, (ii) 
new Notes will be issued, at the Borrower's expense, to such new Bank and 
to the assigning Bank upon the request of such new Bank or assigning Bank, 
such new Notes to be in conformity with the requirements of Section 1.05 
(with appropriate modifications) to the extent needed to reflect the 
revised Commitments, (iii) the consent of BTCo shall be required in 
connection with any such assignment pursuant to clause (y) above (which 
consents shall not be unreasonably withheld), (iv) the consent of the 
Borrower and each Issuing Bank shall be required in connection with any 
assignment of Commitments pursuant to clause (y) above (which consent shall 
not be unreasonably withheld), and (v) the Agent shall receive at the time 
of each such assignment, from the assigning or assignee Bank, the payment 
of a non-refundable assignment fee of $3,500; and provided further, that 
such transfer or assignment shall not be effective until recorded by the 
agent on the Register pursuant to Section 13.16.  To the extent of any 
assignment pursuant to this Section 13.04(b), the assigning Bank shall be 
relieved of its obligations hereunder with respect to its assigned 
Commitments.  At the time of each assignment pursuant to this Section 
13.04(b) to a Person which is not already a Bank hereunder and which is not 
a United States person (as such term is defined in Section 7701(a)(30) of 
the Code) for Federal income tax purposes, the respective assignee Bank 
shall provide to the Borrower and the Agent the appropriate Internal 
Revenue Service Forms (and, if applicable, a Section 4.04(b)(ii) 
Certificate described in Section 4.04(b)).  To the extent that an 
assignment of all or any portion of a Bank's Commitments and related 
outstanding Obligations pursuant to Section 1.13 or this Section 13.04(b) 
would, at the time of such assignment, result in increased costs under 
Section 1.10, 1.11, 2.06 or 4.04 from those being charged by the respective 
assigning Bank prior to such assignment, then the Borrower shall not be 
obligated to pay such increased costs (although the Borrower shall be 
obligated to pay any other increased costs of the type described above 
resulting from changes after the date of the respective assignment).

           (c)  Nothing in this Agreement shall prevent or prohibit any 
Bank from pledging its Loans and Notes hereunder to a Federal Reserve Bank 
in support of borrowings made by such Bank from such Federal Reserve Bank.

           13.05  No Waiver; Remedies Cumulative.  No failure or delay on 
the part of the Agent or any Bank or any holder of any Note in exercising 
any right, power or privilege hereunder or under any other Credit Document 
and no course of dealing between the Borrower or any other Credit Party and 
the Agent or any Bank or the holder of any Note shall operate as a waiver 
thereof; nor shall any single or partial exercise of any right, power or 
privilege hereunder or under any other Credit Document preclude any other 
or further exercise thereof or the exercise of any other right, power or 
privilege hereunder or thereunder.  The rights, powers and remedies herein 
or in any other Credit Document expressly provided are cumulative and not 
exclusive of any rights, powers or remedies which the Agent or any Bank or 
the holder of any Note would otherwise have.  No notice to or demand on any 
Credit Party in any case shall entitle any Credit Party to any other or 
further notice or demand in similar or other circumstances or constitute a 
waiver of the rights of the Agent or any Bank or the holder of any Note to 
any other or further action in any circumstances without notice or demand.

           13.06  Payments Pro Rata.  (a)  Except as otherwise provided in 
this Agreement, the Agent agrees that promptly after its receipt of each 
payment from or on behalf of any Credit Party in respect of any Obligations 
of such Credit Party, it shall distribute such payment to the Banks (other 
than any Bank that has consented in writing to waive its pro rata share of 
any such payment) pro rata based upon their respective shares, if any, of 
the Obligations with respect to which such payment was received.

