JORDAN INDUSTRIES INC
S-4, 1999-05-04
COMMERCIAL PRINTING
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<PAGE>

      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 1999.
                                                           REGISTRATION NO. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                    FORM S-4
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

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

                             JORDAN INDUSTRIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          ILLINOIS                        3678                   36-3598114
(State or other jurisdiction  (Primary Standard Industrial   (I.R.S. Employer
    of incorporation or        Classification Code Number)  Identification No.)
       organization)
                                ----------------

                             JORDAN INDUSTRIES, INC.
                           Arborlake Centre, Suite 550
                               1751 Lake Cook Road
                            Deerfield, Illinois 60015
                            Telephone: (847) 945-5591
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                    REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)

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

                                 WITH A COPY TO:
                                PHILIP J. NIEHOFF
                              MAYER, BROWN & PLATT
                            190 South LaSalle Street
                             Chicago, Illinois 60603
                            Telephone: (312) 701-7843
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                              OF AGENT FOR SERVICE)

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

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.

     If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.  [ ]

     If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box.  [ ]

                        CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
==================================================================================================================
                                                               PROPOSED           PROPOSED
                                                                MAXIMUM            MAXIMUM
   TITLE OF EACH CLASS OF SECURITIES          AMOUNT        OFFERING PRICE   AGGREGATE OFFERING      AMOUNT OF
            TO BE REGISTERED             TO BE REGISTERED     PER UNIT(1)          PRICE(1)       REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                   <C>              <C>                 <C>
Series D 10 3/8% Senior Notes due 2007     $155,000,000          96.62%           $149,761,000        $41,634
==================================================================================================================
</TABLE>

- --------------------------------------------------------------------------------
(1)   Estimated solely for purposes of calculating the registration fee
      pursuant to Rule 457(f).

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

     The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
<PAGE>

================================================================================
                     SUBJECT TO COMPLETION DATED MAY 4, 1999

PROSPECTUS

                             Jordan Industries, Inc.

                                                  [JORDAN INDUSTRIES, INC. LOGO]

                              OFFER TO EXCHANGE ITS

                      10 3/8% SERIES D SENIOR NOTES DUE 2007
                        WHICH HAVE BEEN REGISTERED UNDER
                       THE SECURITIES ACT FOR ANY AND ALL
                     OUTSTANDING 10 3/8% SERIES C SENIOR NOTES
                                    DUE 2007

- --------------------------------------------------------------------------------
THE COMPANY:

o   We are a diverse company comprised of 30 businesses which are divided into
    five strategic business units.

o   Jordan Industries, Inc.
    1751 Lake Cook Road
    Deerfield, Illinois 60015
    (847) 945-5591

MATERIAL TERMS OF THE EXCHANGE OFFER:

o   This exchange offer expires at 5:00 p.m., New York City time, on 
              , 1999, unless extended.

o   Tenders of the series C senior notes may be withdrawn any time before the
    expiration of the exchange offer.

o   This exchange offer is subject to customary conditions, which we may waive.

o   The terms of the series D senior notes to be issued in this exchange offer
    are identical to the series C senior notes, except for transfer restrictions
    and registration rights that apply to the series C senior notes.

o   There is no existing market for the series D senior notes offered in this
    exchange offer and we do not intend to apply for their listing on any
    securities exchange.

Before you tender your series C senior notes, you should consider carefully the
"Risk Factors" beginning on page 11 of this prospectus.

THE SERIES D SENIOR NOTES:

o   Maturity: August 1, 2007.

o   Interest Payment: semiannually in cash on February 1 and August 1,
    commencing on August 1, 1999.

o   Redemption: the series D senior notes will be redeemable on or after August
    1, 2002. Holders of the series D senior notes may also require us to redeem
    all or part of such holder's series D senior notes upon certain asset sales
    or changes of control.

o   Ranking: the series D senior notes will be general unsecured obligations,
    junior to secured obligations and all liabilities of our subsidiaries.

                   THE DATE OF THIS PROSPECTUS IS     , 1999
<PAGE>

               TABLE OF CONTENTS

                                                PAGE

Prospectus Summary .........................      1
Risk Factors ...............................     11
Forward-Looking Statements .................     20
Use of Proceeds ............................     20
Capitalization .............................     21
Selected Financial Data ....................     22
Management's Discussion and
Analysis of Results of Operations and
  Financial Condition ......................     23
Business ...................................     34
Management .................................     55
Principal Stockholders .....................     58
Certain Transactions .......................     60
1997 Recapitalization and
  Repositioning Plan .......................     66
Description of Certain
  Indebtedness .............................     68
Description of Capital Stock ...............     74
The Exchange Offer .........................     77
Description of the Senior Notes ............     83
Certain United States Federal Income
Tax Considerations .........................    106
Plan of Distribution .......................    108
Where You Can Find More Information ........    109
Legal Matters ..............................    109
Experts ....................................    109
Index to Financial Statements and
  Information ..............................    I-1

                                       i
<PAGE>

                               PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this prospectus. We
urge you to read this prospectus in its entirety. References to our business
and pro forma financial information give effect to transactions described in
the Unaudited Pro Forma Financial Information and the related notes, unless the
context indicates otherwise. Unless otherwise indicated or the context
otherwise requires, as used in this prospectus, "we," "us," "our," "Jordan
Industries" or the "Company" means or refers to Jordan Industries, Inc. and its
subsidiaries. The term "Restricted Group" includes subsidiaries in the Consumer
and Industrial Products group ("Consumer and Industrial Products"), SPL
Holdings, Inc. and its subsidiaries ("Specialty Printing and Labeling") and
Jordan Specialty Plastics, Inc. and its subsidiaries ("Specialty Plastics"), as
well as the parent entity, which maintains no operations. The "Nonrestricted
Group" includes Jordan Telecommunication Products, Inc. and its subsidiaries
("Telecommunication Products") and Motors and Gears Holdings, Inc. and its
subsidiaries ("Motors and Gears"). Each individual entity that comprises
Telecommunication Products and Motors and Gears is a Nonrestricted Subsidiary,
as defined in the Indenture, under the Indenture. The Restricted Group is the
primary source of cash flow to service the Senior Notes, as our ability to
access cash from the Nonrestricted Group is limited.

                                  THE COMPANY

     Jordan Industries was organized to acquire and operate a diverse group of
businesses on a decentralized basis, with a corporate staff providing strategic
direction and support. We comprise 30 businesses, which are divided into five
strategic business units: Consumer and Industrial Products, Specialty Printing
and Labeling, Specialty Plastics, Telecommunication Products and Motors and
Gears. We believe that our businesses are characterized by leading positions in
niche industries, high operating margins, strong management, minimal working
capital and capital expenditure requirements, and low sensitivity to
technological change and economic cycles.

     Our business strategy is to enhance the growth and profitability of each
business unit and to build upon the strengths of those units through product
line and other strategic acquisitions. Key elements of this strategy have been
the acquisition and growth of related businesses, increased focus on
international markets, facilities expansion and the acquisition of
complementary product lines. Consistent with this strategy, on March 22, 1999,
we acquired the Alma Products division ("Alma Products") of Alma Piston
Company. As a result of this acquisition, we significantly increased our
presence in the automotive aftermarket industry.

     The operations of the Restricted Group consist of:

     o    Consumer and Industrial Products, which represented 54.4% of pro forma
          net sales of the Restricted Group for the year ended December 31,
          1998.

     o    Specialty Printing and Labeling, which represented 27.8% of pro forma
          net sales of the Restricted Group for the year ended December 31,
          1998.

     o    Specialty Plastics, which represented 17.8% of pro forma net sales of
          the Restricted Group for the year ended December 31, 1998.

     Consumer and Industrial Products serves several product segments. It is
the leading supplier of remanufactured torque converters to the automotive
aftermarket industry. Consumer and Industrial Products also (1) publishes and
markets Bibles, religious books and audio materials, (2) manufactures
hot-formed titanium materials for the aerospace and other industries and (3)
manufactures and imports gift items. The companies that comprise Consumer and
Industrial Products have provided their customers with products and services
for an average of over 40 years.

     Specialty Printing and Labeling manufactures and markets (1) promotional
and specialty advertising products for corporate buyers, (2) labels, tapes and
printed graphic panel overlays for electronics and other manufacturing
companies and (3) printed folding cartons and boxes and other

                                       1
<PAGE>

shipping materials. The companies that comprise Specialty Printing and Labeling
have provided their customers with products and services for an average of over
40 years.

     Specialty Plastics serves a broad range of wholesale and retail markets
within the highly fragmented specialty plastics industry. The group designs,
manufactures and sells (1) "take-one" point of purchase brochure, folder and
application display holders, (2) modular storage systems ("Tilt-BinsTM"), (3)
plastic injection-molded hardware and office supply products, (4) extruded
vinyl chairmats, (5) safety reflectors for bicycle and commercial truck
manufacturers and (6) colorants to the thermoplastics industry. The companies
that comprise Specialty Plastics have provided their customers with products
and services for an average of over 35 years.

                         THE ALMA PRODUCTS ACQUISITION

     At the same time as the closing of the offering of the series C senior
notes, we acquired Alma Products for a purchase price consisting of $84.1
million in cash and the assumption of $2.1 million in long-term liabilities.
Alma Products is comprised of three primary product lines: (1) high quality
remanufactured torque converters (approximately 48% of 1998 net sales) used to
supply warranty replacements for automatic transmissions originally sold to
Ford, Chrysler, John Deere and Caterpillar, (2) remanufactured and new air
conditioning compressors (approximately 34% of 1998 net sales) for original
equipment manufacturers ("OEMs") including Ford, Chrysler and GM and (3) new
and remanufactured clutch and disc assemblies (approximately 18% of 1998 net
sales) used in standard transmissions sold primarily to Ford. As a premium
remanufacturer of torque converters, Alma Products has earned ISO-9002 status
and supplies Ford with 100% and Chrysler with approximately 70% of their
remanufactured torque converter requirements. For a more detailed description
of Alma Products' business, please read "Business--Consumer and Industrial
Products."

     We believe the strategic acquisition of Alma Products complements our
existing subsidiary, Dacco, Incorporated ("Dacco"), and will result in
significant cost and revenue synergies. Alma Products is a leading
remanufacturer to the OEMs and has benefited from the trend among OEMs to
reduce warranty costs through the use of remanufactured parts and assemblies.
Dacco, on the other hand, has been successful in remanufacturing and marketing
torque converters to the independent automotive aftermarket sector, which is
not governed by OEM standards. Through the combination of Alma Products and
Dacco, we believe we can achieve operating synergies through:

     o    Decreasing cost of sales at Dacco by using torque converter cores
          previously discarded by Alma Products, thereby reducing Dacco's need
          to purchase these cores in the scrap market.

     o    Increasing sales at Dacco by providing access to the large inventory
          of Alma Products' torque converter cores, since Dacco currently loses
          significant sales due to inadequate supplies of available cores in the
          scrap market.

     o    Increasing sales of Alma Products' air conditioning compressor
          products and clutch and disc assemblies through Dacco's nationwide
          retail store network.

                                       2
<PAGE>

     The following chart depicts our five strategic business units, together
with the pro forma net sales of each of the five groups for the year ended
December 31, 1998. Pro forma net sales, as set forth below, give effect to the
Alma Products acquisition and certain other transactions described in the
Unaudited Pro Forma Financial Information and the related notes. The boxes in
bold represent the Restricted Group.


<TABLE>
                                            [DIAGRAM]
 
                                      JORDAN INDUSTRIES, INC.

                              ------------------------------------------
                                           RESTRICTED
                                             GROUP          CONSOLIDATED
                                             -----          ------------
                                               (Dollars in millions)
               
                              NET SALES     $431.9            $1,024.2
                              ------------------------------------------
                                                   |
          ----------------------------------------------------------------------------------
         |                    |                    |                   |                    |
- -------------------  -------------------  ------------------- -------------------  -------------------
<S>                  <C>                  <C>                 <C>                  <C>
  Consumer and      
   Industrial         Specialty Printing      Specialty        Telecommunication        Motor and 
    Products             and Labeling        Plastics (2)         Products (1)           Gears (1)
                                                                                        
- - Dacco               - Sales Promotion    - Beemak           
- - Alma Products         Associates           Plastics         
- - Riverside Book      - Valmark            - Sate-Lite        
  and Bible             Industries           Manufacturing    
- - Parsons             - Pamco Printed      - Deflecto         
  Precision Products    Tape and Label     - Rolite Plastics  
- - Cape Craftsmen      - Seaboard                              
- - Cho-Pat               Folding Box                           
                                                              
$234.7 million of     $120.2 million of    $77.0 million of     $296.1 million of   $296.2 million of
Net Sales             Net Sales            Net Sales            Net Sales           Net Sales        
- -------------------  -------------------  ------------------- -------------------  -------------------
</TABLE>

- ----------
(1)   Telecommunication Products and Motors and Gears are Nonrestricted
      Subsidiaries, as defined in the Indenture, the common stock of which is
      owned by stockholders and affiliates of Jordan Industries and management
      of the respective companies. Jordan Industries' ownership in these
      subsidiaries is solely in the form of JTP junior preferred stock and M&G
      junior preferred stock. See "Management's Discussion and Analysis of
      Results of Operations and Financial Condition-- General," "Risk
      Factors--Ability to Service Debt" and "Description of Capital Stock."

(2)   Specialty Products is a Restricted Subsidiary, as defined in the
      Indenture, the common stock of which is owned by stockholders and
      affiliates of Jordan Industries and management of the respective
      companies. Jordan Industries' ownership in these subsidiaries is solely
      in the form of JSP junior preferred stock. See "Management's Discussion
      and Analysis of Results of Operations and Financial Condition--General,"
      "Risk Factors--Ability to Service Debt" and "Description of Capital
      Stock."

                                       3
<PAGE>

                              RECENT DEVELOPMENTS

     On March 31, 1999, our Dura-Line subsidiary in Telecommunication Products,
purchased substantially all of the assets of Integral Corporation. Integral is
a manufacturer of high-density polyethylene conduit for the installation and
protection of cables used in the electrical telecommunications, and cable
television industries. Integral has locations in Dallas, Texas, England and
Malaysia.

     The purchase price of $17.0 million, which does not include related
transaction costs, has not been allocated at this time. The acquisition was
financed with four-month promissory notes for $9.9 million and borrowings from
JTP Industries' revolving credit agreement of $7.1 million.


                                       4
<PAGE>

                         SUMMARY OF THE EXCHANGE OFFER


                             THE INITIAL OFFERING

     The currently outstanding series C senior notes were issued on March 22,
1999 in a private placement. We are party to a registration rights agreement
with the initial purchasers in that private offering pursuant to which we
agreed, among other things, to file a registration statement with respect to
the series D senior notes on or before June 20, 1999, to use our best efforts
to have the registration statement declared effective on or before August 19,
1999. We must pay liquidated damages to the holders of the series C senior
notes if we do not meet these deadlines. For information on the sources and
uses of funds in connection with the original offering, you should see the "Use
of Proceeds" section of this prospectus.


                              THE EXCHANGE OFFER


The Exchange Offer..........   We are offering to exchange $155,000,000
                               principal amount of 10 3/8% series D senior notes
                               due 2007 which have been registered under the
                               Securities Act of 1933 for $155,000,000 of our
                               outstanding 10 3/8% series C senior notes due 
                               2007 which were issued in March 1999.

                               The series D senior notes are substantially
                               identical to the series C senior notes, except
                               that some of the transfer restrictions and
                               registration rights relating to the series C
                               senior notes do not apply to the series D senior
                               notes. You may tender your series C senior notes
                               by following the procedures described in this
                               prospectus under the heading "The Exchange
                               Offer."


Expiration Date.............   The exchange offer will expire at 5:00 p.m.,
                               New York City time, on           , 1999, unless
                               we extend it.


Withdrawal Rights...........   You may withdraw your tender of your notes at
                               any time before 5:00 p.m., New York City time, on
                               the expiration date of the exchange offer.


Conditions of the
 Exchange Offer..............  The exchange offer is subject to customary
                               conditions, which we may waive. Please read "The
                               Exchange Offer--Conditions" section of this
                               prospectus for more information regarding
                               conditions of the exchange offer.


Procedures for Tendering
Series C Senior Notes.......   If you are a holder of series C senior notes
                               and wish to accept the exchange offer, you must
                               either:

                               (a) complete, sign and date the accompanying
                                   Letter of Transmittal, or a facsimile
                                   thereof and mail or otherwise deliver the
                                   document together with your series C senior
                                   notes, to the exchange agent at the address
                                   shown under "The Exchange Offer--Exchange
                                   Agent;" or
                                   

                                       5
<PAGE>

                               (b) arrange for The Depository Trust Company to
                                   transmit the required information to the
                                   exchange agent for this exchange offer in
                                   connection with a book-entry transfer.

                                   By tendering your series C senior notes in
                                   this manner, you will be representing, among
                                   other things, that:

                                   o  the series D senior notes you acquire in
                                      the exchange offer are being acquired in
                                      the ordinary course of your business;

                                   o  you are not participating, do not intend
                                      to participate, and have no arrangement or
                                      understanding with any person to
                                      participate in the distribution of the
                                      series D senior notes issued to you in the
                                      exchange offer; and

                                   o  you are not our "affiliate".


Certain United States Federal
Income Tax Consequences.....   Your exchange of series C senior notes for
                               series D senior notes in the exchange offer will
                               not result in any gain or loss to you for federal
                               income tax purposes. See the "Certain United
                               States Federal Income Tax Consequences" section
                               of this prospectus.


Consequences of Failure
to Exchange.................   Series C senior notes that are not tendered or
                               that are tendered, but not accepted, will be
                               subject to the existing transfer restrictions on
                               the notes after the exchange offer. We will have
                               no further obligation to register the series C
                               senior notes. If you do not participate in the
                               exchange offer, the liquidity of your series C
                               senior notes could be adversely affected.


Procedures for
 Beneficial Owners...........  If you are the beneficial owner of series C
                               senior notes registered in the name of a broker,
                               dealer or other nominee and you wish to tender
                               your notes, you should contact the person in
                               whose name your series C senior notes are
                               registered and promptly instruct the person to
                               tender on your behalf.


Guaranty Delivery
 Procedures..................  If you wish to tender your series C senior notes
                               and time will not permit your required documents
                               to reach the exchange agent by the expiration
                               date, or the procedure for book-entry transfer
                               cannot be completed on time, you may tender your
                               series C senior notes according to the guaranteed
                               delivery procedures. See "The Exchange
                               Offer--Guaranteed Delivery Procedures."


Acceptance of Series C Senior
Notes; Delivery of Series D
 Senior Notes................  Subject to certain conditions, we will accept
                               series C senior notes which are properly tendered
                               in the exchange offer and


                                       6
<PAGE>

                               not withdrawn, before 5:00 p.m., New York City
                               time, on the expiration date of the exchange
                               offer. The series D senior notes will be
                               delivered as promptly as practicable following
                               the expiration date.


Use of Proceeds.............   We will receive no proceeds from the exchange
                               offer.


Exchange Agent..............   U.S. Bank Trust National Association is the
                               exchange agent for the exchange offer.


                      SUMMARY OF THE SERIES D SENIOR NOTES


Total Amount of
Securities Offered..........   We will issue $155,000,000 principal amount of
                               10 3/8% series D senior notes due 2007.


Maturity....................   August 1, 2007.


Interest Rate and
 Payment Dates...............  The series D senior notes will bear interest at a
                               rate of 10 3/8% per year. We will pay interest
                               every six months, on August 1 and February 1. The
                               first interest payment will be August 1, 1999.


Optional Redemption.........   On or after August 1, 2002, we may redeem the
                               series D senior notes at the redemption prices
                               listed in "Description of the Senior
                               Notes--Redemption of Senior Notes."


Mandatory Redemption........   If we sell certain assets or experience
                               specific kinds of changes of control, we must
                               offer to repurchase the senior notes at the
                               prices listed in "Description of the Senior
                               Notes--Mandatory Offers to Purchase Senior
                               Notes."


Ranking.....................   The series D senior notes will be senior
                               unsecured obligations of the Company, will rank
                               equal in right of payment with all other senior
                               indebtedness of the Company (including the series
                               B senior notes) and senior to all subordinated
                               indebtedness of the Company (including the
                               Discount Debentures). The series D senior notes
                               will effectively rank junior to any secured
                               indebtedness to the extent of the assets securing
                               that indebtedness, including indebtedness
                               incurred under the Credit Agreement (as defined),
                               and to the indebtedness and claims of creditors
                               of our subsidiaries. See "Description of the
                               Senior Notes--Certain Covenants" and "Description
                               of Certain Indebtedness."


Certain Covenants...........   The Indenture, among other things, restricts
                               our ability to:

                               o pay dividends or make certain other restricted
                                 payments;

                               o borrow money;

                               o sell certain assets or merge with or into other
                                 companies;

                               o enter into transactions with affiliates;

                                       7
<PAGE>

                               o make certain guarantees of indebtedness; and

                               o make certain investments.

                               See "Description of the Senior Notes--Certain
                               Covenants" and "--Mandatory Offers to Purchase
                               Senior Notes--Asset Sales."


Use of Proceeds.............   We will not receive any proceeds from the
                               exchange offer. The net proceeds we received from
                               the sale of the series C senior notes were used
                               to:

                               o acquire Alma Products;

                               o repay existing indebtedness; and

                               o pay fees and expenses incurred in connection
                                 with the Transactions.


                                 RISK FACTORS

     An investment in the series D senior notes involves a high degree of risk.
For a discussion of certain matters that should be considered by prospective
investors in connection with the exchange offer, please read "Risk Factors."


                                       8
<PAGE>

                            SUMMARY FINANCIAL DATA


     The following table presents summary (1) historical financial data of the
Company for the years ended December 31, 1996, 1997 and 1998, (2) pro forma
financial data of the Company for the year ended December 31, 1998, (3) pro
forma financial data of the Restricted Group for the year ended December 31,
1998 and (4) balance sheet data as of December 31, 1998 on a historical and pro
forma basis for the Company and on a pro forma basis for the Restricted Group.
The historical financial data of the Company as of and for the years ended
December 31, 1996, 1997 and 1998 were derived from the audited consolidated
financial statements of the Company. The pro forma data are unaudited, and the
pro forma statement of operations and other data give effect to certain
transactions as set forth in the Unaudited Pro Forma Financial Information and
the related notes included elsewhere in this prospectus as if such transactions
had occurred at the beginning of the period. Pro forma balance sheet data give
effect to such transactions at the date indicated. The unaudited summary pro
forma consolidated financial data do not purport to project the consolidated
financial position or the consolidated results of operations of the Company or
the Restricted Group for any future period. The Company has acquired a diverse
group of operating Companies over the periods presented, which signficantly
affects the comparability of the information presented. The financial data set
forth below should be read in conjunction with the historical consolidated
financial statements of the Company and the related notes, "Selected Financial
Data," "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Unaudited Pro Forma Financial Information," all
appearing elsewhere in this prospectus.




<TABLE>
<CAPTION>
                                                                                     PRO FORMA
                                         HISTORICAL CONSOLIDATED (1)(2)         CONSOLIDATED (1)(3)          PRO FORMA
                                     ---------------------------------------   ---------------------    RESTRICTED GROUP (4)
                                            YEARS ENDED DECEMBER 31,                 YEAR ENDED              YEAR ENDED
                                     ---------------------------------------   ---------------------   ---------------------
                                         1996          1997          1998        DECEMBER 31, 1998        DECEMBER 31 1998
                                     -----------   -----------   -----------   ---------------------   ---------------------
<S>                                  <C>           <C>           <C>           <C>                     <C>
                                                                      (Dollars  in  thousands)
STATEMENT OF OPERATIONS DATA:
Net sales ........................    $ 601,567     $ 707,112     $ 943,607         $1,024,160               $431,851
Gross profit, excluding
 depreciation ....................      225,822       260,532       342,222            366,145                149,277
Net loss .........................      (55,690)      (45,618)      (31,586)           (31,160)               (16,441)
OTHER FINANCIAL DATA:
Depreciation and amortization.....       30,438        35,321        45,047             49,154                 17,739
Adjusted operating income (5).....       29,367        56,551        91,696            108,210                 36,193
Capital expenditures .............       17,395        14,179        21,477             22,378                  7,085
Interest expense (6) .............       60,339        78,655       105,254            118,752                 46,527
Cash interest expense ............       48,352        60,200        78,450             91,948                 30,585
Ratio of earnings to fixed
 charges (7) .....................           --            --            --                 --                     --
</TABLE>

 

                                       9
<PAGE>


<TABLE>
<CAPTION>
                                                           CONSOLIDATED COMPANY (1)(2)        RESTRICTED GROUP(4)
                                                             AS OF DECEMBER 31, 1998        AS OF DECEMBER 31, 1998
                                                          ------------------------------   ------------------------
                                                           HISTORICAL     PRO FORMA (3)          PRO FORMA (3)
                                                          ------------   ---------------   ------------------------
                                                                           (Dollars in thousands)
BALANCE SHEET DATA:
<S>                                                       <C>            <C>               <C>
Cash and cash equivalents .............................       23,008           25,031                8,886
Working capital .......................................      189,065          203,871               91,411
Total assets ..........................................    1,043,888        1,156,364              512,737
Total debt ............................................    1,065,555        1,165,316              442,972
Preferred stock (8) ...................................       25,649           25,649                   --
Stockholders' equity (net capital deficiency) .........     (208,144)        (208,144)              (8,580)
</TABLE>

- ----------
(1)   The Company consolidates the results of Telecommunication Products and
      Motors and Gears and their respective subsidiaries, all of which
      constitute the Nonrestricted Group, the common stock of which is owned by
      stockholders and affiliates of the Company and management of the
      respective companies. The Company's ownership in these subsidiaries is in
      the form of JTP Junior Preferred Stock and M&G Junior Preferred Stock.

(2)   The Company has acquired a diverse group of operating companies over the
      periods presented, which significantly affects the comparability of the
      information presented.

(3)   The pro forma data reflect the consummation of the Offering and the Alma
      Products acquisition, as well as all other acquisitions and dispositions
      completed during the period for purposes of the operating data, assuming
      such transactions had occurred at the beginning of the period, and for
      purposes of the balance sheet data, assuming such transactions had
      occurred at the date indicated. See the Unaudited Pro Forma Financial
      Information at page P-1.

(4)   The Restricted Group consists of Jordan Industries, Inc., Consumer and
      Industrial Products, Specialty Printing and Labeling and Specialty
      Plastics. The statement of operations and other data for the Restricted
      Group give effect to the allocation of corporate overhead.

(5)   Adjusted operating income represents operating income excluding the
      results of Welcome Home, which filed for bankruptcy on January 21, 1997
      and is no longer consolidated with the Company.

(6)   Does not include amortization of deferred financing fees of $3.0 million,
      $3.8 million and $4.5 million for the years ended December 31, 1996, 1997
      and 1998, respectively, on a historical basis, and $6.1 million for the
      year ended December 31, 1998 on a pro forma basis for the consolidated
      Company. Does not include amortization of deferred financing fees of $3.3
      million for the year ended December 31, 1998 on a pro forma basis for the
      Restricted Group.

(7)   On a historical basis, earnings were insufficient to cover fixed charges
      by $47.4 million, $6.2 million and $22.6 million for the years ended
      December 31, 1996, 1997 and 1998. On a pro forma basis for the Company,
      earnings were insufficient to cover fixed charges by $22.2 million, and on
      a pro forma basis for the Restricted Group, earnings were insufficient to
      cover fixed charges by $13.1 million for the year ended December 31, 1998.

(8)   Includes $25.0 million initial liquidation preference of the Senior
      Preferred Stock of Jordan Telecommunication Products, Inc. and $1.5
      million initial liquidation preference of the Senior Preferred Stock of
      Motor and Gears Holdings, Inc., which preferred stock is owned, in each
      case, by persons other than the Company.


                                       10
<PAGE>

                                 RISK FACTORS

     An investment in the senior notes involves a high degree of risk. You
should consider carefully the following risk factors, in addition to the other
information set forth in this prospectus.


SUBSTANTIAL LEVERAGE--OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE
SENIOR NOTES.

     We have a significant amount of indebtedness. Assuming we had completed
the offering of series C senior notes and related transactions as of December
31, 1998, the total consolidated indebtedness, consolidated total assets and
stockholders' equity for the Restricted Group as of December 31, 1998 would
have been $443.0 million, $512.7 million and $(8.6) million, respectively,
while those same financial measures would have been $1,165.3 million, $1,156.4
million and $(208.1) million, respectively, for Jordan Industries and all
subsidiaries. Earnings before fixed charges for the Company would have been
inadequate to cover fixed charges by $22.2 million for the year ended December
31, 1998.

     Our substantial indebtedness could have important consequences to you. For
example, it could:

     o  make it more difficult for us to satisfy our obligations with respect to
        the senior notes;

     o  increase our vulnerability to general adverse economic and industry
        conditions;

     o  require us to dedicate a substantial portion of our cash flow from
        operations to payments on our indebtedness, thereby reducing the
        availability of our cash flow to fund working capital, capital
        expenditures and other general corporate purposes;

     o  limit our flexibility in planning for, or reacting to, changes in our
        businesses and the industries in which we operate;

     o  place us at a competitive disadvantage compared to our competitors that
        have less debt; and

     o  limit, along with the financial and other restrictive covenants of our
        indebtedness, among other things, our ability to borrow additional
        funds.
      

Failing to comply with those covenants could result in an event of default
which, if not cured or waived, could have a material adverse effect on us. See
"Use of Proceeds," "Capitalization," "Description of the Senior Notes--Certain
Covenants" and "Description of Certain Indebtedness--Credit Agreements."


ADDITIONAL BORROWINGS AVAILABLE--DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT.

     We and our subsidiaries may be able to incur substantial additional
indebtedness (including secured indebtedness) in the future. The terms of the
indenture governing the series D senior notes do not fully prohibit us or our
Restricted Group from doing so, and do not in any way prohibit our
Nonrestricted Group from doing so. Our Credit Agreement currently permits
additional borrowings up to $51.5 million, and all of those borrowings would be
effectively senior to the series D senior notes to the extent of the assets
securing such additional indebtedness under the Credit Agreement. If new debt
is added to our and our subsidiaries' current debt levels, the related risks
that we and they now face could intensify. See "Capitalization," "Selected
Financial Data," "Description of the Senior Notes--Certain Covenants" and
"Description of Certain Indebtedness--Credit Agreements."


ABILITY TO SERVICE DEBT--TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY
FACTORS BEYOND OUR CONTROL.

     Our ability to make payments on and to refinance our indebtedness,
including the series D senior notes, and to fund planned capital expenditures
and research and development efforts will depend on our ability to generate
cash in the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond our control.


                                       11
<PAGE>

     Based on our current level of operations and anticipated cost savings and
operating improvements, we believe that our cash flow from operations,
available cash and available borrowings under our Credit Agreement will be
adequate to meet our liquidity needs for at least the next 12 months. The
Restricted Group is the primary source of cash flow to service the series D
senior notes, as our ability to access cash from Telecommunication Products and
Motors and Gears is limited. We can access cash flow through loans from
Specialty Plastics and repayment of loans made by us to Specialty Plastics. We
are able to do this because the Indenture and our other indebtedness do not
prohibit intercompany loans within the Restricted Group, however, we cannot
assure you that future financings by Specialty Plastics will continue to permit
such intercompany loans.

     Our investment in Telecommunication Products and Motors and Gears (which
comprise the Nonrestricted Group) and Specialty Plastics (which is part of the
Restricted Group) is solely through our ownership of junior preferred stock. As
discussed under "Description of Capital Stock," the junior preferred stock is
mandatorily redeemable upon certain events and redeemable at the option of each
company, in whole or in part, at any time. Following any such redemption, that
company would no longer be our subsidiary, and the cash flow generated by that
company would no longer be available to us.

     We cannot assure you, however, that our business will generate sufficient
cash flow from operations, that we will realize currently anticipated cost
savings and operating improvements on schedule or at all or that future
borrowings will be available to us under the Credit Agreement in an amount
sufficient to enable us to pay our debt, including the series D senior notes,
or to fund our other liquidity needs. To the extent that cash flow from
operations is insufficient to cover our fixed charges and fund our capital
expenditure requirements, we, in order to pay such expenses, may obtain funds
from additional borrowings, if permitted, sell a portion of our business or
other assets, engage in sale/leaseback transactions, raise additional equity
capital and/or acquire other businesses that would provide additional positive
cash flow. We cannot assure you as to the availability or accessibility of
these or other similar transactions, or that these or other similar
transactions could be accomplished on terms favorable to us. We cannot assure
you that we will be able to refinance any of our indebtedness, including our
Credit Agreement and the series D senior notes, on commercially reasonable
terms or at all.


RANKING--YOUR RIGHT TO RECEIVE PAYMENTS ON THE SERIES D SENIOR NOTES IS
EFFECTIVELY JUNIOR TO SOME OF OUR EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR
FUTURE BORROWINGS.

     The series D senior notes effectively rank behind all of our secured
indebtedness, to the extent of the assets which secure such indebtedness, and
all of the indebtedness of our subsidiaries, including future borrowings under
the Credit Agreement. As a result, upon any distribution to our creditors or
the creditors of our subsidiaries in a bankruptcy, liquidation or
reorganization or similar proceeding relating to us, our subsidiaries or our
respective property, the holders of our secured debt and any creditors of our
subsidiaries will be entitled to be paid in full in cash before any payment may
be made with respect to the series D senior notes.

     In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, our subsidiaries or our respective properties,
holders of the series D senior notes will participate with trade creditors of
the parent company and all other holders of our senior unsecured indebtedness
in the assets remaining. In any of these cases, we may not have sufficient
funds to pay all of our creditors, and holders of the series D senior notes may
receive less, ratably, than the holders of secured debt. At December 31, 1998,
on a pro forma basis, the aggregate amount of indebtedness of the Restricted
Group would have been approximately $443.0 million, and the aggregate amount of
indebtedness of the Nonrestricted Group would have been approximately $722.3
million.


RESTRICTIVE COVENANTS--THE RESTRICTIVE COVENANTS CONTAINED IN OUR CREDIT
AGREEMENT, THE INDENTURE AND INDENTURES COVERING OUR OTHER DEBT SECURITIES MAY
LIMIT OUR ABILITY TO REPAY THE SERIES D SENIOR NOTES.

     The Credit Agreement contains restrictive covenants and prohibits us and
our subsidiaries from prepaying other indebtedness, including the series D
senior notes. The Credit Agreement also requires


                                       12
<PAGE>

us to maintain specified financial ratios and satisfy certain financial
condition tests. Our ability to meet those financial ratios and tests can be
affected by events beyond our control, and there can be no assurance that we
will meet those ratios and tests. A breach of any of these covenants could
result in a default under the Credit Agreement, the Indenture and/or indentures
with respect to our other debt securities. Upon the occurrence of an event of
default under the Credit Agreement, the lenders thereunder could elect to
declare all amounts outstanding under the Credit Agreement, together with
accrued interest, to be immediately due and payable. If we were unable to repay
those amounts, such lenders could proceed against the collateral granted to
them to secure that indebtedness. If the indebtedness under the Credit
Agreement were to be accelerated, there can be no assurance that our assets
would be sufficient to repay in full all of our indebtedness, including the
series D senior notes. The indebtedness of JII, Inc., our wholly-owned
subsidiary and the borrower under the Credit Agreement, is secured by a pledge
of substantially all of the assets of, and is guaranteed by, the Restricted
Group. See "Description of Certain Indebtedness--Credit Agreement" and
"Description of the Senior Notes."


HOLDERS OF SERIES C SENIOR NOTES THAT FAIL TO EXCHANGE THEIR NOTES MAY BE
UNABLE TO RESELL THEIR NOTES.

     We did not register the series C senior notes under the federal or any
state securities laws, nor do we intend to register them following the exchange
offer. As a result, the series C senior notes may only be transferred in
limited circumstances under the securities laws. If the holders of series C
senior notes do not exchange their notes in the exchange offer, they lose their
right to have the series C senior notes registered under the federal securities
laws, subject to certain limitations. As a result, a holder of series C senior
notes after the exchange offer may be unable to sell their notes.

     Your series C senior notes will not be accepted for exchange if you fail
to follow the exchange offer procedures.

     The series D senior notes will be issued to you in exchange for your
Series C senior notes only after timely receipt by the exchange agent of:

     o  your series C senior notes; and

     o  either:

        o  a properly completed and executed Letter of Transmittal and all other
           required documentation; or

        o  a book-entry delivery by transmittal of an agent's message through
           The Depository Trust Company.

     If you want to tender your series C senior notes in exchange for series D
senior notes, you should allow sufficient time to ensure timely delivery.

     None of the exchange agent nor the issuer or any of its affiliates are
under any duty to give you notification of defects or irregularities with
respect to tenders of series C senior notes for exchange. series C senior notes
that are not tendered or are tendered but not accepted will, following the
exchange offer, continue to be subject to their existing transfer restrictions.
In addition, if you tender your series C senior notes in the exchange offer to
participate in a distribution of the series C senior notes, you will be
required to comply with the registration and prospectus delivery requirements
of the federal securities laws in connection with any resale transaction. For
additional information, please refer to "The Exchange Offer" and "Plan of
Distribution" sections of this prospectus.


STRUCTURE--OUR HOLDING COMPANY STRUCTURE MAKES US DEPENDENT ON THE EARNINGS OF
OUR SUBSIDIARIES AND THE DISTRIBUTIONS OF THOSE EARNINGS IN ORDER TO MEET OUR
DEBT SERVICE AND OTHER OBLIGATIONS. THE TERMS OF OUR OTHER INDEBTEDNESS MAY
LIMIT OUR ACCESS TO CASH FLOW OF OUR SUBSIDIARIES. IN ADDITION, THE SERIES D
SENIOR NOTES ARE NOT GUARANTEED BY OUR SUBSIDIARIES.

     We are structured as a holding company which owns the Restricted Group
companies. Our current operations are conducted exclusively through our
subsidiaries, and our only significant assets


                                       13
<PAGE>

are the capital stock of our subsidiaries. As a holding company, we are
dependent on dividends or other intercompany transfers of funds from our
subsidiaries to meet our debt service and other obligations. The series D
senior notes will be our obligations exclusively and will not be guaranteed by
any of our subsidiaries. Each subsidiary's management is given broad discretion
in conducting the day-to-day operations of such subsidiary, and the performance
of the subsidiaries is largely dependent upon their individual efforts.
Consequently, our cash flow and ability to service our debt, including the
series D senior notes, are dependent upon the earnings of our subsidiaries and
the distribution of those earnings to us, or upon loans, advances or other
payments made by our subsidiaries to us. Furthermore, the terms of our
permitted indebtedness and other agreements and those of our Restricted Group
may limit the ability of our subsidiaries to pay dividends to us. See
"Description of the Senior Notes--Certain Covenants."


CONSEQUENCES OF SUBSIDIARY DECONSOLIDATION--OUR CONSOLIDATION OF
TELECOMMUNICATION PRODUCTS, SPECIALTY PLASTICS AND MOTORS AND GEARS FOR
FINANCIAL REPORTING PURPOSES MAY NOT CONTINUE IN THE FUTURE. IN ADDITION, OUR
CONSOLIDATION OF TELECOMMUNICATION PRODUCTS AND MOTORS AND GEARS FOR TAX
PURPOSES MAY NOT CONTINUE IN THE FUTURE, WHICH COULD RESULT IN A SUBSTANTIAL
TAX LIABILITY.

     Our ownership interest in Telecommunication Products, Specialty Plastics
and Motors and Gears is represented solely by the Telecommunication Products
junior preferred stock, the Specialty Plastics cumulative preferred stock and
the Motors and Gears cumulative preferred stock, respectively. The common stock
of those entities is held by our stockholders and affiliates and management of
the respective companies. So long as we hold the JTP junior preferred stock,
the JSP junior preferred stock and the M&G junior preferred stock, we expect to
continue to consolidate Telecommunication Products, Specialty Plastics and
Motors and Gears for financial reporting purposes as our subsidiaries. This
financial consolidation and any continuing investment by us in
Telecommunication Products, Specialty Plastics or Motors and Gears will be
discontinued upon the redemption of the JTP junior preferred stock, the JSP
junior preferred stock or the M&G junior preferred stock, as the case may be,
or at such time as the JTP junior preferred stock, JSP junior preferred stock
or M&G junior preferred stock ceases to represent at least a majority of the
voting power and a majority share in the earnings of the relevant company. As
long as the junior preferred stock is outstanding, we expect the vote test to
be satisfied as to each subsidiary. Until March 31, 2002 for Motors and Gears,
August 1, 2002 for Telecommunication Products and March 31, 2003 for Specialty
Plastics, when we discontinue our participation in the earnings of the
companies, so long as the junior preferred stock of those entities is
outstanding, we expect the earnings test to be satisfied as to each subsidiary.
The JTP junior preferred stock, the JSP junior preferred stock and the M&G
junior preferred stock are each mandatorily redeemable upon certain events and
are redeemable at the option of each company, in whole or in part, at any time.
 

     We also expect to include Telecommunication Products and Motors and Gears
in our consolidated group for Federal income tax purposes. This consolidation
would be discontinued as to Telecommunication Products or Motors and Gears upon
the redemption of the junior preferred stock of each company, as applicable,
which could in turn trigger our recognition of substantial income tax
liabilities which were deferred in connection with previous recapitalizations.
If such deconsolidation had occurred at December 31, 1998, we believe that the
amount of taxable income to us resulting from the deconsolidation of
Telecommunication Products would have been approximately $110.4 million (or
approximately $44.2 million of tax liabilities, assuming a 40% combined
Federal, state and local income tax rate), and the amount of taxable income to
us resulting from the deconsolidation of Motors and Gears would have been
approximately $51.2 million (or approximately $20.5 million of tax liabilities,
assuming a 40% combined Federal, state and local income tax rate). We currently
expect to offset these tax liabilities arising from deconsolidation by using
net loss carry-forwards (approximately $131.6 million at December 31, 1998),
and to pay any remaining liability with redemption proceeds from the respective
junior preferred stock of each company; however, there can be no assurance that
at the time of deconsolidation we would have enough net loss carry-forwards or
redemption proceeds from junior preferred stock to offset the tax liabilities.
Deconsolidation would also occur with respect to each of these companies if the
junior preferred stock


                                       14
<PAGE>

issued by such company ceased to represent at least 80% of the voting power and
80% of the stock value of the outstanding junior preferred stock and common
stock combined of such company. As long as the junior preferred stock of each
company is outstanding, we expect the vote test to be satisfied with respect to
such company. The value test depends on the relative values of the junior
preferred stock and common stock of each company, as applicable. It is likely
that by March 31, 2002 for Motors and Gears and August 1, 2002 for
Telecommunication Products the junior preferred stock of each company would
cease to represent 80% of the relevant total combined stock value of such
company. It is entirely possible, however, that the 80% value test could fail
well prior to these dates. In the event that deconsolidation occurs without a
redemption of the junior preferred stock, the tax liabilities discussed above
would be incurred without us receiving the proceeds of a redemption. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition--General," "Certain Transactions" and "Description of Capital
Stock--Subsidiary Securities."


ACQUISITION AND REORGANIZATION STRATEGIES--WE MAY NOT BE ABLE TO IMPLEMENT OUR
BUSINESS STRATEGY IF MARKET CONDITIONS, FINANCING ALTERNATIVES AND OTHER
FACTORS ARE NOT CONDUCIVE TO THE STRATEGY.

     Our business strategy is to enhance the growth and profitability of each
business unit, and to build upon the strengths of those units through product
line and other strategic acquisitions. Key elements of this strategy have been
the consolidation and reorganization of acquired businesses, increased focus on
international markets, facilities expansion and the acquisition of
complementary product lines. When, through such activities, we believe that
critical mass is attained in a particular industry segment, the related
companies are organized as a discrete business unit.

     We are currently exploring a broad range of alternatives in connection
with recapitalizing, refinancing and extending the cash payment obligations and
maturities of our indebtedness, which may include selling, financing,
recapitalizing, reclassifying, spinning-off or similar transactions involving
our subsidiaries and involving third party, Company or affiliate, investors or
purchasers. In structuring these transactions, we believe that some of our
subsidiaries may strategically and financially benefit from being partly or
wholly separated from us on a stand-alone, industry-focused basis. The timing
and our determination of whether to proceed with such recapitalization,
refinancing, extension or transactions will be subject to a number of
considerations, including market conditions, financing alternatives, tax
ramifications, acquisition and divestiture strategies and management philosophy
and resources. We are also constantly exploring, reviewing, discussing and
negotiating acquisition and divestiture opportunities, which may, from time to
time, result in understandings, letters of intent or agreements. There can be
no assurances as to the timing or our determination or ability to proceed with
or close such recapitalization, refinancing, extension, acquisitions,
divestitures or transactions. See "Risk Factors--Consequences of Subsidiary
Deconsolidation," "1997 Recapitalization and Repositioning Plan," "Certain
Transactions" and "Description of Capital Stock--Subsidiary Securities."


FINANCING CHANGE OF CONTROL OFFER--WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE
INDENTURE.

     Upon the occurrence of specific kinds of change of control events, we will
be required to offer to repurchase all outstanding series D senior notes.
However, it is possible that we will not have sufficient funds at the time of
the change of control to make the required repurchase of series D senior notes
or that restrictions in the Credit Agreement will not allow such repurchases.
In addition, certain important corporate events, such as a leveraged
recapitalization that would increase the level of our indebtedness, would not
constitute a "change of control" under the Indenture. See "Description of the
Senior Notes--Mandatory Offers to Purchase Senior Notes."

     Prepayment of the series D senior notes pursuant to a change of control
event would constitute a default under the Credit Agreement. In the event that
a change of control occurs, we will likely be required to refinance the
indebtedness outstanding under the Credit Agreement and the series D senior
notes. There can be no assurance that we would be able to refinance such
indebtedness or, if such refinancing were to occur, that such refinancing would
be on terms favorable to us. See "Description of the Senior Notes--Mandatory
Offers to Purchase Senior Notes."


                                       15
<PAGE>

     The change of control purchase feature of the series D senior notes may in
certain circumstances discourage or make more difficult our sale or takeover
and, thus, the removal of incumbent management.


DEPENDENCE ON MANAGEMENT--OUR SUCCESS IS SIGNIFICANTLY TIED TO THE CONTINUED
SERVICES OF CERTAIN OF OUR OFFICERS AND OTHER KEY PERSONNEL.

     Our success depends, in part, upon the continued services of Thomas H.
Quinn, our president and chief operating officer, and certain other key
personnel. Although incentives exist for these individuals to remain with us,
the loss of the services of any one of them could have a material adverse
effect on our business. We maintain a $5.0 million "key man" insurance policy
on Mr. Quinn under which we are the beneficiary. We are also dependent upon
John W. Jordan II, our chairman and chief executive officer and one of our
principal stockholders, and certain of his affiliates, for strategic planning
and advice, the loss of which could have a material adverse effect on our
business. See "Management."


PRIVATE OWNERSHIP--OUR STOCK IS LARGELY OWNED BY PRINCIPALS, PARTNERS,
OFFICERS, EMPLOYEES AND AFFILIATES OF THE JORDAN COMPANY, AND WE PARTICIPATE IN
AFFILIATE TRANSACTIONS WITH JORDAN-RELATED ENTITIES ON A REGULAR BASIS.

     The principals, partners, officers, employees and affiliates of The Jordan
Company and their respective family members (collectively, the "Jordan Group")
own substantially all of our common stock. Although our Articles of
Incorporation provide for cumulative voting of common stock in the election of
directors, these stockholders collectively have sufficient votes to elect all
of our directors and control our management policy and financing decisions. We
have paid and will continue to pay advisory fees to TJC Management Corporation,
an affiliate of ours and The Jordan Company, and to pay financial consulting
fees to TJC Management Corporation, including financial consulting fees in
connection with the Offering. The Jordan Company is not obligated to provide us
with any acquisition opportunities, and there may be conflicts of interest in
allocating various investment or acquisition opportunities among us, The Jordan
Company and the Jordan Group. Further, certain of our subsidiaries have entered
into a number of affiliate transactions with us and The Jordan Company,
including the TJC Management Consulting Agreement, the Subsidiary Advisory
Agreements, the Subsidiary Consulting Agreements, the JI Properties Services
Agreement and the Tax Sharing Agreement and certain other agreements and
transactions. See "Certain Transactions."