           (b)  Each of the Banks agrees that, if it should receive any 
amount hereunder (whether by voluntary payment, by realization upon 
security, by the exercise of the right of setoff or banker's lien, by 
counterclaim or cross action, by the enforcement of any right under the 
Credit Documents, or otherwise), which is applicable to the payment of the 
principal of, or interest on, the Loans, Unpaid Drawings, Commitment 
Commission or Letter of Credit Fees, of a sum which with respect to the 
related sum or sums received by other Banks is in a greater proportion than 
the total of such Obligation then owed and due to such Bank bears to the 
total of such Obligation then owed and due to all of the Banks immediately 
prior to such receipt, then such Bank receiving such excess payment shall 
purchase for cash without recourse or warranty from the other Banks an 
interest in the Obligations of the respective Credit Party to such Banks in 
such amount as shall result in a proportional participation by all the 
Banks in such amount; provided that if all or any portion of such excess 
amount is thereafter recovered from such Bank, such purchase shall be 
rescinded and the purchase price restored to the extent of such recovery, 
but without interest.

           (c)  Notwithstanding anything to the contrary contained herein, 
the provisions of the preceding Sections 13.06(a) and (b) shall be subject 
to the express provisions of this Agreement which require, or permit, 
differing payments to be made to Non-Defaulting Banks as opposed to 
Defaulting Banks.

           13.07  Calculations; Computations.  (a)  The financial 
statements to be furnished to the Banks pursuant hereto shall be made and 
prepared in accordance with generally accepted accounting principles in the 
United States consistently applied throughout the periods involved (except 
as set forth in the notes thereto or as otherwise disclosed in writing by 
the Borrower to the Banks); provided that, (w) except as otherwise 
specifically provided herein, all computations of the Applicable Commitment 
Commission Percentage, the Interest Reduction Discount and all computations 
determining compliance with Section 9 shall utilize accounting principles 
and policies in conformity with those used to prepare the pro forma 
financial statements delivered to the Banks pursuant to Section 7.05(a)(V) 
(with the foregoing generally accepted accounting principles, subject to 
the preceding proviso, herein called "GAAP"), (x) any interest income 
earned with respect to funds from time to time on deposit pursuant to the 
Existing Seller Letter of Credit Collateral Agreement shall not be included 
for purposes of any of the financial covenants as income of the Borrower or 
its Subsidiaries, (y) any interest expense with respect to the Existing 
Seller Installment Note shall not be included in Consolidated Interest 
Expense, and shall not reduce Consolidated Net Income, to the extent such 
interest expense is offset by earnings with respect to funds deposited 
pursuant to the Existing Seller Letter of Credit Collateral Agreement and 
Consolidated Interest Expense shall not include, and Consolidated Net 
Income shall not be reduced by, fees owing pursuant to the Existing Seller 
Letter of Credit (or the agreement pursuant to which same was issued) to 
the extent such fees are paid (whether directly to the issuer of the 
Existing Seller Letter of Credit or by way of reimbursement to the 
Borrower) by the MK Sellers (although such payments by the MK Sellers shall 
likewise not be included in Consolidated Net Income) and (z) to the extent 
expressly required pursuant to the provisions of this Agreement, certain 
calculations shall be made on a Pro Forma Basis.

           (b)  All computations of interest, Commitment Commission and 
Fees hereunder shall be made on the basis of a year of 360 days for the 
actual number of days (including the first day but excluding the last day) 
occurring in the period for which such interest, Commitment Commission or 
Fees are payable.

           13.08  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER 
OF JURY TRIAL.  (a)  THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE 
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, 
EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN 
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY 
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER 
CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF 
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION 
AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR 
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE 
JURISDICTION OF THE AFORESAID COURTS.  THE BORROWER HEREBY IRREVOCABLY 
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON 
THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE, 
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS 
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL 
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH 
ACTION OR PROCEEDING.  IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT 
SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE BORROWER AGREES TO 
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS 
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS 
AGREEMENT.  THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF 
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR 
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED 
MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE 
ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH 
MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT UNDER THIS 
AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER 
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE 
PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.

           (b)  THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH 
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID 
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT 
OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE 
(a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR 
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY 
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

           (c)  THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL 
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR 
RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS 
CONTEMPLATED HEREBY OR THEREBY.

           13.09  Counterparts.  This Agreement may be executed in any 
number of counterparts and by the different parties hereto on separate 
counterparts, each of which when so executed and delivered shall be an 
original, but all of which shall together constitute one and the same 
instrument.  A set of counterparts executed by all the parties hereto shall 
be lodged with the Borrower and the Agent.

           13.10  Effectiveness.  This Agreement shall become effective on 
the date (the "Effective Date") on which the Borrower and each of the Banks 
shall have signed a counterpart hereof (whether the same or different 
counterparts) and shall have delivered the same to the Agent at its Notice 
Office or, in the case of the Banks, shall have given to the Agent 
telephonic (confirmed in writing), written or telex notice (actually 
received) at such office that the same has been signed and mailed to it.  
The Agent will give the Borrower and each Bank prompt written notice of the 
occurrence of the Effective Date.

           13.11  Headings Descriptive.  The headings of the several 
sections and subsections of this Agreement are inserted for convenience 
only and shall not in any way affect the meaning or construction of any 
provision of this Agreement.

           13.12  Amendment or Waiver; etc.  (a)  Neither this Agreement 
nor any other Credit Document nor any terms hereof or thereof may be 
changed, waived, discharged or terminated unless such change, waiver, 
discharge or termination is in writing signed by the respective Credit 
Parties party thereto and the Required Banks, provided that no such change, 
waiver, discharge or termination shall, without the consent of each Bank 
(other than a Defaulting Bank) (with Obligations being directly affected 
thereby), (i) extend the final scheduled maturity of any Loan or Note or 
extend the stated maturity of any Letter of Credit beyond the Final 
Maturity Date, or reduce the rate (except in connection with a waiver of 
any post-default increase in interest rate) or extend the time of payment 
of interest or Fees thereon, or reduce the principal amount thereof (except 
to the extent repaid in cash), it being understood that any amendment to, 
or modification of, any financial definition shall not constitute a 
reduction for any purpose of this Section 13.12, (ii) release all or 
substantially all of the Collateral (except as expressly provided in the 
Credit Documents) under all the Security Documents, (iii) amend, modify or 
waive any provision of this Section 13.12, (iv) reduce the percentage 
specified in the definition of Required Banks (it being understood that, 
with the consent of the Required Banks, additional extensions of credit 
pursuant to this Agreement may be included in the determination of the 
Required Banks on substantially the same basis as the extensions of 
Commitments are included on the Effective Date) or (v) consent to the 
assignment or transfer by the Borrower of any of its rights and obligations 
under this Agreement; provided further, that no such change, waiver, 
discharge or termination shall (v) increase the Commitments of any Bank 
over the amount thereof then in effect without the consent of such Bank (it 
being understood that waivers or modifications of conditions precedent, 
covenants, Defaults or Events of Default or of a mandatory reduction in the 
Total Commitment shall not constitute an increase of the Commitment of any 
Bank, and that an increase in the available portion of any Commitment of 
any Bank shall not constitute an increase in the Commitment of such Bank), 
(w) without the consent of the Swingline Bank, amend, modify or waive any 
provision relating to the rights or obligations of the Swingline Bank or 
with respect to Swingline Loans (including, without limitation, the 
obligations of the other Banks to fund Mandatory Borrowings), (x) without 
the consent of each Issuing Bank, amend, modify or waive any provision of 
Section 2 or alter its rights or obligations with respect to Letters of 
Credit issued by it, (y) without the consent of the Agent, amend, modify or 
waive any provision of Section 12 as same applies to the Agent or any other 
provision as same relates to the rights or obligations of the Agent and (z) 
without the consent of the Collateral Agent, amend, modify or waive any 
provision relating to the rights or obligations of the Collateral Agent.