PREFERRED STOCK OWNERSHIP OF CERTAIN SUBSIDIARIES--THE OWNERS OF THE COMMON
STOCK OF SOME OF OUR SUBSIDIARIES MAY HAVE INTERESTS THAT CONFLICT WITH OUR
OWN.

     Our ownership in Telecommunication Products, Specialty Plastics and Motors
and Gears consists of ownership of junior preferred stock. The common stock of
Telecommunication Products, Specialty Plastics and Motors and Gears is owned by
members of the Jordan Group and other affiliates of the Company and management
of the respective companies. As a matter of corporate law, the directors and
majority stockholders of Telecommunication Products, Specialty Plastics and
Motors and Gears will owe fiduciary and other duties to the minority common
stockholders of Telecommunication Products, Specialty Plastics and Motors and
Gears, which may conflict with our interests.


ORIGINAL ISSUE DISCOUNT--THE SERIES D SENIOR NOTES WILL HAVE ORIGINAL ISSUE
DISCOUNT.

     The series C senior notes were issued with original issue discount for
United States federal income tax purposes and thus the series D senior notes
will also have original issued discount for United States federal income tax
purposes. Please read "Certain United States Federal Income Tax
Considerations--Tax Consequences of Issuance at a Discount." Holders of the
series D senior notes will be required to include amounts in gross income for
United States federal income tax purposes before they receive the cash payments
to which the income relates.

     If a bankruptcy case were commenced by or against us under the Bankruptcy
Code of 1978 (the "Bankruptcy Code") after the issuance of the series D senior
notes, the claim of a holder with respect


                                       16
<PAGE>

to the principal amount thereof may be limited to the initial offering price
plus that portion of the original issue discount that is not deemed to
constitute "unmatured interest" for purposes of the Bankruptcy Code. Any
original issue discount that was not amortized as of the date of any such
bankruptcy filing would constitute "unmatured interest."


FRAUDULENT CONVEYANCE MATTERS--FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER
SPECIFIC CIRCUMSTANCES, TO VOID CERTAIN OBLIGATIONS AND/OR SUBORDINATE CERTAIN
OBLIGATIONS, SUCH AS THE SERIES D SENIOR NOTES, TO OTHER INDEBTEDNESS.

     Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a court could void all or a portion of our
obligations under the series D senior notes or subordinate our obligations
under the series D senior notes to other existing, and future indebtedness if,
among other things, we, at the time we incurred the indebtedness evidenced by
the series D senior notes:

     o  received less than reasonably equivalent value or fair consideration for
        the incurrence of such indebtedness;

     o  were insolvent or rendered insolvent by reason of such incurrence;

     o  were engaged in a business or transaction for which our remaining assets
        constituted unreasonably small capital; or

     o  intended to incur, or believed that we would incur, debts beyond our
        ability to pay such debts as they mature.

     The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a debtor would be
considered insolvent if:

     o  the sum of its debts, including contingent liabilities, were greater
        than the fair saleable value of all of its assets, or

     o  if the present fair saleable value of its assets were less than the
        amount that would be required to pay its probable liability on its
        existing debts, including contingent liabilities, as they become
        absolute and mature, or

     o  it could not pay its debts as they become due.

     On the basis of historical financial information, recent operating history
and other factors, we believe that we will not be insolvent, will not have
unreasonably small capital for the business in which we are engaged and will
not have incurred debts beyond our ability to pay such debts as they mature.
There can be no assurance, however, as to what standard a court would apply in
making such determinations or that a court would agree with our conclusions in
this regard.

FAILURE BY US OR CERTAIN THIRD PARTIES TO BE YEAR 2000 COMPLIANT POSES CERTAIN
RISKS

     The inability of business processes to continue to function correctly
after the beginning of the Year 2000 could have serious adverse effects on
companies and entities throughout the world. Our business operations are also
dependent on the Year 2000 readiness of our customers and infrastructure
suppliers in areas such as utilities, communications, transportation and other
services.

     We commissioned a review of our subsidiaries to determine their Year 2000
readiness. The results of the review indicated that less than half of the
subsidiaries surveyed had a formal Year 2000 readiness plan or contingency plan
for mission critical inventory items and business partners who may have Year
2000 issues. As a result of the review, we developed a Year 2000 plan for us
and our subsidiaries. We cannot assure you that our Year 2000 plan will be
effective, that our estimates about the timing and cost of completing our plan
will be accurate or that our third party suppliers will timely resolve any or
all Year 2000 problems with their systems. Any failure of the third party
suppliers or us to timely resolve Year 2000 issues could result in a material
disruption of our business. Such a disruption could have a material adverse
effect on our business, financial condition and results of operations. Please
read "Management's Discussion and Analysis of Results of Operations and
Financial Condition--Year 2000."


                                       17
<PAGE>

WE FACE ENVIRONMENTAL REGULATION OF OUR REAL ESTATE AND OPERATIONS

     Our businesses are subject to a variety of federal, state and local
governmental regulations relating to the use, storage, discharge, emission and
disposal of hazardous substances and wastes, remediation of contamination
associated with releases of hazardous substances at our facilities and at
off-site disposal locations, and worker health and safety. These regulations
are complex, change frequently and have tended to become more stringent over
time.

     Based on our experience to date, we believe that the future cost of
compliance with existing environmental regulations and the future cost of
necessary investigation or remediation of contamination will not have a
material adverse effect on our business, financial conditions and results of
operations. Nevertheless, future events, such as discovery of unknown
contamination, compliance with more stringent regulations, or more vigorous
enforcement policies by regulatory agencies or stricter or different
interpretations of existing regulations could require us to make material
expenditures. Please read "Business--Environmental Regulations."


INTERNATIONAL OPERATIONS--THERE ARE NUMEROUS RISKS ASSOCIATED WITH CONDUCTING
OPERATIONS IN INTERNATIONAL MARKETS.

     Our subsidiaries manufacture and assemble products at numerous facilities,
some of which are outside the United States. Although we have not experienced
significant problems conducting operations in these areas, changes in local
economic or political conditions could impact our manufacturing, assembly and
distribution capabilities and have a material adverse effect on our business,
financial condition and results of operations. Additional risks inherent in our
international business activities generally include unexpected changes in
regulatory requirements, tariffs and other trade barriers, changes in local
economic or political conditions, longer accounts receivable payment cycles,
difficulties in managing international operations, potentially adverse tax
consequences, restrictions on repatriation of earnings and the burdens of
complying with a wide variety of foreign laws. In 1998, the Restricted Group
derived less than 1% of its pro forma net sales from customers outside the
United States; however, the Company as a whole derived approximately 12% of its
pro forma net sales from customers outside the United States in 1998. We intend
to continue to expand our operations outside the United States and to enter
additional international markets.

     Most of our international sales are currently denominated in foreign
currencies. Decreases in the value of foreign currencies relative to the U.S.
dollar could result in losses from foreign currency translations. We do not
currently hedge our foreign exchange exposure. With respect to our sales that
are U.S. dollar-denominated, decreases in the value of foreign currencies
relative to the U.S. dollar could make our products less price competitive.


COMPETITION--OUR SUBSIDIARIES OPERATE IN HIGHLY COMPETITIVE BUSINESS SECTORS
AND COMPETE WITH MANY LARGER AND BETTER CAPITALIZED COMPANIES.

     Generally, our subsidiaries are subject to competition from a substantial
number of national, international and regional competitors, many of which have
greater financial, manufacturing, engineering and other resources than our
subsidiaries. Many of these competitors can be expected to continue to improve
the design and performance of their products and to introduce new products with
competitive price and performance characteristics. Although we believe that our
subsidiaries have certain advantages over their competitors, realizing and
maintaining such advantages will require continued investment by our
subsidiaries in manufacturing, research and development, quality standards,
marketing and customer service and support. There can be no assurance that our
subsidiaries will have sufficient resources to continue to make such
investments or that they will be successful in maintaining such advantages.
Failure to make such investments or to maintain such advantages could have a
material adverse effect on our business, financial condition and results of
operations. Except for SILICORE polymer pipe products, certain cable television
components and fiber optic connector technology in Telecommunication Products,
our subsidiaries' products are generally not protected by any proprietary
rights such as patents.


                                       18
<PAGE>

PRICE FLUCTUATIONS OF RAW MATERIALS--AN INCREASE IN THE PRICE OF RAW MATERIALS
COULD ADVERSELY AFFECT OUR SUBSIDIARIES.


     Our subsidiaries purchase most of the raw materials for their products on
the open market, and our subsidiaries' sales may be affected by changes in the
market price of such raw materials. We do not generally engage in commodity
hedging transactions for raw materials. Although our subsidiaries have
generally been able to pass on increases in the price of raw materials to their
customers, there have been delays in the subsidiaries' ability to pass on such
increases in the past and there can be no assurance that they will be able to
do so in the future on a timely basis or at all. The results of operations for
our subsidiary, Dura-Line, have in the past been affected by fluctuations in
the price of its primary raw material, high density polyethylene. Other
subsidiaries have been affected by the fluctuations in the prices of copper and
paper. Additionally, significant increases in the price of our subsidiaries'
products due to increases in the cost of raw materials could have a negative
effect on demand for their respective products and a material adverse effect on
our business, financial condition and results of operations.


NO PRIOR MARKET FOR THE SERIES D SENIOR NOTES--YOU CANNOT BE SURE THAT AN
ACTIVE TRADING MARKET WILL DEVELOP FOR THE SERIES D SENIOR NOTES.


     The series D senior notes are being offered to holders of the series C
senior notes. The series C senior notes were issued to a small number of
institutional investors and the series C senior notes are eligible for trading
in the Private Offering, Resale and Trading through Automated Linkage (PORTAL)
Market, the National Association of Securities Dealers' screenbased, automated
market for trading of securities eligible for resale under Rule 144A. The
series D senior notes are new securities for which there currently is not
market. We have been informed by the Initial Purchasers that they intend to
make a market in the series D senior notes. However, the Initial Purchasers may
cease their market-making at any time. In addition, the liquidity of the
trading market in the series D senior notes, and the market price quoted for
the series D senior notes, may be adversely affected by changes in the overall
market for high yield securities and by changes in our financial performance or
prospects or in the prospects for companies in our industry generally. As a
result, you cannot be sure that an active trading market will develop for the
series D senior notes. Depending on prevailing interest rates, the market for
similar securities and other factors, including our financial condition, the
series D senior notes may trade at a discount from their principal amount.


                                       19
<PAGE>

                          FORWARD-LOOKING STATEMENTS

     We have made forward-looking statements in this prospectus.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Forward-looking statements are statements, other than statements of
historical facts, that address activities, events or developments that we
expect or anticipate will or may occur in the future, including such items as
business strategy and measures to implement strategy, competitive strengths,
goals, growth of our business and operations, plans and references to future
success.

     Forward-looking statements also include any other statements that include
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend"
and other similar expressions.

     Forward-looking statements are based on certain assumptions and analyses
we have made in light of our experience and our perception of historical
trends, current conditions, expected future developments and other factors we
believe are appropriate. Whether actual results and developments will conform
with our expectations and predictions is subject to a number of risks and
uncertainties, including, among others, the following:

     o  general economic and capital market conditions;

     o  the cyclical nature of our business;

     o  foreign currency movements;

     o  our access to credit and our customers' access to credit;

     o  political uncertainty and civil unrest in various areas of the world;

     o  pricing;

     o  product initiatives and other actions taken by competitors;

     o  disruptions in production capacity;

     o  excess inventory levels;

     o  the effect of changes in laws and regulations (including government
        subsidies and international trade regulations);

     o  changes in environmental laws; and

     o  employee relations.


     All of the forward-looking statements made in this prospectus are
qualified by these cautionary statements, and there can be no assurance that
the actual results or developments we have anticipated will be realized. Even
if the results and developments in our forward-looking statements are
substantially realized, there is no assurance that they will have the expected
consequences to or effects on us or our business or operations.


                                USE OF PROCEEDS


     We will not receive any cash proceeds from the issuance of the series D
senior notes. The net proceeds from the sale of the series C senior notes were
approximately $149.8 million. We used these net proceeds to

     (1) acquire Alma Products for approximately $84.1 million,

     (2) repay approximately $52.0 million in existing indebtedness and

     (3) pay approximately $13.7 million in fees and expenses incurred in
connection with the offering of the series C senior notes and the related
transactions.

                                       20
<PAGE>

                                CAPITALIZATION


     The following table sets forth the (1) historical consolidated
capitalization of the Company as of December 31, 1998 and (2) (a) the pro forma
consolidated capitalization of the Company as of December 31, 1998 and (b) the
pro forma consolidated capitalization of the Restricted Group as of December
31, 1998, both after giving effect to the offering of the series C senior notes
and certain other transactions as set forth in the Unaudited Pro Forma
Financial Information and the related notes. The table should be read in
conjunction with the historical consolidated financial statements of the
Company and related notes and the Unaudited Pro Forma Financial Information of
the Company and related notes included elsewhere in this prospectus. See "Use
of Proceeds," "Selected Financial Data," "Description of Certain Indebtedness"
and "Unaudited Pro Forma Financial Information."



<TABLE>
<CAPTION>
                                                                          AS OF DECEMBER 31, 1998
                                                                -------------------------------------------
                                                                                        PRO FORMA
                                                                               ----------------------------
                                                                                CONSOLIDATED     RESTRICTED
                                                                   ACTUAL          COMPANY         GROUP
                                                                ------------   --------------   -----------
                                                                           (Dollars in millions)
<S>                                                             <C>            <C>              <C>
Cash and cash equivalents ...................................    $    23.0       $    25.0       $    8.9
                                                                 =========       =========       ========
Current portion of long-term obligations ....................    $     6.1       $     6.1       $    1.8
Long-term obligations (less current portion):
 Credit Agreements (1):
  Credit Agreement ..........................................    $    50.0       $      --       $     --
  JTP Credit Agreement ......................................         73.0            73.0             --
  M&G Credit Agreement ......................................         41.0            41.0             --
 Debt Securities (2):
  Series C senior notes .....................................           --           149.8          149.8
  Series B senior notes .....................................        120.0           120.0          120.0
  Discount Debentures (3) ...................................        147.7           147.7          147.7
  Telecommunication Products senior notes ...................        188.7           188.7             --
  Telecommunication Products discount
   debentures (3) ...........................................        100.1           100.1             --
  Motors and Gears senior notes .............................        274.0           274.0             --
 Seller promissory notes (4) ................................         33.3            33.3           15.4
 Capital leases and other debt (5) ..........................         31.6            31.6            8.3
                                                                 ---------       ---------       --------
 Total long-term debt (less current portion) ................      1,059.4         1,159.2          441.2
Redeemable preferred stock (6):
 Telecommunication Products senior
  preferred stock ...........................................         23.9            23.9             --
 Motors and Gears senior preferred stock ....................          1.7             1.7             --
                                                                 ---------       ---------       --------
   Total redeemable senior preferred stock ..................         25.6            25.6             --
Total shareholders' equity (net capital deficiency) .........       (208.1)         (208.1)        (  8.6)
                                                                 ---------       ---------       --------
    Total capitalization ....................................    $   876.9       $   976.7       $  432.6
                                                                 =========       =========       ========
</TABLE>

- ----------
(1)   For additional information, see "Description of Certain
      Indebtedness--Credit Agreements."

(2)   For additional information, see "Description of Certain Indebtedness."

(3)   The amounts shown represent accreted value at the date shown.

(4)   For additional information, see "Description of Certain
      Indebtedness--Seller Promissory Notes."

(5)   For additional information, see "Description of Certain
      Indebtedness--Capital Leases."

(6)   For additional information, see "Description of Capital Stock--Subsidiary
      Securities."


                                       21
<PAGE>

                            SELECTED FINANCIAL DATA


     The following table presents summary historical financial data of the
Company as of and for the years ended December 31, 1994, 1995, 1996, 1997 and
1998. The historical financial data of the Company as of and for the years
ended December 31, 1994, 1995, 1996, 1997 and 1998 were derived from the
audited consolidated financial statements of the Company. The financial data
set forth below should be read in conjunction with the historical consolidated
financial statements of the Company and the related notes, "Selected Financial
Data," "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Unaudited Pro Forma Financial Information," all
appearing elsewhere in this prospectus.



<TABLE>
<CAPTION>
                                                                                   CONSOLIDATED
                                                        -------------------------------------------------------------------
                                                                             YEARS ENDED DECEMBER 31,
                                                        -------------------------------------------------------------------
                                                            1994          1995          1996          1997          1998
                                                        -----------   -----------   -----------   -----------   -----------
                                                                              (Dollars in thousands)
<S>                                                     <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA: (1)
Net sales ...........................................    $424,391      $ 507,311     $ 601,567     $ 707,112     $ 943,607
Cost of sales, excluding depreciation ...............     262,730        320,653       375,745       446,580       601,385
Gross profit, excluding depreciation ................     161,661        186,658       225,822       260,532       342,222
Selling, general and administrative
 expenses, excluding depreciation ...................      97,428        121,371       150,951       148,921       193,426
Depreciation and amortization .......................      19,099         21,684        30,438        35,321        45,047
Operating income ....................................      42,944         32,360        13,392        55,444        91,696
Interest expense ....................................      40,887         46,974        63,340        82,455       109,705
Interest (income) ...................................      (1,471)        (2,841)       (2,538)       (2,713)       (2,178)
(Loss) income before income taxes, minority interest,
 extraordinary items and equity in investee .........      27,689        (11,773)      (47,410)       (6,173)      (22,550)
(Loss) income before extraordinary items ............      23,741         (7,470)      (51,884)      (14,260)      (31,407)

OTHER FINANCIAL DATA: (1)
Adjusted operating income (2) .......................    $ 35,868      $  42,426     $  29,367     $  56,551     $  91,696
Capital expenditures ................................      12,112         15,276        17,395        14,179        21,477
Ratio of earnings to fixed
 charges (3) ........................................         1.6x            --            --            --            --
</TABLE>


<TABLE>
<CAPTION>
                                                                           CONSOLIDATED
                                             ------------------------------------------------------------------------
                                                                        AS OF DECEMBER 31,
                                             ------------------------------------------------------------------------
                                                 1994          1995           1996            1997           1998
                                             -----------   -----------   -------------   -------------   ------------
                                                                      (Dollars in thousands)
<S>                                          <C>           <C>           <C>             <C>             <C>
BALANCE SHEET DATA: (1)
Cash and cash equivalents ................    $  56,386     $  41,253     $   32,797      $   52,500      $   23,008
Working capital ..........................      123,395       115,387        123,479         176,508         189,065
Total assets .............................      398,474       532,384        681,885         930,231       1,043,888
Total debt ...............................      382,862       525,395        696,688         931,418       1,065,555
Preferred stock ..........................        1,875         1,875          1,875          21,835          25,649
Shareholders' equity (net capital 
  deficiency) ............................      (68,742)      (76,354)      (130,281)       (175,285)       (208,144)
</TABLE>

- ----------
(1)   We have acquired a diverse group of operating companies over the periods
      presented, which significantly affects the comparability of the
      information presented. Please read "Management's Discussion and Analysis
      of Results of Operations and Financial Condition." Results shown include
      both the Restricted Group and the Nonrestricted Group.

(2)   Adjusted operating income represents operating income excluding the
      results of Welcome Home, which is no longer consolidated with the
      Company.

(3)   On a historical basis, earnings were insufficient to cover fixed charges
      by $11.8 million, $47.4 million, $6.2 million, and $22.6 million for the
      years ended December 31, 1995, 1996, 1997 and 1998.


                                       22
<PAGE>

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION


GENERAL

     Jordan Industries was organized to acquire and operate a diverse group of
businesses on a decentralized basis, with a corporate staff providing strategic
direction and support. We comprise 30 businesses, which are divided into five
strategic business units: Consumer and Industrial Products, Specialty Printing
and Labeling, Specialty Plastics, Telecommunication Products and Motors and
Gears. We believe that our businesses are characterized by leading positions in
niche industries, high operating margins, strong management, minimal working
capital and capital expenditure requirements, and low sensitivity to
technological change and economic cycles. For the year ended December 31, 1998,
we generated combined pro forma net sales of $1,024.2 million.

     Our business strategy is to enhance the growth and profitability of each
business group, and to build upon the strengths of those groups through product
line and other strategic acquisitions. Key elements of this strategy have been
the acquisition and growth of related businesses, increased focus on
international markets, facilities expansion and the acquisition of
complementary product lines. When, through such activities, we believe that
critical mass is attained in a particular industry segment, the related
companies are organized as a discreet business group. For example, we acquired
Imperial in 1988 and made a series of complementary acquisitions, which
resulted in the formation of Motors and Gears, a leading domestic manufacturer
of electric motors, gears and motion control systems. Similarly, we acquired
Dura-Line in 1985, and expanded its presence in the telecommunications industry
through 11 complementary acquisitions. The organization of these companies as
Telecommunication Products created a leading global supplier of products and
equipment serving the telecommunications industry. We acquired Alma Products in
order to expand our presence in the automotive aftermarket industry.

     Through the implementation of this strategy, we have demonstrated
significant and consistent growth in net sales. We generated consolidated net
sales of $943.6 million for the year ended December 31, 1998 as compared to
$358.6 million for the year ended December 31, 1993, representing a compound
annual growth rate of 21.3%.

     Our subsidiaries are operated and managed on a decentralized basis. As a
result, our net sales and gross profit generally equal the sum of the financial
results generated by our subsidiaries. Our general and administrative expense
equals the administrative expense generated at each of our subsidiaries plus
corporate overhead. The purpose of the corporate administrative staff is to
provide strategic, financial and business support, which has enhanced the
ability of our subsidiaries to grow beyond their historical means.

     The results of each of our strategic business units are consolidated into
our financial results. Consumer and Industrial Products, Specialty Printing and
Labeling and Specialty Plastics, together with the parent company which
maintains no operations, comprise the Restricted Group. Telecommunication
Products and Motor and Gears comprise the Nonrestricted Group. The common stock
of Telecommunication Products, Motors and Gears and Specialty Plastics is owned
by stockholders and affiliates of Jordan Industries and management of the
respective companies. Our ownership in these subsidiaries is in the form of JTP
junior preferred stock, M&G junior preferred stock and JSP junior preferred
stock. See "Risk Factors--Consequences of Subsidiary Deconsolidation," "Certain
Transactions" and "Description of Capital Stock--Subsidiary Securities."


RESULTS OF OPERATIONS

     Summarized below are the historical net sales, operating income (loss) and
operating margin (deficit) for each of our business groups for the fiscal years
ended December 31, 1996, 1997 and 1998. This discussion should be read in
conjunction with the historical consolidated financial statements and the
related notes appearing elsewhere in this prospectus.


                                       23
<PAGE>


<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                              -----------------------------------------
                                                  1996        1997(2)          1998
                                              -----------   -----------   -------------
                                                       (Dollars in thousands)
<S>                                           <C>           <C>           <C>
NET SALES (1):
 Consumer and Industrial Products .........    $ 140,842     $155,593       $ 166,018
 Specialty Printing and Labeling ..........      109,587      119,346         120,160
 Specialty Plastics .......................       20,120       24,038          71,568
 Telecommunication Products ...............      131,592      257,010         310,028
 Motors and Gears .........................      117,571      148,669         275,833
 Welcome Home .............................       81,855        2,456              --
                                               ---------     --------       ---------
  Total ...................................    $ 601,567     $707,112       $ 943,607
                                               =========     ========       =========
OPERATING INCOME (LOSS) (1)(3):
 Consumer and Industrial Products .........    $  13,222     $ 16,012       $  17,105
 Specialty Printing and Labeling ..........        5,540        8,540           8,259
 Specialty Plastics .......................         (592)       2,490           4,654
 Telecommunication Products ...............       13,828       13,258          30,791
 Motors and Gears .........................       23,229       27,684          42,324
                                               ---------     --------       ---------
 Adjusted operating income ................       55,227       67,984         103,133
 Welcome Home .............................      (15,975)      (1,107)             --
                                               ---------     --------       ---------
  Total ...................................    $  39,252     $ 66,877       $ 103,133
                                               =========     ========       =========
 
OPERATING MARGIN (DEFICIT):
 Consumer and Industrial Products .........          9.4%        10.3%           10.3%
 Specialty Printing and Labeling ..........          5.1          7.2             6.9
 Specialty Plastics .......................         (2.9)        10.4             6.5
 Telecommunication Products ...............         10.5          5.2             9.9
 Motors and Gears .........................         19.8         18.6            15.3
 Welcome Home .............................        (19.5)       (45.1)             --
 Combined .................................          6.5          9.5            10.9
</TABLE>

- ----------
(1)   In 1998, Sate-Lite and Beemak were reclassified from Consumer and
      Industrial Products to Speciality Plastics. Prior period results were
      restated to reflect the reclassification in order to provide accurate
      comparisons between periods.

(2)   Incudes the results of Welcome Home for the period from January 1, 1997
      to January 21, 1997, the date of its Chapter 11 filing. See Note 3 to the
      Company's financial statements.

(3)   Before corporate overhead of $11,437 and $11,433, for the years ended
      December 31, 1998 and 1997, respectively. The Telecommunication Products
      operating income includes expense of $15,871 related to compensation
      agreements in 1997. The operating income for the year ended December 31,
      1996 is before corporate overhead of $17,500, the write-off of $4,488 in
      notes receivable resulting from the Cape Craftsmen acquisition and the
      charge of $3,872 for a compensation agreement. Telecommunication
      Products' operating income includes the AIM and Cambridge SARA expense of
      $3,411 for the year ended December 31, 1996.



YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Consolidated Operating Results. Net sales increased $236.5 or 33.5% and
operating income increased $36.3 million or 65.4%. The increase in sales was
primarily due to the 1998 acquisitions of Deflecto and Rolite Plastics in
Specialty Plastics, Advanced DC Motors in Motors and Gears, and K&S Sheet Metal
in Telecommunication Products. Sales also increased due to a full year of sales
from the following companies which were acquired in 1997: Arnon-Caine in
Specialty Plastics, Fir, Electrical Design and Control, and Motion Control in
Motors and Gears, Telephone Services, LoDan, and Engineered Endeavors in
Telecommunication Products, and Cho-Pat in Consumer and Industrial Products. In
addition, sales increased due to higher sales of advertising specialty products
and


                                       24
<PAGE>

calendars at Sales Promotion Associates, increased sales of membrane switches
at Valmark, higher sales of warning triangles and colorants at Sate-Lite,
higher sales of sub-fractional motors at Merkle-Korff, increased sales of
fractional/integral motors at Imperial, higher sales of books at Riverside, and
increased sales of wooden furniture at Cape Craftsmen. Partially offsetting
these increases were decreased sales of shielding devices at Valmark, lower
sales of folding boxes at Seaboard, decreased sales of plastic injection-molded
products at Beemak, lower sales of gears and gearboxes at Gear, and lower sales
of aircraft parts at Parsons. In addition, sales decreased due to the
divestiture in 1998 of Diversified in Telecommunication Products and the
divestitures in 1997 of Hudson and Paw Print in Consumer and Industrial
Products.

     Operating income increased primarily due to the 1998 acquisitions, a full
year of operations at the companies acquired in 1997, more favorable pricing at
Valmark, decreased corporate expenses in Specialty Printing and Labeling, a
reduction in stock appreciation rights as the Dura-Line stock appreciation
rights was expensed in 1997, and increased sales of higher gross margin product
at Cape Craftsmen. Partially offsetting these increases were decreased
operating income due to the addition of salespeople to promote the advertising
specialty segment at Sales Promotion Associates, increased operating expenses
related to the expansion of Sate-Lite manufacturing into China, higher
depreciation and amortization related to the 1998 and 1997 acquisitions, and
initial expenses incurred to combine the manufacturing and sales and marketing
functions of the Connector companies. In addition, the divestitures of
Diversified, Hudson, and Paw Print reduced operating income. Operating margin
increased 1.9%, from 7.8% in 1997 to 9.7% in 1998 due to the reasons mentioned
above.

     Interest expense increased $27.3 million or 33.1% due to our refinancing
in July 1997, the tack-on bond offering at Motors and Gears in December 1997,
and higher outstanding revolver balances in 1998 due to financing of the 1998
acquisitions.

     Consumer and Industrial Products. As of December 31, 1998, Consumer and
Industrial Products consisted of Dacco, Riverside, Parsons, Cape Craftsmen,
Cho-Pat and Dura-Line Retube.

     Net sales increased $10.4 million or 6.7% and operating income increased
$1.1 million or 6.8%. Net sales increased primarily due to increased sales of
rebuilt converters at Dacco, $4.2 million, higher sales of Bibles, books,
videos, music and gifts at Riverside, $0.5 million, $3.9 million, $0.9 million,
$0.9 million and $0.4 million, respectively, increased sales of wooden
furniture and other accessories at Cape Craftsmen, $9.7 million, higher sales
of orthopedic supports and other pain-reducing devices at Cho-Pat, $1.1
million, and increased sales of plastic pipe at Dura-Line Retube, $3.4 million.
Partially offsetting these increases were decreased sales of audio tapes at
Riverside, $0.5 million, lower sales of aircraft parts at Parsons, $1.9
million, and decreased sales at Hudson and Paw Print, $6.7 million and $5.5
million, respectively, due to the divestitures of those companies in May and
July 1997. Sales increased at Dacco due to additional market share and the
addition of eight retail stores in 1998, and sales increased at Cape Craftsmen
due to management's success at broadening Cape Craftsmen's customer base.
Cho-Pat, which was purchased in September 1997, contributed sales of $0.4
million in 1997 compared to sales of $1.5 million in 1998.

     Operating income increased due to higher operating income at Dacco,
Parsons, Cape Craftsmen, Cho-Pat, and Dura-Line Retube, $1.5 million, $0.3
million, $2.5 million, $0.2 million, and $0.3 million, respectively. Partially
offsetting these increases was decreased operating income at Hudson and Paw
Print, $2.2 million and $1.5 million, respectively, due to the divestitures of
those companies, as mentioned above. The increased operating income at Cape
Craftsmen was due to increased sales of higher gross margin product, primarily
wooden furniture, the increased operating income at Cho-Pat was due to the
acquisition of the company in September 1997, and decreased operating income at
Parsons was due to the lower absorption of fixed overhead due to lower sales of
aircraft parts. Operating margin remained consistent with 1997.

     Specialty Printing & Labeling. As of December 31, 1998, Specialty Printing
and Labeling consisted of Sales Promotion Associates, Valmark, Pamco, and
Seaboard.

     Net sales increased $0.8 million or 0.7% and operating income decreased
$0.3 million or 3.3%. Sales increased primarily due to higher sales of
advertising specialty products and calendars at Sales


                                       25
<PAGE>



Promotion Associates, $1.5 million and $0.2 million, respectively, increased
sales of graphic panel overlays and membrane switches at Valmark, $1.3 million,
and higher sales of labels at Pamco, $0.4 million. Partially offsetting these
increases were lower sales of school annuals at Sales Promotion Associates,
$0.2 million, decreased sales of labels and shielding devices at Valmark, $0.6
million and $1.0 million, respectively, and lower sales of folding boxes at
Seaboard, $0.8 million. The increased advertising specialty sales at Sales
Promotion Associates were due to management's focus on the higher growth
corporate program business, while decreased sales of shielding devices at
Valmark reflect a major customer's decision to reduce production of laptop
computers that require the shields.

     Operating income decreased due to lower operating income at Sales
Promotion Associates, Pamco, and Seaboard, $0.1 million, $0.3 million, and $0.7
million, respectively. Partially offsetting these decreases was increased
operating income at Valmark, $0.5 million, and decreased corporate expenses,
$0.3 million. The decreased operating income at Sales Promotion Associates was
due to the hiring of additional salespeople to focus on continued growth in the
corporate program advertising specialty segment, and the lower operating income
at Seaboard was due to pricing pressure in the packaging industry. The improved
operating income at Valmark is due to Valmark negotiating more favorable
pricing with customers, while the decreased corporate expenses are due to lower
bank fees as bank debt was repaid in 1997. Operating margin remained consistent
with 1997.

     Specialty Plastics. As of December 31, 1998, Specialty Plastics consisted
on Sate-Lite, Beemak, Deflecto and Rolite.

     Net sales increased $47.5 million of 197.7% and operating income increased
$2.2 million or 86.9%. Net sales increased primarily due to the acquisition of
Deflecto and Rolite in February 1998. Deflecto contributed sales in 1998 of
$45.2 million while Rolite contributed sales of $3.2 million. In addition,
sales of warning triangles and colorants increased at Sate-Lite, $0.2 million
and $0.3 million, respectively. Partially offsetting these increases were lower
sales of bike reflectors and custom molded products at Sate-Lite, $0.2 million
and $0.4 million, respectively, and decreased sales of molded and fabricated
product at Beemak, $0.6 million and $0.2 million, respectively.

     Operating income increased primarily due to the acquisition of Deflecto
and Rolite, as discussed above. These companies contributed operating income in
1998 of $5.3 million and $0.6 million, respectively. Partially offsetting these
increases was lower operating income at Sate-Lite and Beemak, $2.0 million and
$1.5 million, respectively. In addition, corporate overhead of $0.2 million was
incurred in 1998 related to the formation of Specialty Plastics. Operating
income decreased at Sate-Lite due to operating expenses incurred related to the
expansion of manufacturing operations into China and operating income at Beemak
decreased due to lower absorption of fixed operating expenses at a lower sales
level, as well as additional costs associated with Beemak's expansion into a
larger facility. Operating margin decreased 3.9%, from 10.4% in 1997 to 6.5% in
1998, due to the reasons mentioned above.

     Telecommunication Products. As of December 31, 1998, Telecommunication
Products consisted of Dura-Line, Electronic Connectors and Components,
Viewsonics, Bond Technologies, K & S Sheet Metal, Northern Technologies, LoDan,
Engineered Endeavors and Telephone Services. Due to the similarity of many of
the Telecommunication Products subsidiaries' product lines, management
evaluates, oversees and manages the companies based on three product group
segments: Infrastructure Products and Equipment which includes Dura-Line,
Viewsoncis, Northern Technologies and Engineered Endeavors; Electronic
Connectors and Components; and Custom Cable Assemblies and Specialty Wire and
Cable which includes Bond Technologies, K & S Sheet Metal, LoDan and Telephone
Services.

     Net sales increased $53.0 million or 20.6% and operating income increased
$17.5 million or 132.2%. The increase in sales was due to the 1998 acquisition
of K&S Sheet Metal and the 1997 acquisitions of Telephone Services, LoDan, and
Engineered Endeavors. These companies contributed net sales in 1998 of $12.0
million, $45.7 million, $28.8 million, and $17.3 million, respectively,
compared to net sales in 1997 of $4.4 million, $14.7 million, and $7.5 million
for Telephone Services,


                                       26
<PAGE>

LoDan, and Engineered Endeavors, respectively. Partially offsetting these
increases were decreased sales at Diversified Wire & Cable of $15.2 million due
to the divestiture of that company in July 1998. In addition, sales decreased
due to a slowdown of business at Bond Technologies and in the Connectors group.
 

     Operating income increased primarily due to a $15.9 million stock
appreciation rights expense incurred in April 1997 related to our acquisition
of Dura-Line in 1988. Excluding the effects of the stock appreciation rights
expense, operating income in 1998 increased $5.3 million or 18.2%. This
increase was due to the acquisition of K&S Sheet Metal in 1998 and Telephone
Services and LoDan in 1997, as mentioned above. These companies contributed
operating income in 1998 of $2.8 million, $7.5 million, and $3.1 million,
respectively, compared to operating income in 1997 of $0.1 million and $1.0
million for Telephone Services and LoDan, respectively. Partially offsetting
these increases was decreased operating income at Diversified Wire & Cable,
$0.8 million, due to the sale of that company in 1998. Operating income also
decreased in the Connectors group due to the initial costs incurred of
centralizing manufacturing, sales and marketing, and headquarters at Johnson
Components' facility in Minnesota. In addition, corporate expenses increased
due to a full year of overhead in 1998 compared to five months in 1997, as
Telecommunication Products was formed in August 1997.

     Operating margin increased 4.7%, from 5.2% in 1997 to 9.9.% in 1998,
primarily due to the reduction of stock appreciation rights expense in 1998.
Excluding stock appreciation rights expense, operating margin would have been
11.3% in 1997. The decrease in operating margin excluding stock appreciation
rights expense is due to the reasons mentioned above.

     Motors and Gears. As of December 31, 1998, Motors and Gears consisted of
Imperial, Gear, Merkle-Korff, Fir, Electrical Design and Control, Motion
Control, and Advanced DC Motors. Effective January 1997, Barber-Colman became a
fully integrated division of Merkle-Korff. Motors and Gears operates in three
separate business segments; sub-fractional motors, fractional/integral motors,
and controls. Motors and Gears entered the controls business segment through
the acquisitions of Electrical Design and Control and Motion Control during
1997.

     Net sales increased $127.2 million or 85.5% and operating income increased
$14.6 million or 52.9%. The increase in net sales was primarily due to the 1998
acquisition of Advanced DC Motors and the 1997 acquisitions of Fir, Electrical
Design and Control, and Motion Control. These companies contributed net sales
in 1998 of $27.2 million, $42.1 million, $10.3 million, and $51.3 million,
respectively, compared to net sales in 1997 of $14.8 million, $1.8 million, and
$1.2 million for Fir, Electrical Design and Control, and Motion Control,
respectively. Sales of sub-fractional motors increased 13.0% in 1998 due to
continued strength in the vending and appliance markets and sales of
fractional/integral motors increased 6.6% in 1998 (excluding acquisitions)
reflecting market share gains in the floor care market and stronger sales in
the elevator market. Partially offsetting these increases, were decreased sales
of gears and gearboxes, 8.4%, due to a weaker floor care market after stronger
than expected sales in 1997.

     Operating income increased primarily due to the increased sales discussed
above. Advanced DC Motors, Fir, and Motion Control contributed operating income
in 1998 of $5.2 million, $5.9 million, and $6.9 million, respectively, compared
to operating income in 1997 of $1.6 million and $0.1 million for Fir and Motion
Control, respectively. Partially offsetting these increases were additional
selling, general, and administrative expenses as well as higher depreciation
and amortization arising from the 1998 and 1997 acquisitions. Operating margin
decreased 3.3%, from 18.6% in 1997 to 15.3% in 1998, due to these additional
operating expenses.


YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

     Consolidated Operating Results. Net sales increased $105.5 million or
17.6%, and operating income increased $42.1 million or 314.0%. The increase was
primarily due to the 1997 acquisitions of Cho-Pat in Consumer and Industrial
Products; Arnon-Caine in Specialty Plastics; Northern Technologies, LoDan,
Engineered Endeavors and Telephone Services in Telecommunication Products; and
Fir, Electrical Design and Control and Motion Control in Motors and Gears.
Sales also increased


                                       27
<PAGE>


from the benefit of a full year of sales at Cape Craftsmen in Consumer and
Industrial Products; Seaboard in Specialty Printing and Labeling; Johnson
Components, Diversified Wire and Cable, Viewsonics, Vitelec and Bond
Technologies in Telecommunication Products; and Barber-Colman in Motors and
Gears. In addition, sales increased due to increased sales of titanium aircraft
parts at Parsons, higher sales of advertising specialty products at Sales
Promotion Associates, increased sales of cable conduit at Dura-Line, increased
sales of subfractional motors at Merkle-Korff and higher sales of planetary
gears at Gear. Partially offsetting these increases were lower sales of
shielding devices at Valmark, decreased sales of fractional/integral motors at
Imperial and Scott, and lower sales at Welcome Home due to its deconsolidation
from our financial statements.

     Operating income increased primarily due to the 1997 acquisitions, a full
year of operations at the companies acquired in 1996, higher gross profit at
Parsons, lower medical and commissions expenses at Sales Promotion Associates,
increased gross profit at Sate-Lite from sales of custom molded products, and
lower compensation expenses at Aim Electronics, as its stock appreciation
rights were expensed in 1996. In addition, operating income increased due to
the deconsolidation of Welcome Home. Partially offsetting these increases were
lower sales and slightly higher material prices at Dacco, decreased operating
income at Hudson due to the divestiture of that company in May 1997, decreased
gross profit at Pamco stemming from lower sales of custom labels, higher
operating expenses at Dura-Line stemming from the stock appreciation rights
expense, decreased gross profit at Fir and increased operating expenses
attributed to the Motors and Gears' acquisitions. Consolidated operating margin
increased 5.6%, from 2.2% in 1996 to 7.8% in 1997, due to the above factors.

     Interest expense increased $19.1 million or 30.2% primarily due to the
increase in long-term debt stemming from our refinancing in July 1997.

     Consumer and Industrial Products. As of December 31, 1997, Consumer and
Industrial Products consisted of Dacco, Riverside, Parsons, Cape Craftsmen,
Cho-Pat and Dura-Line Retube.

     Net sales increased $14.8 million or 10.5%. The increase in net sales was
partially due to the acquisitions of Cape Craftsmen in July 1996, Paw Print in
November 1996 and Cho-Pat in September 1997. These companies contributed net
sales of $12.8 million, $5.5 million and $0.4 million, respectively, in 1997
compared to net sales in 1996 of $1.3 million for Cape Craftsmen and $1.6
million for Paw Print. Further contributing to the rise in 1997 net sales were
increased sales of soft parts and scrap at Dacco, $0.6 million and $0.2
million, respectively, higher sales of Bibles, books, audio tapes, and music
products at Riverside, $0.9 million, $1.4 million, $1.0 million and $0.8
million respectively, increased sales of aircraft parts at Parsons, $7.6
million, and higher sales of plastic pipe at Dura-Line Retube, $0.2 million.
Partially offsetting these increases were decreased sales of rebuilt converters
at Dacco, $1.8 million, lower contract distribution sales at Riverside, $3.1
million, and lower sales at Hudson, $8.8 million, due to the sale of that
Company. The sales increases were primarily due to the increased focus on sales
of soft parts through an expanded line of retail stores at Dacco, the
resolution of computer system problems at Riverside which negatively impacted
the fourth quarter of 1996 and strong sales of aircraft parts to Boeing at
Parsons. The decrease in net sales of rebuilt converters at Dacco was primarily
due to good weather in the Northeastern United States, while the lower sales to
contract distribution customers at Riverside were due to less focus on the
lower margin contract distribution business and more focus on the higher margin
publishing and distribution business.

     Operating income increased $2.4 million or 13.7%. The increase in
operating income was partially due to the acquisitions of Cape Craftsmen and
Paw Print. These companies contributed $0.4 million and $1.6 million,
respectively, in 1997, compared to operating income in 1996 of ($0.2) million
for Cape Craftsmen. In addition, the increase was due to higher operating
income at: Riverside, $0.6 million, and Parsons, $2.8 million. These increases
were partially offset by decreased operating income at Dacco of $2.1 million
and Hudson of $1.1 million, due to the divestiture of Hudson. The increase in
operating income was primarily due to improved product mix at Riverside and
increased gross profit at Parsons due to higher sales of titanium hot formed
products. The offsetting decrease to operating income at Dacco was primarily
due to lower sales and slightly higher material prices. Operating margin
increased to 13.0% in 1997 from 12.7% in 1996, due to the reasons mentioned
above.


                                       28
<PAGE>

     Specialty Printing and Labeling. As of December 31, 1997, Specialty
Printing and Labeling consisted of Sales Promotion Associates, Valmark, Pamco
and Seaboard.

     Net sales increased $9.8 million or 8.9%. Sales increased due to higher
sales of advertising specialty products at Sales Promotion Associates, $2.2
million, increased sales of rollstock and membrane switches at Valmark, $1.0
million and $0.6 million, respectively, higher sales of labels at Pamco, $0.3
million, and increased sales of folding boxes at Seaboard, $7.3 million, due to
the acquisition of Seaboard in May 1996. Partially offsetting these increases
were decreased sales of calendars and school annuals at Sales Promotion
Associates, $0.1 million and $0.2 million, respectively, and lower sales of
shielding devices at Valmark, $1.3 million.

     Operating income increased $3.0 million or 41.7%. Operating income
increased due to higher operating income at Sales Promotion Associates, $0.6
million, increased operating income at Valmark, $0.1 million, and higher
operating income at Seaboard, $2.6 million. Partially offsetting these
increases was decreased operating income at Pamco, $0.3 million. The higher
operating income at Sales Promotion Associates was due to lower selling,
general and administrative costs, primarily medical insurance and commissions,
while the increase at Valmark was due to higher sales and lower operating
costs. The decrease in operating income at Pamco was attributed to lower gross
profit stemming from decreased sales of custom-made labels. Operating margin
increased 1.9%, from 6.5% in 1996 to 8.4% in 1997, primarily due to higher
sales and lower operating costs as discussed above.

     Specialty Plastics. As of December 31, 1997, Specialty Plastics consisted
of Sate-Lite and Beemak.

     Net sales increased $3.9 million or 19.5%. The increase in net sales was
partially due to the acquisition of Arnon-Caine by Beemak in January 1997.
Arnon-Caine contributed net sales of $3.9 million in 1997. Further contributing
to the increase in 1997 net sales were increased sales of bicycle reflectors
and custom molded products at Sate-Lite, $0.5 million and $0.2 million,
respectively. Partially offsetting these increases were decreased sales of
plastic injection molded products at Beemak, $0.7 million. The increase in
bicycle reflector sales at Sate-Lite was primarily due to the extension of
sales of bicycle reflectors into Asian markets.

     Operating income increased $3.1 million or 2,939.6%. The increase in
operating income was partially due to the acquisition of Arnon-Caine which
contributed operating income of $1.4 million in 1997. In addition, operating
income increased at Sate-Lite and Beemak (excluding Arnon-Caine), $1.1 million
and $0.6 million, respectively. The increase in operating income was primarily
due to higher gross profit at Sate-Lite stemming from increased sales of custom
molded products and decreased operating expenses at Beemak due to a focused
cost cutting program.

     Operating margin increased to 13.4% in 1997 from 0.5% in 1996 due to the
reasons mentioned above.

     Telecommunication Products. As of December 31, 1997, Telecommunication
Products consisted of Dura-Line, Aim Electronics, Cambridge, Johnson
Components, Diversified Wire and Cable, Viewsonics, Vitelec, Bond Technologies,
Northern Technologies, LoDan, Engineered Endeavors and Telephone Services. Due
to the similarity of many of the Telecommunication Products subsidiaries'
product lines, we evaluate, oversee and manage the companies based on three
product group segments: Infrastructure Products and Equipment which includes
Dura-Line, Viewsonics, Northern Technologies and Engineered Endeavors;
Electronic Connectors and Components which includes Aim Electronics, Cambridge,
Johnson Components and Vitelec; and Custom Cable Assemblies and Specialty Wire
and Cable which includes Bond Technologies, Diversified Wire and Cable, LoDan
and Telephone Services.

     Net sales increased $125.4 million or 95.3% and operating income increased
$4.9 million or 36.1%. The increase in net sales was primarily due to the
acquisitions of Johnson Components, Diversified Wire and Cable, Viewsonics,
Vitelec and Bond Technologies in 1996 and Northern, LoDan, Engineered Endeavors
and Telephone Services in 1997. These companies contributed net sales of $19.8
million, $31.3 million, $12.4 million, $5.4 million, $21.8 million, $23.3
million, $14.7 million,


                                       29
<PAGE>

$7.5 million and $4.4 million, respectively, in 1997 compared to net sales in
1996 of $16.9 million for Johnson Components, $13.9 million for Diversified
Wire and Cable, $5.1 million for Viewsonics, $2.4 million for Vitelec and $3.6
million for Bond Technologies. In addition, net sales increased $26.7 million
due to higher sales of infrastructure products and equipment, particularly
cable conduit. This increase was primarily due to higher international sales
resulting from the addition of new manufacturing facilities in Mexico and
China.