           (b)  If, in connection with any proposed change, waiver, 
discharge or termination to any of the provisions of this Agreement as 
contemplated by clauses (i) through (vi), inclusive, of the first proviso 
to Section 13.12(a), the consent of the Required Banks is obtained but the 
consent of one or more of such other Banks whose consent is required is not 
obtained, then the Borrower shall have the right, so long as all 
non-consenting Banks whose individual consent is required are treated as 
described in either clauses (A) or (B) below, to either (A) replace each 
such non-consenting Bank or Banks with one or more Replacement Banks 
pursuant to Section 1.13 so long as at the time of such replacement, each 
such Replacement Bank consents to the proposed  change, waiver, discharge 
or termination or (B) terminate such non-consenting Bank's Commitment and 
repay all outstanding Revolving Loans of, and other unpaid Obligations 
owing to, such Bank in accordance with Sections 3.02(b) and/or 4.01(b), 
provided that, unless the Commitments are terminated, and Revolving Loans 
repaid, pursuant to preceding clause (B) are immediately replaced in full 
at such time through the addition of new Banks or the increase of the 
Commitments and/or outstanding Revolving Loans of existing Banks (who in 
each case must specifically consent thereto), then in the case of any 
action pursuant to preceding clause (B), the Required Banks (determined 
before giving effect to the proposed action) shall specifically consent 
thereto, provided further, that in any event the Borrower shall not have 
the right to replace a Bank, terminate its Commitment or repay its 
Revolving Loans solely as a result of the exercise of such Bank's rights 
(and the withholding of any required consent by such Bank) pursuant to the 
second proviso to Section 13.12(a).

           13.13  Survival.  All indemnities set forth herein including, 
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 13.01, 13.06 and 
13.16 shall, survive the execution, delivery and termination of this 
Agreement, the Notes and any Letters of Credit, and the making and 
repayment of the Loans.

           13.14  Domicile of Loans.  Each Bank may transfer and carry its 
Loans at, to or for the account of any office, Subsidiary or Affiliate of 
such Bank.  Notwithstanding anything to the contrary contained herein, to 
the extent that a transfer of Loans pursuant to this Section 13.14 would, 
at the time of such transfer, result in increased costs under Section 1.10, 
1.11, 2.06 or 4.04 from those being charged by the respective Bank prior to 
such transfer, then the Borrower shall not be obligated to pay such 
increased costs (although the Borrower shall be obligated to pay any other 
increased costs of the type described above resulting from changes after 
the date of the respective transfer).

           13.15  Confidentiality.  (a)  Subject to the provisions of 
clause (b) of this Section 13.15, each Bank agrees that it will use its 
best efforts not to disclose without the prior consent of the Borrower 
(other than to its employees, auditors, advisors or counsel or to another 
Bank if the Bank or such Bank's holding or parent company in its sole 
discretion determines that any such party should have access to such 
information, provided such Persons shall be subject to the provisions of 
this Section 13.15 to the same extent as such Bank) any information with 
respect to any Credit Party or any of their respective Subsidiaries which 
is now or in the future furnished pursuant to this Agreement or any other 
Credit Document and which is designated by the Borrower to the Banks in 
writing as confidential, provided that any Bank may disclose any such 
information (a) as has become generally available to the public, (b) as may 
be required or appropriate in any report, statement or testimony submitted 
to any municipal, state or Federal regulatory body having or claiming to 
have jurisdiction over such Bank or to the Federal Reserve Board or the 
Federal Deposit Insurance Corporation or similar organizations (whether in 
the United States or elsewhere) or their successors, (c) as may be required 
or appropriate in respect to any summons or subpoena or in connection with 
any litigation, (d) in order to comply with any law, order, regulation or 
ruling applicable to such Bank, (e) to the Agent or the Collateral Agent 
and (f) to any prospective or actual transferee or participant in 
connection with any contemplated transfer or participation of any of the 
Notes or Commitments or any interest therein by such Bank, provided, that 
such prospective transferee agrees to provisions substantially the same as 
those contained in this Section.