     Operating income increased primarily due to the acquisitions discussed
above. These companies contributed operating income in 1997 of $3.6 million,
$1.4 million, $3.7 million, $1.0 million, $2.7 million, $4.3 million, $1.1
million, $1.0 million and $0.1 million, respectively, compared to operating
income in 1996 of $2.9 million for Johnson Components, $0.7 million for
Diversified Wire and Cable, $0.5 million for Vitelec and $0.3 million for Bond
Technologies. In addition, operating income at Aim Electronics increased $4.1
million due to stock appreciation rights expense of $5.2 million in 1996.
Operating income at Aim Electronics, excluding stock appreciation rights
expense, decreased $1.1 million in 1997 primarily due to lower domestic sales
and gross profit. In addition, operating income at Dura-Line decreased $13.7
million due to stock appreciation rights expense of $15.9 million in 1997
related to the acquisition of Dura-Line in 1988. Operating income at Dura-Line,
excluding stock appreciation rights, increased $2.2 million in 1997 primarily
due to higher sales of cable conduit in Europe, particularly in the Czech
Republic.

     Operating margin decreased 3.2%, from 10.3% in 1996 to 7.1% in 1997.
Excluding the stock appreciation rights expenses, operating margins would have
decreased 0.9%, from 14.2% in 1996 to 13.3% in 1997. The decrease in operating
margin was primarily due to international market development costs in 1997 not
incurred in 1996 and lower operating margins at Aim Electronics.

     Motors and Gears. As of December 31, 1997, Motors and Gears consisted of
Imperial, Scott, Gear, Merkle-Korff, Fir, Electrical Design and Control and
Motion Control. Effective January 1997, Barber-Colman became a fully integrated
division of Merkle-Korff. Motors and Gears operates in two separate business
segments: electric motors ("motors") and electronic motion control systems
("controls"). Motors and Gears entered the controls business segment through
the acquisitions of Electrical Design and Control and Motion Control during
1997.

     Net sales increased $31.1 million or 26.5% and operating income increased
$4.9 million or 18.7%. Sales increased partially due to the acquisitions of Fir
in June 1997, Electrical Design and Control in October 1997 and Motion Control
in December 1997. These companies contributed $14.8 million, $1.8 million and
$1.2 million, respectively, in 1997, or 57.2% of the total increase in net
sales. In addition, net sales increased due to an 18.3% increase in sales of
subfractional motors at Merkle-Korff and a 24.0% increase in sales of planetary
gears at Gear. Partially offsetting these increases was a 6.6% decrease in
sales of fractional/integral motors at Imperial and Scott The sales increases
were primarily due to strong sales of subfractional motors in the vending and
appliance markets and strong sales of planetary gears in the floor care market.
The decrease in net sales of fractional/integral motors was primarily due to
strong sales in the first half of 1996 resulting from the unusually high
backlog of orders accumulated in the fourth quarter of 1995.

     The increase in operating income was primarily due to the increase in
sales of subfractional motors and planetary gears as discussed above. Partially
offsetting these increases were slightly decreased gross margins in the
fractional/integral motors group due to Fir operating at slightly lower gross
margins than the rest of the group, and increased operating expenses attributed
to the acquisitions of Barber-Colman in 1996, and Fir, Electrical Design and
Control and Motion Control in 1997. Operating margin decreased 1.4% from 22.3%
in 1996 to 20.9% in 1997, due to the decreased gross margins and increased
operating expenses discussed above.

     Welcome Home. Net sales decreased $79.4 million or 97.0%, while the
operating loss increased $14.9 million or 93.1%. These fluctuations are the
direct result of Welcome Home's Chapter 11 bankruptcy filing on January 21,
1997. As a result of the filing, we no longer have the ability to control the
operations and financial affairs of Welcome Home. Accordingly, the results of
operations


                                       30
<PAGE>

of Welcome Home from January 21, 1997 to December 31, 1997, are not included in
the consolidated results of the Company. Since January 21, 1997, we have
accounted for our investment in Welcome Home under the equity method of
accounting. Please read Note 3 to the Company's Financial Statements.


LIQUIDITY AND CAPITAL RESOURCES

     We had approximately $189.1 million in working capital at December 31,
1998, compared to $176.5 million at the end of 1997, representing an increase
of $12.6 million or 7.1%. This increase was due to increased net trade
receivables, higher inventory, and other current assets. The increase in
working capital can also be attributed to lower accrued expenses and a lower
current portion of long term debt. Partially offsetting these increases in
working capital were increased accounts payable balances.

     We have acquired businesses through leveraged buyouts and, as a result,
have significant debt in relation to total capitalization. See "Business." Most
of this acquisition debt was initially financed through the issuance of bonds
which were subsequently refinanced in 1997. See Note 5 to the Consolidated
Financial Statements.

     In connection with each acquisition of a subsidiary, the subsidiary enters
into intercompany notes, and intercompany management and tax sharing
agreements, which permit each subsidiary, including the majority-owned
subsidiaries, substantial flexibility in moving funds from each subsidiary to
us.

     We expect continued growth in net sales and operating income in 1999.
Capital spending levels in 1999 are anticipated to be consistent with 1998
levels and operating margins and operating cash flow are expected to be
favorably impacted by ongoing cost reduction programs, improved efficiencies
and sales growth. We believe that our cash on hand and anticipated funds from
operations will be sufficient to cover our working capital, capital
expenditures, debt service requirements and other fixed charges obligations for
at least the next 12 months.

     None of the subsidiaries require significant amounts of capital spending
to sustain their current operations or to achieve projected growth.

     Net cash provided by operating activities for the year ended December 31,
1998 was $29.4 million compared to $17.5 million provided by operating
activities during 1997. The increase is primarily attributed to increased
operating income resulting from the Company's recent acquisitions and is
partially offset by increases in working capital requirements. Net cash
provided by operating activities for the year ended December 31, 1997 was $17.5
million, compared to $23.1 million provided by operating activities during
1996. The decrease was attributed to increases in accounts receivable and
inventories due to revenue growth and was partially offset by increases in
accounts payable and accrued expenses.

     Net cash used in investing activities for the year ended December 31, 1998
was $140.5 million compared to $180.6 million used in investing activities
during 1997. The decrease is due primarily to a reduction in both the number of
acquisitions and the aggregate purchase price of these acquisitions in 1998.
Partially offsetting these decreases are higher capital expenditures in 1998 as
well as a new investment in an affiliate. Net cash used in investing activities
for the year ended December 31, 1997 was $180.6 million, compared to $167.2
million used in investing activities during 1996. Increased acquisition of
subsidiaries was partially offset by net proceeds from sale of subsidiaries,
redemption of investment in affiliate, decreased capital expenditures, and
decreased notes receivable from affiliate.

     Net cash provided by financing activities for the year ended December 31,
1998 was $79.1 million compared to $184.7 million provided by financing
activities during 1997. The decrease is primarily due to debt issuances from
the Company, Motors and Gears Inc., and Jordan Telecommunication Products, Inc.
and the Jordan Telecommunication Products, Inc. preferred stock issuance which
were completed in 1997. Net cash provided by financing activities for the year
ended December 31, 1997 was $184.7 million, compared to $136.0 million provided
by financing activities during 1996. Proceeds from the Jordan Industries,
Motors and Gears and Telecommunication Products debt issuances and


                                       31
<PAGE>

the Telecommunication Products preferred stock issuance were partially offset
by the increase in repayment of long-term debt and lower borrowings under
revolving credit facilities.

     On March 22, 1999, we issued $155.0 million of series C senior notes due
2007. The net proceeds of $149.8 million from the note issuance were used to
purchase Alma Products for approximately $84.1 million, pay approximately $13.7
million in fees and expenses and repay approximately $52.0 million of
outstanding borrowings on our revolving line of credit. At March 31, 1999, we
had approximataely $65.0 million of available borrowings under our revolving
line of credit agreement.


IMPACT OF INFLATION

     General inflation has had only a minor effect on our operations and our
internal and external sources for liquidity and working capital, as we have
been able to increase prices to reflect cost increases, and expect to be able
to do so in the future.


YEAR 2000

     We have assembled an internal project team that is addressing the issue of
computer programs and embedded computer chips being unable to distinguish
between the year 1900 and the Year 2000. The project team has developed and is
in the process of implementing a three-step plan intended to result in our
operations continuing with minimal interruption through the Year 2000.

     For purposes of this discussion, "Year 2000 compatible" means that the
computer hardware, software or device in question will function in 2000 without
modification or adjustment or will function in 2000 with a one-time manual
adjustment. However, there can be no assurance that any such Year 2000
compatible hardware, software or device will function properly when interacting
with any Year 2000 noncompatible hardware, software or device.

     Process Overview. The first step in our plan is to inventory all of our
computer hardware and software and all of our devices having embedded computer
technology. The Year 2000 project team is focusing on five areas: (i) business
systems; (ii) production (e.g., desktop computers); (iii) financial management
(e.g., banking software, postage equipment and time clocks); (iv) facilities
(e.g., heating and air conditioning systems, elevators, telephones, and fire
and security systems); and (v) significant vendors and customers.

     In the second step, the project team is determining whether each
inventoried system, device, customer or vendor is Year 2000 compatible. In the
third step, those that are not compatible will be upgraded or replaced.

     Business Systems. Our subsidiaries are in the process of assessing whether
their business systems are Year 2000 compatible and what remediation may be
required to make them compatible where they are not.

     Production, Financial Management and Facilities. Once they have been
inventoried, each device and each piece of hardware and non-business system
software (a "Non-System Item") that can be tested by us is being tested for
Year 2000 compatibility. In the case of any Non-System Items that cannot be
tested, the vendor is being asked for a certification regarding compatibility.
Each Non-System Item that is noncompatible will be either upgraded or replaced.
Approximately 20% of the Non-System Items that have been inventoried to date
have been tested or certified by the vendor. We expect substantially all of our
Non-System Items will have been tested or certified and upgraded or replaced by
the end of the third quarter of 1999.

     Customers and Vendors. The project team is contacting each of our
significant customers and vendors and requesting that they apprise us of the
status of their Year 2000 compliance programs. We have targeted the end of the
first quarter of 1999 as the date for receiving substantially all customer and
vendor responses, although minimal responses have been received to date. There
can be no assurance as to when this process will be completed.

     Costs. The total cost associated with us becoming Year 2000 compatible is
not expected to be material to our financial position. We have a preliminary
estimate of the cost to upgrade or replace


                                       32
<PAGE>

Non-System Items, and we expect to develop a more definitive estimate once the
inventory has been completed and the testing/certification process is further
advanced.


     Risks. The failure to correct a material Year 2000 problem could result in
an interruption in or failure of certain normal business activities or
operations. Such failures could have a material adverse effect on us. Due to
the general uncertainty inherent in the Year 2000 issue, resulting in part from
the uncertainty of Year 2000 compliance by our significant customers and
vendors, we are unable to determine at this time whether the consequences of
Year 2000 noncompliance will have a material adverse effect on us, although our
Year 2000 project is expected to significantly reduce that uncertainty.


     We believe that the areas that present the greatest risk to us are (i)
disruption of our business due to Year 2000 incompatibility of one of our
critical business systems and (ii) disruption of the business of certain of our
significant customers and venders due to their noncompliance. At this time, we
believe that all of our business systems will be Year 2000 compatible before
the end of 1999. Whether disruption of a customer's or vendor's business due to
noncompliance will have a material adverse effect on us will depend on several
factors including the nature and duration of the disruption, the significance
of the customer or vendor and, in the case of vendors, the availability of
alternate sources for the vendor's products.


     We are in the process of developing a contingency plan to address material
Year 2000 noncompliance issues and expect to have the plan completed before the
end of 1999.


                                       33
<PAGE>

                                   BUSINESS

     Jordan Industries was organized to acquire and operate a diverse group of
businesses on a decentralized basis, with a corporate staff providing strategic
direction and support. We comprise 30 businesses which are divided into five
strategic business units:

     o  Consumer and Industrial Products;
     o  Specialty Printing and Labeling;
     o  Specialty Plastics;
     o  Telecommunication Products; and
     o  Motors and Gears.

We believe that our businesses are characterized by leading positions in niche
industries, high operating margins, strong management, minimal working capital
and capital expenditure requirements and low sensitivity to technological
change and economic cycles.

     Our business strategy is to enhance the growth and profitability of each
business unit and to build upon the strengths of those units through product
line and other strategic acquisitions. Key elements of this strategy have been
the acquisition and growth of related businesses, increased focus on
international markets, facilities expansion and the acquisition of
complementary product lines. Consistent with this strategy, we purchased Alma
Products on March 22, 1999. As a result, we significantly increased our
presence in the automotive aftermarket industry.

     Through the implementation of this strategy, we have demonstrated
significant and consistent growth in net sales. We have generated combined pro
forma net sales of $1,024.2 million for the year ended December 31, 1998 as
compared to historical net sales of $358.6 million for the year ended December
31, 1993, representing a pro forma compound annual growth rate of 23.4%.


                                       34
<PAGE>

     The following chart depicts the operating subsidiaries which comprise our
five strategic business units, together with the pro forma net sales for each
of the five groups for the year ended December 31, 1998. Pro forma net sales,
as set forth below, give effect to the Alma Products acquisition and certain
other transactions described in the Unaudited Pro Forma Financial Information
and the related notes. The boxes in bold represent the Restricted Group.

                                                       [DIAGRAM]

<TABLE>
                                                JORDAN INDUSTRIES, INC.
                                                -----------------------

                            ------------------------------------------------------------
                                                  RESTRICTED
                                                    GROUP                CONSOLIDATED
                                                    -----                ------------
                                                       (DOLLARS IN MILLIONS)
                            NET SALES              $431.9                  $1,024.2
                            ------------------------------------------------------------
                                                          |
           -----------------------------------------------------------------------------------------------
          |                      |                        |                       |                       | 
- ----------------------  ----------------------  ----------------------  ----------------------  ----------------------
<S>                     <C>                     <C>                     <C>                     <C>
  Consumer and                                        Specialty           Telecommunication           Motors and      
   Industrial           Specialty Printing             Plastics                Products                 Gears         
    Products              and Labeling                                                                                
                                                - Beemak                - Dura-Line             - Merkle-Korff        
- - Dacco                 - Sales Promotion         Plastics              - Viewsonics            - Imperial            
- - Alma Products           Associates            - Sate-Lite             - Northern                Electric            
- - Riverside Book        - Valmark Industries      Manufacturing           Technologies          - Gear                
  and Bible             - Pamco Printed         - Deflecto              - Engineered              Research            
- - Parsons                 Tape and Label        - Rolite Plastics         Endeavors             - Fir Elettro-        
  Precision             - Seaboard                                      - Electronic              meccanica           
  Products                Folding Box                                     Connectors and        - Advanced DC                       
- - Cape Craftsmen                                                          Components              Motors              
- - Cho-Pat                                                               - Bond Technologies     - Motion              
                                                                        - K&S Sheet Metal         Control             
                                                                        - LoDan                   Engineering         
                                                                        - Telephone             - Electrical Design   
                                                                          Services, Inc.          and Control         
                                                                                                                      
$234.7 million of       $120.2 million of       $77.0 million of        $296.1 million of       $296.2 million of
Net Sales               Net Sales               Net Sales               Net Sales               Net Sales              
- ----------------------  ----------------------  ----------------------  ----------------------  ----------------------
</TABLE>

                                       35
<PAGE>

CONSUMER AND INDUSTRIAL PRODUCTS

     Consumer and Industrial Products serves several product segments. It is
the leading supplier of remanufactured torque converters to the automotive
aftermarket industry. With the purchase of Alma Products, we expect to
significantly expand our presence in this industry. Consumer and Industrial
Products also (1) publishes and markets Bibles, religious books and audio
materials, (2) manufactures hot-formed titanium parts for the aerospace and
other industries and (3) manufactures and imports gift items. The companies
that are part of Consumer and Industrial Products have provided their customers
with products and services for an average of over 40 years. For the year ended
December 31, 1998, Consumer and Industrial Products generated combined pro
forma net sales of $234.7 million. Each of the Consumer and Industrial Products
subsidiaries is discussed below.

     Dacco, Incorporated. Dacco is a producer of remanufactured torque
converters, as well as transmission sub-systems and other related products used
by transmission repair shops. Dacco was founded in 1965 and acquired by Jordan
Industries in 1988. Dacco's net sales for the year ended December 31, 1998 were
$65.4 million.

     Approximately 75% of Dacco's products are classified as "hard" products,
which primarily consist of torque converters and hydraulic pumps that have been
rebuilt or remanufactured by Dacco. The torque converter, which replaces a
clutch in an automatic transmission, transfers power from the engine to the
drive shaft. The hydraulic pump supplies oil to all the systems in the
transmission.

     Dacco's primary supply of used torque converters comes from its customers.
As a part of each sale, Dacco recovers the used torque converter which is being
replaced with its remanufactured converter. Dacco also purchases used torque
converters from automobile salvage companies. With the acquisition of Alma
Products, Dacco will have access to a substantial amount of used torque
converters that Alma Products is not able to use. Dacco purchases other hard
parts, such as clutch plates and fly wheels, from outside suppliers.

     Approximately 25% of Dacco's products are classified as "soft" products,
such as sealing rings, bushings, washers, filter kits and rubber components.
Dacco purchases approximately 11,000 soft products from a number of vendors,
which Dacco resells in a broad variety of packages, configurations and kits.

     Dacco's customers are automotive transmission parts distributors and
transmission repair shops and mechanics. Dacco has 50 independent sales
representatives who accounted for approximately 57% of its 1998 net sales.
These sales representatives sell nationwide to independent warehouse
distributors and transmission repair shops. Dacco also owns and operates 35
distribution centers which sell directly to transmission shops. Dacco
distribution centers average 4,000 square feet, cover a 50 to 100-mile selling
radius and sell approximately 41% hard products and 59% soft products. No
single customer accounted for more than 2% of Dacco's net sales in 1998.

     The domestic market for Dacco's hard products is fragmented and its
competitors primarily consist of a number of small regional and local
rebuilders. Dacco believes that it competes effectively against these
rebuilders by offering a broader product line, quality products, and lower
prices, all of which are made possible by its size and economies of operation.
However, the market for soft products is highly competitive and several of the
competitors such as TranStar Industries and Aftermarket Technology Corporation
are larger than Dacco. Dacco competes in the soft products market on the basis
of its low prices due to volume buying, its growing distribution network and
its ability to offer one-step procurement of a broad variety of both hard and
soft products.

     Alma Products Company. Founded in 1944, Alma Products uses a combination
of remanufacturing and new production to produce torque converters,
approximately 48% of 1998 sales, air conditioning compressors, approximately
34% of 1998 sales, and clutch and disc assemblies, approximately 18% of 1998
sales, for major automotive and equipment OEMs such as Ford, Chrysler, GM, John
Deere, Caterpillar, and Case, as well as numerous other direct aftermarket
customers. Jordan Industries acquired Alma Products on March 22, 1999. For the
year ended December 31, 1998, Alma Products had pro forma net sales of $73.6
million.


                                       36
<PAGE>

     Alma Products manufactures its products to customer specifications, and
its engineering department works closely with the customer's engineers to
ensure that specifications are met. Torque converters are remanufactured and
sold to major automotive OEMs such as Ford and Chrysler, typically for warranty
replacement. Alma Products does not sell torque converters in the independent
aftermarket, which is the primary market for Dacco's torque converters. Air
conditioning compressors are both remanufactured and produced new for the
automotive aftermarket. Alma Products' compressors are sold to the service arms
of major automotive manufacturers, such as Ford, Chrysler, GM, John Deere, and
Caterpillar. Alma Products supplies the majority of the compressors purchased
by these customers in the aftermarket. Clutch and disc assemblies are both
remanufactured and produced new and are sold primarily to repackagers who then
resell the products to automotive parts distributors. Alma Products has
long-term contracts with several customers, and has developed strong
relationships with all of its major customers. Alma Products was selected by
Ford to remanufacture, distribute, and fully merchandise Ford's first two Ford
Quality Renewal programs for torque converters and clutch and disc assemblies.
The use of Alma Products' remanufactured Ford Quality Renewal products in new
vehicle warranty repair is indicative of Alma Products' engineering,
manufacturing, and quality expertise. Approximately 47% of Alma Products' 1998
sales were to Ford and approximately 17% were to Chrysler.

     Alma Products' market is somewhat captive in that any supplier selling to
the major automotive and equipment OEMs must adhere to the same quality
standards with which Alma Products complies. Alma Products' primary competitors
in the torque converter market are Dynamic and Aftermarket Technologies, while
Four Seasons is the primary competitor in the air conditioning compressor
market. Alma Products competes based on quality, price, and customer service.

     We expect that our acquisition of Alma Products will build on our presence
in the automotive aftermarket industry. Further, through the combination of
Alma Products and Dacco, we believe that we can achieve operating synergies
through:

     o  Decreasing cost of sales at Dacco by using torque converter cores
        previously discarded by Alma Products, thereby reducing Dacco's need to
        purchase these cores in the scrap market.

     o  Increasing sales at Dacco by providing access to the large inventory of
        Alma Products torque converter cores, since Dacco currently loses
        significant sales due to inadequate supplies of available cores in the
        scrap market.

     o  Increasing sales of Alma Products' air conditioning compressor products
        and clutch and disc assemblies through Dacco's nationwide retail store
        network.

     Riverside Book and Bible. Riverside is a publisher of Bibles and a
distributor of Bibles, religious books and music recordings. Riverside was
founded in 1943 and acquired by Jordan Industries in 1988. Approximately 75% of
Riverside's business consists of products published by other companies.
Riverside sells world-wide to more than 12,000 wholesale, religious and trade
book store customers, using an in-house telemarketing system, four independent
sales representative groups and printed sales media. In addition, Riverside
sells a small percentage of its products through direct mail and to retail
customers. No single customer accounted for more than 5% of Riverside's net
sales in 1998. For the year ended December 31, 1998, Riverside had net sales of
$58.6 million.

     Riverside also provides Bible indexing, warehousing, inventory and
shipping services for domestic book publishers and music producers. Riverside
competes with larger firms, including the Zondervan Corporation, The Thomas
Nelson Company and Ingram Book Company (which owns Spring Arbor). Competition
is based on price, product selection and customer service.

     Parsons Precision Products. Parsons is a diversified supplier of hot
formed titanium parts, precision machined parts and fabricated components for
the U.S. aerospace industry. Parsons was founded in 1959 and acquired by Jordan
Industries in 1988. Approximately 70% of Parsons' 1998 net sales were to The
Boeing Company. Parsons employs precision machining, welding/fabrication and
sheet metal forming processes to manufacture its products at its facilities in
Parsons, Kansas. Parsons continues to invest in its titanium hot forming
operation, which permits it to participate in the aerospace market for
precision titanium components. Parsons' net sales for the year ended December
31, 1998 were $13.1 million.


                                       37
<PAGE>

     Parsons uses metals, including stainless steel, aluminum and titanium, to
fabricate its products. These materials are either supplied by Parsons'
customers or obtained from a number of outside sources.

     Parsons sells its products directly to aerospace and military customers,
relying on longstanding associations and its reputation for high quality
products and service. Although the titanium hot forming market is not very
competitive, Parsons is striving to lower its costs to enhance its competitive
advantage.

     Cape Craftsmen. Founded in 1966 and purchased by Jordan Industries in
1996, Cape Craftsmen is a manufacturer and importer of gifts, wooden furniture,
framed art and other accessories. Cape Craftsmen manufactures products in North
Carolina and imports from Mexico and the Far East. Cape Craftsmen sells its
products through one in-house salesperson and 40 independent sales
representatives. Approximately 64% of Cape Craftsmen's 1998 net sales were to
Welcome Home, an affiliated entity. Cape Craftsmen competes in a highly
fragmented industry and has therefore found it most effective to compete on the
basis of price with most wood manufacturers and importers. Cape Craftsmen also
strives to deliver better quality and service than its competitors. Cape
Craftsmen's net sales for the year ended December 31, 1998 were $22.5 million.

     Cho-Pat. Acquired by Jordan Industries in 1997, Cho-Pat is a leading
designer and manufacturer of orthopedic supports and preventative and pain
reducing medical devices. For the year ended December 31, 1998, Cho-Pat had net
sales of $1.5 million.

     Cho-Pat produces approximately nine different products for the reduction
of pain from injuries and the prevention of injuries resulting from the overuse
of the major joints. Cho-Pat's largest selling product is the patented Cho-Pat
knee strap, designed to reduce the pain from patellar tendinitis in the knee.
Cho-Pat manufactures all of its products in-house. Cho-Pat sells its products
to professional, college, and high school athletic trainers, medical products
distributors, and independent retail drug and sporting goods stores.


SPECIALTY PRINTING AND LABELING

     Specialty Printing and Labeling manufactures and markets (1) promotional
and specialty advertising products for corporate buyers, (2) labels, tapes and
printed graphic panel overlays for electronics and other manufacturing
companies and (3) printed folding cartons and boxes and other shipping
materials.

     The companies that are part of Specialty Printing and Labeling have
provided their customers with products and services for an average of over 40
years. For the year ended December 31, 1998, Specialty Printing and Labeling
generated net sales of $120.2 million. Each of the Specialty Printing and
Labeling subsidiaries is discussed below.

     Sales Promotion Associates. Jordan Industries' former subsidiaries, The
Thos. D. Murphy Co., which was founded in 1889, and Shaw-Barton, Inc., which
was founded in 1940, merged to form Jordan Industries/Sales Promotion
Associates in March 1989. That company was renamed Sales Promotion Associates,
Inc. in August 1995. Sales Promotion Associates is a producer and distributor
of calendars and is a distributor of corporate recognition, promotion and
specialty advertising products for corporate buyers.

     Sales Promotion Associates' net sales for the year ended December 31, 1998
were $62.2 million. For 1998, approximately 60% of its net sales were derived
from distributing a broad variety of corporate recognition products, promotion
and specialty advertising products. These products include apparel, watches,
crystal, luggage, writing instruments, glassware, caps, cases, labels and other
items that are printed and identified with a particular corporate logo and/or
corporate advertising campaign. Approximately 30% of Sales Promotion
Associates' net sales for 1998 were derived from the sale of a broad variety of
calendars, including hanging, desktop and pocket calendars that are used
internally


                                       38
<PAGE>

by corporate customers and distributed by them to their clients and customers.
Sales Promotion Associates distributes high-quality artistic calendars and also
manufactures and distributes softcover school yearbooks for kindergarten
through eighth grade.

     Sales Promotion Associates assembles and finishes calendars that are
printed both in-house as well as by a number of outside printers. Facilities
for in-house manufacturing include a composing room, a camera room, a calendar
finishing department and a full press room. Print stock, binding material,
packaging and other materials are supplied by a number of independent
companies. Specialty advertising products are purchased from more than 2,000
suppliers.

     Sales Promotion Associates sells its calendars and specialty advertising
products through an 850-person sales force, most of whom are independent
contractors. We believe that Sales Promotion Associates has one of the largest
domestic sales forces in the industry. With this large sales force and a broad
range of calendars and corporate recognition products available, we believe
that Sales Promotion Associates is a strong competitor in its market. This
market is very fragmented and most of the competition comes from smaller
producers and distributors.

     Valmark Industries. Valmark, which was founded in 1976 and purchased by
Jordan Industries in 1994, is a specialty printer and manufacturer of pressure
sensitive label products for the electronics OEM market. Valmark's products
include adhesive-backed labels, graphic panel overlays, multi-color membrane
switches and radio frequency interference shielding devices. In 1998,
approximately 33% of Valmark's net sales were derived from the sale of graphic
panel overlays and membrane switches, approximately 64% were from labels and
approximately 3% were from shielding devices. Valmark's net sales for the year
ended December 31, 1998 were $17.2 million.

     The specialty screen products sold in the electronics industry encounter
limited foreign competition due to the high level of communication and short
time frame usually required to produce orders. Currently, the majority of
Valmark's customer base of approximately 1,200 is located in the Northern
California area.

     Valmark sells to four primary markets: (1) personal computers, (2) general
electronics, (3) turn-key services and (4) medical instrumentation. Sales to
the hospital and telecommunication industries have grown the most over recent
years due to Valmark's membrane switch and graphic panel overlay capabilities.

     Valmark is able to provide OEMs with a broader range of products than many
of its competitors. Valmark's markets are very competitive in terms of price,
and accordingly we believe that Valmark's advantage over its competitors is
derived from its diverse product line and excellent quality ratings.

     Pamco Printed Tape and Label. Pamco, which was founded in 1953 and
purchased by Jordan Industries in 1994, is a manufacturer and distributor of a
wide variety of printed tapes and labels. Pamco offers a range of products from
simple one and two-color labels, such as basic bar codes and address labels, to
seven-color, varnish-finished labels for products such as video games and food
packaging. All of Pamco's products are made to customer specifications, and
approximately 90% of all sales were manufactured in-house during 1998. The
remaining 10% of sales are purchased printed products, including business cards
and stationery. Pamco's net sales for the year ended December 31, 1998 were
$16.5 million.

     Pamco's products are marketed by a team of 18 sales representatives who
focus on procuring new accounts. Existing accounts are serviced by nine
customer service representatives and five internal salespeople. Pamco's
customers represent several different industries with the five largest
customers accounting for approximately 20% of net sales for 1998.

     Pamco competes in a highly fragmented industry. Pamco emphasizes its
24-hour turnaround and its ability to accommodate rush orders that other
printers cannot handle. Pamco's ability to deliver a quality product with quick
turnaround is its key competitive advantage.

     Seaboard Folding Box. Seaboard, which was founded in 1954 and purchased by
Jordan Industries in 1996, is a manufacturer of printed folding cartons and
boxes, insert packaging and blister pack cards. Seaboard's net sales for the
year ended December 31, 1998 were $24.3 million.


                                       39
<PAGE>

     Seaboard sells directly to a broad customer base, located primarily east
of the Mississippi River, operating in a variety of industries including
hardware, personal hygiene, toys, automotive supplies, food and drugs.
Seaboard's top 10 customers accounted for approximately 37% of its net sales
for 1998.

     Seaboard has exhibited consistent sales growth and high profit margins and
has gained a reputation for exceeding industry standards, primarily due to its
superior operating capabilities. Seaboard has historically been highly
successful in buying and profitably integrating smaller businesses.

     Seaboard's markets are very competitive in terms of price, and accordingly
we believe that Seaboard's advantage over its competitors is derived from its
high quality products and excellent service.


SPECIALTY PLASTICS

     Specialty Plastics serves a broad range of wholesale and retail markets
within the highly-fragmented specialty plastics industry. The group designs,
manufactures and sells (1) "take-one" point of purchase brochure, folder and
application display holders, (2) modular storage systems ("Tilt-Bins (Trade
Mark) "), (3) plastic injection-molded hardware and office supply products, (4)
extruded vinyl chairmats, (5) safety reflectors for bicycle and commercial
truck manufacturers and (6) colorants to the thermoplastics industry. The
companies that are part of Specialty Plastics have provided their customers
with products and services for an average of over 35 years. For the year ended
December 31, 1998, the Specialty Plastics subsidiaries generated combined pro
forma net sales of $77.0 million. Each of the Specialty Plastics subsidiaries
is discussed below.

     Beemak Plastics. Beemak, which was founded in 1951 and acquired by Jordan
Industries in July 1989, is an integrated manufacturer of specialty "take-one"
point-of-purchase brochure, folder and application display holders, and modular
storage systems ("Tilt-Bins (Trade Mark) ") for storage and display of small
items such as fasteners and bolts. Beemak added modular storage systems to its
product line though the 1997 acquisition of Arnon-Caine, Inc. Beemak sells its
proprietary holders and displays, which accounted for approximately 66% of
Beemak's business in 1998, to approximately 21,000 customers around the world.
It sells its modular storage systems, which accounted for approximately 34% of
Beemak's business in 1998, to wholesale home centers and hardware stores. In
addition, Beemak produces a small amount of custom injection-molded plastic
parts for customers on a contract manufacturing basis. Beemak's net sales for
the year ended December 31, 1998 were $9.4 million.

     Beemak's products are both injection-molded and custom fabricated.
Beemak's molds are made by outside suppliers. The manufacturing process
consists primarily of the injection molding of polystyrene plastic and the
fabrication of plastic sheets. Beemak also provides silk screening of decals
and logos onto the final product.

     Beemak sells its products through a direct sales force, independent
representatives, an extensive on-going advertising campaign and by reputation.
Beemak sells to distributors, major companies, and competitors which resell the
product under a different name. Beemak has been successful in providing
excellent service on orders of all sizes, especially small orders. Beemak's
average order size was approximately $450 for display holders and $1,000 for
modular storage systems in 1998.

     The display holder industry is very fragmented, consisting of a few other
known holder and display firms and regionally-based sheet fabrication shops.
Beemak has benefitted from the growth in "direct" advertising budgets at major
companies. Significant advertising dollars are spent each year on direct-mail
campaigns, point-of-purchase displays and other forms of non-media advertising.
Beemak's modular storage systems compete in the retail storage bin/hardware
store market. Its main competitor in that market is Quantum Storage Systems.

     Sate-Lite Manufacturing. Sate-Lite manufactures safety reflectors for
bicycle and commercial truck manufacturers, as well as plastic parts for
bicycle manufacturers and colorants for the thermoplastics industry. Sate-Lite
was founded in 1968 and acquired by Jordan Industries in 1988.


                                       40
<PAGE>

Bicycle reflectors and plastic bicycle parts accounted for approximately 40% of
Sate-Lite's net sales in 1998. Sales of triangular flares and specialty
reflectors and lenses to commercial truck customers accounted for approximately
36% of net sales in 1998. The remaining 24% of Sate-Lite's 1998 net sales were
derived primarily from the sale of colorants to the thermoplastics industry.
Sate-Lite's net sales for the year ended December 31, 1998 were $13.8 million.

     Sate-Lite's bicycle products are sold directly to a number of OEMs. The
three largest OEM customers for bicycle products are the Huffy Corporation,
Roadmaster and Tandem (China), which together accounted for approximately 17%
of Sate-Lite's net sales in 1998. The triangular flares and other truck
reflector products are also sold to a broad range of OEM customers. Colorants
are sold primarily to mid-western custom molded plastic parts manufacturers. In
1998, Sate-Lite's ten largest customers accounted for approximately 44% of net
sales.

     Sate-Lite's products are marketed on a nationwide basis by its management.
Sales to foreign customers are handled directly by management and by
independent trading companies on a commission basis. Sate-Lite's export net
sales accounted for approximately 17% of its total 1998 net sales. Export sales
were principally to China and Canada. The principal raw materials used in
manufacturing Sate-Lite's products are plastic resins, adhesives, metal
fasteners and color pigments. Sate-Lite obtains these materials from several
independent suppliers. In the fourth quarter of 1998, Sate-Lite opened a
facility in China. Sate-Lite will be selling to Tandem, Giant, China Bike and
other Chinese bicycle manufacturers who have recently been increasing their
share of bicycles sold in the domestic market.

     The markets for bicycle parts and thermoplastic colorants are highly
competitive. Sate-Lite competes in these markets by offering innovative
products and by relying on its established reputation for producing
high-quality plastic components and colorants. Sate-Lite's principal
competitors in the reflector market consist of foreign manufacturers. Sate-Lite
competes with regional companies in the colorants market.

     Deflecto Corporation. Founded in 1960 and acquired by Jordan Industries in
1998, Deflecto designs, manufactures and markets plastic injection-molded
products for mass merchandisers, major retailers and large wholesalers.
Deflecto sells its products in three product categories: hardware products,
office supply products and houseware products. Hardware products, which
comprised approximately 56% of Deflecto's net sales in 1998, include heating
and cooling air deflectors, clothes dryer vents and ducts, kitchen vents and
ducts, sheet metal pipes and elbows, exhaust fittings and other
widely-recognized products. Office supply products, many of which have patents
and trademarks, represented approximately 36% of pro forma net sales in 1998
and include such items as wall pockets, literature displays, file and chart
holders, business card holders and other top-branded office supply products.
The remaining sales were primarily from houseware products such as bath towel
holders, spice racks, paper towel holders and other such items. Deflecto's pro
forma sales for the year ended December 31, 1998 were $50.6 million.

     Deflecto manufactures approximately 90% of its products in-house, with the
remainder outsourced to other injection molders. Deflecto is able to
efficiently manage the mix between manufactured and outsourced product by
relying on its ability to accurately project pricing, cost and capacity
constraints. This strategy enables Deflecto to grow without being constrained
by capacity issues.

     Deflecto sells its products through an in-house salaried sales force and
the use of independent sales representatives. Deflecto has the critical mass to
command strong positions and significant shelf space with the major mass
merchandisers and retailers. In the hardware products line, Deflecto sells to
major national retailers such as Ace Hardware, Wal-Mart and Home Depot, as well
as to heating, ventilating and air conditioning ("HVAC") and appliance parts
wholesalers. Deflecto sells its office supply products line to major office
supply retailers such as Office Depot, Office Max and Staples, as well as
national wholesalers, such as United Wholesalers and S.P. Richards. Houseware
products are sold primarily to smaller customers, although Deflecto does sell
to Wal-Mart, K-Mart and other retail chains. Deflecto has established strong
relationships with its customers and is known for delivering high quality,
well-packaged products in a timely manner.


                                       41
<PAGE>

     Competition in the hardware, office supplies and housewares products
businesses is increasing due to the consolidation of companies serving the
market. The increased competition has prevented price increases and has forced
manufacturers to improve production efficiency, product quality and
distribution capabilities. We believe that Deflecto's mix of manufactured and
outsourced product, and its management of this process, allows it to maintain
high production efficiency, keeping costs down and product quality high.

     Rolite Plastics. Founded in 1978 and acquired by Jordan Industries in
1998, Rolite manufactures and sells extruded vinyl chairmats for the office
products industry. During 1998, Rolite sold its products to plastics
distributors, aproximately 33%, foreign-based office products companies,
approximately 29%, office products dealers, approximately 25%, and office
superstores, approximately 13%. Rolite produces three types of standard-size
chairmats, as well as custom-size chairmats. Standard-size chairmats, which
comprised approximately 92% of 1998 net sales, consist of: (1) regular, which
is Rolite's largest seller, (2) anti-static, which reduces static electricity
and is used by computer operators, and (3) glass clear, which is nearly
transparent. Rolite's emphasis on technology helps to ensure excellent product
quality, and all of Rolite's products are backed by a lifetime warranty against
breakage. Rolite's pro forma net sales for the year ended December 31, 1998
were $3.2 million.

     Rolite produces its products with a small staff of personnel. Each shift
consists of an extruder, a mixer who compounds the raw materials, and two or
three finishers who rout chairmats to their finished shape and pack them for
shipment.

     Rolite's products are sold through nine independent manufacturers'
representatives who sell to over 600 dealers and six regional wholesalers.
Merchandising chairmats is difficult given their bulky composition. To address
this problem, Rolite developed a freestanding merchandise display and a counter
top display that make the chairmats more accessible to customers while
consuming a small amount of retail space. These displays are sold to dealers,
who can then recoup the cost via discounts on future chairmat purchases. In
addition to the independent sales representative network, Rolite's products
will be sold as a separate product line through Deflecto.

     Rolite is one of four manufacturers of vinyl chairmats in the United
States and one of only seven worldwide. The estimated $80 million domestic
market is dominated by Rubbermaid and Tenex; however, Rolite believes that its
superior product quality and customer service, coupled with a lack of loyalty
in the marketplace among dealers, will enable it to gain market share. Rolite
has also been successful internationally, with over one-third of sales going to
customers outside of the United States. The superior quality of Rolite's
products compared with those of foreign manufacturers, coupled with Rolite's
price-competitiveness and customer service, represents an opportunity to
continue strong international growth.


TELECOMMUNICATION PRODUCTS

     Telecommunication Products is a leading supplier of infrastructure
products and equipment (approximately 50% of 1998 sales), custom cable
assemblies and accessories (approximately 35% of 1998 sales) and electronic
connectors and components (approximately 15% of 1998 sales) to the
telecommunications industry. It has provided its customers with products and
services for an average of over 20 years. For the year ended December 31, 1998,
Telecommunication Products generated combined pro forma net sales of $296.1
million. Each of the Telecommunication Products subsidiaries is discussed
below.


 Infrastructure Products and Equipment

     Dura-Line. Dura-Line is a manufacturer and supplier of "Innerduct" pipe
through which fiber optic cable is installed and housed. Dura-Line sells this
product to major telecommunications companies throughout the world. Dura-Line
was founded in 1971, and acquired by Jordan Industries in 1985.

     Almost all of Dura-Line's 1998 net sales were from sales of its Innerduct
product. Dura-Line sells Innerduct to major telecommunications companies such
as SPT Telecom, GTE, Bell South and Pacific


                                       42
<PAGE>

Telesis, each of which accounted for less than 12% of Dura-Line's net sales in
1998. Innerduct is marketed worldwide by Dura-Line's management, 10
manufacturing representatives and 40 in-house sales representatives. Dura-Line
negotiates long-term contracts with major telecommunications companies for its
Innerduct product line. Dura-Line's net sales for the year ended December 31,
1998 were $91.5 million.

     Dura-Line's products are manufactured through the plastic extrusion
process. Dura-Line procures raw plastic for extrusion from a number of
independent suppliers. In March 1989, Dura-Line opened a new manufacturing
facility in the United Kingdom to manufacture products for sale to British
Telecom and other foreign customers. Approximately 44% of Dura-Line's 1998 net
sales were foreign sales. In late 1990, Dura-Line purchased a facility in Reno,
Nevada. This facility opened in early 1991 and has increased Dura-Line's annual
capacity by approximately 50%. In 1993, Dura-Line entered into joint venture
agreements in the Czech Republic and Israel to service Eastern Europe and the
Middle East more effectively. In early and late 1995, Dura-Line opened
wholly-owned subsidiaries in Mexico and China to manufacture and supply high
density polyethylene plastic conduit systems to Central and South American
markets as well as China and other Asian markets. In August 1996, Dura-Line
incorporated a subsidiary in India under a joint venture agreement in which
Dura-Line has the controlling interest. The subsidiary manufactures and
supplies high density polyethylene plastic conduit systems to India and
neighboring countries. Dura-Line opened a facility in Pryor, Oklahoma in 1998
and foreign facilities in Malaysia and Spain in 1997. The Pryor, Oklahoma
facility was opened to supply high density polyethylene plastic conduit systems
in support of Dura-Line's contracts as part of Level 3 Communications, Inc.'s
nationwide buildout of its telecommunications infrastructure, as well as to
increase general domestic capacity. The facilities in Malaysia and Spain were
opened to manufacture and supply high density polyethylene plastic conduit
systems in those markets.

     The cable conduit market is highly competitive. Dura-Line faces
competition from a wide range of companies including national, international
and regional suppliers of cable conduit. Competition within the industry is
based primarily on quality, price, production capacity, field support,
technical capabilities, service and reputation.

     Viewsonics. Viewsonics was founded in 1974 and purchased by Jordan
Industries in 1996. Viewsonics designs, manufactures and markets branded cable
television, electronic network components, and electronic security components
mainly for the "drop" or home connection portion of the cable television
infrastructure. Viewsonics develops, warehouses and sells its products out of
its Florida facility. Viewsonics sources 80% of its products from China, 50% of
which are manufactured in Viewsonics' Shanghai facility, and the remaining 50%
are manufactured by subcontractors. Viewsonics has also developed manufacturing
capabilities in St. Petersburg, Russia. This overseas procurement has allowed
Viewsonics to lower production costs and it has also positioned Viewsonics to
exploit the overseas cable television component markets as they develop.

     Viewsonics sold approximately 50% of its products in 1998 to multisystem
operations including companies such as Time/Warner, Cencast, Continental
Cablevision and TCI. Viewsonics also sells to a network of distributors, six of
whom account for the majority of the other 50% of 1998 net sales. For the year
ended December 31, 1998, Viewsonics generated net sales of $14.2 million.
Competition in the industry is focused on quality service, engineering support
and price.

     Northern Technologies. Northern Technologies was founded in 1985 and was
purchased by Telecommunication Products in 1996. Northern Technologies designs,
manufactures and markets power conditioning and power protection equipment
primarily for telecommunication applications, such as cellular and personal
communication system networks. Northern Technologies also offers a variety of
products including voltage regulators, uninterruptible power suppliers,
isolation transformers, and grounding devices to protect power-critical
applications.

     Northern Technologies sells directly through its own highly technical
in-house sales force of 23 employees, who are supported by seven application
engineers and four product development engineers. Northern Technologies sells
to such large telecommunication OEMs as Sprint, Motorola,


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<PAGE>

Lucent Technologies, Ericsson and Nokia. Northern's largest customer, Sprint,
accounted for approximately 50% of 1998 net sales, while its 10 largest
customers accounted for approximately 76%. Northern Technologies' net sales for
the year ended December 31, 1998 were $26.4 million.

     Engineered Endeavors. Founded in 1987 and acquired by Telecommunication
Products in 1997, Engineered Endeavors designs complete cellular and personal
communication system towers, and manufactures monopole antenna mount platforms,
and other towers and accessories. Engineered Endeavors also distributes
ancillary products used in the construction of cellular and personal
communication system towers. Approximately 51% of its 1998 net sales were from
personal communication system towers, while approximately 24% were from
cellular towers. The remaining 25% were from packagers and others. Engineered
Endeavors' net sales for the year ended December 31, 1998 were $18.4 million.

     Engineered Endeavors' manufacturing facility links a computer aided design
drawing system directly to the production lines where the antenna support,
monopole and ancillary equipment is manufactured. Once manufactured, the
products are shipped to a New Orleans subcontractor where they are galvanized,
packaged and shipped directly to the telecommunication tower construction site.
 

     Engineered Endeavors uses a direct sales force consisting of one lead
salesman, six computer aided design engineers and five structural engineers. It
also uses one manufacturers' representative. Engineered Endeavors' largest
customer is Nextel Communications, Inc., which comprised approximately 16% of
revenues in 1998. Other top customers include Airtouch Cellular, Bell South
PCS, Southwestern Bell, Sprint, AT&T Wireless and Alltell. Its sales are
primarily to the domestic market.

     The market for communications towers is expected to continue to grow for
the next several years, and Engineered Endeavors provides Telecommunication
Products with an entrance into that market. It also complements
Telecommunication Products' Northern Technologies subsidiary, which specializes
in surge protection devices for cellular and personal communication systems.
Engineered Endeavors' competition is primarily regional, with Valmont, Fort
Worth Tower, Summit Manufacturing, Piro and UNR Roan being its main
competitors. Engineered Endeavors will also benefit from Telecommunication
Products' strong international presence.

     Electronic Connectors and Components. Effective December 1998,
Telecommunication Products reorganized the operations of its connectors
subsidiaries, Johnson Components, Aim Electronics, Cambridge Products and
Vitelec Electronics. The reorganization consisted of centralizing
manufacturing, sales and marketing, and headquarters operations at Johnson's
Waseca, Minnesota facility. Aim Electronics' Sunrise Florida facility and
Vitelec's Bordon, England facility are still used for assembly, distribution
and sales operations. Electric Connectors and Components still sells and
markets its products under the Johnson Components, Aim Electronics, Cambridge
Products and Vitelec Electronics tradenames.

     Electronic Connectors and Components is a leading designer, developer,
manufacturer and distributor of standard, sub-miniature and micro-miniature
radio frequency and other connectors and related products for use in cable
assemblies, mobile communications, voice/data communications, testing
instruments, computers, security equipment and other applications. Electronic
Connectors and Components has a reputation for delivering high-quality products
with a high degree of service and expedited delivery. Of its 1998 net sales,
radio frequency connectors/adaptors represented approximately 59%, voice/data
products accounted for approximately 15%, cable assemblies comprised
approximately 9%, and electronic hardware and other electronic components were
responsible for approximately 17%. Electronic Connectors and Components' net
sales for the year ended December 31, 1998 were $43.0 million.

     Electronic Connectors and Components manufactures, assembles and
distributes its products in a timely and cost-effective manner worldwide. Its
manufactured radio frequency connectors (including sub-miniature and
micro-miniature) are made 98% from brass bar and rod stock. The brass bar is
machined to specification and then plated. Manufactured hardware and other
electronic components


                                       44
<PAGE>

are produced from various metals as well as injection-molded parts, and often
require manual assembly. Electronic Connectors and Components' efficient,
fully-integrated manufacturing system and warehouse operations allow 26% of its
manufactured product orders to be shipped within 24 hours. The industry's
average lead time is six to eight weeks. The assembly operations import
materials from Taiwan, Hong Kong and the United Kingdom. The operations are
fully automated and have excellent order processing and warehouse systems.
These systems allow Electronic Connectors and Components to ship assembled
product within 24 hours of receipt of an order 90% of the time, on average.

     Electronic Connectors and Components' products are sold to OEMs
(approximately 18% of 1998 sales) and general line distributors (approximately
82% of 1998 sales). Its OEM customers include Hewlett-Packard, Nokia, Motorola,
Ericsson and Tandy. Electronic Connectors and Components sells its products
through a direct sales force of 11 and a coordinated effort with over 100
manufacturing representatives belonging to over 20 independent representative
organizations. Sales to North America and South America are coordinated out of
Electronic Connectors and Components' headquarters, while European sales are
managed by a United Kingdom-based sales manager. International sales comprised
approximately 23% of 1998 revenues. Electronic Connectors and Components'
customer base is large and diverse, and no one customer accounted for more than
5% of sales. The top 10 customers accounted for approximately 18% of sales in
1998.

     The electronic connector and components industry is highly fragmented with
over 1,500 manufacturers competing worldwide. Electronic Connectors and
Components competes with different suppliers in each of the various categories
of the overall market, as well as with large national suppliers such as
Amphenol, M-A/COM (a division of AMP), Radiall and Pan-Pacific. Electronic
Connectors and Components focuses on the customer niche that values high
quality products with a quick turnaround time and superior customer service.


 Cable Assemblies

     Bond Technologies. In 1996 Jordan Industries purchased 80% of the
outstanding common stock of Bond Technologies, which was founded in 1988. Bond
Technologies designs, engineers and manufacturers high-quality custom
electronic cables and connector sub-assemblies for computer-related and
telecommunications customers. All of Bond Technologies' products are
custom-made. Bond Technologies has three fully integrated, independent
manufacturing facilities. Bond Technologies has rapidly become an industry
leader due to its commitment to high quality and its competitively priced
products offered in conjunction with outstanding and dependable service.

     Bond Technologies has established two sales agencies in Northern and
Southern California. Bond Technologies is continuing to actively solicit new
strategic customers located throughout the United States via an independent
sales representative network. Bond Technologies' single-largest customer
accounted for approximately 31% of its net sales in 1998, while its top five
customers accounted for approximately 53%. Bond Technologies' net sales for the
year ended December 31, 1998 were $13.9 million.

     K&S Sheet Metal. In January 1998, Bond Technologies purchased K&S Sheet
Metal, a manufacturer of precision metal electronic enclosures and box-build
assemblies for electronic OEMs. Box-build assemblies consist of precision metal
enclosures outfitted with power supplies, fans, cable assemblies and other
electronic and mechanical components. All of K&S Sheet Metal's products are
customized according to customer specifications. Approximately 96% of K&S Sheet
Metal's 1998 revenues are derived from the sale of precision metal enclosures,
while the remaining 4% are derived from box-build assemblies. K&S Sheet Metal's
pro forma net sales for the year ended December 31, 1998 were $12.0 million.

     K&S Sheet Metal has carved a niche as a supplier of short to medium run
complicated boxes where it can demand a premium price for good product quality
and service. It sells directly to many of the largest data storage, computer
and telecommunication product OEMs in Southern California. Its top five
customers are Kingston Technologies Corporation, MGE -UPS Systems, Gateway
2000, OLEC and Cherokee International.


                                       45
<PAGE>

     LoDan. LoDan, founded in 1967 and acquired by Jordan Industries in May
1997, designs, engineers, manufactures, and distributes high-quality, custom
electronic cable assemblies, sub-assemblies, and electro-mechanical assemblies
to OEMs in the data and telecommunications segments of the electronics
industry. LoDan manufactures approximately 49% of the products it sells
in-house at an ISO-9001 certified manufacturing facility, with the remaining
51% being distributed products. LoDan's net sales were $28.8 million for the
year ended December 31, 1998.

     The acquisition of LoDan has bolstered Telecommunication Products'
presence in the custom cable assembly business. LoDan's customer base, which
complements Bond Technologies', was built based on providing innovative
solutions to customers' needs. LoDan's largest customer, Cisco Systems (43% of
1998 revenues), is the world's pre-eminent networking company and provides
LoDan with access to international markets. LoDan's products are sold through
internal and external sales forces.

     Bond Technologies and LoDan supply the custom cable assembly market and
encounter competition from a broad range of companies, several of which are
much larger and have greater financial resources than either Bond Technologies
or LoDan. In addition to other independent manufacturers of cable assemblies,
offshore manufacturers compete in this market, primarily on the basis of price.
Competition within the industry is based on quality, production, capacity,
breadth of product line, engineering support capability, price, local support
capability, systems support and financial strength.

     Telephone Services, Inc. In 1997, Telecommunication Products acquired 70%
of the outstanding common stock of Telephone Services, which was founded in
1984. Telephone Services designs, manufacturers and distributes custom cable
assemblies (approximately 82% of 1998 net sales), terminal strips and terminal
blocks (approximately 8% of 1998 net sales), and other connecting devices
(approximately 10% of 1998 net sales), primarily to the telephone operating
companies and major telecommunications OEMs. Telephone Services has established
a reputation for high-quality products, on-time delivery and dependable
service. For the year ended December 31, 1998, its net sales were $45.7
million.

     Telephone Services designs its products on an engineer-to-engineer basis
for specific telecommunication applications. Its manufacturing equipment
consists of numerous crimping and stripping devices used to manufacture cable
assemblies and test equipment for quality control purposes. Its manufacturing
process is extremely efficient, enabling it to finish prototype and
pre-production assemblies within one week. After pre-production, general
production lead times average one to three weeks. Telephone Services' technical
expertise and efficient production process have enabled it to establish strong
relationships with many of the largest telecommunication companies.

     Telephone Services manufactures cable assemblies for approximately 100
telecommunication OEMs. It sells its products through a direct sales force of
eight regional salespeople who are supported internally by a staff of
engineering and technical application engineers. The direct salesperson also
functions as an application engineer and interacts directly with the customer's
design engineers. Telephone Services' largest customer is Pacific Bell, which
represented approximately 24% of net sales in 1998. The next four largest
customers in 1998 were Tekontrol, approximately 17%, GTE, approximately 15%,
Sprint, approximately 9%, and A.D.C., approximately 6%. Other top customers
include Southwestern Bell, Nynex, World Com and M.F.S. Communications.

     The cable assembly business is highly fragmented, but is experiencing
strong growth as telecommunication companies continue to outsource this
subcomponent. Telephone Services' competition is regional by product line, and
cable assembly competitors include Majestic Management, Inc., Varitronics and
Telect, while terminal block competitors include Thomas & Betts and Lucent
Technologies.

     A key component of Telephone Services' growth involves acquisitions of
smaller companies with product line and/or customer synergies. As part of this
strategy, in July 1998, Telephone Services acquired Opto-Tech Industries, Inc.,
a manufacturer of a variety of filters, attenuaters and other


                                       46
<PAGE>

miscellaneous equipment for the telecommunications industry. Most of
Opto-Tech's sales are to Regional Bell Operating Companies. Opto-Tech
Industries is a good fit for Telephone Services because of their overlapping
customer base. Opto-Tech's operations have been fully integrated into those of
Telephone Services.


MOTORS AND GEARS

     Motors and Gears is a leading domestic manufacturer of specialty purpose
electric motors and gears, serving a diverse customer base. Its products are
used in a broad range of applications, including vending machines, refrigerator
ice dispensers, commercial floor care equipment, elevators and photocopy
machines. The Motors and Gears subsidiaries have sold their brand name products
to their customers for an average of over 70 years. For the year ended December
31, 1998, Motors and Gears' subsidiaries generated combined pro forma net sales
of $296.2 million. Each of Motors and Gears' subsidiaries is discussed below.

     Motors and Gears' three primary product lines are subfractional motors
(approximately 38% of 1998 sales), fractional/integral motors (approximately
40% of 1998 sales) and controls (approximately 22% of 1998 sales).


 Subfractional Motors

     Merkle-Korff. Merkle-Korff was founded in 1911. Jordan Industries
purchased Merkle-Korff, along with its wholly owned subsidiaries, Elmco
Industries, Inc. and Mercury Industries, Inc., in September 1995. Merkle-Korff
is a custom manufacturer of Alternating Current ("AC") and Direct Current
("DC") subfractional horsepower motors and gear motors. Merkle-Korff's products
are used in a wide range of products including refrigerators, freezers,
dishwashers, vending machines, business machines, pumps and compressors, and
its Coleman Motors product line is used in copiers, printers, ATM machines,
currency changers, x-ray machines, peristatic pumps, HVAC activators, medical
equipment and other applications. Approximately 67% of Merkle-Korff's 1998 net
sales were derived from the home appliance and vending machine market.
Merkle-Korff's products are primarily sold to OEMs, and prominent customers
include General Electric Company, Whirlpool Corporation and Dixie-Narco, Inc.
Merkle-Korff's top 10 customers represented approximately 60% of net sales in
1998. Merkle-Korff's net sales for the year ended December 31, 1998 were $103.1
million.

     Merkle-Korff experiences limited competition across its product lines.
Competitors, such as Molon Motors and ECM, are generally much smaller in terms
of revenues and also produce a much more limited product line.


 Fractional/Integral Motors

     Imperial Electric Company. Founded in 1889 and acquired by Jordan
Industries in 1988, Imperial manufactures elevator motors, floor care equipment
motors and automatic hose reel motors under its Imperial trade name, and floor
care, silicone controlled rectifier motors (variable speed motors used in
treadmills, conveyers, machine tools and mixing and transferring pumps), and
low voltage DC motors under its Scott trade name. Scott was acquired by
Imperial in 1988 and was merged into Imperial in early 1997.

     Imperial designs, manufactures and distributes its specialty electric
motors for industrial and commercial use. It manufactures its products with
steel, magnets, copper wire, castings and other components supplied by a
variety of firms. Its products, AC and DC motors, generators and permanent
magnet motors, are sold principally in the United States and Canada and to a
limited extent in Europe and Australia. In 1998, approximately 54% of
Imperial's net sales were derived from permanent magnet motors sold primarily
to domestic manufacturers of floor care equipment, 26% were derived from
elevator motors sold to major domestic elevator manufacturers, 8% from hose
reels and 12% from other products. Imperial's net sales for the year ended
December 31, 1998 were $37.4 million (before the elimination of intercompany
sales).


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<PAGE>

     Otis Elevator Company, Westinghouse Corporation and other leading elevator
manufacturers have in recent years ceased manufacturing motors and have turned
to Imperial and other independent manufacturers to supply motors. Imperial's
largest customer accounted for approximately 9% of its 1998 net sales, while
the top 10 customers accounted for approximately 50%. Imperial's products are
marketed domestically by its management and one independent sales
representatives, and internationally by management.

     In the elevator motor market, Imperial competes with several firms of
varying size. The other markets in which Imperial competes are also highly
competitive. Imperial believes that it competes effectively with these firms on
the basis of product reliability, price and customer service.

     In December 1998, Imperial acquired Euclid Universal, Inc., a designer and
manufacturer of gear drives for special applications where stock items will not
fit or meet performance requirements. Euclid's products include speed reducers,
custom gearing, right angle gearboxes and transaxles. Its customized products
are used in an array of industries, including materials handling, healthcare,
agriculture, floor care and food processing. Euclid's technical expertise lies
in the areas of worm, spur and helical gearing.

     Euclid maintains a flexible engineering and production process that yields
a rapid response in design, prototype and production. All gearing is
manufactured in-house to industry standards and housings are made of high
strength, heat treated aluminum alloys, cast iron or steel. Euclid is able to
produce food grade finishes to its products, as well as hard coating for the
stringent wash down equipment requirements. We believe that the addition of
Euclid provides cross selling opportunities with Imperial, Gear and Advanced DC
Motors. Currently, Euclid is working with Imperial to develop a transaxle
product for the floor care industry. We believe that the ability to provide
this product will enable Imperial to broaden its product line and to defend its
market share in the floor care industry.

     Gear Research Company. Founded in 1952 and acquired by Imperial in October
1988, Gear manufactures precision gears and gear boxes for OEMs requiring
high-precision commercial gears. Gear manufactures precision gears for both AC
and DC electric motors in a variety of sizes. The gears are sold primarily to
the food, floor care machine and aerospace industries and to other
manufacturers of machines and hydraulic pumps. Gear's products are nationally
advertised in trade journals and are sold by one internal salesman and one
independent sales representative. Gear precision machines its products from
steel forgings and castings. Gear's net sales for the year ended December 31,
1998 were $7.7 million.

     The gear industry is very fragmented and competitive. Gear competes
primarily on the basis of quality. In addition, the ability of Imperial and
Gear to offer both electric motors and gear boxes as a package, and to custom
design these items for customers, may allow both companies to gain greater
market penetration.

     Fir Elettromeccanica. Founded in 1925 and acquired by Jordan Industries in
June 1997, Fir is a leading European manufacturer of AC and DC motors and pumps
for special-end applications such as pumps for commercial dishwashers, motors
for industrial sewing machines, motors for industrial fans and ventilators,
explosion-proof motors for gasoline pumps and the oil industry, and
asynchronous and brushless motors for elevator doors. With the exception of
motors for industrial sewing machines, Fir produces custom products only after
receiving specific customer orders. Motors for industrial sewing machines,
which comprised approximately 9% of Fir's 1998 net sales, are fairly
standardized and are manufactured and stocked based on internal forecasts.
Fir's net sales for the year ended December 31, 1998 were $42.1 million.

     Fir sells directly to customers and through two non-exclusive independent
sales representatives located in France and Germany. Fir enjoys long-term
relationships with its customers, some of which have been customers of Fir for
over 20 years. The successful development of long-term customer relationships
is a direct result of Fir's reputation for high-quality products and on-time
delivery. Within Fir's customer base of over 450, no single customer accounted
for more than 5% of 1998 net sales. Fir's top 10 customers accounted for
approximately 32% of 1998 net sales.


                                       48
<PAGE>

     Fir has many competitors across a very fragmented European motor market.
However, Fir distinguishes itself by providing highly engineered custom
products for small markets.

     Fir provides Motors and Gears with a strong foundation upon which to
expand its overseas market. Through Fir, Motors and Gears has access to
established European markets, including Italy, Germany, France, Spain and Great
Britain, as well as emerging Eastern European markets such as Poland, the Czech
Republic and Russia. Through Fir's European market presence and established
brand name, we believe Fir will enable Motors and Gears to further develop
leadership positions within market niches and to expand globally.

     Advanced DC Motors. Founded in 1989 and purchased by Motors and Gears in
1998, Advanced DC Motors is a designer and manufacturer of DC permanent magnet
motors and starters (generators) which range from 4.5 inches to 9 inches in
size. Advanced DC Motors sells special purpose custom designed motors for use
in electric lift trucks, power sweepers, electric utility vehicles, golf carts,
electric boats and other niche products. Advanced DC Motors also manufactures
and sells commutators, which are motor components used to reverse the direction
of electric current in motors, as well as special purpose production equipment.
Special purpose motors comprised approximately 95% of Advanced DC Motors' net
sales in 1998, while commutators and production equipment accounted for
approximately 5%. Advanced DC Motors' pro forma net sales for the year ended
December 31, 1998 were $44.3 million.

     Advanced DC Motors is a fully-integrated manufacturer, with nearly 100% of
its products manufactured to custom specifications developed through direct
engineer-to-engineer design. Advanced DC Motors is capable of producing
high-volume orders, none of which are for stock. As a result, Advanced DC
Motors carries virtually no finished goods inventory. Advanced DC Motors has
several production facilities, each specializing in some aspect of its
business, such as motor production, commutator production for internal and
external use, manufacturing of production equipment for internal and some
external use, production of field coils and armature coils used primarily for
internal production and research and development of electronic control
products. Advanced DC Motors also has a warehouse facility in Germany used to
service its European customers.

     Advanced DC Motors primarily sells directly to OEMs through its executive
team, due to the technical nature of the sale. Advanced DC Motors uses one
independent representative. Advanced DC Motors also sells to distributors who
serve the on-road electric vehicle market. Advanced DC Motors' largest customer
accounted for approximately 28% of sales and the top five customers accounted
for approximately 72% in 1998.


 Controls

     Motion Control Engineering. Founded in 1983 and acquired by Motors and
Gears in 1997, Motion Control is a leading supplier of electronic motion and
logic control products to the elevator industry. Motion Control designs,
engineers and assembles custom microprocessor-based control systems primarily
used in modernizing and upgrading existing cable traction and hydraulic
elevators (approximately 90% of 1998 net sales), and also provides systems for
elevators installed in new building construction (approximately 10% of 1998 net
sales). Motion Control fits closely with Motors and Gears' Imperial subsidiary,
which supplies motor products to the elevator industry. The addition of Motion
Control enables Motors and Gears to provide the elevator industry with a
complete value-added motor and control package. Motion Control had net sales of
$51.3 million for the year ended December 31, 1998.

     Motion Control's production process consists primarily of assembling
electronic components in a cabinet and testing the final product. Virtually all
component parts, such as personal computer boards, switches, resistors,
drivers, transformers, wire and cabinets are supplied through a network of
wholesalers and distributors, none of which Motion Control is reliant on.
Motion Control's production process is designed to accommodate flexibility and
efficiency in a custom-production environment. Motion Control's engineers
design most of Motion Control's products in a modular format to accommodate
customization.


                                       49
<PAGE>

     Motion Control sells through a direct sales force to major elevator
manufacturers (approximately 32% of 1998 sales), large and small independent
contractors (approximately 62% of 1998 sales), and international companies
(approximately 6% of 1998 sales). Motion Control's sales and marketing staff of
approximately 20 consists of eight sales representatives, seven of whom cover
the domestic market and one Australia-based employee who serves the Australian
market and all international customers. Motion Control also engages in
marketing and promotional activities such as presentations at trade shows and
industry conventions; development of brochures; articles and advertisements in
trade magazines; direct mailings to customers; and a quarterly newsletter
distributed to over 3,000 existing and potential customers.

     Elevator modernization projects represent Motion Control's primary market.
Motion Control focuses on the high-end domestic elevator modernization market,
a niche which represents approximately 5% of the entire worldwide elevator
control market. Elevator modernization primarily involves cosmetic, structural,
or performance enhancements to an existing elevator system. While an elevator
may last 30-40 years, its controls are typically replaced two-to-three times
during its life. Further, while the worldwide elevator market is growing at
approximately 4% annually, the elevator modernization niche is growing at
approximately 20% annually. This growth is expected to continue as new
electronic control technology is developed. Motion Control's technology is also
transferrable to other non-elevator motion control and drive markets, such as
factory automation, commercial equipment and appliances.

     Electrical Design and Control. Founded in 1958 and purchased by Motors and
Gears in 1997, Electrical Design and Control designs, engineers, and
manufactures electrical control systems and panels for material handling
systems and similar applications. Electrical Design and Control's products
regulate the speed and movement of conveyor systems used in a variety of
automotive plants and other industrial applications. Electrical Design and
Control's net sales for the year ended December 31, 1998 were $10.3 million.

     Electrical Design and Control provides its customers with two distinct
types of product/service. The first type consists of designing, programming,
manufacturing, and commissioning the control system. These types of orders,
which represented approximately 65% of 1998 orders, are value-added to the
customer and therefore earn higher margins. The second type of product/service
consists of manufacturing only, in which the customer provides Electrical
Design and Control with control panel designs and specifications and Electrical
Design and Control manufactures and assembles the product. These projects
comprised approximately 35% of 1998 orders.

     Electrical Design and Control obtains the majority of its revenues through
repeat business, referrals from its current customer base, and requests for
proposals brought to Electrical Design and Control due to its reputation for
high quality design. Approximately 98% of 1998 net sales were to the automobile
industry. Auto manufacturers have very stringent requirements regarding their
material handling systems, and Electrical Design and Control has gained
significant expertise from servicing these demanding automotive OEMs. This
expertise provides Electrical Design and Control with a competitive advantage
in less technically demanding markets. The company's largest customer accounted
for approximately 35% of revenues, while the top five customers accounted for
approximately 70% in 1998.

BACKLOG

     As of December 31, 1998, we had a backlog of approximately $134.4 million
(approximately $28.3 million of which was attributed to the Restricted Group),
compared with approximately $109.6 million as of December 31, 1997
(approximately $25.2 million of which was attributed to the Restricted Group).
The backlog is primarily due to titanium hot formed sales at Parsons, motor
sales at Merkle-Korff and cable assembly sales at LoDan. We believe that the
backlog may not be indicative of future sales.

     Our aggregate business has a certain degree of seasonality. Sales
Promotion Associates' and Riverside's sales are somewhat stronger toward
year-end due to the nature of their products. Calendars at Sales Promotion
Associates have an annual cycle, while Bibles and religious books at Riverside
are popular as holiday gifts.


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<PAGE>

RESEARCH AND DEVELOPMENT

     As a general matter, we operate businesses that do not require substantial
capital or research and development expenditures. However, development efforts
are targeted at certain subsidiaries as market opportunities are identified.
None of these subsidiary development efforts require substantial resources from
Jordan Industries.


PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

     We rely on a combination of patent, copyright, trademark and trade secret
laws and contractual agreements to protect our proprietary technology and
know-how. For example, Dura-Line has a U.S. patent for producing a form of
Innerduct sold under the trademark SILICORE which is lubricated to permit
easier installation of fiber optic cable.

     We own and use trademarks and brandnames to identify ourself as a source
of certain goods and services, including the DURA-LINE and SILICORE trademarks,
both of which are registered in the United States and various foreign
countries, and the VIEWSONICS brandname, in which we have common law rights.
There can be no assurance that we will be granted additional patents or that
our patents either will be upheld as valid if ever challenged or will prevent
the development of competitive products. The U.S. patent with respect to the
SILICORE lubricant lining expires in 2007. We have not sought foreign patents
for most of our technologies, including technologies which have been patented
in the United States, which may adversely affect our ability to protect our
technologies and products in foreign countries. We also own and license other
patents, trademarks and copyrights. We protect our confidential, proprietary
information as trade secrets.

     Except for the SILICORE polymer pipe products, certain of our cable
television components and our fiber optic connector technology, our products
are generally not protected by virtue of any proprietary rights such as
patents. There can be no assurance that the steps taken by us to protect our
proprietary rights will be adequate to prevent misappropriation of our
technology and know-how or that our competitors will not independently develop
technologies that are substantially equivalent to or superior to our
technology. In addition, the laws of some foreign countries do not protect our
proprietary rights to the same extent as do the laws of the United States. In
our opinion, the loss of any intellectual property asset, other than the
DURA-LINE or SILICORE trademarks, or the patent or manufacturing trade secret
covering the solid co-extruded polymer lubricant lining used in connection with
the SILICORE technology, would not have a material adverse effect on the
conduct of our business.

     We are also subject to the risk of adverse claims and litigation alleging
infringement of the proprietary rights of others. From time to time, we have
received notice of infringement claims from other parties. Although we do not
believe we infringe the valid proprietary rights of others, there can be no
assurance against future infringement claims by third parties with respect to
our current or future products. The resolution of any such infringement claims
may require us to enter into license arrangements or result in protracted and
costly litigation, regardless of the merits of such claims.


EMPLOYEES

     As of December 31, 1998, we and our subsidiaries employed approximately
7,092 people. Approximately 1,189 of these employees were members of labor
unions at Sate-Lite, Gear, Imperial, Sales Promotion Associates, Seaboard,
Merkle-Korff and Dura-Line. The above subsidiaries have not experienced any
work stoppages in the past five years as a result of labor disruptions. We
believe that our subsidiaries' relations with their respective employees are
good.

     Alma Piston Company is a party to a collective bargaining agreement with
the Oil, Chemical and Atomic Workers' Union covering 475 of Alma Piston's 595
employees. The collective bargaining agreement expires on May 1, 1999. At the
end of the term of the preceding collective bargaining agreement in 1996, Alma
Piston and its employees were initially unable to agree on the terms of a new
agreement, and Alma Piston's employees went on strike for a period of 30 days.
We cannot


                                       51
<PAGE>

assure you that Alma Piston will be able to negotiate a new collective
bargaining agreement prior to the end of the current agreement or that Alma
Piston's employees will not go on strike.


ENVIRONMENTAL REGULATIONS

     We are subject to voluminous and complex foreign, federal, state and local
environmental laws and regulations ("Environmental Laws") which regulate, among
other things, air and water emission, the generation, storage, treatment,
transportation, and disposal of hazardous substances and, in some
circumstances, the condition of industrial property prior to transfer or sale.
The content of these Environmental Laws is ever-changing, as are the
interpretations and priorities of those who enforce them. Because we operate
numerous manufacturing facilities, our operations are heavily subject to these
Environmental Laws, and we periodically make capital expenditures to meet their
requirements and periodically are required to contribute to the remediation of
contamination at sites at which our waste has been disposed. While historically
these expenditures have not been material, we cannot assure you that we will
not incur material expenses for environmental compliance in the future.

     Furthermore, pursuant to Environmental Laws, current and past owners and
"operators" of real estate (including lessees) may be liable for the costs of
removal and/or remediation of certain hazardous substances on, in or about such
properties. The liability imposed by such laws is often joint and several, and
without regard to whether the owner/operator knew of, or was responsible for,
the presence of such hazardous substances. Because we own and lease numerous
properties in connection with our operations, we periodically incur costs to
investigate and remediate environmental contamination. While historically these
expenditures have not been material, we cannot assure you that we will not
incur material expenses for environmental remediation in the future.

     Based on our pre-acquisition diligence, from time to time we have
determined that certain of our acquisitions are or may be subject to
environmental liabilities that may be material. In those circumstances we
endeavor to protect ourselves with contractual indemnities and, where
appropriate, escrowed funds. We believe that we are adequately protected by
these indemnities and escrowed funds, but there can be no assurance that the
liabilities will not exceed the funds in the escrow and/or the ability of the
sellers to indemnify us.

     In October 1997, the Tennessee Department of Environmental Control (DEC)
requested information from Dacco about a contaminated spring adjacent to its
Cookeville, Tennessee property. The spring is reportedly contaminated with
materials which Dacco does not believe it ever used at the facility, and Dacco
therefore does not believe that it caused the contamination or that it will be
responsible for the cleanup. In September 1998, the DEC informed Dacco that the
spring requires further investigation, and that the Cookeville property meets
the criteria for designation as a state Superfund cleanup site. The DEC has
subsequently agreed to examine the potential liability of other companies in
the area before pursuing Dacco for cleanup costs. While we do not believe that
Dacco will be liable for the cost of any further investigation or cleanup,
there can be no assurance that the DEC will not attempt to impose such
liability, or that, if the DEC is successful in doing so, that such liability
would not be material.


PROPERTIES

     We lease approximately 31,700 square feet of office space for our
headquarters in Illinois. The principal properties of each subsidiary at
December 31, 1998, and the location, the primary use, the capacity, and
ownership status thereof, are set forth in the table below:



<TABLE>
<CAPTION>
                                                                                        SQUARE     OWNED
           COMPANY                   LOCATION                       USE                  FEET      LEASED
- ----------------------------   --------------------   ------------------------------   --------   -------
<S>                            <C>                    <C>                              <C>        <C>
Advanced DC Motors .........   Dewitt, NY             Manufacturing/Administration     49,600     Owned
                               Syracuse, NY           Manufacturing                    45,000     Leased
                               Carrollton, TX         Manufacturing/Administration     29,000     Leased
                               Dewitt, NY             Manufacturing                    18,500     Leased
                               Eternoz, France        Manufacturing/Administration     10,000     Leased
                               Putzbrunn, Germany     Warehouse                         1,200     Leased
                               Palo Alto, CA          R&D                               1,000     Leased
</TABLE>

                                       52
<PAGE>


<TABLE>
<CAPTION>
                                                                                                           SQUARE       OWNED
            COMPANY                        LOCATION                              USE                        FEET        LEASED
- ------------------------------   ---------------------------   ---------------------------------------   ---------   -----------
<S>                              <C>                           <C>                                       <C>         <C>
Alma Products ................   Alma, Michigan                Manufacturing/Administration              369,000     Owned
                                                                (2 buildings)                             90,000     Owned
                                                               Warehouse (3 buildings)                    12,000     Leased
Beemak .......................   Rancho Dominguez, CA          Manufacturing/Administration              110,000     Leased
Bond Technologies ............   Huntington Beach, CA          Manufacturing/Administration              150,000     Leased
                                 Austin, TX                    Manufacturing/Administration               13,000     Leased
                                 Anaheim, CA                   Manufacturing/Administration               22,000     Leased
Cape Craftsmen ...............   Elizabethtown, NC             Manufacturing                             230,200     Leased
                                 Wilmington, NC                Administration                              8,500     Leased
Cho-Pat ......................   Hainesport, NJ                Manufacturing/Administration                7,000     Leased
Dacco ........................   Cookeville, TN                Administration/Manufacturing              140,000     Owned
                                 Huntland, TN                  Manufacturing                              65,000     Owned
                                 Rancho Cucamonga, CA          Administration/Manufacturing               40,000     Owned
Deflecto .....................   Indianapolis, IN              Manufacturing/Administration              200,000     Leased
                                 Indianapolis, IN              Manufacturing                              38,100     Leased
                                 Indianapolis, IN              Manufacturing                              25,600     Leased
                                 St. Catherines, Ontario       Manufacturing                              30,000     Owned
                                 St. Catherines, Ontario       Manufacturing                              30,000     Leased
Dura-Line ....................   Pryor, OK                     Manufacturing/Administration               33,750     Owned
                                 Beranang, Malaysia            Manufacturing/Administration               64,000     Leased
                                 Ciudad Real, Spain            Manufacturing/Administration                3,000     Leased
                                 Sao Paolo, Brazil             Sales                                         600     Leased
                                 Middlesboro, KY               Manufacturing/Administration               80,000     Owned
                                 Grimbsby, U.K.                Manufacturing/Administration               35,000     Owned
                                 Sparks, NV                    Manufacturing                              35,000     Owned
                                 Zlin, Czech Republic          Manufacturing/Administration               40,000     Owned
                                 Knoxville, TN                 Administration                             10,000     Leased
                                 Tel Aviv, Israel              Manufacturing/Administration               10,000     Leased
                                 Queretaro, Mexico             Manufacturing/Administration               43,000     Leased
                                 Mexico City, Mexico           Sales Office/Administration                 2,000     Leased
                                 Shanghai, China               Manufacturing/Administration               50,000     Owned
                                 Shanghai, China               Sales Office/Administration                 1,000     Leased
                                 Goa, India                    Manufacturing/Administration               48,000     Owned
                                 New Delhi, India              Sales Office/Administration                 2,000     Leased
Electrical Design and Control    Troy, MI                      Manufacturing/Administration               29,400     Leased
Electronic Connectors and
 Components ..................   Bordon, U.K.                  Distribution/Administration/Assembly       16,500     Owned
                                 Sunrise, FL                   Distribution/Administration/ Assembly      28,000     Leased
                                 Waseca, MN                    Manufacturing/Administration               70,000     Subleased
                                 Paris, France                 Sales                                       1,000     Leased
Engineered Endeavors .........   Mentor, OH                    Manufacturing/Administration               48,000     Leased
                                 Belle Chasse, LA              Warehouse                                 195,000     Leased
Fir ..........................   Casalmaggiore, Italy          Manufacturing/Administration              100,000     Owned
                                 Varano, Italy                 Manufacturing                              30,000     Owned
                                 Bedonia, Italy                Manufacturing                               8,000     Owned
                                 Genova, Italy                 Manufacturing                              33,000     Leased
                                 Reggio Emilia, Italy          Manufacturing                              35,000     Leased
                                 Reggio Emilia, Italy          Manufacturing                              30,000     Leased
Gear .........................   Grand Rapids, MI              Manufacturing/Administration               39,000     Owned
Imperial .....................   Alamogordo, NM                Manufacturing                              15,000     Leased
                                 Akron, OH                     Manufacturing/Administration               43,000     Owned
                                 Stow, OH                      Administration                              7,000     Leased
                                 Middleport, OH                Manufacturing                              85,000     Owned
                                 Cuyahoga Falls, OH            Manufacturing                              63,000     Leased
                                 Bedford, OH                   Manufacturing/Administration               25,000     Leased
LoDan ........................   San Carlos, CA                Manufacturing/Administration               22,500     Leased
                                 San Carlos, CA                Manufacturing                              13,500     Leased
Merkle-Korff .................   Des Plaines, IL               Manufacturing/Administration               38,000     Leased
                                 Des Plaines, IL               Manufacturing/Administration               45,000     Leased
                                 Richland Center, WI           Manufacturing/Administration               45,000     Leased
                                 Darlington, WI                Manufacturing                              68,000     Leased
                                 Des Plaines, IL               Manufacturing/Administration              112,000     Leased
Motion Control ...............   Rancho Cordova, CA            Manufacturing/Administration               40,000     Leased
Northern .....................   Liberty Lake, WA              Manufacturing/Administration               22,600     Leased
Pamco ........................   Des Plaines, IL               Manufacturing/Administration               24,500     Owned
Parsons ......................   Parsons, KS                   Manufacturing/Administration               97,500     Owned
Riverside ....................   Iowa Falls, IA                Distribution/Administration                65,900     Leased
                                 Sparks, NV                    Distribution                               35,000     Leased
Rolite .......................   Midvale, OH (3 buildings)     Manufacturing/Administration               20,500     Owned
Sate-Lite ....................   Niles, IL                     Manufacturing/Administration              120,000     Leased
                                 Shunde, China                 Manufacturing/Administration                9,282     Sub-leased
</TABLE>

                                       53
<PAGE>


<TABLE>
<CAPTION>
                                                                                                        SQUARE     OWNED
               COMPANY                         LOCATION                          USE                     FEET      LEASED
- ------------------------------------   ------------------------   ---------------------------------   ---------   -------
<S>                                    <C>                        <C>                                 <C>         <C>
Seaboard ...........................   Fitchburg, MA              Manufacturing/Administration        260,000     Owned
                                       Miami, FL                  Manufacturing                        90,000     Owned
                                       Brentwood, NY              Manufacturing                        35,000     Leased
                                       Brooklyn, NY               Manufacturing                        35,000     Leased
Sales Promotion Associates .........   Red Oak, IA                Manufacturing/Administration        136,500     Owned
                                       Coshocton, OH               (four buildings)                   240,000     Leased
                                                                  Manufacturing/Administration
Telephone Services .................   Grand Prairie, TX          Manufacturing/Administration         15,000     Leased
                                       Riverview, FL              Manufacturing                        75,000     Leased
                                       Tampa, FL                  Manufacturing                        20,000     Leased
                                       Shasta Lake, CA            Manufacturing                         5,000     Leased
Valmark ............................   Fremont, CA                Manufacturing/Administration         46,000     Leased
                                       Fremont, CA                Manufacturing/Administration         15,000     Leased
Viewsonics .........................   Boca Raton, FL             Administration/Distribution/R&D      14,500     Leased
                                       Shanghai, China            Manufacturing/Administration         25,000     Leased
                                       St. Petersburg, Russia     Manufacturing/Administration         10,000     Leased
</TABLE>

     Dacco also owns or leases 35 distribution centers, which average 4,000
square feet in size. Dacco maintains four distribution centers in Florida, five
distribution centers in Tennessee, two distribution centers in each of
Illinois, Arizona, Michigan, Texas, Alabama, California, Ohio, Virginia; and
the remaining distribution centers are located in Pennsylvania, Indiana,
Minnesota, Missouri, Nebraska, West Virginia, Oklahoma, South Carolina, Nevada,
and Kentucky.


     Merkle-Korff's facilities are leased from the chairman of Merkle-Korff and
Northern Technologies' Liberty Lake, Washington, facility is leased from a
general partnership consisting of the former owners. We believe that the terms
of these leases are comparable to those which would have been obtained by us
had these leases been entered into with an unaffiliated third party.


     We also have sales representatives in field offices in Florida, Illinois,
Ohio, Oregon, Virginia and internationally in Brazil, Bulgaria, Germany,
Malaysia, Romania, Russia and Slovakia.


     To the extent that any of our existing leases expire in 1999, we believe
that we will be able to renegotiate them on acceptable terms. We believe that
our existing leased facilities are adequate for our and our subsidiaries'
operations.


LEGAL PROCEEDINGS


     On January 21, 1997, Welcome Home filed for Chapter 11 bankruptcy
protection. As a result of the Chapter 11 filing, the results of Welcome Home
are not consolidated with Jordan Industries' results for periods subsequent to
January 21, 1997. As of December 31, 1998, Jordan Industries' aggregate
investment in Welcome Home was approximately $2.0 million. See note 3 to the
Company's financial statements.


     Our subsidiaries are parties to various other legal actions arising in the
normal course of their business. We believe that the disposition of such
actions individually or in the aggregate will not have a material adverse
effect on our consolidated financial position.


                                       54
<PAGE>

                                  MANAGEMENT

OUR DIRECTORS AND EXECUTIVE OFFICERS

     The following sets forth the names and ages of each of the Company's
directors and executive officers and the positions they hold at the Company:

<TABLE>
<CAPTION>
NAME                              AGE    POSITION WITH THE COMPANY
- ----                              ---    -------------------------
<S>                              <C>     <C>
John W. Jordan II ............   51      Chairman of the Board of Directors and Chief
                                          Executive Officer.
Thomas H. Quinn ..............   51      Director, President and Chief Operating Officer.
Joseph S. Steinberg ..........   55      Director.
David W. Zalaznick ...........   43      Director.
Jonathan F. Boucher ..........   42      Director, Vice President and Assistant Secretary.
G. Robert Fisher .............   59      Director, General Counsel and Secretary.
</TABLE>

     Each of the directors and executive officers of the Company will serve
until the next annual meeting of the stockholders or until their death,
resignation or removal, whichever is earlier. Directors are elected annually
and executive officers hold office for such terms as may be determined by the
Company's board of directors (the "Board of Directors").

     Set forth below is a brief description of the business experience of each
director and executive officers of the Company.

     MR. JORDAN has served as Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1988. Mr. Jordan is a managing partner
of The Jordan Company, a private merchant banking firm which he founded in
1982. Mr. Jordan is also a director of American Safety Razor Company,
AmeriKing, Inc., Carmike Cinemas, Inc., Archibald Candy Corporation, GFSI,
Inc., GFSI Holdings, Inc., Jordan Telecommunication Products, Inc., Motors and
Gears, Inc., Rockshox, Inc. and Apparel Ventures, Inc., as well as other
privately held companies. In December 1996, Mr. Jordan resigned as a director
and officer of Welcome Home. In January 1997, Welcome Home filed a voluntary
petition for bankruptcy.

     MR. QUINN has served as a director, President and Chief Operating Officer
of the Company since 1988. From November 1985 to December 1987, Mr. Quinn was
Group Vice President and a corporate officer of Baxter International. From
September 1970 to November 1985, Mr. Quinn was employed by American Hospital
Supply Corporation, where he was a Group Vice President and a corporate officer
when American Hospital was acquired by Baxter. Mr. Quinn is also the Chairman
of the Board and Chief Executive Officer of American Safety Razor Company and
Archibald Candy Corporation, Chairman of the Board of Motors and Gears, Inc.
and Jordan Telecommunication Products, Inc. and a director of AmeriKing, Inc.
and Welcome Home, as well as other privately held companies. In January 1997,
Welcome Home filed a voluntary petition for bankruptcy.

     MR. STEINBERG has served as a director of the Company since 1988. Since
1979, Mr. Steinberg has been the President and a director of Leucadia National
Corporation, a bank holding company. He is also a Trustee of New York
University.

     MR. ZALAZNICK has served as a director of the Company since June 1997.
Since 1982, Mr. Zalaznick has been a managing partner of The Jordan Company.
Mr. Zalaznick is also a director of Carmike Cinemas, Inc., AmeriKing, Inc.,
Marisa Christina, Inc., Motors and Gears, Inc., Apparel Ventures, Inc.,
American Safety Razor Company, Jackson Products, Inc., GFSI, Inc., GFSI
Holdings, Inc. and Jordan Telecommunication Products, Inc., as well as other
privately held companies.

     MR. BOUCHER has served as a Vice President, Assistant Secretary and a
director of the Company since 1988. Since 1983, Mr. Boucher has been a partner
of The Jordan Company. Mr. Boucher is also a director of American Safety Razor
Company, Jordan Telecommunication Products, Inc. and Motors and Gears, Inc., as
well as other privately held companies. In December 1996, Mr. Boucher resigned
as a director and officer of Welcome Home. In January 1997, Welcome Home filed
a voluntary petition for bankruptcy.


                                       55
<PAGE>

     MR. FISHER has served as a director, General Counsel and Secretary since
1988. Since February 1999, Mr. Fisher has been a member of the law firm of
Sonnenschein Nath & Rosenthal, a firm that represents the Company in various
legal matters. From June 1995 until February 1999, Mr. Fisher was a member of
the law firm of Bryan Cave LLP. For 27 years, Mr. Fisher was a member of the
law firm of Smith, Gill, Fisher & Butts, P.C., which combined with Bryan Cave
LLP in June 1995.


EXECUTIVE COMPENSATION

     The following table shows the cash compensation paid by the Company, for
the three years ended December 31, 1998, for services in all capacities to the
Chief Executive Officer and the President and Chief Operating Officer of the
Company.

                        SUMMARY COMPENSATION TABLE (1)

<TABLE>
<CAPTION>
                                                       ANNUAL COMPENSATION
                                          ----------------------------------------------
                                                                          OTHER ANNUAL
NAME AND PRINCIPAL POSITION       YEAR       SALARY         BONUS         COMPENSATION
- ------------------------------   ------   -----------   -------------   ----------------
<S>                              <C>      <C>           <C>             <C>
John W. Jordan, II,              1998        --             --              --
 Chief Executive Officer (2)     1997        --             --              --
                                 1996        --             --              --
Thomas H. Quinn                  1998     $600,000      $1,402,950      $ 36,685
 President and Chief             1997      500,000       2,392,524       870,000(3)
 Operating Officer               1996      500,000       1,850,750          --
</TABLE>

- ----------
(1)   The aggregate number of shares of restricted common stock held by the
      Company's executive officers and directors at December 31, 1998 was 5,000
      shares, consisting of 4,000 shares held by Mr. Quinn and 1,000 shares
      held by Mr. Boucher. The value of the restricted shares is not able to be
      calculated because there is no market price for shares of the Company's
      unrestricted common stock. Dividends will be paid on the restricted
      shares to the same extent paid on unrestricted shares. See
      "Management--Restricted Stock Agreements."

(2)   Mr. Jordan derived his compensation from the Jordan Company and
      Jordan/Zalaznick Capital Company for his services to the Company and its
      subsidiaries. He received no compensation from the Company or its
      subsidiaries for his services as Chief Executive Officer.

(3)   Represents the difference between the amount paid for 1,500 shares of
      common stock and the related market value of the stock.


     Employment Agreement. Mr. Quinn has an employment agreement with the
Company which provides for his employment as President and Chief Operating
Officer of the Company. The employment agreement can be terminated at any time
by the Company. His base salary is $600,000 per year, and he is provided with a
guaranteed bonus of $100,000 per year, which amounts are inclusive of any
compensation, fees, salary, bonuses or other payments to Mr. Quinn by any of
the subsidiaries or affiliates of the Company or affiliates of The Jordan
Company. Under the employment agreement, if Mr. Quinn's employment is
terminated for reasons other than voluntary termination, cause, disability or
death, he will be paid a severance payment equal to the greater of $350,000 or
the sum of his most recent base annual salary plus $100,000. If employment is
terminated for reasons of cause or voluntary termination, no severance payment
is made. The Company maintains a $5.0 million "key man" life insurance policy
on Mr. Quinn under which the Company is the beneficiary.

     Restricted Stock Agreements. The Company is a party to restricted stock
agreements, dated as of February 25, 1988, with each of Messrs. Quinn and
Boucher, pursuant to which they were issued shares of Common Stock which, for
purposes of such restricted stock agreements, were classified as "Group 1
Shares" or "Group 2 Shares." Messrs. Quinn and Boucher were issued 3,500 and
1,870.7676 Group 1 shares, respectively, and 4,000 and 1,000 Group 2 Shares,
respectively, at $4.00 per share. The Group 1 Shares are not subject to
repurchase or contractual restrictions on transfer pursuant to the Restricted
Stock Agreements. The Group 2 Shares are subject to repurchase at cost, in the
event that Messrs. Quinn or Boucher ceases to be employed (as a partner,
officer or employee) by the Company, The Jordan Company, Jordan/Zalaznick
Capital Company or any reconstitution thereof conducting


                                       56
<PAGE>

similar business activities in which they are a partner, officer or employee.
If such person ceases to be so employed prior to January 1, 2003, the Group 2
Shares can also be repurchased at cost, unless such person releases and
terminates such repurchase option by making a payment of $300.00 per share to
the Company. Certain adjustments to the foregoing occur in the event of the
death or disability of any of the partners of The Jordan Company or
Jordan/Zalaznick Capital Company, the death or disability of such person, or
the sale of the Company. On January 1, 1992, the Company issued Messrs. Quinn
and Boucher 600 and 533.8386 shares, respectively, at $107.00 per share,
pursuant to similar Restricted Stock Agreements, dated as of January 1, 1992,
under which such shares were effectively treated as "Group 1 Shares." On
December 31, 1992, the Company issued an additional 400 shares to Mr. Quinn for
$107.00 per share pursuant to similar Restricted Stock Agreements, under which
such shares were effectively treated as "Group 1 Shares." The purchase price
per share was based upon an independent appraiser's valuation of the shares of
Common Stock at the time of their issuance. In June 1997, the Company issued an
additional 1,500 shares to Mr. Quinn for approximately $86.67 per share
pursuant to a similar Restricted Stock Agreement, under which such shares were
effectively treated as "Group 1 Shares." These shares were issued by the
Company to provide a long-term incentive to the recipients to advance the
Company's business and financial interest.


     Directors' Compensation. We compensate our directors quarterly, at the
rate of $20,000 per year for each director. The Indenture permits director fees
of up to $250,000 per year in the aggregate. In addition, we reimburse
directors for their travel and other expenses incurred in connection with
attending Board meetings (and committees thereof) and otherwise performing
their duties as directors of the Company.


                                       57
<PAGE>

                            PRINCIPAL STOCKHOLDERS


     The following table furnishes information, as of March 31, 1999, as to the
beneficial ownership of the Company's common stock by (i) each person known by
the Company to beneficially own more than 5% of the outstanding shares of
common stock, (ii) each director and executive officer of the Company, and
(iii) all officers and directors of the Company as a group.




<TABLE>
<CAPTION>
                                                                  AMOUNT OF BENEFICIAL OWNERSHIP
                                                                  ------------------------------
                                                                      NUMBER OF       PERCENTAGE
                                                                       SHARES         OWNED (1)
EXECUTIVE OFFICER AND DIRECTORS:                                  ----------------   -----------
<S>                                                               <C>                <C>
John W. Jordan II (2)(3)(4) ...................................       41,820.9087        42.5%
David W. Zalaznick (3)(5)(6) ..................................       19,965.0000        20.3%
Thomas H. Quinn (7) ...........................................       10,000.0000        10.2%
Jonathan F. Boucher (8) .......................................        5,533.8386         5.6%
G. Robert Fisher (4)(9) .......................................          624.3496         0.6%
Joseph S. Steinberg (10) ......................................            0.0000         0.0%
All directors and officers as a group (6 persons) (3) .........       87,914.0968        89.3%
OTHER PRINCIPAL STOCKHOLDERS:
Leucadia Investors, Inc. (3) ..................................        9,969.9999        10.1%
</TABLE>

- ----------
(1)   Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
      13d-3(d), shares not outstanding which are subject to options, warrants,
      rights or conversion privileges exercisable within 60 days are deemed
      outstanding for the purposes of calculating the number and percentage
      owned by such person, but not deemed outstanding for the purpose of
      calculating the percentage owned by each other person listed. As of
      December 31, 1998, there were 98,501.0004 shares of common stock issued
      and outstanding.

(2)   Includes 1 share held personally and 41,819.9087 shares held by John W.
      Jordan II Revocable Trust. Does not include 309.2933 shares held by Daly
      Jordan O'Brien, the sister of Mr. Jordan, 309.2933 shares held by
      Elizabeth O'Brien Jordan, the sister of Mr. Jordan or 309.2933 shares
      held by George Cook Jordan, Jr., the brother of Mr. Jordan.