           (b)  Each Credit Party hereby acknowledges and agrees that each 
Bank may share with any of its affiliates any information related to any 
Credit Party or any of its respective Subsidiaries (including, without 
limitation, any nonpublic customer information regarding the 
creditworthiness of any Credit Party or any of their respective 
Subsidiaries), provided such Persons shall be subject to the provisions of 
this Section 13.15 to the same extent as such Bank.

           13.16  Register.  The Borrower hereby designates the Agent to 
serve as the Borrower's agent, solely for purposes of this Section 13.16, 
to maintain a register (the "Register") on which it will record the 
Commitments from time to time of each of the Banks, the Loans made by each 
of the Banks and each repayment in respect of the principal amount of the 
Loans of each Bank.  Failure to make any such recordation, or any error in 
such recordation shall not affect the Borrower's obligations in respect of 
such Loans.  With respect to any Bank, the transfer of the Commitments of 
such Bank and the rights to the principal of, and interest on, any Loan 
made pursuant to such Commitments shall not be effective until such 
transfer is recorded on the Register maintained by the Agent with respect 
to ownership of such Commitments and Loans and prior to such recordation 
all amounts owing to the transferor with respect to such Commitments and 
Loans shall remain owing to the transferor.  The registration of assignment 
or transfer of all or part of the Commitments and the Loans shall be 
recorded by the Agent on the Register only upon the acceptance by the Agent 
of a properly executed and delivered Assignment and Assumption Agreement 
pursuant to Section 13.04(b).  Coincident with the delivery of such an 
Assignment and Assumption Agreement to the Agent for acceptance and 
registration of assignment or transfer of all or part of a Loan, or as soon 
thereafter as practicable, the assigning or transferor Bank shall surrender 
the Note evidencing such Loan, and thereupon one or more new Notes in the 
same aggregate principal amount shall be issued to the assigning or 
transferor Bank and/or the new Bank.  The Borrower agrees to indemnify the 
Agent from and against any and all losses, claims, damages and liabilities 
of whatsoever nature which may be imposed on, asserted against or incurred 
by the Agent in performing its duties under this Section 13.16.

                        *        *        *

           IN WITNESS WHEREOF, the parties hereto have caused their duly 
authorized officers to execute and deliver this Agreement as of the date 
first above written.



1751 Lake Cook Road, Suite 550       MOTORS AND GEARS
Deerfield, Illinois  60015           INDUSTRIES, INC.
Attention:  Thomas C. Spielberger
                                     By    /s/ Jonathan F. Boucher    
                                       -------------------------------
                                     Title: Vice President
with copies to:

Jonathan F. Boucher
The Jordan Company
9 West 57th Street, 40th Floor
New York, New York  10019

and

James B. Carlson, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York  10019



                                   BANKERS TRUST COMPANY,
                                   Individually and as Agent


                                   By   /s/ Patricia Hogan                
                                      --------------------------
                                   Title: Vice President




<PAGE>

                                                        EXHIBIT 10.4






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


                            SECURITY AGREEMENT


                                  among


                      MOTORS AND GEARS INDUSTRIES, INC.


            VARIOUS SUBSIDIARIES OF MOTORS AND GEARS INDUSTRIES, INC.



                                   and


                         BANKERS TRUST COMPANY,
                          as Collateral Agent


                       Dated as of November 7, 1996


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



                           SECURITY AGREEMENT
                           ------------------

      SECURITY AGREEMENT, dated as of November 7, 1996 (as amended, 
modified or supplemented from time to time, the "Agreement"), among each of 
the undersigned (each, an "Assignor" and, collectively, the "Assignors") 
and BANKERS TRUST COMPANY, as Collateral Agent (the "Collateral Agent"), 
for the benefit of the Secured Creditors (as defined below).  Except as 
otherwise defined herein, terms used herein and defined in the Credit 
Agreement (as defined below) shall be used herein as therein defined.


                          W I T N E S S E T H :


      WHEREAS, Motors and Gears Industries, Inc. (the "Borrower"), various 
financial institutions from time to time party thereto (the "Banks') and 
Bankers Trust Company, as Agent (the "Agent", and together with the Banks 
and the Collateral Agent, the "Bank Creditors"), have entered into a Credit 
Agreement, dated as of November 7, 1996, providing for the making of Loans 
to the Borrower and the issuance of, and participation in, Letters of 
Credit for the account of the Borrower as contemplated therein (as used 
herein, the term "Credit Agreement" means the Credit Agreement described 
above in this paragraph as so amended, modified, extended, renewed, 
replaced, restated, supplemented, restructured or refinanced from time to 
time, and including any agreement extending the maturity of, refinancing or 
restructuring (including, but not limited to, the inclusion of additional 
borrowers thereunder that are Subsidiaries of the Borrower and whose 
obligations are guaranteed by the Borrower thereunder or any increase in 
the amount borrowed) all, or any portion of, the Indebtedness under such 
agreement or any successor agreements; provided, that with respect to any 
agreement providing for the refinancing of Indebtedness under the Credit 
Agreement, such agreement shall only be treated as, or as part of, the 
Credit Agreement hereunder if (i) either (A) all obligations under the 
Credit Agreement being refinanced shall be paid in full at the time of such 
refinancing, and all commitments under the refinanced Credit Agreement 
shall have terminated in accordance with their terms or (B) the Required 
Banks shall have consented in writing to the refinancing Indebtedness being 
treated, along with their Indebtedness, as Indebtedness pursuant to the 
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to 
be incurred under the Credit Agreement being refinanced (if such Credit 
Agreement is to remain outstanding) and (iii) a notice to the effect that 
the refinancing Indebtedness shall be treated as issued under the Credit 
Agreement shall be delivered by the Borrower to the Collateral Agent);

      WHEREAS, the Borrower may from time to time enter into one or more 
(i) interest rate protection agreements (including, without limitation, 
interest rate swaps, caps, floors, collars and similar agreements), (ii) 
foreign exchange contracts, currency swap agreements, commodity agreements 
or other similar agreements or arrangements designed to protect against the 
fluctuations in currency values and/or (iii) other types of hedging 
agreements from time to time (each such agreement or arrangement with an 
Other Creditor (as hereinafter defined), an "Interest Rate Protection 
Agreement or Other Hedging Agreement"), with Bankers Trust Company in its 
individual capacity ("BTCo"), any Bank or a syndicate of financial 
institutions organized by BTCo or any such Bank, or an affiliate of BTCo or 
any such Bank (BTCo, any such Bank or Banks or affiliate or affiliates of 
BTCo or such Bank or Banks (even if BTCo or any such Bank ceases to be a 
Bank under the Credit Agreement for any reason) and any such institution 
that participates in such Interest Rate Protection Agreements or Other 
Hedging Agreements and their subsequent successors and assigns 
collectively, the "Other Creditors", and together with the Bank Creditors, 
the "Secured Creditors");

      WHEREAS, pursuant to a Guaranty, each Subsidiary Guarantor will have, 
after the execution and delivery thereof, jointly and severally guaranteed 
the payment when due of all obligations and liabilities of the Borrower 
under or with respect to the Credit Documents and each Interest Rate 
Protection Agreement or Other Hedging Agreement with one or more Other 
Creditors;

      WHEREAS, it is a condition precedent to the making of Loans to the 
Borrower and the issuance of, and participation in, Letters of Credit for 
the account of the Borrower under the Credit Agreement and to the Other 
Creditors entering into Interest Rate Protection Agreements or Other 
Hedging Agreements that each Assignor shall have executed and delivered to 
the Collateral Agent this Agreement; and

      WHEREAS, each Assignor desires to execute this Agreement to satisfy 
the condition described in the preceding paragraph;