(3)   Does not include 100 shares held by Jordan/Zalaznick Capital Company or
      3,500 shares of Common Stock held by JZ Equity Partners PLC, a publicly
      traded U.K. investment trust advised by an Affiliate of The Jordan
      Company (controlled by Messrs. Jordan and Zalaznick). Mr. Jordan, Mr.
      Zalaznick and Leucadia, Inc. are the sole partners of Jordan/Zalaznick
      Capital Company. Mr. Jordan and Mr. Zalaznick own and manage the advisor
      to JZ Equity Partners PLC.

(4)   Does not include 3,248.3332 shares held by The Jordan Family Trust, of
      which John W. Jordan II, George Cook Jordan, Jr. and G. Robert Fisher are
      the trustees.

(5)   Does not include 82.1697 shares held by Bruce Zalaznick, the brother of
      Mr. Zalaznick.

(6)   Excludes 2,541.4237 shares that are held by John W. Jordan II Revocable
      Trust, but which may be purchased by Mr. Zalaznick, and must be purchased
      by Mr. Zalaznick, under certain circumstances, pursuant to an agreement,
      dated as of October 27, 1988, between Mr. Jordan and Mr. Zalaznick.

(7)   Includes 4,000 shares which are treated as "Group 2 Shares" pursuant to
      the terms of a Restricted Stock Agreement between Mr. Quinn and the
      Company. See "Management--Restricted Stock Agreements."

(8)   Includes 1,000 shares which are treated as "Group 2 Shares" pursuant to
      the terms of a Restricted Stock Agreement between Mr. Boucher and the
      Company. See "Management--Restricted Stock Agreements."

(9)   Includes 624.3496 shares held by G. Robert Fisher, as Trustee of the G.
      Robert Fisher Irrevocable Gift Trust, U.T.I., dated December 26, 1990.

(10)  Excludes 9,969.9999 shares held by Leucadia Investors, Inc., of which
      Joseph S. Steinberg is President and a director.


                                       58
<PAGE>

     The following table furnishes information, as of March 31, 1999, as to the
beneficial ownership of the common stock of Jordan Telecommunication Products,
Inc. ("JTP"), Motors and Gears, Inc. ("M&G") and Jordan Specialty Plastics
("JSP") by (i) each director and executive officer of Jordan Industries, and
(ii) all officers and directors of Jordan Industries as a group.

<TABLE>
<CAPTION>
                                                                    AMOUNT OF BENEFICIAL OWNERSHIP
                                       ----------------------------------------------------------------------------------------
                                                    JTP                           M&G                          JSP
                                       ------------------------------ ---------------------------- ----------------------------
                                           NUMBER OF      PERCENTAGE     NUMBER OF     PERCENTAGE      NUMBER OF     PERCENTAGE
                                             SHARES        OWNED(1)        SHARES       OWNED(1)        SHARES        OWNED(1)
                                       ----------------- ------------ --------------- ------------ ---------------- -----------
<S>                                    <C>               <C>          <C>             <C>          <C>              <C>
EXECUTIVE OFFICERS AND
 DIRECTORS:
John W. Jordan II (2)(3)(4) ..........     379,349.1691       38.2        7,136.8809       36.2        36,088.7050       37.2
David W. Zalaznick (3)(5)(6) .........     183,073.2676       18.4        3,531.2473       17.9        17,228.4800       17.8
Thomas W. Quinn ......................      89,804.6030        9.0        1,799.7294        9.1         8,629.3700        8.9
Jonathan F. Boucher ..................     52,935,1436         5.3        1,116.5587        5.7         4,775.3850        4.9
G. Robert Fisher (4)(6) ..............       5,606.9406         *           103.0008         *            538.8150         *
Joseph S. Steinberg (7) ..............           0.0000         *             0.0000         *              0.0000         *
All directors and officers as a
 group (6 persons)(3) ................     710,769.1239       71.6       13,687.4171       69.5        67,260.7550       69.3
</TABLE>

- ----------
*     Represents less than 1% of the outstanding shares of common stock.

(1)   Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under rule
      13d-3(d), shares not outstanding, which are subject to options, warrants,
      rights or conversion privileges exercisable within 60 days are deemed
      outstanding for the purpose of calculating the number and percentage
      owned by such person, but not deemed outstanding for the purpose of
      calculating the percentage owned by each other person listed. As of March
      31, 1999, JTP, M&G and JSP had 983,916.6667, 19,700 and 97,000,
      respectively, shares of common stock issued and outstanding.

(2)   Includes 8.9820 shares of JTP, 0.1650 shares of M&G and 0.85 shares of
      JSP held personally and 379,340.1871 shares of JTP, 7,136.7159 shares of
      M&G and 36,087.850 shares of JSP held by the John W. Jordan II Revocable
      Trust. Does not include 2,777.5927 shares of JTP , 51.025 shares of M&G
      and 266.9 shares of JSP held by Daly Jordan O'Brien the sister of Mr.
      Jordan, 2,777.5927 shares of JTP, 51.025 shares of M&G and 266.9 shares
      of JSP held by Elizabeth O'Brien Jordan, the sister of Mr. Jordan, or
      2,777.5927 shares of JTP, 51.025 shares of M&G and 266.9 shares of JSP
      held by George Cook Jordan, Jr., the brother of Mr. Jordan.

(3)   Does not include 898.0451 shares of JTP, 16.4973 shares of M&G and 86.275
      shares of JSP held by the Jordan/Zalaznick Capital Company or 31,431.5758
      shares of JTP, 577.4053 shares of M&G and 3,020.3050 shares of JSP held
      by JZ Equity Partners PLC.

(4)   Does not include 29,171.4943 shares of JTP, 535.8871 shares of M&G and
      2,803.13 shares of JSP held by The Jordan Family Trust.

(5)   Does not include 737,8205 shares of JTP, 13.5558 shares of M&G and 70.89
      shares of JSP held by Bruce Zalaznick, the brother of Mr. Zalaznick.

(6)   Includes 5,606.9406 shares of JTP, 103.0008 shares of M&G and 538.815
      shares of JSP held by G. Robert Fisher, as the Trustee of the G. Robert
      Fisher Irrevocable Gift Trust, U.T.I., dated December 26, 1990

(7)   Does not include 95,566.3378 shares of JTP, 2,019.7802 shares of M&G and
      8,603.445 of JSP held by Leucadia Investors, Inc., of which Joseph S.
      Steinberg is President and a director.


     Stockholder Agreement. Each holder of our outstanding shares of common
stock is a party to a Stockholder Agreement, dated as of June 1, 1988 (the
"Stockholder Agreements"), by and among such stockholders and us. The
Stockholder Agreements subject the transfer of shares of common stock by such
stockholders to our right of first refusal and "co-sale" rights in favor of the
other stockholders, subject to certain restrictions. Under certain
circumstances, stockholders holding 60% or more of the outstanding shares of
common stock, on a fully diluted basis, have certain rights to require the
other stockholders to sell their shares of common stock.


                                       59
<PAGE>

                             CERTAIN TRANSACTIONS

     1997 Recapitalization and Repositioning Plan. In 1997, we recapitalized
our investment in Motors and Gears and Telecommunication Products. In
connection with Motors and Gears' recapitalization, Motors and Gears issued
16,250 shares of Motors and Gears common stock (representing approximately
82.5% of the outstanding shares of Motors and Gears common stock) to the Jordan
Group and Motors and Gears management for total consideration of $2.2 million
(of which $1.1 million was paid in cash and $1.1 million was paid through the
delivery of 8% zero coupon notes due 2007). Also in connection with Motors and
Gears' recapitalization, $1,500,000 of senior, non-voting 8.0% cumulative
preferred stock was issued to the Jordan Group and Motors and Gears management.
In connection with Telecommunication Products' recapitalization,
Telecommunication Products issued 959,638.8889 shares of Telecommunication
Products common stock (representing approximately 96.5% of the outstanding
shares of Telecommunication Products common stock after consummation of the
plan) to the Jordan Group and Telecommunication Products management for total
cash consideration of approximately $1.9 million (of which $1.0 million was
loaned to them by us pursuant to 8% zero coupon notes due 2007). In 1998, we
repurchased 10,722.2222 shares of Telecommunication Products common stock at
$2.00 per share from a Telecommunication Products executive who left the
Company. As a result of each of these recapitalizations, the Jordan Group and
such management own substantially all of the Motors and Gears common stock and
the Telecommunication Products common stock and our investment in Motors and
Gears and Telecommunication Products is evidenced only by the M&G junior
preferred stock and the JTP junior preferred stock. As a matter of corporate
law, the directors and majority stockholders of Motors and Gears and
Telecommunication Products will owe fiduciary and other duties to Motors and
Gears' and Telecommunication Products' common stockholders, which may conflict
with our interests.

     In connection with Motors and Gears' recapitalization, Leucadia Investors,
Inc. and Messrs. Quinn, Jordan, Zalaznick and Boucher purchased 1,644.7802,
1,649.7294, 6,899.3184 (which includes 6,899.1534 shares purchased by the John
W. Jordan II Revocable Trust, but does not include 51.0250 shares purchased by
Daly Jordan O'Brien, the sister of Mr. Jordan, 51.0250 shares purchased by
Elizabeth O'Brien Jordan, the sister of Mr. Jordan, 51.0250 shares purchased by
George C. Jordan, Jr., the brother of Mr. Jordan, 16.4973 shares purchased by
The Jordan/Zalaznick Capital Company, 535.8871 shares purchased by The Jordan
Family Trust, of which Mr. Jordan is a trustee and 577.41 shares purchased by
JZ Equity Partners PLC, a publicly traded U.K. investment trust advised by an
affiliate of The Jordan Company (controlled by Messrs. Jordan and Zalaznick)),
3,293.6848 (which does not include 13.5558 shares purchased by Bruce Zalaznick,
the brother of Mr. Zalaznick, 16.4973 shares purchased by The Jordan/Zalaznick
Capital Company, 6,899.1534 shares purchased by the John W. Jordan II Revocable
Trust and 577.41 shares purchased by JZ Equity Partners PLC) and 912.9337
shares of Motors and Gears common stock, respectively, from the Company for a
purchase price of $135.38 per share.

     Also in connection with Motors and Gears' recapitalization, Leucadia
Investors, Inc., Messrs. Quinn, Jordan, Zalaznick and Boucher were issued
Motors and Gears non-voting preferred shares with initial liquidation values of
$163,043.48, $65,217.39, $103,288.04 (which includes $103,288.04 issued to the
John W. Jordan II Revocable Trust, but does not include $652,173.91 issued to
JII Partners), $103,288.04 (which does not include $103,288.04 issued to the
John W. Jordan II Revocable Trust or $652,173.91 issued to JII Partners) and
$88,532.61, respectively.

     In connection with Telecommunication Products' recapitalization, Leucadia
Investors, Inc., Messrs. Quinn, Jordan, Zalaznick and Boucher purchased
95,566.34, 89,804.60, 379,349.17 (which includes 379,340.19 shares purchased by
the John W. Jordan II Revocable Trust, but does not include 2,777.59 shares
purchased by Daly Jordan O'Brien, the sister of Mr. Jordan, 2,777.59 shares
purchased by Elizabeth O'Brien Jordan, the sister of Mr. Jordan, 2,777.59
shares purchased by George C. Jordan, Jr., the brother of Mr. Jordan, 898.05
shares purchased by The Jordan/Zalaznick Capital Company, 29,171.49 shares
purchased by The Jordan Family Trust, of which Mr. Jordan is a trustee,
40,208.33 shares purchased by JII Partners and 31,431.58 shares purchased by JZ
Equity Partners PLC), 183,073.27 (which does not include 737.82 shares
purchased by Bruce Zalaznick, the brother of Mr.


                                       60
<PAGE>

Zalaznick, 898.05 shares purchased by The Jordan/Zalaznick Capital Company,
379,340.19 shares purchased by the John W. Jordan II Revocable Trust, 40,208.33
shares purchased by JII Partners and 31,431.58 shares purchased by JZ Equity
Partners PLC) and 52,935.14 shares of Telecommunication Products common stock,
respectively, from us for a purchase price of $2.00 per share.

     Formation of Specialty Plastics. On February 9, 1998, we completed the
formation of Specialty Plastics, Inc. as a Restricted Subsidiary under our
indentures. We sold the stock of Beemak and Sate-Lite to Specialty Plastics for
$11.5 million of preferred stock, which will accrete at plus or minus 97.5% of
the cumulative net income or net loss, as the case may be, of Specialty
Plastics through the earlier of an Early Redemption Event (as defined) or March
31, 2003. We will also keep our intercompany notes with Sate-Lite ($1.2 million
at January 31, 1998) and Beemak ($9.8 million at January 31, 1998).

     Specialty Plastics Recapitalization Plan. In 1998, we recapitalized our
investment in Specialty Plastics. In connection with Specialty Plastics'
recapitalization, Specialty Plastics issued 97,000 shares of Specialty Plastics
common stock (representing 97.0% of the Specialty Plastics common stock after
consummation of the plan) to the Jordan Group for total cash consideration of
$97,000. As a result of this recapitalization, the Jordan Group and management
own substantially all of the Specialty Plastics common stock, and our
investment in Specialty Plastics is evidenced only by the JSP junior preferred
stock. As a matter of corporate law, the directors and majority stockholders of
Specialty Plastics will owe fiduciary and other duties to Specialty Plastics'
common stockholders, which may conflict with our interests.

     In connection with Specialty Plastics' recapitalization, Leucadia
Investors, Inc., Messrs. Quinn, Jordan, Zalaznick and Boucher purchased
8,603.4450, 8,629.3700, 36,087.8550 (which includes 36,087.8550 shares
purchased by the John W. Jordan II Revocable Trust, but does not include
266.9000 shares purchased by Daly Jordan O'Brien, the sister of Mr. Jordan,
266.9000 shares purchased by Elizabeth O'Brien Jordan, the sister of Mr.
Jordan, 266.9000 shares purchased by George C. Jordan, Jr., the brother of Mr.
Jordan, 86.2750 shares purchased by The Jordan/Zalaznick Capital Company,
2,803.1300 shares purchased by The Jordan Family Trust, of which Mr. Jordan is
a trustee, 11,000.0000 shares purchased by JII Partners and 3,020.3050 shares
purchased by JZ Equity Partners PLC), 17,228.4800 (which does not include
70.8900 shares purchased by Bruce Zalaznick, the brother of Mr. Zalaznick,
86.2750 shares purchased by The Jordan/Zalaznick Capital Company, 36,087.8550
shares purchased by the John W. Jordan II Revocable Trust, 11,000.0000 shares
purchased by JII Partners and 3,020.3050 shares purchased by JZ Equity Partners
PLC) and 4,775.3850 shares of Specialty Plastics common stock, respectively,
from us for a purchase price of $1.00 per share.

     Each of those recapitalizations permit the Jordan Group, the Company's
stockholders and management of Motors and Gears, Telecommunication Products and
Specialty Plastics, to invest directly in Motors and Gears, Telecommunication
Products and Specialty Plastics, respectively. If, in the future, the M&G
junior preferred stock or the JTP junior preferred stock is redeemed, as well
as under certain other circumstances, we could be required to pay substantial
income tax liabilities resulting from the deconsolidation of these subsidiaries
from the Company's consolidated group for Federal income tax purposes. See
"Risk Factors--Consequences of Subsidiary Deconsolidation," "Risk
Factors--Acquisition and Reorganization Strategies" and "1997 Recapitalization
and Repositioning Plan."

     Motors and Gears Holdings, Inc. Discount Notes. In December 1997, we made
an investment through the purchase of $20.0 million initial accreted value of
13 1/2% senior discount notes issued by Motors and Gears Holdings, Inc. These
notes were issued at a deep discount, accrue interest at the rate of 13 1/2%
per annum and are non-cash pay through December 15, 2002. These notes are
redeemable at the option of Motors and Gears Holdings, Inc., in whole or in
part, at anytime. These notes mature on December 15, 2007.

     Service Agreements.  Each of our subsidiaries (other than certain of the
subsidiaries of Bond Technologies and Dura-Line) are parties to advisory
agreements with us (the "Subsidiary Advisory Agreements"), pursuant to which
such subsidiaries will pay to us (i) investment banking and


                                       61
<PAGE>

sponsorship fees of up to 2.0% of the purchase price of acquisitions, joint
ventures, minority investments or sales involving such subsidiaries or their
respective businesses or properties; (ii) financial advisory fees of up to 1.0%
of any debt, equity or other financing or refinancing involving such
subsidiary, in each case, arranged with the assistance of the Company or its
affiliates; and (iii) reimbursement for our out-of-pocket costs in connection
with providing such services. The Subsidiary Advisory Agreements contain
customary indemnities in favor of the Company, The Jordan Company and TJC
Management Corporation (an affiliate of the Jordan Company) in connection with
such services. Pursuant to the TJC Management Consulting Agreement, we, in
turn, will also pay to TJC Management Corporation one-half of such investment
banking, sponsorship and financial advisory fees and its portion of such cost
reimbursements, unless otherwise determined by our Board of Directors. The
Subsidiary Advisory Agreements will expire in December 2007, but are
automatically renewed after such date for successive one-year terms, unless any
party provides written notice of termination 60 days prior to the scheduled
renewal date. We received fees of $4.6 million for 1997 pursuant to the
Subsidiary Advisory Agreements and $1.2 million in 1998. No such fees or cost
reimbursements were accrued or unpaid in 1997 or 1998.

     We have entered into a consulting services agreement with TJC Management
Corporation (the "TJC Management Consulting Agreement"), pursuant to which we
will pay to TJC Management Corporation (i) annual consulting fees of $3.0
million, payable quarterly; (ii) one-half of the investment banking sponsorship
and financing advisory fees paid to us pursuant to the Subsidiary Advisory
Agreements, unless otherwise determined by our Board of Directors; (iii) (A)
investment banking and sponsorship fees of up to 2.0% of the purchase price of
acquisitions, joint ventures and minority investments or sales involving us or
our subsidiaries (other than Motors and Gears, Specialty Plastics,
Telecommunication Products and other subsidiaries that are a party to any of
the Subsidiary Advisory Agreements) and (B) financial advisory fees of up to
one-half of 1.0% of any debt, equity or other financing or refinancing
involving us or such subsidiaries, in each case, arranged with the assistance
of TJC Management Corporation or its affiliates, unless otherwise determined by
the Board of Directors of TJC Management Corporation; and (iv) reimbursement
for TJC Management Corporation's and The Jordan Company's out-of-pocket costs
incurred in connection with providing such services. The TJC Management
Consulting Agreement also contains customary indemnities in favor of TJC
Management Corporation and The Jordan Company in connection with such services.
In consideration for these fees, the services of Mr. Jordan and the investment
banking, sponsorship and advisory services of The Jordan Company will be
provided to us. The TJC Management Consulting Agreement will expire in December
2007, but is automatically renewed after such date for successive one-year
terms, unless either party provides written notice of termination 60 days prior
to the scheduled renewal date. Pursuant to this Agreement, we paid, on our
behalf and that of our subsidiaries, to TJC Management Corporation and The
Jordan Company fees and cost reimbursements of approximately $7.3 million in
1997 and approximately $6.0 million in 1998. In addition, $4.9 million of such
fees and cost reimbursements are accrued and unpaid in respect of 1997 and $4.1
million are accrued and unpaid in respect of 1998.

     Each of our subsidiaries (other than certain of the subsidiaries of Bond
Technologies and Dura-Line) are parties to consulting agreements with us (the
"Subsidiary Consulting Agreements"), pursuant to which they will pay to us
annual consulting fees of 1.0% of such subsidiary's net sales for such
services, payable quarterly, and will reimburse us for our out-of-pocket costs
related to its services. In the Subsidiary Consulting Agreements relating to
Motors and Gears, Specialty Plastics and Telecommunication Products, we (but
not our affiliates, including The Jordan Company) are obligated to present all
acquisition, business and investment opportunities that relate to
manufacturing, assembly, distribution or marketing of products and services in
the motors and gears and telecommunications and data communications industries
to Motors and Gears, Specialty Plastics and Telecommunication Products,
respectively, and we are not permitted to pursue such opportunities or present
them to third parties unless Motors and Gears, Specialty Plastics or
Telecommunication Products, as applicable, determine not to pursue such
opportunities or Motors and Gears, Specialty Plastics or Telecommunication
Products, as applicable, consent thereto. The Subsidiary Consulting Agreements
do not prohibit our affiliates from pursuing such opportunities or offering
them to third


                                       62
<PAGE>

parties without Motors and Gears', Specialty Plastics' or Telecommunication
Products' consent, as the case may be. The Subsidiary Consulting Agreements
expire in December 2007, but are automatically renewed for successive one year
terms, unless either party to the agreement provides written notice of
termination 60 days prior to the scheduled renewal date. We received $14.5
million in connection with the Subsidiary Consulting Agreements in 1997 and
$22.8 million in 1998. In addition $6.3 million of such fees and cost
reimbursements are accrued and unpaid in respect of 1997 and $2.9 million are
accrued and unpaid in respect of 1998.

     Our Nonrestricted Subsidiary, JI Properties, Inc., entered into a services
agreement (the "JI Properties Services Agreement") with us and each of our
other subsidiaries (other than certain subsidiaries of Bond Technologies and
Dura-Line), pursuant to which JI Properties will provide certain real estate,
other assets, transportation and related services to us and such subsidiaries.
JI Properties' current capital leases are guaranteed by us. Pursuant to the JI
Properties Services Agreement, our subsidiaries will be charged their allocable
portion of such services and related costs based upon their usage of such
services and their relative revenues as compared with other subsidiaries. The
JI Properties Services Agreement will expire in December 2007, but is
automatically renewed for successive one year terms, unless either party
provides written notice of termination 60 days prior to the scheduled renewal
date. We received $0.3 million pursuant to the JI Properties Services Agreement
in 1997 and $1.6 million in 1998. In addition, $0.6 million of such fees and
cost reimbursements are accrued and unpaid in respect of 1997 and $0.9 million
are accrued and unpaid in respect of 1998.

     We also allocate overhead, general and administrative charges and expenses
among us and our subsidiaries based on the respective revenues and usage of
corporate overhead by us and our subsidiaries. We received $1.8 million in 1997
and $4.1 million in 1998 in respect of overhead allocation reimbursement.

     Three companies that are not our subsidiaries -- Healthcare Holdings,
Sourcelink, Inc. and Saldon Holdings, Inc. -- are also party to service and fee
agreements with us, pursuant to which such companies will pay to us (i)
investment banking and sponsorship fees of up to 2.0% of the purchase price of
acquisitions, joint ventures, minority investments or sales involving such
subsidiaries or their respective businesses or properties; (ii) financial
advisory fees of up to 1.0% of any debt, equity or other financing or
refinancing involving such company, in each case, arranged with our assistance
or that of our affiliates; (iii) fees of 3.0% of EBITDA (as defined); and (iv)
reimbursement for our out-of-pocket costs in connection with providing such
services. These fee agreements contain customary indemnities in favor of the
Company, The Jordan Company and TJC Management Corporation in connection with
such services. Pursuant to the TJC Management Consulting Agreement, we, in
turn, will also pay to TJC Management Corporation one-half of such investment
banking, sponsorship and financial advisory fees and its portion of such cost
reimbursements, unless otherwise determined by our Board of Directors. These
fee agreements will expire in either 2007 or 2008, but are automatically
renewed after such date for successive one-year terms, unless any party
provides written notice of termination 60 days prior to the scheduled renewal
date. We received fees of $1.0 million for 1997 pursuant to these fee
agreements and $3.3 million in 1998. In addition, $0.2 million of such fees and
cost reimbursements are accrued and unpaid in respect of 1997 and $1.0 million
are accrued and unpaid in respect of 1998.

     Transaction Fees. We will pay $0.8 million of investment banking,
sponsorship and financial advisory fees to TJC Management Corporation in
connection with the offering of the series C senior notes and the acquisition
of Alma Products.

     Tax Sharing Agreements. Each of our subsidiaries and we are parties to a
tax sharing agreement. Pursuant to these tax sharing agreements, each of our
consolidated subsidiaries pays to us, on an annual basis, an amount determined
by reference to the separate return tax liability of the subsidiary as defined
in Treasury Regulation Section 1.1552-1(a)(2)(ii). We received payments of $5.3
million and $3.9 million, respectively, from our subsidiaries pursuant to the
tax sharing agreements in the year ended December 31, 1997 and the year ended
December 31, 1998, respectively. These income tax payments reflected a Federal
income tax rate of approximately 34% of each subsidiary's pre-tax income.


                                       63
<PAGE>

     Upon redemption of the junior preferred stock of Motors and Gears,
Specialty Plastics or Telecommunication Products, or upon other circumstances
that cause Motors and Gears, Specialty Plastics or Telecommunication Products
and their respective subsidiaries to cease to be our tax-consolidated
subsidiaries, Motors and Gears, Specialty Plastics or Telecommunication
Products, as the case may be, and their respective subsidiaries will be
released from making any further payments under the tax sharing agreements.
While the release will discharge Motors and Gears, Specialty Plastics or
Telecommunication Products and their respective subsidiaries from making future
income tax payments to us, Motors and Gears, Specialty Plastics or
Telecommunication Products and their respective subsidiaries, as the case may
be, will remain contingently liable to us under the tax sharing agreements in
respect of any increases in their separate return tax liability for periods
prior to such deconsolidations.

     Fannie May. On July 2, 1997, Fannie May Holdings, Inc. ("Fannie May")
engaged in a refinancing of substantially all its indebtedness. After the 1997
refinancing, we held approximately 15.1% of the outstanding common stock of
Fannie May as well as preferred stock with a liquidation value of $1.5 million.
Fannie May's Chief Executive Officer is Mr. Quinn, and its stockholders include
Messrs. Jordan, Quinn, Zalaznick and Boucher, who are our directors and
stockholders, as well as other partners, principals and associates of The
Jordan Company who are also our stockholders. Fannie May, which is also known
as "Fannie May Candies," is a manufacturer and marketer of kitchen-fresh,
high-end boxed chocolates through its 337 company-owned retail stores and
through third party retail and non-retail sales channels. Its products are
marketed under both the "Fannie May" and "Fanny Farmer" brand names.

     JIR. On June 23, 1998, we made approximately $0.8 million of unsecured
advances to JIR, Inc., JIR Broadcast, Inc. and JIR Paging, Inc. Each of these
company's Chief Executive Officer is Mr. Quinn, and its stockholders include
Messrs. Jordan, Quinn, Zalaznick and Boucher, who are our directors and
stockholders, as well as other partners, principals and associates of The
Jordan Company who are also our stockholders. These companies are engaged in
the development of businesses in Russia, including in the broadcast and paging
sectors.

     JZ International, Ltd. In November, 1998, Motors and Gears invested $5.6
million in the Class A Preferred Stock and $1.7 million in Class B Preferred
Stock of JZ International, Ltd. Motors and Gears expects to make an additional
$5.0 million of investments in JZ International's Class A Preferred Stock. JZ
International's Chief Executive Officer is David W. Zalaznick, and its
stockholders include Messrs. Jordan, Quinn, Zalaznick and Boucher, who are our
directors and stockholders, as well as other partners, principals and
associates of The Jordan Company who are also our stockholders. JZ
International is a merchant bank located in London, England that is focused on
making European and other international investments.

     CBD Networks, Inc. During 1998, we made approximately $1.4 million of
unsecured advances to CBD Networks, Inc. We expect to form a new, Nonrestricted
Subsidiary to acquire all or substantially all of the business and assets of
CBD Networks in the near future, pursuant to which we will invest $3.5 million
in a five-year unsecured note, bearing interest at 10% per annum, and a
warrant, exercisable for 10% of the issued and outstanding common stock of CBD
Networks. We expect that substantially all of the issued and outstanding common
stock of the company that acquires the business of CBD Networks will be owned
by our stockholders and the management of CBD Networks. CBD Networks is a
provider of Internet access for approximately 10,000 customers.

     Healthcare Products Holdings, Inc. During 1998, we made approximately $1.0
million of unsecured advances to Healthcare Products Holdings, Inc. Healthcare
Products Holdings' Chief Executive Officer is Thomas H. Quinn, and its
stockholders include Messrs. Jordan, Quinn, Zalaznick and Boucher, who are our
directors and stockholders, as well as other partners, principals and
associates of The Jordan Company who are also our stockholders.

     Employment Agreements; Stock Transactions. On February 25, 1988, we
entered into an employment agreement with Thomas H. Quinn, pursuant to which
Mr. Quinn became our President and Chief Operating Officer, effective January
1, 1988. See "Management--Executive Compensation--Employment Agreement."


                                       64
<PAGE>

     Legal Counsel. Mr. G. Robert Fisher, one of our directors, and our general
counsel and secretary, is also a partner of Sonnenschein Nath & Rosenthal, and
was a partner of Bryan Cave LLP, and was a partner of Smith, Gill, Fisher &
Butts which merged into Bryan Cave LLP. Mr. Fisher and his law firms have
represented us and The Jordan Company in the past, and we expect them to
continue representing each of us in the future. In 1997 and 1998, while Mr.
Fisher was a partner of Bryan Cave LLP, we paid Bryan Cave LLP approximately
$1.8 million and $1.1 million, respectively, in fees and expenses.


     Stock Appreciation Rights Payments. In connection with acquiring our
subsidiaries, the sellers of the subsidiaries, who usually included the
subsidiary's management, often receive seller notes, stock, stock appreciation
rights and special bonus plans in respect of those subsidiaries. In April 1997,
we paid and purchased stock appreciation rights and related interests at three
companies. At Dura-Line, we agreed to pay $15.4 million to purchase Dura-Line
stock appreciation rights from the president and chief financial officer of
Dura-Line (of which $9.4 million was paid in April 1997, $1.0 million was paid
in March 1998, and $5.0 million is payable in annual installments through
2002), and redeemed $1.9 million of Dura-Line preferred stock held by the
president and chief financial officer of Dura-Line in April 1998. At Aim
Electronics and Cambridge, we paid a total of $6.2 million to purchase Aim
Electronics and Cambridge stock appreciation rights (based upon 20% of Aim
Electronics' and Cambridge's appreciation from 1989 to 1996) from the estate of
the former president of Aim Electronics and Cambridge. Each of these payments
and purchases in respect of the stock appreciation rights was expensed for
financial reporting purposes.


     Sale of Telecommunication Products Common Stock. Telecommunication
Products has agreed to sell 10,000 shares of its common stock to Harold Bevis,
the Chief Executive Officer of Telecommunication Products, for $2.00 per share.
 


     Directors and Officers Indemnification. We have entered into
indemnification agreements with each member of our Board of Directors whereby
we have agreed, subject to certain exceptions, to indemnify and hold harmless
each director from liabilities incurred as a result of such person's status as
one of our directors. See "Management--Our Directors and Executive Officers."


     Future Arrangements. We have adopted a policy that future transactions
between us and our officers, directors and other affiliates (including the
Motors and Gears, the Specialty Plastics and the Telecommunication Products
subsidiaries) must (i) be approved by a majority of the members of our Board of
Directors and by a majority of the disinterested members of our Board of
Directors and (ii) be on terms no less favorable to us than could be obtained
from unaffiliated third parties.


                                       65
<PAGE>

                 1997 RECAPITALIZATION AND REPOSITIONING PLAN

     In 1997, we implemented a plan to recapitalize and reposition our
subsidiaries in order to establish them as more independent, stand-alone,
industry-focused companies, to provide us with additional financial and
operational flexibility and to allow our stockholders and the management of
Telecommunication Products and Motors and Gears to invest directly in those
entities.

     The principal elements of this plan included the following:

     The Series B Senior Notes Offering. We issued the series B senior notes on
October 3, 1997 in a registered exchange offer for our 10 3/8% series A senior
notes which were issued and sold on July 25, 1997 for net proceeds of
approximately $113 million.

     Jordan Telecommunication Products Recapitalization. We formed Jordan
Telecommunication Products, Inc., which acquired all of the Telecommunication
Products subsidiaries from Jordan Industries in a series of transactions for
aggregate consideration of $294.0 million, consisting of $284.0 million of cash
proceeds and $10.0 million of assumed obligations. As part of that
recapitalization, we purchased $20.0 million of aggregate initial liquidation
preference of JTP junior preferred stock, resulting in net cash proceeds to us
of $264.0 million. See "Risk Factors--Consequences of Subsidiary
Deconsolidation," "Certain Transactions--1997 Recapitalization and
Repositioning Plan" and "Description of Capital Stock--Subsidiary
Securities--JTP Junior Preferred Stock."

     Jordan Telecommunication Products Offering. Jordan Telecommunication
Products, Inc. sold $190.0 million of senior notes, $85.0 million of initial
accreted value of senior discount notes and units consisting of senior
preferred stock with an aggregate liquidation preference of $25.0 million and
shares of common stock, which was completed concurrently with the offering of
series B senior notes.

     Fannie May Refinancing. Fannie May refinanced its indebtedness, including
the notes held by us in an aggregate principal amount (together with accrued
interest) of $14.4 million at June 30, 1997. We received net cash proceeds of
approximately $17.4 million from the Fannie May refinancing. See "Certain
Transactions--Fannie May."

     Credit Agreement. JII, Inc., one of our subsidiaries, established the
Credit Agreement by amending and restating the prior JII Credit Agreement. The
Credit Agreement provides us and certain of our subsidiaries with a revolving
credit and letter of credit facility of up to $75.0 million, of which $50.0
million was drawn on as of December 31, 1998. See "Description of Certain
Indebtedness--Credit Agreements."

     Reclassification of Subsidiaries. We reclassified the Specialty Printing
and Labeling subsidiaries as Restricted Subsidiaries for purposes of our
indentures, which subjects Specialty Printing and Labeling subsidiaries to the
restrictive covenants of those indentures, and we reclassified JI Properties as
a Nonrestricted Subsidiary for the purposes of the indentures. Following this
reclassification, Jordan Industries continues to guaranty JI Properties'
current capital leases.

     The net proceeds from the foregoing were used as follows:

     Repayment of the Old Credit Agreements. We repaid in full approximately
$78.0 million aggregate principal amount of indebtedness under our prior credit
agreements.

     Tender Offer and Consent Solicitation for the Series B Senior Notes. We
completed a tender offer for substantially all of our series B 10 3/8% senior
notes due 2003 and an accompanying consent solicitation to amend the related
indenture, and paid related fees and expenses.

     Consent Solicitation for the Discount Debentures. We completed a consent
solicitation for the discount debentures which included (1) the adoption of
certain amendments to the indenture governing the discount debentures and (2)
the payment of fees and expenses relating to the consent solicitation.

     In addition, as part of our strategy to make complementary acquisitions
and to divest non-core businesses, we have executed the following transactions
as additional elements of this plan:


                                       66
<PAGE>

     Motors and Gears Recapitalization. In May 1997, we recapitalized our
investment in Motors and Gears through the amendment and restatement of our
preferred stock investment in Motors and Gears involving, among other things,
increasing to $42.0 million of the initial aggregate liquidation preference of
the M&G junior preferred stock. In connection with that recapitalization,
Motors and Gears issued 16,250 shares of Motors and Gears common stock
(representing approximately 82.5% of the outstanding shares of Motors and Gears
common stock) to the Jordan Group and Motors and Gears management for total
consideration of $2.2 million (of which $1.1 million was paid in cash and $1.1
million was paid through the delivery of 8% zero coupon notes due 2007). See
"Risk Factors--Consequences of Subsidiary Deconsolidation," "Certain
Transactions" and "Description of Capital Stock--Subsidiary Securities--M&G
Junior Preferred Stock."


     Acquisitions. The acquisition by Telecommunication Products of the assets
of LoDan for approximately $17.0 million in May 1997, and the acquisition by
Motors and Gears of the stock of Fir for approximately $51.3 million in June
1997.


     Dispositions. The sale of Hudson in May 1997 for approximately $35.0
million, and the sale of Paw Print to an affiliate in July 1997 for
approximately $10.0 million in net cash proceeds and approximately $2.5 million
of assumed debt.


                                       67
<PAGE>

                      DESCRIPTION OF CERTAIN INDEBTEDNESS

     The following is a summary of certain terms of our indebtedness.


CREDIT AGREEMENTS

     Credit Agreement. On July 25, 1997, JII, Inc., one of our subsidiaries,
entered into a credit agreement (the "Credit Agreement") under which JII, Inc.
is able to borrow, on behalf of Jordan Industries, to fund acquisitions,
provide working capital and for other general corporate purposes. The Credit
Agreement provides for a revolving line of credit of $75.0 million over a term
of five years. Outstanding borrowings carry a floating rate, at JII, Inc.'s
option, equal to the Eurodollar rate +2.00% or the Base Rate +.50%. The
indebtedness of JII, Inc. is secured by a pledge of substantially all of the
assets of the Restricted Group, and is guaranteed by the Restricted Group. At
March 31, 1999, there were no amounts outstanding under the Credit Agreement.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

     Other Credit Facilities. On July 25, 1997, JTP Industries, Inc., a
subsidiary of Jordan Telecommunication Products, Inc., entered into an
agreement (the "JTP Credit Agreement"), under which Telecommunication Products
is able to borrow to fund acquisitions, provide working capital and for other
general corporate purposes. The JTP Credit Agreement provides for a revolving
line of credit of $110.0 million over a term of five years. Outstanding
borrowings carry a floating rate, at Jordan Telecommunication Products, Inc.'s
option, equal to the Eurodollar rate +2.50% or the Base Rate +1.00%. The JTP
Credit Agreement is secured by a first priority security interest in
substantially all of the assets of the operating subsidiaries of
Telecommunication Products, including a pledge of the stock of the
subsidiaries, and is guaranteed by those subsidiaries. At March 31, 1999, $80.0
million was outstanding under the JTP Credit Agreement.

     On November 7, 1996, M&G Industries, Inc., a subsidiary of Motors and
Gears, Inc., entered into an agreement (the "M&G Credit Agreement"), under
which Motors and Gears is able to borrow to fund acquisitions, provide working
capital and for other general corporate purposes. The M&G Credit Agreement
provides for a revolving line of credit of $75.0 million over a term of five
years. Outstanding borrowings carry a floating rate, at Motors and Gears'
option, equal to the Eurodollar rate +2.25% or the Base Rate +1.25%. The M&G
Credit Agreement is secured by a first priority security interest in
substantially all of the assets of the operating subsidiaries of Motors and
Gears, including a pledge of the stock of the subsidiaries, and is guaranteed
by those subsidiaries. At March 31, 1999, $36.0 million was outstanding under
the M&G Credit Agreement.

     Motors and Gears' Fir subsidiary has a number of unsecured short-term
borrowing facilities available from approximately 25 banks in the form of
overdraft coverage. The total amount available under the overdraft facilities
is $3.5 million at interest rates ranging from 9.5% to 10.5% at March 31, 1999.
No amounts under these arrangements were outstanding at March 31, 1999.

     Dura-Line has available a line of credit from ABN-Amro Bank N.V. of
Prague, Czech Republic in the amount of $0.8 million. The line of credit
matures on April 23, 1999, if not renewed. At March 31, 1999, no amounts were
outstanding under this line of credit. Outstanding borrowings under the line of
credit carry an interest rate of 1.25% above PRIBOR (Prague Inter-Bank Offered
Rate). The applicable rate at December 1, 1998 was 14.0%. The facility is
secured by the assets of Dura-Line's majority owned subsidiary, Dura-Line CT
s.r.o., which is located in the Czech Republic. The facility is also guaranteed
with a standby letter of credit issued by Dura-Line.


TERM LOANS

     Pamco. Pamco, a Specialty Printing and Labeling subsidiary, has a $1.3
million, 8.2% seven year mortgage with First Chicago Bank payable in monthly
installments through October 2003. At March 31, 1999, $1.2 million was
outstanding under the mortgage.

     Deflecto. Deflecto, a Specialty Plastics subsidiary, has a $2.4 million,
 .25% below prime rate, 30 year mortgage outstanding with BancOne. At March 31,
1999, $2.2 million was outstanding under the mortgage.


                                       68
<PAGE>

     Dura-Line. Dura-Line, a Telecommunication Products subsidiary, has (1) a
$1.5 million term loan from Heller Financial, Inc. at 10.2% maturing in 2001,
(2) a term loan with ABN-Amro Bank N.V. for $0.9 million at 5.49% maturing in
2000 and (3) a term loan with Oriental Bank (India) for $1.5 million at 17.0%
maturing in 2005.


CAPITAL LEASES

     Interest rates on capital leases range from 8.3% to 14.5%. The future
minimum lease payments as of December 31, 1998 under capital leases (certain of
which are capital leases of Nonrestricted Group guaranteed by the Company)
consist of the following:



<TABLE>
<S>                                                                  <C>
          1999 ...................................................   $ 6,434,000
          2000 ...................................................    12,482,000
          2001 ...................................................     4,307,000
          2002 ...................................................     3,620,000
          2003 ...................................................     9,531,000
          Thereafter .............................................       852,000
                                                                     -----------
            Total ................................................   $37,226,000
          Less amount representing interest ......................     6,893,000
                                                                     -----------
          Present value of future minimum lease payments .........   $30,333,000
                                                                     ===========
</TABLE>

     The present value of the future minimum lease payments approximates the
book value of property, plant and equipment under capital leases at December
31, 1998.


SELLER PROMISSORY NOTES

     In connection with the acquisition of Parsons, a Consumer and Industrial
Products company, Parsons issued to the seller a $0.6 million 9.0% subordinated
promissory note. This note matured in 1991. As of March 31, 1999, no payments
have been made and no interest has been accrued by the Company in respect of
the note.

     In connection with the acquisition of Deflecto, a Specialty Plastics
company, Deflecto issued to a certain seller a $5.0 million 8.5% subordinated
promissory note. This note is a general unsecured obligation of Deflecto, and
is subordinated to borrowings under the Credit Agreement. Interest is payable
annually in arrears and Deflecto is scheduled to pay installments of principal
on the note of $2.5 million in 2003 and $2.5 million in 2004.

     In connection with the acquisition of Rolite, a Specialty Plastics
company, Rolite issued to the seller a $0.9 million 8.5% subordinated
promissory note. This note is a general unsecured obligation of Rolite, and is
subordinated to borrowings under the Credit Agreement. Interest is payable
annually in arrears and Rolite is scheduled to pay the entire principal amount
of the note in 2002.

     In connection with the acquisition of Valmark, a Specialty Printing and
Labeling company, Valmark issued to the seller a $4.0 million, 8.0% note. This
note is a general unsecured obligation of Valmark, subordinated to borrowings
under the Credit Agreement. Interest under the note is payable annually in
arrears and Valmark is scheduled to pay installments of principal on the note
of $2.0 million in 1999 and $2.0 million in 2000.

     In connection with the acquisition of Pamco, a Specialty Printing and
Labeling company, Pamco issued to the sellers a $1.8 million, 8.0% note and a
$2.1 million, 8.0% note. These notes are general unsecured obligations of
Pamco, subordinated to borrowings under the Credit Agreement. Interest is
payable annually in arrears and Pamco is scheduled to pay the principal on
these notes in 2001.

     In connection with the acquisition of Seaboard, a Specialty Printing and
Labeling company, Seaboard issued to the seller a $1.5 million 8.0%
subordinated promissory note. This note is a general unsecured obligation of
Seaboard, subordinated to borrowings under the Credit Agreement. Interest is
payable annually in arrears and Seaboard is required to pay the entire
principal amount of the note in 2001.


                                       69
<PAGE>

     In connection with the acquisition of LoDan, a Telecommunication Products
company, LoDan issued to the Seller a $1.5 million 8.0% subordinated promissory
note. This note is a general unsecured obligation of LoDan and is subordinated
to borrowings under the JTP Credit Agreement. Interest is payable annually in
arrears and the principal amount of the note is payable in full in 1999.

     In connection with the acquisition of Telephone Services, a
Telecommunication Products company, Telephone Services issued to the sellers an
aggregate of $5.0 million 8% subordinated promissory notes. These notes are
general unsecured obligations of Telephone Services, and are subordinated to
borrowings under the JTP Credit Agreement. Telephone Services is scheduled to
pay installments of principal on the notes of $1.275 million in 2002, $2.5
million in 2003 and $1.225 million in 2004.

     In connection with the acquisition of K&S Sheet Metal, a Telecommunication
Products company, K&S Sheet Metal issued to the sellers an aggregate of $1.5
million 8% subordinated promissory notes. These notes are general unsecured
obligations of K&S Sheet Metal, and are subordinated to borrowings under the
JTP Credit Agreement. Interest is payable annually in arrears and K&S Sheet
Metal is scheduled to pay installments of principal on the notes of $0.75
million in 2004 and $0.75 million in 2005.

     In connection with the acquisition of Opto-Tech, a subsidiary of Telephone
Services (a Telecommunication Products company), Opto-Tech issued to the seller
a $1.25 million 8% subordinated promissory note. This note is secured by a
limited guaranty from Jordan Telecommunication Products, Inc. Interest is
payable annually in arrears and Opto-Tech is required to pay installments of
principal on the note in equal increments of $0.25 million each year beginning
in 1999 and ending in 2003.

     In connection with the acquisition of Merkle-Korff, a Motors and Gears
company, Merkle-Korff issued to the seller a $5.0 million 9% seller note due
December 31, 2003. This note is a general unsecured obligation of Merkle-Korff,
subordinated to borrowings under the M&G Credit Agreement. Interest under this
note is payable annually in arrears and Merkle-Korff is required to pay
installments of principal on the note as follows: (i) $1.0 million on December
31, 2000; (ii) $1.25 million on December 31, 2001; (iii) $1.25 million on
December 31, 2002; and (iv) the entire then outstanding principal amount on
December 31, 2003.

     In connection with the acquisition of Electrical Design and Control, a
Motors and Gears company, Electrical Design and Control issued to the sellers
an aggregate of $4.0 million 9% subordinated promissory notes. Upon agreement
between the sellers and Electrical Design and Control, the aggregate principal
amount due on these notes has been reduced to $3.85 million. These notes are
general unsecured obligations of Electrical Design and Control, and are
subordinated to borrowings under the M&G Credit Agreement. Interest is payable
annually in arrears and Electrical Design and Control is scheduled to pay the
entire $3.85 million principal amount of the note in 2002.


STOCK APPRECIATION RIGHTS AGREEMENTS

     Dura-Line Preferred Stock and Stock Appreciation Rights Redemption
Agreement. Pursuant to a redemption agreement entered into with certain former
stockholders of Dura-Line on March 9, 1997, Dura-Line, a Telecommunication
Products subsidiary, redeemed from the stockholders $1.9 million of outstanding
7% cumulative preferred stock on March 9, 1998. In addition, on April 30, 1998,
we paid the stockholders a "special bonus" of $0.5 million, which represented
25% of Dura-Line's 1997 gross profit in excess of $30.0 million. Further
pursuant to the redemption agreement, Dura-Line agreed to pay the stockholders
$15.4 million in exchange for the stockholders' stock appreciation rights. Of
the $15.4 million, $9.4 million was paid in cash on March 9, 1997, and $1.0
million was paid on March 31, 1998. The remaining $5.0 million is due in the
following installments: (i) $1.1 million on March 31, 1999; (ii) $1.2 million
on March 31, 2000; (iii) $1.3 million on March 31, 2001; and (iv) $1.4 million
on March 31, 2002. As consideration for signing the redemption agreement, the
stockholders received total non-compete payments of $0.4 million over the
thirteen month period ended May 1998.


                                       70
<PAGE>

     Aim Electronics and Cambridge Stock Appreciation Rights. In April 1997, we
entered into an agreement to purchase Aim Electronics and Cambridge stock
appreciation rights (based upon 20% appreciation of Aim Electronics and
Cambridge from 1989 to 1996) from the estate of the former president of Aim
Electronics and Cambridge for total consideration of $6.2 million. Of this
amount, $3.1 million was paid in April 1997, and the remaining $3.1 million was
paid in April 1998.

OTHER SUBSIDIARY AGREEMENTS

     Deflecto Additional Purchase Price. In connection with the acquisition of
Deflecto, a Specialty Plastics company, Deflecto entered into an additional
purchase price agreement with the sellers of Deflecto as participants. The
additional purchase price agreement calls for payments to be made to the
participants based upon a specific formula, the basis of which is the average
EBIT (as defined) for the years ended December 31, 2006 and December 31, 2007.
A different formula applies if Deflecto is sold to a third party prior to
December 31, 2007.