      NOW, THEREFORE, in consideration of the benefits accruing to each 
Assignor, the receipt and sufficiency of which are hereby acknowledged, 
each Assignor hereby makes the following representations and warranties to 
the Collateral Agent and hereby covenants and agrees with the Collateral 
Agent as follows:


                                ARTICLE I

                           SECURITY INTERESTS

      1.1  Grant of Security Interests.  (a) As security for the prompt and 
complete payment and performance when due of all of the Obligations, each 
Assignor does hereby assign and transfer unto the Collateral Agent, and 
does hereby pledge and grant to the Collateral Agent for the benefit of the 
Secured Creditors, a continuing security interest of first priority in, all 
of the right, title and interest of such Assignor in, to and under all of 
the following, whether now existing or hereafter from time to time 
acquired:

           (i)  each and every Receivable;

           (ii)  all Contracts, together with all Contract Rights arising 
      thereunder;

           (iii)  all Inventory;

           (iv)  the Cash Collateral Account and any other cash collateral 
      account
      established for any Assignor for the benefit of the Secured Creditors 
      and all moneys, securities and instruments deposited or required to 
      be deposited in such Cash Collateral Account;

           (v)  all Equipment;

           (vi)  all Marks, together with the registrations and right to 
      all renewals
      thereof, and the goodwill of the business of such Assignor symbolized 
      by the Marks;

           (vii)  all Patents and Copyrights and all reissues, renewals and 
      extensions thereof;

           (viii)  all computer programs of such Assignor and all 
      intellectual property rights therein and all other proprietary 
      information of such Assignor, including, but not limited to, trade 
      secrets and Trade Secret Rights;

           (ix)  all insurance policies;

           (x)  all other Goods, General Intangibles, Chattel Paper, 
      Documents and Instruments and other assets of such Assignor (other 
      than the Pledged Securities); and

           (xi)  all Proceeds and products of any and all of the foregoing 
      (all of the above, collectively, the "Collateral").

Notwithstanding anything to the contrary contained above, the term 
"Collateral" shall not include any Collateral to the extent that, and for 
so long as, such Collateral constitutes Excluded Collateral in accordance 
with the definition thereof.  To the extent that any Collateral 
constituting Excluded Collateral no longer constitutes Excluded Collateral, 
each respective Assignor shall, in accordance with the terms of the Credit 
Agreement, take all actions required hereby and thereby to grant a security 
interest in such Collateral as and when required by the Credit Agreement.

      (b)  The security interest of the Collateral Agent under this 
Agreement extends to all Collateral of the kind which is the subject of 
this Agreement which any Assignor may acquire at any time during the 
continuation of this Agreement.

      1.2  Power of Attorney.  Each Assignor hereby constitutes and 
appoints the Collateral Agent its true and lawful attorney, irrevocably, 
with full power after the occurrence of and during the continuance of an 
Event of Default (in the name of such Assignor or otherwise) to act, 
require, demand, receive, compound and give acquittance for any and all 
monies and claims for monies due or to become due to such Assignor under or 
arising out of the Collateral, to endorse any checks or other instruments 
or orders in connection therewith and to file any claims or take any action 
or institute any proceedings which the Collateral Agent may deem to be 
necessary or advisable to accomplish the purposes of this Agreement, which 
appointment as attorney is coupled with an interest.


                               ARTICLE II

            GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

      Each Assignor represents, warrants and covenants, which 
representations, warranties and covenants shall survive execution and 
delivery of this Agreement, as follows:

      2.1  Necessary Filings.  All filings, registrations and recordings 
necessary or appropriate to create, preserve, protect and perfect the 
security interest granted by such Assignor to the Collateral Agent hereby 
in respect of the Collateral have been accomplished and the security 
interest granted to the Collateral Agent pursuant to this Agreement in and 
to the Collateral constitutes a perfected security interest therein prior 
to the rights of all other Persons therein and subject to no other Liens 
(other than Permitted Liens) and is entitled to all the rights, priorities 
and benefits afforded by the Uniform Commercial Code or other relevant law 
as enacted in any relevant jurisdiction to perfected security interests.

      2.2  No Liens.  Such Assignor is, and as to Collateral acquired by it 
from time to time after the date hereof such Assignor will be, the owner of 
all Collateral free from any Lien, security interest, encumbrance or other 
right, title or interest of any Person (other than Permitted Liens and 
Liens created under this Agreement) and such Assignor shall defend the 
Collateral against all claims and demands of all Persons at any time 
claiming the same or any interest therein adverse to the Collateral Agent.

      2.3  Other Financing Statements.  As of the date hereof, there is no 
financing statement (or similar statement or instrument of registration 
under the law of any jurisdiction) covering or purporting to cover any 
interest of any kind in the Collateral (other than (x) those created under 
this Agreement and (y) as may be filed in connection with Liens permitted 
pursuant to Section 9.01(iii) of the Credit Agreement), and so long as the 
Total Commitment has not been terminated or any Note or Letter of Credit 
remains outstanding or any of the Obligations remain unpaid or any Interest 
Rate Protection Agreement or Other Hedging Agreement remains in effect or 
any Obligations are owed with respect thereto, such Assignor will not 
execute or authorize to be filed in any public office any financing 
statement (or similar statement or instrument of registration under the law 
of any jurisdiction) or statements relating to the Collateral, except 
financing statements filed or to be filed in respect of and covering the 
security interests granted hereby by such Assignor or as permitted by the 
Credit Agreement.

      2.4  Chief Executive Office; Records.  The chief executive office of 
such Assignor is located at the address or addresses indicated on Annex A 
hereto.  Such Assignor will not move its chief executive office except to 
such new location as such Assignor may establish in accordance with the 
last sentence of this Section 2.4.  The originals of all documents 
evidencing all Receivables and Contract Rights and Trade Secret Rights of 
such Assignor and the only original books of account and records of such 
Assignor relating thereto are, and will continue to be, kept at such chief 
executive office or at such new locations as such Assignor may establish in 
accordance with the last sentence of this Section 2.4.  All Receivables and 
Contract Rights and Trade Secret Rights of such Assignor are, and will 
continue to be, maintained at, and controlled and directed (including, 
without limitation, for general accounting purposes) from, the office 
locations described above or such new location established in accordance 
with the last sentence of this Section 2.4.  No Assignor shall establish 
new locations for such offices until (i) it shall have given to the 
Collateral Agent not less than 30 days' prior written notice of its 
intention to do so, clearly describing such new location and providing such 
other information in connection therewith as the Collateral Agent may 
reasonably request, (ii) with respect to such new location, it shall have 
taken all action, satisfactory to the Collateral Agent, to maintain the 
security interest of the Collateral Agent in the Collateral intended to be 
granted hereby at all times fully perfected and in full force and effect, 
(iii) at the request of the Collateral Agent, it shall have furnished an 
opinion of counsel acceptable to the Collateral Agent to the effect that 
all financing or continuation statements and amendments or supplements 
thereto have been filed in the appropriate filing office or offices, and 
(iv) the Collateral Agent shall have received evidence that all other 
actions (including, without limitation, the payment of all filing fees and 
taxes, if any, payable in connection with such filings) have been taken, in 
order to perfect (and maintain the perfection and priority of) the security 
interest granted hereby.

      2.5  Location of Inventory and Equipment.  All Inventory and 
Equipment held on the date hereof by each Assignor is located at one of the 
locations shown on Annex B hereto.  Each Assignor agrees that all Inventory 
and Equipment now held or subsequently acquired by it shall be kept at (or 
shall be in transport to) any one of the locations shown on Annex B hereto, 
or such new location as such Assignor may establish in accordance with the 
last sentence of this Section 2.5, except as permitted to be sold in 
accordance with the terms hereof and in the Credit Agreement.  Any Assignor