     Motion Control Earn-Out Rights. In connection with the acquisition of
Motion Control, a Motors and Gears company, Motion Control entered into an
earn-out rights plan with the sellers (the "participants") of Motion Control.
This plan calls for payments to be made to the participants upon exercise of
the earned-out rights, such exercise being a one-time election during the first
four months of each calendar year beginning with the year 2003 through and
including 2008. The amount payable to the participants is based upon a specific
formula, the basis of which is the average EBIT (as defined) for the two
calendar years preceding the year of exercise. When exercised, the rights are
payable on or before September 30th of that year.

     Advanced DC Motors Contingent Purchase Price. In connection with the
acquisition of Advanced DC Motors, a Motors and Gears company, Advanced DC
Motors entered into a contingent purchase price plan with the sellers (or the
"participants") of Advanced DC Motors. This plan calls for two separate
payments to be made to the participants based on the EBIT (as defined) achieved
(1) for the year ended December 31, 1998 and (2) for the year ended December
31, 1999. It is payable on or before the April 1st immediately following the
respective year in which each such contingent payment is earned. A payment of
$3.1 million was made on March 30, 1999.

     Fir Additional Purchase Price. Pursuant to the purchase agreement entered
into between Motors and Gears and the sellers of Fir, Fir agreed to pay the
sellers, as additional purchase price, an amount based upon the Annual Net
Sales (as defined) achieved for the 12-month period ended July 31, 2000. It is
payable within 60 days after July 31, 2000.

     Viewsonics Contingent Purchase Price. In connection with the acquisition
of Viewsonics, a Telecommunication Products company, Viewsonics entered into a
contingent purchase price plan with the seller of Viewsonics. That plan called
for two payments to be made to the seller based upon the EBIT achieved for (1)
the 12-month period ended July 31, 1997 ("first payment period") and (2) the
12-month period ended July 31, 1998 ("second payment period"). Pursuant to the
terms of that plan, Viewsonics paid the seller $1.4 million on January 2, 1998
to satisfy the first payment period, and accrued $1.1 million to satisfy the
second payment period.

     Engineered Endeavors Stock Appreciation Rights Agreement. In connection
with the acquisition of Engineered Endeavors, a Telecommunication Products
company, Engineered Endeavors entered into a stock appreciation rights
agreement with the sellers of Engineered Endeavors (the "participants"). The
stock appreciation rights agreement calls for payments to be made to the
participants upon exercise of the stock appreciation rights, such exercise
being a one-time election during the calendar years 2003 through and including
2008. The sellers must exercise the stock appreciation rights within 30 days
after the receipt of the audited financial statements. The amount payable to
the participants is based upon a specific formula, the basis of which is the
average EBIT (as defined) for the two calendar years preceding the exercise
date. A different formula applies if Engineered Endeavors is sold before
December 31, 2008. When exercised, the stock appreciation rights are payable
one-fourth on or before September 30th of the year of exercise, and the
remaining three-fourths payable in equal installments on each of the following
three anniversaries of the first delivery date.


                                       71
<PAGE>

     Telephone Services Additional Purchase Price and Bonus Plan. In connection
with the acquisition of Telephone Services, a Telecommunication Products
company, Telephone Services entered into an additional purchase price agreement
and a 1998 bonus plan agreement with the sellers of Telephone Services. Those
agreements called for additional purchase price and payments to be made to the
sellers based upon the EBIT (as defined) achieved for the 12-month period ended
October 31, 1998. The estimated combined value of those agreements is $5.8
million. The amounts were paid to the sellers on March 1, 1999.

     K&S Sheet Metal Additional Purchase Price. In connection with the
acquisition of K&S Sheet Metal, a Telecommunication Products company, K&S Sheet
Metal entered into an additional purchase price agreement with the sellers of
K&S Sheet Metal. That agreement was entered into in order to induce the sellers
to enter into the purchase agreement and consummate the transactions
contemplated therein. That agreement calls for seven annual payments to be paid
to the sellers based upon the EBIT (as defined) achieved for the calendar years
1998 through and including 2004.

JORDAN INDUSTRIES, INC. 10 3/8% SENIOR NOTES DUE 2007 AND 113/4% DISCOUNT
DEBENTURES DUE 2009

     As part of the 1997 plan, we issued $120.0 million 10 3/8% series B senior
notes due 2007 at 100% of par. Interest on the series B senior notes is payable
in arrears on February 1 and August 1 of each year, commencing February 1,
1998. The series B senior notes are redeemable at our option, in whole or in
part, at any time on or after August 1, 2002.

     As part of the 1997 plan, we repurchased substantially all of the
then-outstanding $275.0 million 10 3/8% senior notes due 2003 pursuant to a
tender offer. At December 31, 1998, none of those notes were outstanding. See
"1997 Recapitalization and Repositioning Plan."

     In April 1997, we exchanged $133.1 million 113/4% senior subordinated
discount debentures due 2005 for $214.0 million 113/4% senior subordinated
discount debentures due 2009 (the "Discount Debentures"). The discount
debentures were issued at a deep discount and are non-cash pay through April 1,
2002. Semi-annual cash interest payments begin October 1, 2002. The discount
debentures are redeemable at our option, in whole or in part, at any time on or
after April 1, 2002.

     The indentures relating to the series B senior notes and the discount
debentures contain certain covenants which restrict (i) the payment of
dividends, (ii) the repurchase of stock and the making of certain other
restricted payments, (iii) certain mergers or consolidations and (iv) the
assumption of certain levels of indebtedness.

     The series B senior notes and the discount debentures are not secured by
the assets of either our Restricted or Nonrestricted Groups.


JORDAN TELECOMMUNICATION PRODUCTS, INC. 97/8% SENIOR NOTES DUE 2007 AND 113/4%
SENIOR DISCOUNT NOTES DUE 2007

     As part of the 1997 plan, Telecommunication Products was formed to create
a stand-alone, industry focused company. As part of that plan, Jordan
Telecommunication Products, Inc. issued $190.0 million 97/8% senior notes due
2007. Interest on those senior notes is due on February 1 and August 1 of each
year, commencing February 1, 1998. In addition, as part of that plan, Jordan
Telecommunication Products, Inc. issued $120.0 million 113/4% senior discount
notes. Those senior discount notes were issued at a deep discount and are
non-cash pay through August 1, 2000. Semi-annual cash interest payments begin
February 1, 2001.

     Each of the above issues are redeemable at the option of Telecommunication
Products, in whole or in part, at any time on or after August 1, 2002. Jordan
Telecommunication Products, Inc. may also redeem up to one-third of the
aggregate principal amount of each of those on or prior to August 1, 2000,
under certain circumstances.

     The indentures relating to those senior notes and those senior discount
notes contain certain covenants which restrict (i) the payment of dividends,
(ii) the repurchase of stock and the making of certain other restricted
payments, (iii) certain mergers or consolidations and (iv) the assumption of
certain levels of indebtedness.


                                       72
<PAGE>

     Those senior notes and senior discount notes are not secured by the assets
of Telecommunication Products or by our assets. Telecommunication Products is a
Nonrestricted Subsidiary for purposes of the Indenture.


MOTORS AND GEARS, INC. 103/4% SENIOR NOTES


     In November 1996, Motors and Gears, Inc. issued $170.0 million in
aggregate principal amount of 103/4% series B senior notes. In December 1997,
in order to finance the acquisition of Motion Control and repay indebtedness
under Motors and Gears' Revolving Credit Facility, Motors and Gears, Inc.
privately placed an additional $100.0 million in aggregate principal amount of
103/4% series C senior notes. The Tack-On Senior Notes had the same
characteristics as the original senior notes. On February 23, 1998, Motors and
Gears completed a registered exchange offer pursuant to which the holders of
the series B senior notes and the series C senior notes received 103/4% series
D senior notes having the same terms. Interest on those senior notes is payable
in arrears on May 15 and November 15 of each year.


     Those senior notes are redeemable at the option of Motors and Gears, Inc.,
in whole or in part, at any time on or after November 15, 2001. Motors and
Gears may also redeem up to 35% of the aggregate principal amount of those
senior notes on or prior to November 15, 1999, under certain circumstances.


     The indenture relating to those senior notes contain covenants which
restrict (i) the payment of dividends, (ii) the repurchase of stock and the
making of certain other restricted payments, (iii) certain mergers or
consolidations and (iv) the assumption of certain levels of indebtedness.


     Those senior notes are not secured by the assets of Motors and Gears, Inc.
or by our assets. Motors and Gears is a Nonrestricted Subsidiary for purposes
of the Indenture.


                                       73
<PAGE>

                         DESCRIPTION OF CAPITAL STOCK

     The following summarizes certain provisions of our Articles of
Incorporation and those of our subsidiaries.


GENERAL

     Our authorized capital stock consists of 100,000 shares of common stock,
par value $0.01 per share. As of December 31, 1998, 98,501.0004 shares were
issued and outstanding.

     Common Stock. Each holder of shares of common stock is entitled to one
vote per share on all matters to be voted on by stockholders. The holders of
common stock are entitled to dividends and other distributions if, as and when
declared by our Board of Directors out of assets legally available therefor,
subject to the restrictions, if any, imposed by other indebtedness outstanding
from time to time. Upon our liquidation, dissolution or winding up, the holders
of shares of common stock would be entitled to share ratably in the
distribution of all of our assets. The holders of common stock have certain
preemptive and other subscription rights to purchase shares of our capital
stock. See "Principal Stockholders--Stockholder Agreements." As of December 31,
1998, there were 19 beneficial owners of common stock.


SUBSIDIARY SECURITIES

     We own all of the common stock of each of our subsidiaries except for Bond
Technologies, of which we own 80% and Telephone Services, of which we own 70%,
and Telecommunication Products, Specialty Plastics and Motors and Gears, the
common stock of which is owned by our stockholders and affiliates and
management of the respective companies. Our ownership of the capital stock of
Telecommunication Products, Specialty Plastics and Motors and Gears is strictly
through our ownership of junior preferred stock. In addition, our stockholders,
their affiliates and third parties hold capital stock of certain of our
subsidiaries, the terms of which may have a significant impact on our
operations. A description of the terms of such capital stock is set forth
below.

     JTP Junior Preferred Stock. We purchased JTP junior preferred stock which
initially had a liquidation preference of $20.0 million plus or minus 95% of
Telecommunication Products' net income or losses through August 1, 2002.
Following August 1, 2002, or the failure by Telecommunication Products to
redeem the JTP junior preferred stock following the sale of Telecommunication
Products or a public equity offering by Telecommunication Products, dividends
will accrue on any outstanding JTP junior preferred stock at a rate of 10% per
annum of the Initial JTP Junior Preferred Liquidation Value. Absent such an
event, the Company does not anticipate receiving any cash distributions in
respect of the JTP junior preferred stock prior to August 1, 2002. The JTP
junior preferred stock has voting rights equal to 95% of the total combined
voting power of the JTP junior preferred stock and the Telecommunication
Products common stock.

     The JTP junior preferred stock is mandatorily redeemable on August 1, 2010
and, if and to the extent permitted by the covenants of Telecommunication
Products' then outstanding indebtedness, on the earliest to occur of (x) August
1, 2002, (y) the sale of Telecommunication Products or (z) a public equity
offering by Telecommunication Products. In the event the JTP junior preferred
stock is redeemed prior to August 1, 2002, the redemption price will be equal
to (i) $20.0 million, plus or minus (ii) 95% of Telecommunication Products' net
income or losses through the redemption date (collectively, the "Initial JTP
Junior Preferred Liquidation Value"), plus or minus (iii) the present value of
the projected net income or losses of Telecommunication Products from the
redemption date through August 1, 2002. In the event the JTP junior preferred
stock is redeemed on or after August 1, 2002, the redemption price will be
equal to the Initial JTP Junior Preferred Liquidation Value plus accrued and
unpaid dividends through the Redemption Date.

     The redemption of the JTP junior preferred stock could result in the
recognition by the Company of substantial income tax liabilities arising out of
the Telecommunication Products Recapitalization. See "Risk
Factors--Consequences of Subsidiary Deconsolidation."


                                       74
<PAGE>

     JTP Senior Preferred Stock. Telecommunication Products issued units
consisting of senior exchangeable preferred stock due 2009 and common stock of
Telecommunication Products to qualified institutional buyers for net cash
proceeds to Telecommunication Products of approximately $25.0 million. The JTP
senior preferred stock ranks senior, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of
Telecommunication Products, to the JTP junior preferred stock which is held by
us. Accordingly, upon a sale of Telecommunication Products, which would
otherwise require the mandatory redemption of the JTP junior preferred stock,
the proceeds of such sale would be applied first to pay the liquidation
preference and accrued dividends with respect to the JTP senior preferred
stock. The JTP senior preferred stock is mandatorily redeemable on the twelfth
anniversary of the date of issuance. The holders of the JTP senior preferred
stock do not have voting rights, except under limited circumstances.

     M&G Junior Preferred Stock. In connection with Motors and Gears'
recapitalization, we amended and restated our preferred stock investment in
Motors and Gears resulting in the M&G junior preferred stock, which initially
had an increased liquidation preference of $42.0 million plus or minus 80% of
Motors and Gears' net income or losses through March 31, 2002. Following March
31, 2002 or the failure by Motors and Gears to redeem the M&G junior preferred
stock following the sale of Motors and Gears or a public equity offering by
Motors and Gears, dividends will accrue on any outstanding M&G junior preferred
stock at a rate of 10% per annum of the Initial M&G Junior Preferred
Liquidation Value. Absent such an event, we do not anticipate receiving any
cash distributions in respect of the M&G junior preferred stock prior to March
31, 2002. The M&G junior preferred stock has voting rights equal to 82.5% of
the total combined voting power of the M&G junior preferred stock and the
Motors and Gears common stock.

     The M&G junior preferred stock will be mandatorily redeemable on March 31,
2008 and, if and to the extent permitted by the covenants of Motors and Gears'
then outstanding indebtedness, on the earliest to occur of (x) March 31, 2002,
(y) the sale of Motors and Gears or (z) a public equity offering by Motors and
Gears. In the event the M&G junior preferred stock is redeemed prior to March
31, 2002, the redemption price will be equal to (i) $42.0 million, plus or
minus (ii) 80% of Motors and Gears' net income or losses through the redemption
date (collectively, the "Initial M&G Junior Preferred Liquidation Value"), plus
or minus (iii) the present value of the projected net income or losses of
Motors and Gears from the redemption date through March 31, 2002. In the event
the M&G junior preferred stock is redeemed on or after March 31, 2002, the
redemption price will be equal to the Initial M&G Junior Preferred Liquidation
Value plus accrued and unpaid dividends through the Redemption Date.

     The redemption of the M&G junior preferred stock could result in the
recognition by the Company of substantial income tax liabilities arising out of
the Motors and Gears Recapitalization. See "Risk Factors--Consequences of
Subsidiary Deconsolidation."

     Motors and Gears Senior Preferred Stock. In connection with Motors and
Gears' recapitalization, Motors and Gears issued to the Jordan Group and
management of Motors and Gears 8% cumulative non-voting preferred stock, which
initially had a liquidation preference of $1.5 million. Dividends will accrue
on this outstanding non-voting preferred stock at a rate of 8% per annum of the
liquidation value.

     The non-voting preferred stock will be mandatorily redeemable on March 31,
2008 or, if and to the extent permitted by the covenants of Motors and Gears'
then outstanding indebtedness, on the earliest to occur of (x) March 31, 2002,
(y) the sale of Motors and Gears or (z) a public equity offering by Motors and
Gears. In the event the non-voting preferred stock is redeemed prior to March
31, 2008, the redemption price will be equal to the then liquidation value plus
any accrued and unpaid dividends through the redemption date. The non-voting
preferred stock is redeemable on any date provided that all accrued and unpaid
dividends have either been paid or accrued and added to the liquidation value,
any consent required for redemption has been obtained.

     JSP Junior Preferred Stock. We amended and restated our preferred stock
investment in Specialty Plastics resulting in the JSP junior preferred stock
which initially had an increased


                                       75
<PAGE>

liquidation preference of $11.5 million plus or minus 97.5% of Specialty
Plastics' net income or losses through March 31, 2003. Following March 31, 2003
or the failure by Specialty Plastics to redeem the JSP junior preferred stock
following the sale of Specialty Plastics or a public equity offering by
Specialty Plastics, dividends will accrue on any outstanding JSP junior
preferred stock at a rate of 10% per annum of the Initial JSP Junior Preferred
Liquidation Value. Absent such an event, we do not anticipate receiving any
cash distributions in respect of the JSP junior preferred stock prior to March
31, 2003. The JSP junior preferred stock will have voting rights equal to 97.5%
of the total combined voting power of the JSP junior preferred stock and the
Specialty Plastics common stock.


     The JSP junior preferred stock will be mandatorily redeemable on March 31,
2011 and, if and to the extent permitted by the covenants of Specialty
Plastics' then outstanding indebtedness, on the earliest to occur of (x) March
31, 2003, (y) the sale of Specialty Plastics or (z) a public equity offering by
Specialty Plastics. In the event the JSP junior preferred stock is redeemed
prior to March 31, 2003, the redemption price will be equal to (i) $11.5
million, plus or minus (ii) 97.5% of Specialty Plastics's net income or losses
through the redemption date (collectively, the "Initial JSP Junior Preferred
Liquidation Value"), plus or minus (iii) the present value of the projected net
income or losses of Specialty Plastics from the redemption date through March
31, 2003. In the event the JSP junior preferred stock is redeemed on or after
March 31, 2003, the redemption price will be equal to the Initial JSP Junior
Preferred Liquidation Value plus accrued and unpaid dividends through the
Redemption Date.


     The redemption of the JSP junior preferred stock could result in our
recognition of substantial income tax liabilities arising out of the Specialty
Plastics Recapitalization. See "Risk Factors--Consequences of Subsidiary
Deconsolidation."


                                       76
<PAGE>

                              THE EXCHANGE OFFER


PURPOSE AND EFFECT OF THE EXCHANGE OFFER

     We sold $155.0 million of series C senior notes on March 22, 1999 in a
private placement. Those notes were not registered under the Securities Act of
1933. The initial purchasers of the series C senior notes were Donaldson,
Lufkin & Jenrette Securities Corporation, Jefferies & Company, Inc. and
BancBoston Robertson Stephens Inc. They have advised us that they promptly
resold the series C senior notes to "qualified institutional buyers" in
reliance on Rule 144A under the Securities Act. When we sold the series C
senior notes to the initial purchasers, we entered into the registration rights
agreement, which requires that we file a registration statement under the
Securities Act of 1933 with respect to the series D senior notes to be issued
in the exchange offer and, upon the effectiveness of the registration
statement, offer to you and all other holders of the series C senior notes the
opportunity to exchange your series C senior notes for a like principal amount
of series D senior notes. These series D senior notes will be issued without a
restrictive legend and, except as set forth below, may be reoffered and resold
without restrictions or limitations under the Securities Act of 1933. After we
complete the exchange offer, our obligations with respect to the registration
of the series C senior notes will terminate, except as provided in the last
paragraph of this section. As a result of the timely filing and effectiveness
of the registration statement of which this prospectus is a part, assuming we
complete the exchange offer by September 18, 1999, certain prospective
increases in the interest rate on the series C senior notes that were provided
for in the registration rights agreement will not occur.

     Under existing interpretations of the staff of the Securities and Exchange
Commission contained in several no action letters to third parties, we believe
that the series D senior notes to be issued in the exchange offer will be
freely transferable by a holder who receives them in exchange for series C
senior notes, without further registration under the Securities Act of 1933,
provided that the holder represents to us that:

        (1) it is not an "affiliate" of our company (such as a director,
     executive officer or controlling stockholder of our company or our parent
     company),

        (2) it will be acquiring the series D senior notes in the ordinary
     course of its business, and

        (3) it has not engaged in, does not intend to engage in, and has no
     arrangement or understanding with any other person to participate in, a
     distribution of the series D senior notes.

     However, we have not sought a no-action letter from the Securities and
Exchange Commission with respect to this exchange offer and we cannot assure
you that the Securities and Exchange Commission's staff would make a similar
determination with respect to this exchange offer. Any holder of series C
senior notes who is an "affiliate" of our company or who intends to participate
in the exchange offer for the purpose of distributing the series D senior
notes,

        (1) will not be able to validly tender its series C senior notes in the
     exchange offer,

        (2) will not be able to rely on the interpretations of the staff of the
     Securities and Exchange Commission, and

        (3) must comply with the registration and prospectus delivery
     requirements of the Securities Act in connection with any offer or sale of
     its series C senior notes, unless such offer or sale is made pursuant to an
     exemption from those requirements.

     In addition, each broker-dealer that receives series D senior notes for
its own account in the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of those notes. The letter of
transmittal accompanying this prospectus states that, by so acknowledging and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is acting in the capacity of an "underwriter" within the meaning of Section
2(11) of the Securities Act of 1933. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of series D senior notes received in exchange for series C senior
notes that


                                       77
<PAGE>

had been acquired by that broker-dealer as a result of market-making or other
trading activities. Pursuant to the registration rights agreement, we have
agreed to make this prospectus available to any broker-dealer for use in
connection with any such resale.

     If you are not eligible to participate in the exchange offer, you can
elect, by so indicating on the letter of transmittal and providing certain
additional necessary information, to have your series C senior notes included
within the coverage of a shelf registration statement pursuant to Rule 415
under the Securities Act of 1933. If we have to file a shelf registration
statement, we will be required to keep it effective for a period of two years
or such shorter period that will terminate when all of the series C senior
notes covered by that shelf registration statement have been resold. Other than
as set forth in this paragraph, holders of series C senior notes will not have
the right to require us to register their series C senior notes under the
Securities Act.


TERMS OF THE EXCHANGE OFFER

     Upon satisfaction or waiver of the conditions of the exchange offer set
forth in this prospectus and in the accompanying letter of transmittal, we will
accept all series C senior notes that are validly tendered and not withdrawn
prior to 5:00 p.m. New York City time, on the expiration date. After
authentication of the series D senior notes by the trustee, we will issue and
deliver $1,000 principal amount of series D senior notes in exchange for each
$1,000 principal amount of outstanding series C senior notes accepted in the
exchange offer. You may tender some or all of your series C senior notes
pursuant to the exchange offer in denominations of $1,000 and integral
multiples thereof.

     By tendering series C senior notes in exchange for series D senior notes
and by executing the letter of transmittal, you will be required to represent
that:

        (1) you are not an "affiliate" of our company,

        (2) any series D senior notes that you receive in the exchange offer
     will be acquired by you in the ordinary course of your business, and

        (3) you have no intention to distribute, and have no arrangement or
     understanding with any person to participate in the distribution of, the
     series D senior notes you acquire.

     The form and terms of the series D senior notes will be identical in all
material respects to the form and terms of the series C senior notes, except
that:

        (1) the offering of the series D senior notes has been registered under
     the Securities Act,

        (2) the series D senior notes will not be subject to restrictions on
     resale, and

        (3) certain provisions in the registration rights agreement relating to
     an increase in the stated interest rate on the series C senior notes
     provided for under certain circumstances will become ineffective.

     The series D senior notes will evidence the same debt as the series C
senior notes and will be issued under and entitled to the benefits of the same
indenture as the series C senior notes.

     As of the date of this Prospectus, $155,000,000 aggregate principal amount
of series C senior notes is outstanding. In connection with the issuance of the
series C senior notes, we arranged for the series C senior notes to be issued
and transferable in book-entry form through the facilities of DTC, acting as a
depositary. The series D senior notes will also be issuable and transferable in
book-entry form through DTC.

     This prospectus, together with the accompanying letter of transmittal, is
initially being sent to all registered holders of the series C senior notes as
of the close of business on         , 1999. The exchange offer is not
conditioned upon any minimum aggregate principal amount of series C senior
notes being tendered. However, the exchange offer is subject to certain
customary conditions which may be waived by us, and to the terms and provisions
of the registration rights agreement. See "--Conditions to the Exchange Offer"
for a detailed description of those conditions.


                                       78
<PAGE>

     We will be deemed to have accepted validly tendered series C senior notes
when, as and if we have given oral or written notice thereof to the exchange
agent. The exchange agent will receive the series D senior notes from us and
deliver them to the tendering holders.

     If we do not accept any tendered series C senior notes for exchange
because of an invalid tender or because the conditions to the exchange offer
have not been met, certificates for any such unaccepted series C senior notes
will be returned, at our cost, to the tendering holder thereof as promptly as
practicable after the expiration date.

     Holders who tender series C senior notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes with respect to the exchange of
their series C senior notes pursuant to the exchange offer. We will pay all
charges and expenses, other than certain applicable taxes, in connection with
the exchange offer.


EXPIRATION DATE; EXTENSIONS; AMENDMENTS

     The term "expiration date," as used in this prospectus, means 5:00 p.m.,
New York City time, on       , 1999, unless we, in our sole discretion, extend
the exchange offer, in which case the term "expiration date" shall mean the
latest date to which the exchange offer is extended. We may extend the exchange
offer at any time and from time to time by giving oral or written notice to the
exchange agent and by timely public announcement.

     We reserve the right, in our sole discretion,

        (1) to delay accepting any series C senior notes for exchange,

        (2) to extend the exchange offer,

        (3) to terminate the exchange offer if the conditions set forth below
     under "--Conditions to the Exchange Offer" shall not have been satisfied,
     or

        (4) to amend the terms of the exchange offer in any manner.

     We will notify the exchange agent of any delay, extension, termination or
amendment by oral or written notice. In addition, we will promptly notify each
registered holder of series C senior notes of any amendment. We will give to
the exchange agent written confirmation of any oral notice.

     We acknowledge and undertake to comply with the provisions of Rule
14e-1(c) under the Securities Exchange Act of 1934, which requires us to pay
the consideration offered, or return the series C senior notes surrendered for
exchange, promptly after the termination or withdrawal of the exchange offer.


INTEREST ON THE SERIES D SENIOR NOTES

     Interest on the series D senior notes will accrue from the last interest
payment date on which interest was paid on the series C senior notes
surrendered in exchange therefor or, if no interest has been paid on the series
C senior notes, from March 22, 1999.


PROCEDURES FOR TENDERING

     If you wish to accept the exchange offer, you must complete, sign and date
the letter of transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein. You must then mail or otherwise
deliver the letter of transmittal, or facsimile, together with the series C
senior notes to be exchanged and any other required documentation, to U.S. Bank
Trust National Association, as exchange agent, at the address set forth herein
and therein. You may also effect a tender of series C senior notes pursuant to
the procedures for book-entry transfer as provided for herein and therein.

     Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of its series C senior
notes by causing DTC to transfer those series C senior


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<PAGE>

notes into the exchange agent's account in accordance with DTC's procedure for
such transfer. Although delivery of series C senior notes may be effected
through book-entry transfer into the exchange agent's account at DTC, the
letter of transmittal, or facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the exchange agent at its address set forth herein under "--
Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration date.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.

     Only a holder in whose name series C senior notes are registered may
tender those series C senior notes in the exchange offer. To tender in the
exchange offer, a holder must:

        (1) complete, sign and date the letter of transmittal or a facsimile
     thereof,

        (2) have the signatures thereof guaranteed if required by the letter of
     transmittal, and

        (3) unless the tender is being effected pursuant to the procedure for
     book-entry transfer, mail or otherwise deliver the letter of transmittal or
     facsimile thereof, together with the series C senior notes and other
     required documents, to the exchange agent, prior to 5:00 p.m., New York
     City time, on the expiration date.

     If less than all of the series C senior notes are tendered, a tendering
holder should fill in the amount of series C senior notes being tendered in the
appropriate box on the letter of transmittal. The entire amount of series C
senior notes delivered to the exchange agent will be deemed to have been
tendered unless otherwise indicated.

     The method of delivery of series C senior notes and the letter of
transmittal and all other required documents to the exchange agent is at the
election and risk of the holders. Instead of delivery by mail, it is
recommended that holders use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to ensure delivery to the exchange
agent prior to the expiration date. No letter of transmittal or series C senior
notes should be sent to us. You may request that your broker, or a commercial
bank, trust company or nominee, effect the tender on your behalf, as set forth
herein and in the letter of transmittal.

     If your series C senior notes are registered in the name of a broker,
commercial bank, trust company or other nominee and you wish to tender, you
should contact the registered holder promptly and instruct the registered
holder to tender on your behalf. If you wish to tender on your own behalf,
prior to completing and executing the letter of transmittal and delivering your
series C senior notes, you must either make appropriate arrangements to
register ownership of the series C senior notes in your name or obtain a
properly completed bond power from the registered holder. The transfer of
record ownership may take considerable time.

     Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934 (each an "Eligible
Institution"), unless the series C senior notes tendered pursuant thereto are
tendered by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instruction" of the letter of
transmittal or for the account of an Eligible Institution. If the letter of
transmittal is signed by a person other than the registered holder listed
therein, the series C senior notes that are the subject of that letter of
transmittal must be endorsed or accompanied by appropriate bond powers that
authorize that person to tender the series C senior notes on behalf of the
registered holder. The endorsement or bond powers must be signed in the name of
the registered holder as it appears on the series C senior notes.

     All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered series C senior notes will
be determined by us in our sole discretion, and that determination will be
final and binding. We reserve the absolute right to reject any and all


                                       80
<PAGE>

series C senior notes not properly tendered and to waive any irregularities or
conditions of tender as to particular series C senior notes. Our interpretation
of the terms and conditions of the exchange offer, including the instructions
in the letter of transmittal, will be final and binding on all parties.

     Any series C senior notes received by the exchange agent that we determine
are not properly tendered or as to which the defects or irregularities have not
been cured or waived, will be returned by the exchange agent to the tendering
holder, as soon as practicable following the expiration date.

     In addition, we reserve the right, in our sole discretion,

        (1) to purchase or make offers for any series C senior notes that remain
     outstanding subsequent to the expiration date, and

        (2) to the extent permitted by applicable law, to purchase series C
     senior notes in the open market, in privately negotiated transactions or
     otherwise.

     The terms of any such purchases or offers may differ from the terms of the
exchange offer.


CONDITIONS TO THE EXCHANGE OFFER

     Notwithstanding any other term of the exchange offer, we will not be
required to accept any series C senior notes for exchange, or to exchange new
registered notes for any series C senior notes, and we may terminate or amend
the exchange offer before the acceptance of the series C senior notes if:

        (1) the exchange offer, or the making of any exchange by a holder,
     violates any applicable law or any applicable interpretation of the staff
     of the Securities and Exchange Commission, or

        (2) any action or proceeding is instituted or threatened in any court or
     by or before any governmental agency or body to enjoin or obtain damages in
     respect of the exchange offer, or that can reasonably be expected to impair
     our ability to proceed with the exchange offer.

     If we determine that either of these events or circumstances has occurred
or exists, we may:

        (1) refuse to accept any series C senior notes and return to the holders
     any series C senior notes that have been tendered, or

        (2) extend the exchange offer and retain all series C senior notes
     tendered prior to the original expiration date of the exchange offer,
     subject to the rights of the holders of those notes to withdraw them, or

        (3) waive the condition and accept all properly tendered series C senior
     notes that have not been withdrawn.

     The exchange offer is not conditioned on any minimum aggregate principal
amount of series C senior notes being tendered for exchange. Any extension of
the exchange offer shall be for not more than 60 days, and in no event shall
the exchange offer be extended beyond       , 1999.


EXCHANGE AGENT

     U.S. Bank Trust National Association, f.k.a. First Trust National
Association, the trustee under the indenture, has been appointed as exchange
agent for the exchange offer. In that capacity, the exchange agent has no
fiduciary duties and will be acting solely on the basis of our directions.
Requests for assistance and requests for additional copies of this prospectus
or of the letter of transmittal should be directed to the exchange agent
addressed as follows:

By registered or certified mail
or by overnight courier
or by hand delivery:       U.S. Bank Trust National Association
                           180 East Fifth Street
                           St. Paul, Minnesota 55101
                           Attn: Specialized Finance Corporate Trust Department,
                                 Fourth Floor


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<PAGE>

Facsimile transmission: (612) 244-1537


Information or confirmation by telephone:


Delivery to an address or facsimile number other than those listed above will
not constitute a valid delivery.


ACCOUNTING TREATMENT


     The exchange notes will be recorded at the same carrying value as the
series C senior notes, as reflected in our accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by our company as a result of the consummation of the exchange
offer. The expenses of the exchange offer will be amortized by us over the
remaining term of the notes issued in the exchange offer.


CONSEQUENCES OF FAILURE TO EXCHANGE


     Holders of series C senior notes who do not tender their notes in the
exchange offer will continue to hold those series C senior notes and will be
entitled to all the rights, and subject to the limitations applicable thereto,
under the indenture. All series C senior notes that are not tendered will
continue to be subject to the restrictions on resale set forth in the
indenture. Accordingly, prior to the later of March 22, 2001 (two years from
the date of original issue of the notes) or two years after those series C
senior notes were last sold by us or one of our affiliates, those series C
senior notes may be offered and resold only

        (1) to us,

        (2) pursuant to a registration statement that has been declared
     effective under the Securities Act of 1933,

        (3) in the United States to a "qualified institutional buyer" within the
     meaning of Rule 144A in reliance upon the exemption from the registration
     requirements of the Securities Act of 1933 provided by Rule 144A,

        (4) in the United States to an "Institutional Accredited Investor", as
     defined in Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities
     Act of 1933, in a transaction that is exempt from the registration
     requirements of the Securities Act of 1933,

        (5) outside the United States to a foreign person in a transaction that
     complies with the provisions of Regulation S under the Securities Act of
     1933, or

        (6) pursuant to any other available exemption from the registration
     requirements of the Securities Act of 1933, in each case in accordance with
     applicable state securities laws.


To the extent that series C senior notes are tendered and accepted in the
exchange offer, the liquidity of the trading market for untendered series C
senior notes will be adversely affected.


                                       82
<PAGE>

                        DESCRIPTION OF THE SENIOR NOTES


GENERAL

     The series C senior notes were issued and the series D senior notes will
be issued pursuant to an indenture (the "Indenture") between the Company and
U.S. Bank Trust National Association, f.k.a. First Trust National Association,
as trustee (the "Trustee"). A copy of the Indenture has been filed as an
exhibit to the registration statement which includes this prospectus. The terms
of the series D senior notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
in effect on the date of original issuance of the series C senior notes. The
series D senior notes are subject to all such terms, and holders of the series
D senior notes are referred to the Indenture and the Trust Indenture Act for a
statement thereof. The following summary of the material provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. The series D senior notes and series C senior notes are sometimes
collectively referred to as the "Senior Notes."

     Principal of, premium, if any, interest and Liquidated Damages, if any, on
the series D senior notes will be payable, and the series D senior notes may be
presented for registration of transfer or exchange, at the respective offices
of the Paying Agent and Registrar in New York, New York. Holders of series D
senior notes must surrender their series D senior notes to the Paying Agent to
collect principal payments, and we may pay principal, premium, if any,
Liquidated Damages, if any, and interest by check and may mail checks to a
holder's registered address; provided that all payments with respect to Global
Securities and Certificated Securities, the holders of whom have given wire
transfer instructions to us, will be required to be made by wire transfer of
immediately available funds to the accounts specified by those holders. The
Registrar may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection with certain transfers or
exchanges. See "--Transfer and Exchange." The Trustee is initially acting as
Paying Agent and Registrar. We may change the Paying Agent or Registrar without
prior notice to holders of series D senior notes, and, subject to certain
exceptions, we or any of our subsidiaries may act as Paying Agent or Registrar
under the Indenture.

     Our operations are conducted exclusively through our subsidiaries. As a
consequence, our ability to service our Indebtedness (including the series D
senior notes) is dependent upon our receipt of funds from our Subsidiaries. See
"Risk Factors--Structure."


TERMS OF THE SENIOR NOTES

     The series C senior notes were and the series D senior notes will be
general unsecured senior obligations, will rank senior in right of payment to
all of our subordinated Indebtedness, and will rank equal in right of payment
with all senior Indebtedness (including the Series B Senior Notes). The series
D senior notes will effectively rank junior to any of our secured senior
Indebtedness to the extent of the value of the assets securing such
Indebtedness and to any Indebtedness of our Subsidiaries, including borrowings
under the Credit Agreement. The senior notes will be limited to $155,000,000 in
aggregate principal amount. The series D senior notes will bear interest at the
rate of 10 3/8% per year. Interest on the series D senior notes is payable
semi-annually in cash on February 1 and August 1 of each year to holders of
record of series D senior notes at the close of business on the January 15 and
July 15 immediately prior to the interest payment date. Interest will initially
accrue from February 1, 1999 and the first interest payment date will be August
1, 1999. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The series D senior notes will mature on August 1, 2007 and will
be issued in denominations of $1,000 and integral multiples thereof.


REDEMPTION OF SENIOR NOTES

     Optional Redemption. The Senior Notes may not be redeemed at our option
prior to August 1, 2002. During the 12-month period beginning August 1 of the
years indicated below, the Senior Notes


                                       83
<PAGE>

will be redeemable, at our option, 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:

<TABLE>
<CAPTION>
        YEAR                              PERCENTAGE
        ----                              ----------
        <S>                                <C>
        2002 .........................     105.188%
        2003 .........................     102.594%
        2004 and thereafter ..........     100.000%
</TABLE>

     The restrictions on optional redemptions contained in the Indenture do not
limit our right to separately make open market, privately negotiated or other
purchases of Senior Notes from time to time.

     Mandatory Redemption. Except as set forth below under "Mandatory Offers to
Purchase Senior Notes--Change of Control" and "--Asset Sales," we are not
required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Senior Notes.


MANDATORY OFFERS TO PURCHASE SENIOR NOTES

     Change of Control. 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 us 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
(as defined herein) at a purchase price equal to 101% of the aggregate
principal amount of the Senior Notes, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase. Prepayment of the Senior
Notes pursuant to a Change of Control would constitute a default under the
Credit Agreement. In the event a Change of Control occurs, the Company will
likely be required to refinance the Indebtedness outstanding under the Credit
Agreement and the Senior Notes.

     Asset Sales. The Indenture provides that we may not, and may 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 to one or more of the following
in such combination as we shall elect: (a) 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 that
time; provided, that such investment occurs on or prior to the 365th day
following the date of such Asset Sale (the "Asset Sale Disposition Date"), (b)
the purchase, redemption or other prepayment or repayment of outstanding senior
Indebtedness on or prior to the Asset Sale Disposition Date or (c) an Offer
expiring on or prior to the Purchase Date (as defined herein). The Indenture
also provides that we may not, and may not permit any Restricted Subsidiary to,
directly or indirectly consummate an Asset Sale unless at least 50% of the
consideration thereof received by the Company or such Restricted Subsidiary is
in the form of cash, cash equivalents or marketable securities. Any Net
Proceeds from any Asset Sale that are not applied or invested as provided in
clauses (a) or (b) shall constitute "Excess Proceeds."

     When the aggregate amount of Excess Proceeds exceeds $10,000,000 under the
Indenture (such date being an "Asset Sale Trigger Date"), we shall make an
Offer to purchase the maximum principal amount of the Senior Notes and the
Series B Senior Notes then outstanding under the Indenture and the indenture
governing the Series B Senior Notes 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 those
indentures.

     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 proceeds so
affected will not be required to be applied as described in this or the
preceding paragraph, but may be retained for so long, but only for so long, as
the applicable local law prohibits repatriation to the United States.


                                       84
<PAGE>

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

     Procedures for Offers. Within 30 days following any Change of Control or
Asset Sale Trigger Date, we shall mail to each holder of Senior Notes at such
holder's registered address a notice stating: (a) that an offer ("Offer") is
being made pursuant to a Change of Control or an Asset Sale, as the case may
be, the length of time the Offer shall remain open and the Change of Control
Offer amount or the Asset Sale Offer amount, as the case may be, and the
maximum principal amount of Senior Notes that will be accepted for payment
pursuant to such Offer, (b) the purchase price, the amount of accrued and
unpaid interest and Liquidated Damages, if any, as of the Purchase Date, and
the purchase date (which shall be no earlier than 30 days or later than 40 days
from the date such notice is mailed (the "Purchase Date")), and (c) such other
information required by the Indenture and applicable law and regulations.

     On the Purchase Date for any Offer, we will, to the extent lawful and
required by the Indenture and such Offer, (1) in the case of an Offer resulting
from a Change of Control, accept for payment all Senior Notes and Series B
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 and Series B Senior Notes or portions thereof
tendered pursuant to such Offer that can be purchased out of Excess Proceeds
from such Asset Sale, (2) deposit with the Paying Agent the aggregate purchase
price of all Senior Notes and Series B Senior Notes or portions thereof
accepted for payment and any accrued and unpaid interest and Liquidated
Damages, if any, on such Senior Notes and Series B Senior Notes as of the
Purchase Date and (3) deliver or cause to be delivered to the Trustee the
Senior Notes and Series B Senior Notes so accepted pursuant to the Offer. The
Paying Agent shall promptly mail to each holder of Senior Notes and Series B
Senior Notes so accepted, payment in an amount equal to the purchase price for
such Senior Notes or Series B Senior Notes and any accrued and unpaid interest
and Liquidated Damages, if any, on such Senior Notes or Series B Senior Notes
as of the purchase date, and the Trustee shall promptly authenticate and mail
(or cause to be transferred by book-entry) to such holder replacement Senior
Notes or Series B Senior Notes equal in principal amount to any unpurchased
portion of the Senior Notes or Series B Senior Notes surrendered; provided that
such replacement Senior Notes or Series B Senior Notes shall be in principal
amounts of $1,000 or integral multiples thereof. The Company will publicly
announce the results of the Offer on or as soon as practicable after the
purchase date.

     We will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations to the extent such laws and regulations are
applicable to any Offer. To the extent that the provisions of the securities
laws or regulations conflict with provisions of the Indenture, we shall comply
with any such securities laws and regulations and shall not be deemed to have
breached its obligations under the Indenture by virtue thereof.

     Selection and Notice. In the event of a redemption or purchase of less
than all of the Senior Notes and Series B Senior Notes, the Senior Notes and
Series B Senior Notes to be redeemed or purchased will be chosen by the Trustee
pro rata, by lot or any other method that the Trustee considers fair and
appropriate and, if the Senior Notes or the Series B Senior Notes are listed on
any securities exchange, by a method that complies with the requirements of
such exchange, provided that, if less than all of a holder's Senior Notes and
Series B Senior Notes are to be redeemed or accepted for payment, only
principal amounts of $1,000 or multiples thereof may be selected for redemption
or accepted for payment. For purposes of selection, the Trustee will consider
the Senior Notes and the Series B Senior Notes together as one series. Notice
of any redemption or offer to purchase will be mailed at least 30 days but not
more than 60 days before the redemption or purchase date to each holder of
Senior Notes and Series B Senior Notes to be redeemed or purchased at such
holder's registered address.


RANKING

     The Senior Notes will rank senior in right of payment to all senior
subordinated Indebtedness of the Company (including the 113/4% Senior
Subordinated Discount Debentures due 2009) and all


                                       85
<PAGE>

subordinated Indebtedness of the Company. The Senior Notes will rank equal to
all senior Indebtedness of the Company (including the Series B Senior Notes).


CERTAIN COVENANTS

     The Indenture contains, among other things, the following covenants:

        Limitation on Restricted Payments. The Indenture provides that we will
     not, and will 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
     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 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), (iii) voluntarily prepay Indebtedness that is
     subordinated to the Senior Notes, whether any such subordinated
     Indebtedness is outstanding on, or issued after, July 25, 1997, or (iv)
     make any Restricted Investment (all such dividends, distributions,
     purchases, redemptions or other 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 the first sentence of the
        "Limitation on Incurrence of Indebtedness" covenant; or

           (c) such Restricted Payment, together with the aggregate of all other
        Restricted Payments made after July 25, 1997, exceeds the sum, without
        duplication, 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 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 July
        25, 1997 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 Equity Interests or
        warrants, options or rights to acquire Equity Interests of the Company
        or any Restricted Subsidiary subsequent to July 25, 1997 (other than
        Equity Interests issued or sold to a Restricted Subsidiary and other
        than Disqualified Stock), plus (3) $5,000,000, plus (4) the amount by
        which the principal amount of and any accrued interest on either (a)
        senior Indebtedness of the Company or (b) any Indebtedness of the
        Restricted Subsidiaries (not held by the Company or any Restricted
        Subsidiary) is reduced on the Company's consolidated balance sheet upon
        the conversion or exchange subsequent to July 25, 1997 of such
        Indebtedness for Equity Interests (other than Disqualified Stock) of the
        Company or any Restricted Subsidiary (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 Nonrestricted Subsidiary is redesignated as a Restricted
        Subsidiary, the fair market value (as determined by the Board of
        Directors in good faith) of such Nonrestricted Subsidiary as of the date
        it is redesignated; provided, however, that for purposes of this clause
        (5), the fair market value of any redesignated Nonrestricted 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 clause (3) of the next sentence.


                                       86
<PAGE>

        Notwithstanding the foregoing, the Indenture does not prohibit as
        Restricted Payments:

           (1) 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 covenants of the Indenture (including, but not limited
        to, the "Limitation on Restricted Payments" covenant);

           (2) the retirement of any of the Company's Capital Stock or
        subordinated Indebtedness in exchange for, or out of the net proceeds of
        the substantially concurrent sale (other than to a Restricted
        Subsidiary) of, other Capital Stock (other than Disqualified Stock) and
        neither such retirement nor the proceeds of any such sale or exchange
        shall be included in any computation made pursuant to the preceding
        sentence;

           (3) making Restricted Investments at any time, and from time to time,
        in an aggregate outstanding amount of $50,000,000 after July 25, 1997
        (it being understood that if any Restricted Investment acquired with a
        Restricted Payment after July 25, 1997 pursuant to this clause (3) 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 clause (3), so that up to
        $50,000,000 of Restricted Investments may be outstanding under this
        clause (3) at any given time);

           (4) the repurchase or redemption of the Company's common stock upon
        the death of Thomas H. Quinn, pursuant to the terms of an employment
        agreement, dated as of February 25, 1988, between the Company and Thomas
        H. Quinn; provided, however, that the funds necessary to satisfy the
        Company's obligation to repurchase or redeem such common stock shall be
        fully reimbursed by insurance;

           (5) the repurchase or redemption of the Company's common stock
        pursuant to the terms of the several restricted stock agreements, each
        dated as of February 25, 1988, between the Company and each of Thomas H.
        Quinn, Jonathan F. Boucher and John R. Lowden, the restricted stock
        agreement, dated as of January 1, 1992, between the Company and Thomas
        Quinn, the restricted stock agreements, each dated as of January 1,
        1992, between the Company and each of Jonathan F. Boucher, Adam Max and
        Thomas Quinn, and the restricted stock agreement, dated as of May 16,
        1997, between the Company and Thomas Quinn, in each case as amended or
        supplemented, up to an aggregate amount not to exceed $7,500,000;

           (6) 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, pursuant to intercompany Indebtedness,
        intercompany management agreements, intercompany tax sharing agreements,
        and other intercompany agreements and obligations;

           (7) the payment of directors' fees in an annual aggregate amount not
        to exceed $250,000;

           (8) to the extent constituting Restricted Payments, if no Default or
        Event of Default shall have occurred and be continuing or shall occur as
        a consequence thereof, the payment of consulting, financial and
        investment banking fees (but not limiting the payment of indemnities,
        expenses and other amounts) under the TJC Management Consulting
        Agreement, provided, that the obligation of the Company to pay such fees
        under the TJC Management Consulting Agreement shall be subordinated
        expressly to the Company's Obligations on the Senior Notes;

           (9) the purchase, redemption, retirement or other acquisition of the
        Discount Debentures required by their terms to be purchased, redeemed,
        retired or acquired with the net proceeds from asset sales (as defined
        in the instrument evidencing such subordinated Indebtedness) or upon a
        change of control (as defined in the instrument evidencing such
        subordinated Indebtedness);


                                       87
<PAGE>

           (10) the exchanging, refinancing or refunding of subordinated
        Indebtedness through the issuance of subordinated Indebtedness so long
        as the subordinated Indebtedness to be issued is Refinancing
        Indebtedness permitted under the "Limitation on Incurrence of
        Indebtedness" covenant;

           (11) to the extent constituting Restricted Payments, any payments
        made in connection with the Plan, the Prior Offering and the Offering
        described in this prospectus;

           (12) Restricted Investments received as consideration for the sale,
        transfer or disposition of any business, properties or assets of the
        Company or any Restricted Subsidiary, provided, that the Company
        complies with the "Asset Sale" covenant;

           (13) 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;

           (14) any Restricted Investment constituting an equity investment in a
        Receivables Subsidiary; provided, that the aggregate amount of such
        equity investments does not exceed $1,000,000; and

           (15) guarantees by the Company of capital lease obligations of its
        Nonrestricted Subsidiaries in an aggregate principal or face amount not
        exceeding the aggregate principal or face amount of capital leases of
        the Nonrestricted Subsidiaries guaranteed by the Company on July 25,
        1997.

     Limitation on Incurrence of Indebtedness. The Indenture provides that we
will not, and will not permit any Restricted Subsidiary to, issue any
Indebtedness (other than the Indebtedness represented by the Senior Notes)
unless our Cash Flow Coverage Ratio for the four full fiscal quarters next
preceding the date such additional Indebtedness is issued would have been at
least: (a) 1.7 to 1, if such date is between the Issue Date and June 30, 1999,
(b) 1.85 to 1, from July 1, 1999 through June 30, 2001, or (c) 2.0 to 1, from
July 1, 2001 and thereafter, in each case determined on a Pro Forma Basis 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.

     The foregoing limitations do not apply to the issuance of:

        (1) Indebtedness of the Company and/or its Restricted Subsidiaries up to
     the greater of (A) $75.0 million in aggregate principal amount pursuant to
     the Credit Agreement, and (B) an aggregate principal amount up to the sum
     of: (x) 85% of the book value of the Company and its Restricted
     Subsidiaries' Receivables on a consolidated basis, and (y) 65% of the book
     value of the Company and its Restricted Subsidiaries' inventories on a
     consolidated basis;

        (2) Indebtedness of the Company and its Restricted Subsidiaries pursuant
     to any Receivables Financing;

        (3) 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 Issue Date
     up to $20,000,000 in aggregate principal amount, or (B) their properties,
     assets and rights acquired after the Issue Date, provided that such
     Indebtedness under this clause (3)(B) does not exceed 100% of the cost of
     such properties, assets and rights;

        (4) 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 Credit
     Agreement); and

        (5) Other Permitted Indebtedness.

     Limitation on Liens. The Indenture provides that 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 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,

                                       88
<PAGE>

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.

     Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Indenture provides that the Company will not, and
will 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: (a)
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, (b) make loans or advances to the Company, or (c)
transfer any of its properties or assets to the Company, except for such
encumbrances or restrictions existing under or by reason of: (i) applicable
law, (ii) Indebtedness permitted (A) under the first sentence of the
"Limitation on Incurrence of Indebtedness" covenant, (B) under clauses (1), (2)
and (4) of the second sentence of the "Limitation on Incurrence of
Indebtedness" covenant and clauses (1), (7) and (9) of the definition of Other
Permitted Indebtedness, or (C) Restricted Payments and agreements or
instruments evidencing Restricted Payments permitted under the "Limitation on
Restricted Payments" covenant, (iii) customary provisions restricting
subletting or assignment of any lease or license of the Company or any
Restricted Subsidiary, (iv) customary provisions of any franchise, distribution
or similar agreement, (v) 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, (vi) Indebtedness or other agreements existing on the Issue Date,
(vii) any Refinancing Indebtedness of Indebtedness described in clauses (1),
(2), (3), and (4) of the second sentence of the "Limitation on Incurrence of
Indebtedness" covenant and clauses (1), (6), and (9) 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, (viii)
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, (ix) the
terms of any Indebtedness of the Company incurred in connection with the
"Limitation on Incurrence of Indebtedness" covenant, 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 permitted by
this covenant, and (x) 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.

     Nothing contained in this covenant prevents us 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 its Restricted Subsidiaries that are subject to Permitted Liens.

     Limitation on Transactions With Affiliates. The Indenture provides, except
as otherwise set forth in the Indenture, that neither the Company nor any of
its Restricted Subsidiaries may 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 any 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.

     The Indenture further provides that neither the Company nor any of its
Restricted Subsidiaries may engage in any Affiliate Transaction involving
aggregate payments or other transfers by the


                                       89
<PAGE>

Company and its Restricted Subsidiaries in excess of $5.0 million (including
cash and non-cash payments and benefits valued at their fair market value by
the Board of Directors 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 the Indenture, and (ii) an opinion as to the fairness of such
Affiliate Transaction to the Company or such Restricted Subsidiary and the
holders of Senior Notes, in each case, from a financial point of view by an
investment banking firm of national prominence that is not an Affiliate of the
Company.

     Notwithstanding the foregoing, this covenant does not apply to: (i)
transactions between the Company and any Restricted Subsidiary or between
Restricted Subsidiaries, (ii) any Restricted Payments permitted pursuant to the
"Limitation on Restricted Payments" covenant, (iii) payments of fees and other
amounts due under any Stock Appreciation Right agreements, the Subsidiary
Advisory Agreements, the Subsidiary Consulting Agreements, the Tax Sharing
Agreement, the JI Properties Services Agreement, the Transition Agreement and
the TJC Management Consulting Agreement, provided, that any amendments,
supplements, modifications, substitutions, renewals or replacements of the
foregoing agreements are approved by a majority of the Board of Directors
(including a majority of the disinterested directors, if any) as fair to the
Company and the holders of the Senior Notes, (iv) the payment of reasonable and
customary directors' fees to directors of the Company and its Restricted
Subsidiaries, (v) transactions in connection with a Receivables Financing or
(vi) payments and transactions in connection with the Offering as described in
this prospectus.

     Limitation on Guarantees of Company Indebtedness by Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly
or indirectly, to guarantee any Indebtedness of the Company other than the
Senior Notes (the "Other Indebtedness") unless (A) 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
(the "Other Indebtedness Guarantee") of the Other Indebtedness (including
waiver of subrogation, if any) and (B) if the Other Indebtedness guaranteed by
such Restricted Subsidiary is (i) senior Indebtedness, the guarantee for the
Senior Notes shall be equal in right of payment with the Other Indebtedness
Guarantee and (ii) subordinated Indebtedness, the guarantee for the Senior
Notes shall be senior in right of payment to the Other Indebtedness Guarantee,
provided that the foregoing will not limit or restrict guarantees issued by any
Restricted Subsidiary in respect of Indebtedness of other Restricted
Subsidiaries.

     Each guarantee of the Senior Notes created by a Restricted Subsidiary
pursuant to the provisions described in the foregoing paragraph shall be in
form and substance satisfactory to the Trustee and shall provide among other
things, by its terms that it shall be automatically and unconditionally
released and discharged upon (i) any sale, exchange or transfer permitted by
the Indenture to any person not an Affiliate of the Company 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 the "Asset Sales" provisions described herein, or (ii) the
release or discharge of the Other 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 payment under such Other Indebtedness Guarantee.


MERGER OR CONSOLIDATION

     The Indenture provides that 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: (a) the successor entity of such
Disposition or the person 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; (b) 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; (c)
immediately after such Disposition, no Default or


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Event of Default shall exist; and (d) the corporation formed by or surviving
any such Disposition, or the corporation to which such Disposition shall have
been made, shall (i) have Consolidated Net Worth (immediately after the
Disposition but prior to any purchase accounting adjustments resulting from the
Disposition) equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the Disposition, (ii) be permitted immediately after the
Disposition by the terms of the Indenture to issue at least $1.00 of additional
Indebtedness determined on a Pro Forma Basis pursuant to the first sentence
under "Limitation on Incurrence of Indebtedness," and (iii) have a Cash Flow
Coverage Ratio, for the four fiscal quarters immediately preceding the
applicable Disposition, 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 the Indenture on the Company's ability to make a
Disposition described in this paragraph do not restrict the Company's ability
to sell less than all or substantially all of its assets, such sales being
governed by the "Asset Sales" provisions of the Indenture as described in this
propsectus.

     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 the Indenture.


PROVISION OF FINANCIAL INFORMATION TO HOLDERS OF SENIOR NOTES

     So long as the Senior Notes are outstanding, whether or not we are subject
to the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, we shall submit for filing with the Commission the annual reports,
quarterly reports and other documents that we would have been required to file
with the Commission pursuant to Section 13 or 15(d) if we were subject to such
reporting requirements. We will also provide to all holders of Senior Notes and
file with the Trustee copies of such annual reports, quarterly reports and
other documents required to be furnished to stockholders generally under the
Securities Exchange Act of 1934. In addition, we have agreed that, for so long
as any Senior Notes remain outstanding, we will furnish to the holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act of 1933.


EVENTS OF DEFAULT AND REMEDIES

     The Indenture provides that an Event of Default is: (a) a default for 30
days in payment of interest on the Senior Notes; (b) a default in payment when
due of principal or premium, if any; (c) the failure of the Company to comply
with any of its other agreements or covenants in, or provisions of, the
Indenture or the Senior Notes outstanding under the Indenture and the Default
continues for the period, if applicable, and after the notice specified in the
next paragraph; (d) 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 (1) either (A) such
default results from the failure to pay principal of or interest on any such
Indebtedness and such default continues for 30 days beyond any applicable grace
period, or (B) as a result of such default the maturity of such Indebtedness
has been accelerated prior to its expressed maturity, and (2) 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,
or the maturity of which has been accelerated, aggregates in excess of
$15,000,000; (e) a failure by the Company or any Restricted Subsidiary to pay
final judgments (not covered by insurance) aggregating in excess of $7,500,000
which judgments a court of competent jurisdiction does not rescind, annul or
stay within 45 days after their entry and the Default continues for the period
and after the notice specified in the next paragraph; and (f) certain events of
bankruptcy or insolvency involving the Company or any Significant Subsidiary.

     A Default under clause (c) (other than an Event of Default arising under
the "Merger or Consolidation," "Asset Sales" or "Change of Control" provisions
described herein or the covenants


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described under "Certain Covenants," any of which shall be an Event of Default
with the notice but without the passage of time specified in this paragraph) or
clause (e) is not an Event of Default under the Indenture until the Trustee or
the holders of at least 25% in principal amount of the Senior Notes outstanding
under the Indenture then outstanding notify the Company of the Default and the
Company does not cure the Default within 30 days after receipt of the notice.

     Upon the occurrence of an Event of Default, the Trustee or the holders of
at least 25% in aggregate principal amount of the then outstanding Senior Notes
may declare all Senior Notes to be due and payable immediately and, upon such
declaration, the principal of, premium, if any, and any accrued and unpaid
interest and Liquidated Damages, if any, on all Senior Notes shall be due and
payable immediately. The holders of a majority in aggregate principal amount of
the Senior Notes then outstanding under the Indenture, by notice to the
Trustee, may rescind any declaration of acceleration of the 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 the Senior Notes that shall have become due by such
declaration) shall have been cured or waived. Holders of the Senior Notes may
not enforce the Indenture, except as provided therein. The Trustee may withhold
from holders of the Senior Notes notice of any continuing Default or Event of
Default (except a Default or an Event of Default in payment of principal,
premium, if any, or interest) if the Trustee determines that withholding notice
is in their interest.

     The holders of a majority in aggregate principal amount of the Senior
Notes then outstanding under the Indenture may on behalf of all holders of the
Senior Notes waive any existing Default or Event of Default under the Indenture
and its consequences, except a continuing Default in the payment of the
principal of, or premium, if any, or interest on, such Senior Notes, which may
only be waived with the consent of each holder of the Senior Notes affected.

     We are required to deliver to the Trustee annually a statement regarding
compliance with the Indenture and, upon one of our officers becoming aware of
any Default or Event of Default, a statement specifying such Default or Event
of Default.


NO PERSONAL LIABILITY OF OFFICERS, DIRECTORS, EMPLOYEES AND STOCKHOLDERS

     None of our officers, employees, directors or stockholders shall have any
liability for any Obligations of the Company under the Senior Notes or the
Indenture, or for any claim based on, in respect of, or by reason of, such
Obligations or the creation of any such Obligation. Each holder of the Senior
Notes by accepting a Senior Note waives and releases all such liability, and
such waiver and release are part of the consideration for issuance of the
Senior Notes. The foregoing waiver may not be effective to waive liabilities
under the Federal securities laws, and the Commission is of the view that such
a waiver is against public policy.


SATISFACTION AND DISCHARGE OF THE INDENTURE

     We may at any time terminate all of our obligations under the Senior Notes
and the Indenture (the "legal defeasance option"), except for certain
obligations (including those with respect to the defeasance trust (as defined
herein) and obligations to register the transfer or exchange of the Senior
Notes, to replace mutilated, destroyed, lost or stolen Senior Notes and to
maintain a registrar and paying agent in respect of the Senior Notes). We may
at any time terminate (1) our obligations under the "Change of Control" and
"Asset Sales" provisions and the covenants described under "Certain Covenants,"
and certain other covenants in the Indenture, (2) the operation of clauses (c),
(d), (e), and (f) contained in the first paragraph of the "Events of Default
and Remedies" provisions and (3) the limitations contained in clauses (c) and
(d) under the "Merger or Consolidation" provisions (collectively, a "covenant
defeasance option").

     We may exercise our legal defeasance option notwithstanding our prior
exercise of our covenant defeasance option. If we exercise our legal defeasance
option, payment of the Senior Notes may not be accelerated because of an Event
of Default with respect thereto. If we exercise our covenant defeasance option,
payment of the Senior Notes shall not be accelerated because of an Event of


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Default specified in clauses (c), (d), (e) or (f) in the first paragraph under
the "Events of Default and Remedies" provisions described herein or because of
our failure to comply with clauses (c) and (d) under the "Merger or
Consolidation" provisions.

     To exercise either the legal or covenant defeasance option with respect to
the Senior Notes outstanding under the Indenture, we must irrevocably deposit
in trust (the "defeasance trust") with the Trustee money or U.S. government
obligations for the payment of principal of, and premium, if any, and interest
on, and Liquidated Damages, if any, on such Senior Notes to redemption or
maturity, as the case may be, and must comply with certain other conditions,
including the passage of 91 days and delivering to such Trustee an opinion of
counsel to the effect that holders of such Senior Notes 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 and in the same manner and at the same time as would have been the case
if such deposit and 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).
 


TRANSFER AND EXCHANGE

     Holders of Senior Notes may transfer or exchange their Senior Notes in
accordance with the Indenture, but the Registrar may require a holder, among
other things, to furnish appropriate endorsements and transfer documents, and
to pay any taxes and fees required by law or permitted by the Indenture, in
connection with any such transfer or exchange. The Registrar is not required to
issue, register the transfer or exchange (i) any Senior Notes selected for
redemption or purchase, or (ii) any Senior Notes for a period of 15 days before
a selection of such Senior Notes to be redeemed or purchased or between a
record date and the next succeeding interest payment date.

     The registered holder of a Senior Note is treated as its owner for all
purposes.


AMENDMENT, SUPPLEMENT AND WAIVER

     Subject to certain exceptions, the Indenture may be amended or
supplemented with the consent of the holders of at least a majority in
aggregate principal amount of the Senior Notes then outstanding under the
Indenture and any existing Default or Event of Default or compliance with any
provision may be waived with the consent of the holders of a majority in
aggregate principal amount of the Senior Notes then outstanding under such the
Indenture. Without the consent of any holder of Senior Notes, we and the
Trustee may amend or supplement the Indenture or the Senior Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated securities in
addition to or in place of certificated securities, to provide for the
assumption of our obligations in the case of a Disposition, to comply with the
Trust Indenture Act, or to make any change that does not materially adversely
affect the rights of any holder of Senior Notes.

     Without the consent of each holder of Senior Notes affected, we may not

        (1) reduce the principal amount of Senior Notes whose consent is
     necessary to effect the amendment to or waiver under the Indenture;

        (2) reduce the rate of or change the interest payment time of such
     Senior Notes, or alter the redemption provisions with respect thereto
     (other than the provisions relating to the covenants described above under
     the caption "--Mandatory Offers to Purchase Senior Notes--Change of
     Control" and "--Asset Sales") or the price at which the Company is required
     to offer to purchase such Senior Notes;

        (3) reduce the principal of or change the fixed maturity of such Senior
     Notes;

        (4) make such Senior Notes payable in money other than stated in such
     Senior Notes;

        (5) make any change in the provisions concerning waiver of Defaults or
     Events of Default by holders of such Senior Notes, or rights of holders of
     such Senior Notes to receive payment of principal or interest; or


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        (6) waive any default in the payment of principal of, premium, if any,
     or interest on, or Liquidated Damages, if any, with respect to such Senior
     Notes.


CONCERNING THE TRUSTEE

     The Indenture contains certain limitations on the rights of the Trustee,
if it becomes a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest (as defined in
the Trust Indenture Act) it must eliminate such conflict or resign.

     The holders of a majority in principal amount of the Senior Notes then
outstanding under the Indenture will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy available to
the Trustee, subject to certain exceptions. The Indenture provides that if an
Event of Default occurs (and has not been cured), the Trustee will be required,
in the exercise of its power, to use the degree of care of a prudent person in
similar circumstances in the conduct of its own affairs. Subject to the
provisions of the Indenture, the Trustee is under no obligation to exercise any
of its rights or powers under the Indenture at the request of any of the
holders of the Senior Notes issued under the Indenture, unless such holders
shall have offered to the Trustee security and indemnity satisfactory to it.


BOOK-ENTRY, DELIVERY AND FORM

     Except as set forth in the next paragraph, the series D senior notes will
initially be issued in the form of one or more registered global securities
(the "Global Securities"), each of which will be deposited on the Closing Date
with, or on behalf of, DTC and registered in the name of the Global Holder. The
following are summaries of certain rules and operating procedures of DTC which
affect the Global Securities.

     The series D senior notes that are issued as described under "Certificated
Securities," will be issued in registered form (the "Certificated Securities").
For a description of the restrictions on the transfer of Certificated
Securities, see "Notice to Investors."

     DTC has advised us that a limited-purchase trust company was created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in such securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers
and dealers, banks and trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to the other entities
such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Persons who are
not Participants may beneficially own securities held by or on behalf of DTC
only through the Participants or the Indirect Participants.

     We expect that pursuant to procedures established by DTC (i) upon deposit
of the Global Securities, DTC will credit the accounts of Participants with
portions of the Global Securities; and (ii) ownership of the Senior Notes will
be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC (with respect to the interests of the
Participants), the Participants and the Indirect Participants. The laws of some
states require that certain persons take physical delivery in definitive form
of securities that they own. Consequently, the ability to transfer Senior Notes
will be limited to such extent. For certain other restrictions on the
transferability of the Senior Notes, see "Notice to Investors."

     So long as the Global Holder is the registered owner of any Senior Notes,
the Global Holder will be considered the sole owner of such Senior Notes
outstanding under the Indenture. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have Senior Notes
represented by such Global Securities registered in their names, will not
receive or be entitled to receive physical delivery of Certificated Securities,
and will not be considered the owners or holders


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thereof under the Indenture for any purpose. As a result, the ability of a
person having a beneficial interest in Senior Notes represented by a Global
Security to pledge such interest to persons or entities that do not participate
in the DTC's system or to otherwise take actions in respect of such interest,
may be affected by the lack of a physical certificate evidencing such interest.
Accordingly, each QIB owning a beneficial interest in a Global Security must
rely on the procedures of DTC and, if such QIB is not a Participant or an
Indirect Participant, on the procedures of the Participant through which such
QIB owns its interest, to exercise any rights of a holder under such Global
Security or the Indenture.

     Neither the Trustee nor we will have any responsibility or liability for
any aspect of the records relating to or payments made on account of Senior
Notes by DTC, or for maintaining, supervising or reviewing any records of DTC
relating to such Senior Notes.

     Payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on any Senior Notes registered in the name of a
Global Holder on the applicable record date will be payable by the Trustee to
or at the direction of such Global Holder in its capacity as the registered
holder under the Indenture. Under the terms of the Indenture, we and the
Trustee may treat the persons in whose names the Senior Notes, including the
Global Securities, are registered as the owners thereof for the purpose of
receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Trustee nor we have or will have any responsibility
or liability for the payment of such amounts to beneficial owners of Senior
Notes (including principal, premium, if any, and interest), or to immediately
credit the accounts of the relevant Participants with such payment, in amounts
proportionate to their respective interests in the Global Securities in
principal amount of beneficial interests in the relevant security as shown on
the records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of Senior Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Participants or the Indirect Participants.

     We have been informed by DTC that its management is aware that some
computer applications, systems, and the like for processing data ("Systems")
that are dependent upon calendar dates including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems." We have also been informed
by DTC that is has informed its Participants and other members of the financial
community (the "Industry") that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payments of distributions
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ("DTC Services"), continue to
function appropriately. According to DTC, this program includes a technical
assessment and a remediation plan, each of which is complete. Additionally, DTC
has informed us that its plan includes a testing phase, which is expected to be
completed within appropriate time frames.

     However, we have been informed by DTC that its ability to perform properly
its services is also dependent upon other parties, including but not limited to
issuers and their agents, as well as third party vendors from whom DTC licenses
software and hardware, and third-party vendors on whom DTC relies for
information or the provision of services, including telecommunications and
electrical utility service providers, among others. DTC has informed us that it
is contacting (and will continue to contact) third-party vendors from whom DTC
acquires services to: (1) impress upon them the importance of such services
being Year 2000 compliant; and (2) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, DTC has informed us that it is in the process of developing such
contingency plans as it deems appropriate.

     According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.


CERTIFICATED SECURITIES

     If (i) we notify the Trustee in writing that DTC is no longer willing or
able to act as a depository and we are unable to locate a qualified successor
within 90 days or (ii) we, at our option, notify the Trustee in writing that we
elect to cause the issuance of the Senior Notes in definitive form under the


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Indenture, then, upon surrender by the relevant Global Holder of its Global
Security, Senior Notes in such form will be issued to each person that such
Global Holder and the Depository identifies as the beneficial owner of the
related Senior Notes. In addition, subject to certain conditions, any person
having a beneficial interest in the Global Security may, upon request to the
Trustee, exchange such beneficial interest for Certificated Securities. Upon
any such issuance, the Trustee is required to register such Senior Notes in the
name of, and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). Such Senior Notes would be issued in fully registered
form.


SAME-DAY SETTLEMENT AND PAYMENT

     With respect to certificated securities, the Company will make all
payments of principal, premium and interest by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address.


CERTAIN DEFINITIONS

     Set forth below are certain of the defined terms used in the Indenture.
Reference is made to the Indenture for the definition of all other terms.

     "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 person 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.

     "Asset Sale" means the sale, lease, conveyance or other disposition by the
Company or a Restricted Subsidiary of assets or property (other than (i) the
sale or disposition of any Restricted Investment, (ii) the sale or lease of
inventory, equipment, receivables or other assets in the ordinary course of
business, (iii) Receivables Financings, (iv) any sale or transfer of properties
or assets by the Company or a Restricted Subsidiary to the Company or any other
Restricted Subsidiary, (v) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company as permitted under
"Merger or Consolidation," or (vi) Restricted Payments permitted by the
"Limitations on Restricted Payments" covenant).

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

     "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) 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) non-capitalized transaction costs incurred in
connection with financings, acquisitions or dispositions (including, but not
limited to, financing and refinancing fees, 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 to the extent deducted in computing Consolidated Net
Income), plus (g) 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


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or SFAS 109 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 for 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 any of the following: (i) the
Jordan Stockholders shall fail to be the beneficial owners, directly or
indirectly, of at least 22% of the outstanding shares of Common Stock of the
Company on a fully-diluted basis; (provided, that the issuance of any shares of
the Company's Common Stock pursuant to a primary public offering shall not be
considered to have diluted such percentage ownership); or (ii) the Company is
merged or consolidated with another corporation, or all or substantially all of
the assets of the Company are sold, leased or conveyed to another person, and
the Jordan Stockholders are not the beneficial owners, directly or indirectly,
immediately following such transaction, of at least 22% of the Equity Interests
(which are entitled to vote in the election of directors or other governing
body) of the corporation surviving any such consolidation or merger, or the
person to which such sale, lease or conveyance shall have been made; or (iii)
the Company is liquidated or dissolved.

     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 would not constitute a Change of Control.

     "Commission" means the Securities and Exchange Commission.

     "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 (with
respect to the covenants limiting the incurrence of additional Indebtedness,
mergers, consolidations and sales of assets), Consolidated Interest Expense
shall be calculated on a Pro Forma Basis; provided further, any premiums, fees
and expenses (including the amortization thereof) payable in connection with
the Offering, the Prior Offering and the 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) 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


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write-ups, goodwill, debt and financing costs, and Incentive Arrangements), (C)
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 of deferred financing costs or other
financial recapitalization charges in connection with redeeming or retiring any
Indebtedness prior to its stated maturity, and (E) any non-recurring charge
arising out of the restructuring or consolidation of the operations of any
person(s) or business either alone or together with the Company or any
Restricted Subsidiary, incurred within 18 months following the acquisition of
such person(s) or business by the Company or any Restricted Subsidiary;
provided, however, that for purposes of determining the Cash Flow Coverage
Ratio (with respect to the covenants and provisions in the Indenture limiting
the incurrence of additional Indebtedness, mergers or consolidations, and sales
of assets), 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) non-capitalized transaction costs incurred in connection
with financings, acquisitions or divestitures (including, but not limited to,
financing and refinancing fees), (d) 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 of deferred financing costs or other financial
recapitalization charges incurred in connection with redeeming or retiring any
Indebtedness prior to its stated maturity, (f) any non-recurring charge arising
out of the restructuring or consolidation of the operations of any person(s) or
business either alone or together with the Company or any Restricted
Subsidiary, incurred within 18 months following the acquisition of such
person(s) or business by the Company or any Restricted Subsidiary, and (g) any
extraordinary or non-recurring charge arising out of the implementation of SFAS
106 or SFAS 109; provided, however, that for purposes of determining
Consolidated Net Worth (with respect to the covenants and provisions in the
Indenture limiting the incurrence of additional Indebtedness, mergers or
consolidations, and sales of assets) Consolidated Net Worth shall be calculated
on a Pro Forma Basis.

     "Credit Agreement" means the credit agreement, dated July 25, 1997,
entered into by JII, Inc. and certain Subsidiaries and the lenders party
thereto in their capacities as lenders thereunder and Bank Boston, N.A., 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 the "Limitation on Incurrence of
Indebtedness" covenant, 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.

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

     "Disqualified Stock" means any Capital Stock that by its terms (or by the
terms of any security into which its 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.


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<PAGE>

     "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.

     "GAAP" means generally accepted accounting principles, consistently
applied, as of the Issue Date. All financial and accounting determinations and
calculations under the Indenture will be made in accordance with GAAP.

     "Global Holder" means Cede & Co., as nominee of DTC.

     "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
in, or otherwise to establish financial hedges in respect of, exchange rates,
currency rates or interest rates.

     "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.

     "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
marshaling of assets and liabilities of the Company.

     "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.

     "Issue Date" means March 22, 1999.

     "Jordan Stockholders" means John W. Jordan, II, and/or his heirs,
executors and administrators, and/or The John W. Jordan, II Revocable Trust,
The Jordan Family Trust and/or any other trust established by John W. Jordan,
II whose beneficiaries are John W. Jordan, II and/or his lineal descendants or
other relatives.

     "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).


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<PAGE>

     "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, premium, if any, and interest on Indebtedness required to be paid as
a result of such Asset Sale (other than the Series B Senior Notes and the
Senior Notes) and legal, accounting, management, 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.

     "Nonrestricted Subsidiary" means Motors and Gears Holdings, Inc. and its
Subsidiaries, Telecommunication Products and its Subsidiaries, JI Properties,
Inc. and its Subsidiaries and any other Subsidiary of the Company other than a
Restricted Subsidiary.

     The covenants in the Indenture do not generally restrict the Nonrestricted
Subsidiaries, including their incurrence of Indebtedness.

     "Obligations" means, with respect to any Indebtedness, all principal,
interest, premium, 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 series C senior notes which
occurred on March 22, 1999.

     "Offering Memorandum" means the prospectus, dated March 17, 1999, relating
to the Company's offering and placement of the series C senior notes.

     "Other Permitted Indebtedness" means:

        (i) Indebtedness of the Company and its Restricted Subsidiaries existing
     as of the Issue Date and all related Obligations as in effect on such date
     (including Senior Notes, Series B Senior Notes and 113/4% Senior
     Subordinated Discount Debentures due 2009);

        (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
     of 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


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<PAGE>

     unused commitments) so 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, and (C) in the case
     of Refinancing Indebtedness for subordinated Indebtedness, such Refinancing
     Indebtedness shall be subordinated to the Senior Notes at least to the same
     extent as the 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 "Limitation on
     Guarantees of Company Indebtedness by Restricted Subsidiaries" covenant);

        (v) Indebtedness of the Company and its Restricted Subsidiaries incurred
     in making permitted Restricted Payments under clauses (iv) or (v) of the
     second sentence of the "Limitation on Restricted Payments" covenant and
     guarantees by the Company of capital leases of the Company's Nonrestricted
     Subsidiaries up to the aggregate amount permitted by clause (xv) of the
     second sentence of the "Limitation and Restricted Payments" covenant;

        (vi) Indebtedness of any Nonrestricted Subsidiary; 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 and
     that such Indebtedness is nonrecourse to the Company and any other
     Restricted Subsidiary and the Company and such other Restricted
     Subsidiaries have no Obligations with respect to such Indebtedness;

        (x) guarantees by Restricted Subsidiaries of Indebtedness of any
     Restricted Subsidiary if the 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 the "Limitation on Guarantees of Company Indebtedness by
     Restricted Subsidiaries" covenant;

        (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; and

        (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.

     "Permitted Liens" means: (a) with respect to the Company and the
Restricted Subsidiaries, (1) 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

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<PAGE>

therefor; (2) 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; (3) Liens incurred on
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (4)
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); (5) 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; (6) Liens (including extensions, renewals and
replacements thereof) upon property acquired (the "Acquired Property") after
the Issue Date, 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 the "Limitation
on Incurrence of Indebtedness" covenant; (7) 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; (8) judgment and attachment
Liens not giving rise to an Event of Default; (9) leases or subleases granted
to others not interfering in any material respect with the business of the
Company or any of its Restricted Subsidiaries; (10) Liens encumbering customary
initial deposits and margin deposits, and other Liens incurred in the ordinary
course of business and that are within the general parameters customary in the
industry, in each case securing Indebtedness under Hedging Obligations; (11)
Liens encumbering deposits made to secure obligations arising from statutory,
regulatory, contractual or warranty requirements of the Company or its
Restricted Subsidiaries; (12) 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; (13) any interest
or title of a lessor in property subject to any Capital Lease Obligation or
operating lease; (14) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (15) Liens existing on the Issue Date
and any extensions, renewals or replacements thereof; and (16) any Lien granted
to the Trustee under the Indenture 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;

     (b) with respect to the Restricted Subsidiaries, (1) 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; (2) Liens securing Indebtedness
issued by Restricted Subsidiaries if such Indebtedness is permitted by (A) the
first sentence of the "Limitation on Incurrence of Indebtedness" covenant, (B)
clauses (i), (ii), (iii) or (iv) of the second sentence of the "Limitation on
Incurrence of Indebtedness" covenant, or (C) clauses (i), (iii) (to the extent
the Indebtedness subject to such Refinancing Indebtedness was subject to Liens)
(vii), (ix) or (x) of the definition of Other Permitted Indebtedness; (3) Liens
securing intercompany Indebtedness issued by any Restricted Subsidiary to the
Company or another Restricted Subsidiary; (4) additional Liens at any one time
outstanding with respect to assets of the Restricted Subsidiaries the aggregate
fair market value of which does not exceed $10,000,000 (the fair market value
of any such asset is to be determined on the date such Lien is granted on such
asset); and (5) Liens securing guarantees by Restricted Subsidiaries of
Indebtedness issued by the Company if such guarantees are 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; and

     (c) with respect to the Company, (1) Liens securing Indebtedness issued by
the Company under the Credit Agreement if such Indebtedness is permitted by the
"Limitation on Incurrence of


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Indebtedness" covenant (including, but not limited to, Indebtedness issued by
the Company under the Credit Agreement pursuant to clause (i) and/or clause
(iv) of the second sentence of "Limitation on Incurrence of Indebtedness"
covenant), (2) 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, and (3) Liens securing guarantees by the
Company of Indebtedness issued by Restricted Subsidiaries if such Indebtedness
is permitted by the "Limitation on Incurrence of Indebtedness" covenant
(including, but not limited to, Indebtedness issued by Restricted Subsidiaries
under the Credit Agreement pursuant to clause (i) and/or clause (v) of the
second sentence of the "Limitation on Incurrence of Indebtedness" covenant) and
if such guarantees are permitted by clause (xii) (but only in respect of
Indebtedness issued by the Restricted Subsidiaries under the Credit Agreement
pursuant to "Limitation on Incurrence of Indebtedness" covenant) of the
definition of Other Permitted Indebtedness;

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 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 pursuant to the "Limitation on
Incurrence of Indebtedness" covenant and any permitted Refinancing Indebtedness
of such Indebtedness, and (B) guarantees by the Company of Indebtedness issued
by Restricted Subsidiaries under the Credit Agreement pursuant to the
"Limitation on Incurrence of Indebtedness" covenant and any permitted
Refinancing Indebtedness of such Indebtedness.

     "Plan" means the Company's 1997 Recapitalization and Repositioning Plan
referenced in the prospectus and all agreements, instruments and transactions
pursuant thereto.

     "Prior Offering" means the offer and sale of the Series B Senior Notes.

     "Pro Forma Basis" means, for purposes of determining Consolidated Net
Income, Cash Flow, and Consolidated Interest Expense in connection with the
Cash Flow Coverage Ratio (including in connection with the "Limitation on
Restricted Payments" covenant, the incurrence of Indebtedness pursuant to the
first sentence of the "Limitation on Incurrence of Indebtedness" covenant and
Consolidated Net Worth for purposes of the "Merger or Consolidation" covenant),
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 related restructuring charges in respect of
restructurings, consolidations, compensation or headcount reductions or other
cost savings which would otherwise be accounted for as an adjustment permitted
by Regulation S-X under the Securities Act of 1933 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 of 1933 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


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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 or other disposition of
Receivables that arise in the ordinary course of business, or (ii) the sale or
other disposition of Receivables arising 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 a Subsidiary of the Company that is
exclusively engaged in Receivables Financings and activities reasonably related
thereto.

     "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 the Exchange Indentures or any Indebtedness issued
to so extend, refinance, renew, replace, substitute or refund such
Indebtedness, (ii) any refinancings of Indebtedness issued under the Credit
Agreement, and (iii) any additional Indebtedness issued to pay premiums and
fees in connection with clauses (i) and (ii).

     "Restricted Investment" means any capital contribution to, or other debt
or equity investment in (other than certain investments in marketable
securities and other negotiable instruments permitted by the Indenture) any
Nonrestricted Subsidiary or any person other than a Restricted Subsidiary or
the Company; provided, that Restricted Investments will not include Incentive
Arrangements. 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) included in the
original Restricted Investment, plus all additions thereto, without any
adjustments for increases or decreases in value or write-ups, write-downs or
write-offs with respect to such Restricted Investment. Notwithstanding the
foregoing, the assignment by the Company and the assumption by a Nonrestricted
Subsidiary of all or any portion of an operating lease of the Company shall not
be deemed a Restricted Investment, so long as the obligations of the Company
under any such lease are not increased by the terms of such assignment or
assumption.

     "Restricted Subsidiary" means: (i) any Subsidiary of the Company existing
on the Issue Date other than a Nonrestricted Subsidiary, and (ii) any other
Subsidiary of the Company formed, acquired or existing after the Issue Date
that is designated as a "Restricted Subsidiary" by the Company pursuant to a
resolution approved by a majority of the Board of Directors, provided that any
Restricted Subsidiary that is organized under the laws of a foreign
jurisdiction and whose stock or ownership interests are sold or transferred to
a Nonrestricted Subsidiary may, by resolution approved by a majority of the
Board of Directors, be thereafter designated and considered as a Nonrestricted
Subsidiary.

     "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 of
1933.

     "Senior Notes" means Series C Senior Notes and Series D Senior Notes.

     "Series B Senior Notes" means the 10 3/8% Series B Senior Notes due 2007 of
the Company which were issued on October 3, 1997 in a registered exchange offer
for the Company's 10 3/8% Series A Senior Notes due 2007.


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     "Series D Senior Notes" means the 10 3/8% Series D Senior Notes due 2007 of
the Company to be issued pursuant to this prospectus in a registered exchange
offer for the Company's 10 3/8% Series C Senior Notes due 2007.

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

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

     "Significant Subsidiary" means (i) 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 of 1933 and the Exchange Act, and (ii) any other Restricted Subsidiary of
the Company that is material to the business, earnings, prospects, assets or
condition, financial or otherwise, of the Company and its Restricted
Subsidiaries taken as a whole.

     "Stated Maturity" means with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

     "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).

     "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.


                                      105
<PAGE>

            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     The following discussion is a summary of the material United States
federal income tax considerations relevant to the acquisition, ownership and
disposition of the series D senior notes acquired in and under the terms of the
exchange offer by holders of series C senior notes who acquired such series C
senior notes at their initial issuance, but does not purport to be a complete
analysis of all potential tax effects. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
Internal Revenue Service rulings and pronouncements and judicial decisions all
in effect as of the date of this propsectus, all of which are subject to change
at any time, and any such change may be applied retroactively in a manner that
could adversely affect a holder of the series D senior notes. The discussion
does not address all of the federal income tax consequences that may be
relevant to a holder in light of such holder's particular circumstances or to
holders subject to special rules, such as certain financial institutions,
insurance companies, dealers in securities, foreign corporations, nonresident
alien individuals and persons holding the series D senior notes as part of a
"straddle," "hedge" or "conversion transaction." Moreover, the effect of any
applicable state, local or foreign tax laws is not discussed. The discussion
deals only with series D senior notes held as "capital assets" within the
meaning of Section 1221 of the Code.

     The Company has not sought and will not seek any rulings from the IRS with
respect to any position of the Company discussed below. There can be no
assurance that the IRS will not take a different position from the Company
concerning aspects of the tax consequences of the acquisition, ownership or
disposition of the series D senior notes or that any such position would not be
sustained.

     PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO
THE APPLICATION OF THE TAX CONSIDERATIONS DISCUSSED BELOW TO THEIR PARTICULAR
SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX
LAWS.


CONSEQUENCES OF THE EXCHANGE OFFER TO EXCHANGING AND NONEXCHANGING HOLDERS

     The exchange of a series C senior note for a series D senior note pursuant
to the exchange offer will not be taxable to an exchanging holder for Federal
income tax purposes. As a result (i) an exchanging holder will not recognize
any gain or loss on the exchange, (ii) the holding period for the series D
senior note will include the holding period for the series C senior note, and
(iii) the basis of the series D senior note will be the same as the basis for
the series C senior note.

     The exchange offer will result in no Federal income tax consequences to a
nonexchanging holder of series C senior notes.


LIQUIDATED DAMAGES

     The treatment of interest described below with respect to the series D
senior notes is based in part upon the Company's determination that, as of the
date of issuance of the series C senior notes, the possibility that Liquidated
Damages would be paid to holders of the series C senior notes pursuant to a
Registration Default was remote. See "Description of Senior Notes--Registration
Rights; Exchange Offer." The IRS may take a different position, which could
affect the timing and character of interest income reported by holders of the
series D senior notes.


PRE-ISSUANCE ACCRUED INTEREST

     The Company intends to treat the amount of interest accrued prior to the
issue date on the series C senior notes (the "Accrued Interest") in a manner
consistent with Treasury Regulation Section 1.1273-2(m) with the result that
the Company will exclude the Accrued Interest from the initial purchase price
of the series D senior notes and thus will also exclude the Accrued Interest
from the initial purchase price of the series C senior notes. Accordingly,
unless an election to use an alternative method is made, a holder similarly
will exclude the Accrued Interest from the initial


                                      106
<PAGE>

purchase price of the series D senior notes. As a result, the portion of the
first interest payment attributable to the Accrued Interest will be treated as
a return of the Accrued Interest and not as an amount includable in income. A
holder may desire to contact its own tax advisor regarding the manner of
electing to include the Accrued Interest in the initial purchase price of the
series C senior notes and the tax consequences of such election.


INTEREST INCOME

     Interest on a series D senior note which constitutes the 10 3/8% current
mandatory payment of interest is "qualified stated interest" as defined below
under "--Tax Consequences of Issuance at a Discount," and will be taxable to a
holder as ordinary income at the time it is received or accrued in accordance
with the holder's method of accounting for tax purposes. The original issue
discount ("OID") on a series D senior note will be included in income by a
holder under the rules described below under "--Tax Consequences of Issuance at
a Discount."


TAX CONSEQUENCES OF ISSUANCE AT A DISCOUNT

     Each series C senior note was issued with OID and thus each series D
senior note will also have OID. OID is equal to the excess of the series D
senior note's "stated redemption price at maturity" over its "issue price." The
stated redemption price at maturity of a series D senior note is the total of
all payments provided by the series D senior note that are not payments of
"qualified stated interest." A qualified stated interest payment is generally
any one of a series of stated interest payments on a series D senior note that
are unconditionally payable at least annually at a single fixed rate applied to
the outstanding principal amount of the series D senior note. Accordingly, the
10 3/8% current mandatory interest payable on a series D senior note will
constitute "qualified stated interest." All other amounts payable on the series
D senior notes will be included in the series D senior note's stated redemption
price at maturity.

     Holders of a series D senior note must generally include OID in income
calculated on a constant-yield method before the receipt of cash attributable
to such income, and generally will have to include in income increasingly
greater amounts of OID over the life of the series D senior note. The amount of
OID includible in income by a holder of a series D senior note is the sum of
the daily portions of OID with respect to the series D senior note for each day
during the taxable year or portion of the taxable year on which the holder
holds such series D senior note ("accrued OID"). The daily portion is
determined by allocating to each day in any "accrual period" a pro rata portion
of the OID allocable to that accrual period. Accrual periods with respect to a
series D senior note may be of any length selected by the holder and may vary
in length over the term of the series D senior note as long as (i) no accrual
period is longer than one year and (ii) each scheduled payment of interest or
principal on the series D senior note occurs on either the final or first day
of an accrual period. The amount of OID allocable to an accrual period equals
the excess of (a) the product of the series D senior note's adjusted issue
price at the beginning of the accrual period and such series D senior note's
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the sum of the payments of qualified stated interest on the series D senior
note allocable to the accrual period. The "adjusted issue price" of a series D
senior note at the beginning of any accrual period is the issue price of the
series D senior note increased by (x) the amount of accrued OID for each prior
accrual period and decreased by (y) the amount of any payments previously made
on the series D senior note that were not payments of qualified stated
interest. The amount of OID allocable to an initial short accrual period may be
computed using any reasonable method if all other accrual periods other than a
final short accrual period are of equal length. The amount of OID allocable to
the final accrual period is the difference between (x) the amount payable at
the maturity of the series D senior note (other than any payment of qualified
stated interest) and (y) the series D senior note's adjusted issue price as of
the beginning of the final accrual period.


                                      107
<PAGE>

SALE, REDEMPTION OR RETIREMENT

     If a series D senior note is redeemed, sold or otherwise disposed of, a
holder generally will recognize gain or loss equal to the difference between
the amount realized on the sale or other disposition of such series D senior
note (to the extent such amount does not represent accrued but unpaid interest)
and such holder's tax basis in the series D senior note. A holder's tax basis
in a series D senior note will equal the initial purchase price of a series C
senior note by such holder, increased by the amount of any OID previously
included in income by such holder, and reduced by any payments of amounts on
the series D senior notes not constituting "qualified stated interest." Such
gain or loss generally will be capital gain or loss, provided that the holder
has held the series D senior note as a capital asset. A capital gain or loss
will be a long-term capital gain or loss if the holder's holding period is more
than 12 months. For individual holders, long-term capital gains are subject to
a maximum Federal income tax rate of 20 percent. The deduction of capital
losses may be subject to limitation. In addition, a holder will recognize
interest income to the extent of any accrued but unpaid interest on the series
D senior notes not previously recognized by the holder at the time of the
redemption or sale.


BACKUP WITHHOLDING

     A holder may be subject, under certain circumstances, to backup
withholding at a 31% rate with respect to "reportable payments" on the series D
senior notes. This withholding generally applies only if the holder (i) fails
to furnish his or her social security or other taxpayer identification number
("TIN"), (ii) furnishes an incorrect TIN, (iii) is notified by the IRS that he
or she has failed to report properly payments of interest and dividends and the
IRS has notified the Company that the holder is subject to backup withholding,
or (iv) fails, under certain circumstances, to provide a certified statement,
signed under penalty of perjury, that the TIN provided is his or her correct
number and that he or she is not subject to backup withholding. Any amount
withheld from payment to a holder under the backup withholding rules is
allowable as a credit against such holder's federal income tax liability,
provided that the required information is furnished to the IRS. Certain holders
(including, among others, corporations) are not subject to backup withholding.
Holders should consult their tax advisors as to their qualifications for
exemption from backup withholding and the procedure for obtaining such an
exemption.


INFORMATION REPORTING

     The Company is required to furnish certain information to the IRS and will
furnish annually to record holders of the series D senior notes information
with respect to interest paid (and OID accrued) on the series D senior notes
during the calendar year.


                             PLAN OF DISTRIBUTION

     Each broker-dealer that receives series D senior notes for its own account
as a result of market-making activities or other trading activities in
connection with the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such series D senior notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of series D senior notes received
in exchange for series C senior notes where such series C senior notes were
acquired as a result of market-making activities or other trading activities.
We have agreed that for a period of 120 days after the Expiration Date, we will
make this prospectus, as it may be amended or supplemented, available to any
broker-dealer for use in connection with any such resale.

     We will not receive any proceeds from any sale of series D senior notes by
broker-dealers. series D senior notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the series D senior notes or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to


                                      108
<PAGE>

prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such selling
broker-dealer or the purchasers of any such series D senior notes. Any
broker-dealer that resells series D senior notes that it received for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of those series D senior notes may be deemed to
be an "underwriter" within the meaning of the Securities Act of 1933 and any
profit on any such resale of those series D senior notes and any commissions or
concessions received by any participating broker or dealer may be deemed to be
underwriting compensation under the Securities Act of 1933. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act of 1933.


                      WHERE YOU CAN FIND MORE INFORMATION

     We file reports, proxy statements and other information with the
Securities and Exchange Commission. Our Securities and Exchange Commission
filings are also available over the Internet at the Securities and Exchange
Commission's web site at http://www.sec.gov. You may also read and copy any
document we file at the Securities and Exchange Commission's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 to obtain information on
the operation of the public reference room.

     We have filed with the Securities and Exchange Commission the registration
statement pursuant to the Securities Act of 1933, and the rules and regulations
promulgated thereunder, covering the series D senior notes. This prospectus
does not contain all the information set forth in the registration statement,
and certain parts of the registration statement are omitted in accordance with
the rules and regulations of the Securities and Exchange Commission. For
further information with respect to us and the series D new senior notes,
please read the registration statement. Statements made in this prospectus
relating to the contents of any contract, agreement or other document referred
to in the registration statement are not necessarily complete. For each
contract, agreement or other document filed as an exhibit to the registration
statement, we make reference to the exhibit for a complete description of the
matter involved.


                                 LEGAL MATTERS

     The validity of the series D senior notes will be passed upon for the
Company by Mayer, Brown & Platt, Chicago, Illinois.


                                    EXPERTS

     Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in this prospectus and registration statement as
set forth in their report which, as to 1996 is based in part on the reports of
Mellen, Smith & Pivoz, P.C., independent auditors; as to 1997 is based in part
on the reports of Mellen, Smith & Pivoz, P.C., independent auditors, Moss Adams
LLP, independent auditors, Arthur Andersen LLP, independent public accountants,
and Coopers & Lybrand S.p.A., independent auditors; and as to 1998 is based in
part on the reports of Moss Adams LLP, independent auditors, Arthur Andersen
LLP, independent public accountants, and Coopers & Lybrand S.p.A., independent
auditors. We have included our financial statements in the prospectus and
elsewhere in the registration statement, in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.

     The financial statements of Alma Products included in this prospectus and
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, to the extent and for the period indicated as set forth in
their report. The financial statements included in the prospectus and elsewhere
in the registration statement are included in reliance on Arthur Andersen LLP's
report given on their authority as experts in accounting and auditing.


                                      109
<PAGE>

                 INDEX TO FINANCIAL STATEMENTS AND INFORMATION

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                      <C>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
 Unaudited Pro Forma Balance Sheet as of December 31, 1998 ...........................   P-2
 Unaudited Pro Forma Statement of Operations for the year ended December 31, 1998 ....   P-3
JORDAN INDUSTRIES, INC.
 Report of Independent Auditors ......................................................   F-1
    DIVERSIFIED WIRE & CABLE, INC.
      Independent Auditors' Report ...................................................   F-2
    FIR GROUP
      Independent Auditor's Report ...................................................   F-3
    MOTION CONTROL ENGINEERING, INC.
      Report of Independent Public Accountants .......................................   F-4
    NORTHERN TECHNOLOGIES HOLDINGS, INC.
      Independent Auditor's Report ...................................................   F-5
 Consolidated Balance Sheets as of December 31, 1998 and 1997 ........................   F-6
 Consolidated Statements of Operations for the three years in the period ended
   December 31, 1998 .................................................................   F-7
 Consolidated Statements of Changes in Shareholders' Equity (Net Capital Deficiency)
   for the three years in the period ended December 31, 1998 .........................   F-8
 Consolidated Statements of Cash Flows for the three years in the period ended
   December 31, 1998 .................................................................   F-9
 Notes to Consolidated Financial Statements ..........................................   F-11
ALMA PRODUCTS
 Report of Independent Public Accountants ............................................   F-37
 Statements of Net Assets as of December 31, 1998 and 1997 ...........................   F-38
 Statements of Income for the three years in the period ended December 31, 1998 ......   F-39
 Statements of Cash Flows for the three years in the period ended December 31, 1998 ..   F-40
 Notes to Financial Statements .......................................................   F-41
</TABLE>

                                      I-1
<PAGE>

                   UNAUDITED PRO FORMA FINANCIAL INFORMATION

     We have prepared the following financial information (the "Unaudited Pro
Forma Financial Information") based on pro forma adjustments to our historical
consolidated financial statements. The Unaudited Pro Forma Financial
Information gives effect to (i) the results of the Offering, (ii) the
acquisition of Alma Products, (iii) the full year impact of the acquisitions of
Deflecto, Rolite, Advanced DC Motors, Euclid, K&S Sheet Metal and Opto-Tech
(collectively, the "Company Acquisitions"), and (iv) the disposition of
Diversified Wire and Cable (the "Disposition"). The pro forma adjustments are
described in the accompanying notes. The Unaudited Pro Forma Financial
Information is presented for informational purposes only and does not purport
to represent what our financial position or results of operations would
actually have been if the aforementioned events had occurred on the dates
specified or to project our financial position or results of operations at any
future date or for any future periods. The Unaudited Pro Forma Financial
Information should be read in conjunction with our historical consolidated
financial statements, and the related notes.


                                      P-1
<PAGE>

                       UNAUDITED PRO FORMA BALANCE SHEET
                            AS OF DECEMBER 31, 1998




<TABLE>
<CAPTION>
                                                       HISTORICAL    ACQUISITION (1)
                                                       ----------    -----------
                                                          (DOLLARS IN THOUSANDS)
<S>                                                  <C>            <C>
ASSETS
Current assets:
 Cash and cash equivalents .........................   $   23,008        $    --
 Accounts receivable, net ..........................      160,586          9,565
 Inventories .......................................      139,720         12,790
 Prepaid expenses and other current
   assets ..........................................       17,724          1,053
                                                       ----------        -------
Total current assets ...............................      341,038         23,408
Property and equipment, net ........................      139,578          7,925
Other assets .......................................      563,272             --
                                                       ----------        -------
Total assets .......................................   $1,043,888        $31,333
                                                       ==========        =======
LIABILITIES AND STOCKHOLDERS'
 EQUITY
Current liabilities ................................   $  145,837        $ 9,035
Current portion of long-term obligations ...........        6,136             --
Long-term obligations:
 Credit Agreements .................................      164,000             --
 Senior Notes ......................................           --             --
 Other debt ........................................      895,419             --
                                                       ----------        -------
Total long-term obligations ........................    1,059,419             --
Other non-current liabilities and deferred
 income taxes ......................................       14,991          2,706
 Jordan Telecommunication Products
   Senior Preferred Stock ..........................       23,943             --
 Motors and Gears Senior Preferred
   Stock ...........................................        1,706             --
Stockholders' equity (net capital
 deficiency) .......................................     (208,144)        19,592
                                                       ----------        -------
Total liabilities and stockholders' equity .........   $1,043,888        $31,333
                                                       ==========        =======



<CAPTION>
                                                         PRO FORMA
                                                      ADJUSTMENTS (2)   OFFERING (3)    PRO FORMA
                                                     ----------------- -------------- -------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                  <C>               <C>            <C>
ASSETS
Current assets:
 Cash and cash equivalents .........................     $(84,077)       $   86,100    $   25,031
 Accounts receivable, net ..........................          --                 --       170,151
 Inventories .......................................          --                 --       152,510
 Prepaid expenses and other current
   assets ..........................................          --                 --        18,777
                                                         --------        ----------    ----------
Total current assets ...............................     (84,077)            86,100       366,469
Property and equipment, net ........................          --                 --       147,503
Other assets .......................................      65,459             13,661       642,392
                                                         --------        ----------    ----------
Total assets .......................................     $(18,618)       $   99,761    $1,156,364
                                                         ========        ==========    ==========
LIABILITIES AND STOCKHOLDERS'
 EQUITY
Current liabilities ................................     $ 1,590(4)      $       --    $  156,462
Current portion of long-term obligations ...........          --                 --         6,136
Long-term obligations:
 Credit Agreements .................................          --            (50,000)      114,000
 Senior Notes ......................................          --            149,761       149,761
 Other debt ........................................          --                 --       895,419
                                                         ---------       ----------    ----------
Total long-term obligations ........................          --             99,761     1,159,180
Other non-current liabilities and deferred
 income taxes ......................................        (616)(5)             --        17,081
 Jordan Telecommunication Products
   Senior Preferred Stock ..........................          --                 --        23,943
 Motors and Gears Senior Preferred
   Stock ...........................................          --                 --         1,706
Stockholders' equity (net capital
 deficiency) .......................................     (19,592)                --      (208,144)
                                                         ---------       ----------    ----------
Total liabilities and stockholders' equity .........     $(18,618)       $   99,761    $1,156,364
                                                         =========       ==========    ==========
</TABLE>

- ----------
(1)   Reflects the historical balance sheet of Alma Products as of December 31,
      1998.

(2)   Reflects the acquisition price and certain preliminary purchase
      accounting adjustments related to the Alma Products acquisition.

(3)   Reflects the offering including the issuance of $155.0 million of senior
      notes, less a discount of $5.2 million, the repayment of the Credit
      Agreement of $50.0 million, and the payment of fees and expenses related
      to the offering related transactions of $13.7 million.

(4)   Reflects a $2.0 million accrual for the payment of transaction related
      fees and the elimination of $0.4 million for an environmental accrual
      that was not assumed by the Company.

(5)   Reflects the elimination of certain officer employment contract and
      retirement benefit liabilities that were not assumed by the Company.


                                      P-2
<PAGE>

                  UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                             FOR THE YEAR ENDED DECEMBER 31, 1998
                                                        -----------------------------------------------
                                                                           ALMA
                                                         HISTORICAL   ACQUISITION(1)   ACQUISITIONS(2)
STATEMENT OF OPERATIONS DATA:                           ------------ ---------------- -----------------
<S>                                                     <C>          <C>              <C>
Net Sales .............................................  $ 943,607       $73,608          $ 28,012
Cost of sales, excluding depreciation .................    601,385        55,998            15,900
Selling, general and administrative expenses,
 excluding depreciation ...............................    193,426         3,603             4,649
Depreciation and amortization .........................     45,047         2,879             1,573
Advisory fees and other, net ..........................     12,053            --                50
                                                         ---------       -------          --------
Operating income ......................................     91,696        11,128             5,840
Interest expense, net .................................    107,527            --             2,232
Other (income) expense ................................      6,719           (43)              124
                                                         ---------       -------          --------
Income (loss) before income taxes, minority interest
 and extraordinary items ..............................    (22,550)       11,171             3,484
Income taxes (credits) ................................      8,162           179                --
Minority interest .....................................        695            --                --
                                                         ---------       -------          --------
Net income (loss) before extraordinary items ..........    (31,407)       10,992             3,484
Extraordinary items ...................................        179            --                --
                                                         ---------       -------          --------
Net income (loss) .....................................  $ (31,586)      $10,992          $  3,484
                                                         =========       =======          ========
OTHER DATA:
Adjusted operating income .............................  $  91,696       $11,128          $  5,840
Capital expenditures ..................................     21,477         1,131               837
Cash interest expense, net ............................     78,450            --             1,292



<CAPTION>
                                                              FOR THE YEAR ENDED DECEMBER 31, 1998
                                                        ------------------------------------------------
                                                                              OFFERING          PRO
                                                         DISPOSITION(3)      AND OTHER         FORMA
STATEMENT OF OPERATIONS DATA:                           ---------------- ----------------- -------------
<S>                                                     <C>              <C>               <C>
Net Sales .............................................    $ (21,067)      $        --      $1,024,160
Cost of sales, excluding depreciation .................      (15,268)               --         658,015
Selling, general and administrative expenses,
 excluding depreciation ...............................       (5,709)               --         195,969
Depreciation and amortization .........................         (345)               --          49,154
Advisory fees and other, net ..........................          709                --          12,812
                                                           ---------       -----------      ----------
Operating income ......................................         (454)               --         108,210
Interest expense, net .................................          (66)           13,879 (4)     123,572
Other (income) expense ................................           --                --           6,800
                                                           ---------       -----------      ----------
Income (loss) before income taxes, minority interest
 and extraordinary items ..............................         (388)          (13,879)        (22,162)
Income taxes (credits) ................................          (38)               --           8,303
Minority interest .....................................           --                --             695
                                                           ---------       -----------      ----------
Net income (loss) before extraordinary items ..........         (350)          (13,879)        (31,160)
Extraordinary items ...................................           --              (179)(5)          --
                                                           ---------       -----------      ----------
Net income (loss) .....................................    $    (350)      $   (13,700)     $  (31,160)
                                                           =========       ===========      ==========
OTHER DATA:
Adjusted operating income .............................    $    (454)      $        --      $  108,210
Capital expenditures ..................................          (92)             (975)         22,378
Cash interest expense, net ............................          (66)           12,272          91,948
</TABLE>

- -------
(1)   Represents the results of operations of Alma Products for the year ended
      December 31, 1998. The results of operations also include purchase price
      accounting adjustments for additional amortization related to the excess
      of purchase price over the value of the net assets acquired (goodwill) of
      $1.7 million, as well as the elimination of $0.6 million of selling,
      general and administrative expenses relating to liabilities for certain
      officer employment benefits which were not assumed by the Company.

(2)   Represents the results of operations of Deflecto, Rolite, Advanced DC
      Motors, Euclid, K&S Sheet Metal and Opto-Tech prior to their acquisition
      by us or our subsidiaries. The results of operations also include
      purchase accounting adjustments for additional depreciation and
      amortization related to the write up of property and equipment and the
      excess of purchase price over the value of the net assets acquired
      (goodwill).

(3)   Reflects the results of operations of Diversified Wire and Cable prior to
      its sale in July 1998.

(4)   Reflects (i) additional interest expense of $16.1 million related to the
      offering, (ii) the elimination of $3.8 million of interest expense
      incurred on the Company's outstanding borrowings under its revolving
      credit facility, and (iii) $1.6 million of incremental amortization of
      deferred financing fees related to costs incurred in connection with the
      offering.

(5)   Reflects the write-off of deferred financing fees recorded in connection
      with a portion of the Company's long-term debt.


                                      P-3
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Shareholders
Jordan Industries, Inc.


     We have audited the accompanying consolidated balance sheets of Jordan
Industries, Inc. as of December 31, 1998 and 1997, and the related consolidated
statements of operations, shareholders' equity (net capital deficiency), and
cash flows for each of the three years in the period ended December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits. We did not audit the financial statements of certain subsidiaries
whose statements reflect total assets constituting 15% and 19% as of December
31, 1998 and 1997, respectively, and net sales constituting 12%, 10%, and 3% for
each of the three years in the period ended December 31, 1998, of the related
consolidated totals. Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to
data included for these subsidiaries, is based solely on the reports of the
other auditors.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the reports of other
auditors provide a reasonable basis for our opinion.

     In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Jordan Industries, Inc. at
December 31, 1998 and 1997, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles.


                                   ERNST & YOUNG LLP


Chicago, Illinois
March 31, 1999


                                      F-1
<PAGE>

                                                                          [LOGO]

                         INDEPENDENT AUDITORS' REPORT


Board of Directors
Diversified Wire & Cable, Inc.
Troy, Michigan


     We have audited the balance sheets of Diversified Wire & Cable, Inc. as of
December 31, 1997 and 1996 and the related statements of operations, changes in
stockholders' equity and cash flows for the year ended December 31, 1997 and
for the period June 25, 1996 (Commencement of Operations) through December 31,
1996, respectively, (not separately presented herein). These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosure in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position of Diversified Wire & Cable,
Inc. as of December 31, 1997 and 1996, and the results of its operations, the
changes in stockholders' equity and its cash flows for the year ended December
31, 1997 and for the period June 25, 1996 through December 31, 1996,
respectively, in conformity with generally accepted accounting principles.




                                            Mellen, Smith & Pivoz, P.C.


Bingham Farms, Michigan
January 22, 1998


                                      F-2
<PAGE>

                         INDEPENDENT AUDITOR'S REPORT



To the Board of Directors of
Fir Group


     We have audited the consolidated balance sheet of Fir Group (the
"Company") composed of FIR Elettromeccanica S.p.A., CIME S.p.A., Selin Sistemi
S.p.A. and TEA S.r.1. as of October 31, 1998 and 1997, and the related
consolidated statements of income, retained earnings, and cash flows for the
year and for the five months then ended, respectively. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of October 31, 1998 and 1997, and the results of its operations and its cash
flows for the year and for the five months then ended, in conformity with
generally accepted accounting principles.




                                            COOPERS & LYBRAND S.p.A.


Bologna, 5 February 1999

                                      F-3
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of
Motion Control Engineering, Inc.:


     We have audited the balance sheets of MOTION CONTROL ENGINEERING, INC. (a
California corporation and a wholly-owned subsidiary of Motors & Gears, Inc.)
as of December 31, 1998 and 1997, and the related statements of income,
shareholders' equity and cash flows for the year ended December 31, 1998 and
for the 13 days ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Motion Control Engineering,
Inc. as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for the year ended December 31, 1998 and for the 13 days ended
December 31, 1997 in conformity with generally accepted accounting principles.




                                            Arthur Andersen LLP


Sacramento, California
February 9, 1999


                                      F-4
<PAGE>

                         INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
Northern Technologies Holdings, Inc.
Deerfield, Illinois


     We have audited the accompanying balance sheets of Northern Technologies
Holdings, Inc. as of December 31, 1998 and 1997 and the related consolidated
statements of income, stockholder's equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosure in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Northern
Technologies Holdings, Inc. as of December 31, 1998 and 1997, and the results
of its operations and cash flows for the year then ended in conformity with
generally accepted accounting principles.




                                            Moss Adams LLP


Spokane, Washington
January 22, 1999


                                      F-5
<PAGE>

                            JORDAN INDUSTRIES, INC.

                          CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                      ----------------------------
                                                                           1998           1997
                                                                      -------------   ------------
<S>                                                                   <C>             <C>
ASSETS
Current assets:
 Cash and cash equivalents ........................................    $   23,008      $   52,500
 Accounts receivable, net of allowance of $4,493 and $3,645 in 1998
   and 1997, respectively .........................................       160,586         134,177
 Inventories ......................................................       139,720         124,000
 Prepaid expenses and other current assets ........................        17,724          12,706
                                                                       ----------      ----------
   Total current assets ...........................................       341,038         323,383
Property, plant and equipment, net ................................       139,578         105,070
Investments in and advances to affiliates .........................         1,722           1,722
Goodwill, net .....................................................       491,510         433,294
Other assets ......................................................        70,040          66,762
                                                                       ----------      ----------
   Total Assets ...................................................    $1,043,888      $  930,231
                                                                       ==========      ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
 (NET CAPITAL DEFICIENCY)
Current liabilities:
 Notes payable ....................................................    $      737      $    2,650
 Accounts payable .................................................        70,798          58,781
 Accrued liabilities ..............................................        68,722          70,473
 Advance deposits .................................................         5,580           5,424
 Current portion of long-term debt ................................         6,136           9,547
                                                                       ----------      ----------
   Total current liabilities ......................................       151,973         146,875
Long-term debt ....................................................     1,059,419         921,871
Other noncurrent liabilities ......................................        12,762          13,403
Deferred income taxes .............................................         1,444           1,444
Minority interest .................................................           785              88
Preferred stock ...................................................        25,649          21,835
Shareholders' equity (net capital deficiency):
 Common stock $.01 par value:
   authorized - 100,000 shares
   issued and outstanding - 98,501 shares .........................             1               1
 Additional paid-in capital .......................................         2,116           2,116
 Accumulated other comprehensive income ...........................         2,038            (504)
 Accumulated deficit ..............................................      (212,299)       (176,898)
                                                                       ----------      ----------
   Total shareholders' equity (net capital deficiency) ............      (208,144)       (175,285)
                                                                       ----------      ----------
   Total Liabilities and Shareholders' Equity
    (Net Capital Deficiency) ......................................    $1,043,888      $  930,231
                                                                       ==========      ==========
</TABLE>

                            See accompanying notes.

                                      F-6
<PAGE>

                            JORDAN INDUSTRIES, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)




<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                           ---------------------------------------------
                                                                1998            1997            1996
                                                           -------------   -------------   -------------
<S>                                                        <C>             <C>             <C>
Net sales ..............................................     $ 943,607       $ 707,112       $ 601,567
Cost of sales, excluding depreciation ..................       601,385         446,580         375,745
Selling, general and administrative expense ............       193,426         148,921         150,951
Depreciation ...........................................        23,180          19,612          18,939
Amortization of goodwill and other intangibles .........        21,867          15,709          11,499
Stock appreciation right and compensation
 agreements ............................................            --          15,871           9,822
Loss on purchase of an affiliated company ..............            --              --           4,488
Management fees and other ..............................         9,033           4,975           4,489
Loss on foreign currency transactions ..................         3,020              --              --
Restructuring charges ..................................            --              --           8,106
Other non-recurring charges ............................            --              --           4,136
                                                             ---------       ---------       ---------
 Operating income ......................................        91,696          55,444          13,392
Other (income) and expenses:
   Interest expense ....................................       109,705          82,455          63,340
   Interest income .....................................        (2,178)         (2,713)         (2,538)
   Loss (gain) on sale of subsidiaries .................         6,299         (17,081)             --
   Other ...............................................           420          (1,044)             --
                                                             ---------       ---------       ---------
    Total other expenses ...............................       114,246          61,617          60,802
                                                             ---------       ---------       ---------
Loss before income taxes, minority interest, equity in
 investee and extraordinary items ......................       (22,550)         (6,173)        (47,410)
Provision for income taxes .............................         8,162           6,575           4,415
                                                             ---------       ---------       ---------
Loss before minority interest, equity in investee and
 extraordinary items ...................................       (30,712)        (12,748)        (51,825)
Minority interest ......................................           695          (1,874)             59
Equity in losses of investee ...........................            --           3,386              --
                                                             ---------       ---------       ---------
Loss before extraordinary items ........................       (31,407)        (14,260)        (51,884)
Extraordinary loss .....................................           179          31,358           3,806
                                                             ---------       ---------       ---------
 Net loss ..............................................     $ (31,586)      $ (45,618)      $ (55,690)
                                                             =========       =========       =========
</TABLE>

                            See accompanying notes.

                                      F-7
<PAGE>

                            JORDAN INDUSTRIES, INC.

          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                           (NET CAPITAL DEFICIENCY)
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                          COMMON STOCK                      NOTE       ACCUMULATED
                                      --------------------  ADDITIONAL   RECEIVABLE       OTHER
                                         NUMBER               PAID-IN       FROM      COMPREHENSIVE    ACCUMULATED
                                       OF SHARES   AMOUNT     CAPITAL      OFFICER        INCOME         DEFICIT        TOTAL
                                      ----------- -------- ------------ ------------ --------------- -------------- -------------
<S>                                   <C>         <C>      <C>          <C>          <C>             <C>            <C>
Balance at January 1, 1996 ..........    93,501      $ 1     $  1,097     $     --      $   (778)      $  (76,674)   $  (76,354)
   Common stock issuance ............     1,500       --        1,460       (1,460)           --               --            --
   Cumulative translation
    adjustment ......................        --       --           --           --         1,763               --         1,763
   Net Loss .........................        --       --           --           --            --          (55,690)      (55,690)
                                                                                                                     ----------
   Comprehensive income .............        --       --           --           --            --               --       (53,927)
                                         ------      ---     --------     --------      --------       ----------    ----------
Balance at December 31, 1996 ........    95,001        1        2,557       (1,460)          985         (132,364)     (130,281)
   Purchase of common stock .........    (1,500)      --       (1,460)       1,460            --               --            --
   Issuance of common stock .........     5,000       --        1,019           --            --               --         1,019
   Sales of subsidiary to Related
    party ...........................        --       --           --           --            --            1,084         1,084
   Cumulative translation
    adjustment ......................        --       --           --           --        (1,489)              --        (1,489)
   Net Loss .........................        --       --           --           --            --          (45,618)      (45,618)
                                                                                                                     ----------
   Comprehensive income .............        --       --           --           --            --               --       (47,107)
                                         ------      ---     --------     --------      --------       ----------    ----------
Balance at December 31, 1997 ........    98,501        1        2,116           --          (504)        (176,898)     (175,285)
   Non-cash dividends to third
    parties .........................        --       --           --           --            --           (3,815)       (3,815)
   Cumulative translation
    adjustment ......................        --       --           --           --         2,542               --         2,542
   Net loss .........................        --       --           --           --            --          (31,586)      (31,586)
                                                                                                                     ----------
   Comprehensive income .............        --                    --           --            --               --       (29,044)
                                         ------              --------     --------      --------       ----------    ----------
Balance at December 31, 1998 ........    98,501      $ 1     $  2,116     $     --      $  2,038       $ (212,299)   $ (208,144)
                                         ======      ===     ========     ========      ========       ==========    ==========
</TABLE>

                            See accompanying notes.

                                      F-8
<PAGE>

                            JORDAN INDUSTRIES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)




<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                           ---------------------------------------------
                                                                1998            1997            1996
                                                           -------------   -------------   -------------
<S>                                                        <C>             <C>             <C>
Cash flows from operating activities:
 Net loss ..............................................    $  (31,586)     $  (45,618)     $  (55,690)
   Adjustments to reconcile net loss to net cash
    provided by operating activities:
    Restructuring charges ..............................            --              --           8,106
    Amortization of deferred financing costs ...........         4,451           3,622           3,001
    Depreciation and amortization ......................        45,047          35,321          30,438
    Provision for deferred income taxes ................            --              --           2,184
    Equity in losses of investee .......................            --           3,386              --
    Loss (gain) on sale of subsidiary ..................         6,299         (17,081)             --
    Loss on acquisition of affiliated company ..........            --              --           4,488
    Minority interest ..................................           696          (1,874)             59
    Extraordinary loss .................................           179          31,358           3,806
    Non-cash interest ..................................        26,303          18,456          11,987
Changes in operating assets and liabilities (net of
 acquisitions):
    Accounts receivable ................................       (16,025)        (15,942)         13,894
    Inventories ........................................        (4,241)         (5,695)            796
    Prepaid expenses and other current assets ..........        (4,441)            796            (851)
    Non-current assets .................................        (4,024)           (602)         (1,071)
    Accounts payable, accrued liabilities, and other
      current liabilities ..............................         6,526           3,713           2,560
    Advance deposits ...................................           156           3,524              69
    Non-current liabilities ............................           378           3,799            (526)
    Other ..............................................          (335)            345            (146)
                                                            ----------      ----------      ----------
Net cash provided by operating activities ..............        29,383          17,508          23,104
Cash flows from investing activities:
 Capital expenditures, net of dispositions .............       (21,477)        (14,179)        (17,395)
 Notes receivable from affiliates ......................            --              --          (5,263)
 Acquisitions of subsidiaries ..........................      (129,065)       (229,807)       (150,360)
 Net cash acquired in purchase of subsidiaries .........         2,292           4,972           5,869
 Acquisitions of minority interests and other ..........            --              --             (81)
 Net proceeds from sale of subsidiary ..................        15,000          45,954              --
 Redemption of investment in affiliate .................            --          12,500              --
 Investment in affiliate ...............................        (7,285)             --              --
                                                            ----------      ----------      ----------
Net cash used in investing activities ..................      (140,535)       (180,560)       (167,230)
</TABLE>

                         (Continued on following page.)
                            See accompanying notes.

                                      F-9
<PAGE>

                            JORDAN INDUSTRIES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

                                  (continued)

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                             ------------------------------------------
                                                                 1998           1997           1996
                                                             ------------   ------------   ------------
<S>                                                          <C>            <C>            <C>
Cash flows from financing activities:
 Proceeds of debt issuance - SPL Holdings, Inc. ..........    $      --      $       --     $  13,000
 Proceeds of debt issuance - MK Holdings, Inc. ...........           --              --        20,000
 Proceeds of debt issuance - JII, Inc. ...................           --         120,000            --
 Proceeds from preferred stock issuance - Jordan
   Telecommunications Products, Inc. .....................           --          25,000            --
 Proceeds of debt issuance - Motors and Gears, Inc.                  --         105,692       170,000
 Proceeds of debt issuance - Jordan
   Telecommunications, Inc. ..............................           --         273,545            --
 Proceeds from revolving credit facilities, net ..........       96,000          21,500        40,909
 Payment of financing costs ..............................           --         (29,514)      (11,858)
 Repayment of long-term debt .............................      (19,192)       (331,560)      (98,143)
 Other borrowing .........................................        2,310              --         2,107
                                                              ---------      ----------     ---------
Net cash provided by financing activities ................       79,118         184,663       136,015
Foreign currency translation .............................        2,542          (1,908)         (345)
                                                              ---------      ----------     ---------
Net increase (decrease) in cash and cash equivalents .....      (29,492)         19,703        (8,456)
Cash and cash equivalents at beginning of year ...........       52,500          32,797        41,253
                                                              ---------      ----------     ---------
Cash and cash equivalents at end of year .................    $  23,008      $   52,500     $  32,797
                                                              =========      ==========     =========
Supplemental disclosures of cash flow information:
 Cash paid during the year for:
   Interest ..............................................    $  74,715      $   56,957     $  45,563
                                                              =========      ==========     =========
   Income taxes, net .....................................    $   3,714      $    4,617     $   2,603
                                                              =========      ==========     =========
 Noncash investing activities:
   Capital leases ........................................    $  15,489      $    2,318     $   5,543
                                                              =========      ==========     =========
</TABLE>

                            See accompanying notes.

                                      F-10
<PAGE>

                            JORDAN INDUSTRIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)


NOTE 1 -- ORGANIZATION

Jordan Industries, Inc. (the Company), an Illinois corporation, was formed by
Chicago Group Holdings, Inc. on May 26, 1988 for the purpose of combining into
one corporation certain companies in which partners and affiliates of The
Jordan Company (The Jordan Group) acquired ownership interests through
leveraged buy-outs. Chicago Group Holdings, Inc. was formed on February 8, 1988
and had no operations. The Company was merged with Chicago Group Holdings, Inc.
on May 31, 1988 with the Company being the surviving company.

The Company's business is divided into five groups. The Specialty Printing and
Labeling group consists of Sales Promotion Associates, Inc. ("SPAI"), Valmark
Industries, Inc. ("Valmark"), Pamco Printed Tape and Label Co., Inc. ("Pamco")
and Seaboard Folding Box, Inc. ("Seaboard"). The Jordan Specialty Plastics
group consists of Beemak Plastics Inc. ("Beemak"), Sate-Lite Manufacturing
Company ("Sate-Lite"), Deflecto Corporation ("Deflecto"), and Rolite Plastics
("Rolite"). The Motors and Gears group consists of The Imperial Electric
Company ("Imperial") and its subsidiaries, Gear Research, Inc. ("Gear") and
Euclid Universal Corporation ("Euclid"), Merkle-Korff Industries, Inc.
("Merkle-Korff"), FIR Group Companies ("FIR"), Electrical Design & Control
("ED&C"), Motion Control Engineering ("Motion Control")and Advanced D.C. Motors
("Advanced DC"). The Telecommunication Products Group consists of Dura-Line
Corporation ("Dura-Line"), Electronic Connectors and Components ("Connectors"),
Viewsonics, Inc. ("Viewsonics"), Bond Holdings, Inc. ("Bond"), LoDan West, Inc.
("LoDan"), Northern Technologies, Inc. ("Northern"), Engineered Endeavors, Inc.
("EEI") Telephone Services, Inc. ("TSI")and K&S Sheet Metal ("K&S"). Welcome
Home, Inc. ("Welcome Home") is managed on a stand-alone basis and is no longer
consolidated in the Company's results of operations. (See note 3). The
remaining businesses comprise the Company's Consumer and Industrial Products
group. This group consists of DACCO, Incorporated ("DACCO"), Riverside Book and
Bible House, Inc. ("Riverside"), Parsons Precision Products, Inc. ("Parsons"),
Cape Craftsmen, Inc. ("Cape"), Cho-Pat Inc. ("Cho-Pat") and Dura-Line Retube
("Retube"). All of the foregoing corporations are collectively referred to
herein as the "Subsidiaries," and individually as a "Subsidiary."


NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES


 Principles of consolidation

The consolidated financial statements include the accounts of the Company and
subsidiaries. All significant intercompany balances and transactions have been
eliminated. Operations of FIR are included for the period ended two months
prior to the Company's year end to ensure timely preparation of the
consolidated financial statements.


 Cash and cash equivalents

The Company considers all highly liquid investments purchased with an initial
maturity of three months or less to be cash equivalents.


 Inventories

Inventories are stated at the lower of cost or market. Inventories are
primarily valued at either average or first-in, first-out ("FIFO") cost.


 Depreciation and amortization

Property, plant and equipment -- Depreciation and amortization of property,
plant and equipment is calculated using estimated useful lives, or over the
lives of the underlying leases, if less, using the straight-line method.


                                      F-11
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
The useful lives of plant and equipment for the purpose of computing book
depreciation are as follows:



<TABLE>
<S>                                      <C>
  Machinery and equipment ............   3-10 years
  Buildings and improvements .........   7-35 years
  Furniture & fixtures ...............   5-10 years
</TABLE>

Goodwill -- Goodwill is being amortized on the straight-line basis over periods
ranging from 15 to 40 years. Goodwill at December 31, 1998 and 1997 is net of
accumulated amortization of $47,651, and $32,380, respectively. The Company
evaluates the recoverability of long-lived assets by measuring the carrying
amount of the assets against the estimated undiscounted future cash flows
associated with them. At the time such evaluations indicate that the future
undiscounted cash flows of certain long-lived assets are not sufficient to
recover the carrying value of such assets, the assets are adjusted to their
fair values. Based on these evaluations, there were no material adjustments to
the carrying value of long-lived assets in 1998 or 1997.


 Other assets

Patents are amortized over the remainder of their legal lives, which
approximate their useful lives, on the straight-line basis. Deferred financing
costs amounting to $34,201 and $38,568, net of accumulated amortization of
$14,533 and $9,939 at December 31, 1998 and 1997, respectively, are amortized
over the terms of the loans or, if shorter, the period such loans are expected
to be outstanding. Non-compete covenants and customer lists amounting to
$10,314 and $12,121, net of accumulated amortization of $51,487 and $47,632 at
December 31, 1998 and 1997, respectively, are amortized on the straight-line
basis over their estimated useful lives, ranging from three to ten years.


 Income taxes

Deferred tax assets and liabilities are determined based on differences between
the financial reporting and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that are expected to be in effect
when the differences reverse. The Company has not provided for U.S. Federal and
State Income Taxes on undistributed earnings of foreign subsidiaries to the
extent the undistributed earnings are considered to be permanently reinvested.


 Revenue recognition

Revenues are primarily recognized when products are shipped to customers.


 Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.


 Reclassification

Certain amounts in prior years financial statements have been reclassified to
conform with the presentation in 1998.


 Realignment of segment reporting

In 1996, Dura-Line was moved from the Consumer and Industrial Products segment
to the Telecommunication Products segment. In 1997, the Retube product line of
Dura-Line was moved from


                                      F-12
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
the Telecommunication Products segment to the Consumer and Industrial Products
segment. In 1998 Sate-Lite and Beemak were reclassified from the Consumer and
Industrial Products segment to the Jordan Specialty Plastics segment. Prior
period results were also realigned into these new groups in order to provide
accurate comparisons between periods.


 New pronouncements

The Company has adopted Financial Accounting Standards Board's ("FASB")
Statement of Financial Accounting Standards ("SFAS") No. 130 ("Statement 130"),
Reporting Comprehensive Income. Statement 130 establishes new rules for the
reporting and display of comprehensive income and its components; however the
adoption of this Statement had no impact on the Company's net income or
shareholders' equity. Statement 130 requires the Company's foreign currency
translation adjustments, which prior to adoption were reported separately in
shareholders' equity, to be included in other comprehensive income. Prior year
financial statements have been reclassified to conform to the requirements of
Statement 130.

The Company has adopted SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information ("Statement 131"). Statement 131 supersedes
FASB Statement No. 14, Financial Reporting for Segments of a Business
Enterprise. Statement 131 establishes standards for the way that public
business enterprises report information about operating segments in annual
financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The adoption of Statement 131 is solely
a reporting requirement and therefore did not have an effect on the Company's
financial position or results of operations.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities ("Statement 133"), which is required to be
adopted in fiscal years beginning after June 15, 1999. Statement 133 requires
all derivatives to be recognized in the balance sheet as either assets or
liabilities at fair value. Derivatives that are not hedges must be adjusted to
fair value through income. In addition, all hedging relationships must be
designated, reassessed and documented pursuant to the provisions of Statement
133. Management believes the adoption of this Statement will not have a
material effect on the Company.


 Concentration of credit risk

Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of cash and cash equivalents and accounts
receivable. The Company places cash and cash equivalents with high quality
financial institutions, and is restricted by its revolving credit facilities as
to its investment instruments. Concentration of credit risk relating to
accounts receivable is limited due to the large number of customers from many
different industries and locations. The Company believes that its allowance for
doubtful accounts is adequate to cover potential credit risk.


 Foreign currency translation

In accordance with SFAS No. 52, Foreign Currency Translation, assets and
liabilities of the Company's foreign operations are translated from foreign
currencies into U.S. dollars at year-end rates while income and expenses are
translated at the weighted-average exchange rates for the year. Gains or losses
resulting from the translations of foreign currency financial statements are
deferred and classified as a separate component of shareholders' equity. Gains
or losses resulting from the remeasurement of financial statements of foreign
entities located in highly inflationary economies have


                                      F-13
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
been included in the determination of net income or loss in the current period.
The Company recognized a $3,020 charge in 1998 related to remeasurement of the
financial statements of Dura-Line's Mexican operations as of December 31, 1998.
 

NOTE 3 -- WELCOME HOME CHAPTER 11 FILING

On January 21, 1997, Welcome Home filed a voluntary petition for relief under
Chapter 11 ("Chapter 11") of title 11 of the United States code in the United
States Bankruptcy Court for the Southern District of New York ("Bankruptcy
Court"). In Chapter 11, Welcome Home has continued to manage its affairs and
operate its business as a debtor-in-possession. As a debtor-in-possession in
Chapter 11, Welcome Home may not engage in transactions outside of the ordinary
course of business without approval of the Bankruptcy Court. The Company
expects Welcome Home to emerge from Chapter 11 within the next 90 days. Upon
emergence from Chapter 11, the Company will own approximately 94% of the then
outstanding common stock of Welcome Home, for consideration paid to creditors
of approximately $1,100.

Subsequent to the filing, Welcome Home reached an agreement with Fleet Capital
Corporation to provide secured debtor-in-possession financing in the form of a
credit facility. The credit facility provides for borrowings dependent upon
Welcome Home's level of inventory with maximum borrowings of $12,750. The
agreement grants a security interest in substantially all assets. Advances
under the facility bear interest at the prime rate plus 1.5%. The agreement
will terminate on October 29, 2003.

As a result of Welcome Home's Chapter 11 filing, the Company no longer has the
ability to control the operations and financial affairs of Welcome Home.
Accordingly, the Company no longer consolidates Welcome Home in its financial
statements from January 21, 1997, the date of the filing. For the period ended
January 21, 1997, the Company recorded a net loss of $1,195 related to Welcome
Home.

The operating results of Welcome Home included in the consolidated results of
the Company over the last three years are as follows:

<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                            -----------------------------------
                                             1998        1997          1996
                                            ------   -----------   ------------
<S>                                         <C>      <C>           <C>
       Net sales ........................    $ --     $  2,456      $  81,855
       Operating loss ...................      --       (1,107)       (15,975)
       Loss before income taxes .........    $ --     $ (1,195)     $ (18,154)
</TABLE>

From January 21, 1997, the Company accounted for its investment in Welcome Home
under the equity method of accounting and recognized a $3,386 loss on its
investment.

In 1998, Cape's sales to Welcome Home were $14,420, or 64% of Cape's total
sales for the year. The Company's receivable outstanding related to these sales
was $1,965 at December 31, 1998.


NOTE 4 -- RESTRUCTURING CHARGES

In the fourth quarter of 1995, Welcome Home adopted a restructuring plan which
continued through 1996. The major elements of the plan included a change in
Welcome Home's merchandising strategy and the liquidation of merchandise which
was not consistent with that strategy, closure of unprofitable stores, and
strengthening the company's executive management team and information systems
as necessary to successfully implement the above strategies.


                                      F-14
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
Restructuring charges incurred in 1996 were primarily due to store closings. In
the fourth quarter of 1996, Welcome Home recorded restructuring charges of
$8,106, of which $872 related to employee contracts, $4,266 related to leases
and inventory, and $2,968 related to its investment in furniture, fixtures, and
leasehold improvements.


NOTE 5 -- FINANCIAL RECAPITALIZATION AND BUSINESS REPOSITIONING PLAN ("THE
PLAN")

Motors and Gears Holdings, Inc., along with its wholly-owned subsidiary, Motors
and Gears, Inc. ("M&G"), were formed in September 1995 to combine a group of
companies engaged in the manufacture and sale of fractional and sub-fractional
motors and gear motors primarily to customers located throughout the United
States.

At the end of 1996, M&G was comprised of Merkle-Korff and its wholly-owned
subsidiary, Barber-Colman, and Imperial and its wholly-owned subsidiaries,
Scott and Gear. All of the outstanding shares of Merkle-Korff were purchased by
M&G in September 1995 and the net assets of Barber-Colman were purchased by
Merkle-Korff in March 1996. Barber-Colman was legally merged into Merkle-Korff
as of January 1, 1997 and now operates as a division of Merkle-Korff. The net
assets of Imperial, Scott and Gear were purchased by M&G, from the Company, at
an arms length basis on November 7, 1996, with the proceeds from a debt
offering. The purchase price was $75,656, which included the repayment of
$6,008 in Imperial liabilities owed to the Company, and a contingent payment
payable pursuant to a contingent earnout agreement. Under the terms of the
contingent earnout agreement, 50% of Imperial, Scott and Gear's cumulative
earnings before interest, taxes, depreciation and amortization, as defined,
exceeding $50,000 during the five fiscal years ended December 31, 1996, through
December 31, 2000, will be paid to the Company. Payments, if any, under the
contingent earnout agreement will be determined and made on April 30, 2001.

As a result of this sale to M&G, the Company recognized approximately $62,700
of deferred gain at the time of sale for U.S. Federal income tax purposes, as
adjusted for the value of the earnout, once finally determined. A portion of
this deferred gain is reported as the M&G group reports depreciation and
amortization over approximately 15 years on the step-up in basis of those
purchased assets. As long as M&G remains in the Company's affiliated group, the
gain reported and the depreciation on the step-up in basis should exactly
offset each other. Upon any future deconsolidation of M&G from the Company's
affiliated group for U.S. Federal income tax purposes, any unreported gain
would be fully reported and subject to tax.

On May 16, 1997, the Company participated in a recapitalization of M&G. In
connection with the recapitalization, M&G issued 16,250 shares of M&G common
stock (representing approximately 82.5% of the outstanding shares of M&G common
stock) to certain stockholders and affiliates of the Company and M&G management
for a total consideration of $2,200 (of which $1,110 was paid in cash and
$1,090 was paid through the delivery of 8.0% zero coupon notes due 2007). As a
result of the Recapitalization, certain of the Company's affiliates and M&G
management own substantially all of the M&G common stock and the Company's
investment in M&G is represented solely by the Cumulative Preferred Stock of
M&G (the "M&G Junior Preferred Stock"). The M&G Junior Preferred Stock
represents 82.5% of M&G's stockholder voting rights and 80% of M&G's net income
or loss is accretable to the Junior Preferred Stock. The Company has obtained
an independent opinion as to the fairness, from a financial point of view, of
the recapitalization to the Company and its public bondholders. The Company
continues to consolidate M&G and its subsidiaries, for financial reporting
purposes, as subsidiaries of the Company. The M&G Junior Preferred Stock
discontinues its participation in M&G's earnings on the fifth anniversary of
issuance. This financial consolidation and a continuing Company investment in
M&G will be discontinued upon the redemption of the M&G Junior Preferred Stock,
or at such time as the M&G Junior Preferred Stock ceases to represent at least
a majority of the voting power and a majority share in the earnings of the
relevant company. As


                                      F-15
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
long as the M&G Junior Preferred Stock is outstanding, the Company expects the
vote test to be satisfied. The M&G Junior Preferred Stock is mandatorily
redeemable upon certain events and is redeemable at the option of M&G, in whole
or in part, at any time.

The Company also expects to continue to include the subsidiaries of M&G in its
consolidated group for U.S. Federal income tax purposes. This consolidation
would be discontinued, however, upon the redemption of the M&G Junior Preferred
Stock, which could result in recognition by the Company of substantial income
tax liabilities arising out of the recapitalization. If such deconsolidation
had occurred at December 31, 1998, the Company believes that the amount of
taxable income to the Company attributable to M&G would have been approximately
$51,200 (or approximately $20,480 of tax liabilities, assuming a 40.0% combined
Federal, state and local income tax rate). The Company currently expects to
offset these tax liabilities arising from deconsolidation by using net
operating loss carryforwards (approximately $131,600 at December 31, 1998), and
to pay any remaining liability with redemption proceeds from the M&G Junior
Preferred Stock. Deconsolidation would also occur with respect to M&G if the
M&G Junior Preferred Stock ceased to represent at least 80.0% of the voting
power and 80.0% of the combined stock value of the outstanding M&G Junior
Preferred Stock and common stock of M&G. As long as the M&G Junior Preferred
Stock is outstanding, the Company expects the vote test to be satisfied. The
value test depends on the relative values of the M&G Junior Preferred Stock and
common stock of M&G. It is likely that by the fifth anniversary of their
issuances, the M&G Junior Preferred Stock would cease to represent 80.0% of the
relevant total combined stock value. It is entirely possible, however, that the
80.0% value test could fail well prior to the fifth anniversary after issuance.
In the event that deconsolidation for U.S. Federal income tax purposes occurs
without a redemption of the M&G Junior Preferred Stock, the tax liabilities
discussed above would be incurred without the Company receiving the proceeds of
the redemption.

On July 25, 1997, the Company recapitalized its investment in Jordan
Telecommunication Products, Inc. ("JTP") and JTP acquired the Company's
telecommunications and data communications products business from the Company
for total consideration of approximately $294,027, consisting of $264,027 in
cash, $10,000 of assumed indebtedness and preferred stock, and the issuance to
the Company of $20,000 aggregate liquidation preference of JTP Junior Preferred
Stock. The Company's stockholders and affiliates and JTP management invested in
and acquired the JTP common stock. As a result of the recapitalization, certain
of the Company's affiliates and JTP management own substantially all of the JTP
common stock. The Company's investment in JTP is represented solely by the JTP
Junior Preferred Stock. The JTP Junior Preferred Stock represents 95% of JTP's
stockholder voting rights and 95% of JTP's net income or loss is accretable to
the Junior Preferred Stock. The Company has obtained an independent opinion as
to the fairness, from a financial point of view, of the recapitalization to the
Company and its public bondholders.

The Company continues to consolidate JTP and its subsidiaries, for financial
reporting purposes, as subsidiaries of the Company. The JTP Junior Preferred
Stock discontinues its participation in JTP's earnings on the fifth anniversary
of issuance. This financial consolidation and any continuing Company investment
in JTP will be discontinued upon the redemption of the JTP Junior Preferred
Stock, or at such time as the JTP Junior Preferred Stock ceases to represent at
least a majority of the voting power and a majority share in the earnings of
the relevant company. As long as the JTP Junior Preferred Stock is outstanding,
the Company expects the vote test to be satisfied. The JTP Junior Preferred
Stock is mandatorily redeemable upon certain events and is redeemable at the
option of JTP, in whole or in part, at any time.

The Company also expects to continue to include the subsidiaries of JTP in its
consolidated group for U.S. Federal income tax purposes. This consolidation
would be discontinued, however, upon the redemption of the JTP Junior Preferred
Stock, which could result in recognition by the Company of


                                      F-16
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
substantial income tax liabilities arising out of the recapitalization. If such
deconsolidation had occurred at December 31, 1998, the Company believes that
the amount of taxable income to the Company attributed to JTP would have been
approximately $110,400 (or approximately $44,160 of tax liabilities, assuming a
40.0% combined Federal, state and local income tax rate). The Company currently
expects to offset these tax liabilities arising from deconsolidation by using
net operating loss carryforwards (approximately $131,600 at December 31, 1998),
and to pay any remaining liability with redemption proceeds from the JTP Junior
Preferred Stock. Deconsolidation for federal income tax purposes would also
occur with respect to JTP if the JTP Junior Preferred Stock ceased to represent
at least 80.0% of the voting power and 80.0% of the combined stock value of the
outstanding JTP Junior Preferred Stock and common stock. It is likely that by
the fifth anniversary of their issuances, the JTP Junior Preferred Stock would
cease to represent 80.0% of the relevant total combined stock value. It is
entirely possible, however, that the 80.0% value test could fail well prior to
the fifth anniversary after issuance. In the event that deconsolidation for
federal income tax purposes occurs without a redemption of the JTP Junior
Preferred Stock, the tax liabilities discussed above would be incurred without
the Company receiving the proceeds of a redemption.

JTP financed the cash portion of this total consideration through JTP's private
placement of $190,000 of JTP Senior Notes due 2007, $85,000 of cash proceeds of
JTP Senior Discount Debentures due 2007, and $25,000 of JTP Senior Preferred
Stock due 2009.

In conjunction with the recapitalization of JTP, the Company privately placed
$120,000 of the Company's Senior Notes due 2007, and used the net proceeds from
this private placement, as well as the net proceeds received by the Company in
connection with the JTP recapitalization, to repay approximately $78,000 of
bank borrowings by the Company's subsidiaries under their credit agreements and
repurchase $271,600 of the Company's 10 3/8% Senior Notes due 2003 pursuant to a
tender offer and related consent solicitation. The Company also conducted a
consent solicitation with regard to its 113/4% Senior Subordinated Discount
Debentures due 2009 in order to conform their covenant structure to those in
the Company's Senior Notes due 2007.


NOTE 6 -- INVENTORIES

Inventories consist of:

<TABLE>
<CAPTION>
                                        DECEMBER 31,
                                   -----------------------
                                      1998         1997
                                   ----------   ----------
<S>                                <C>          <C>
       Raw materials ...........    $ 59,350     $ 45,324
       Work-in-process .........      17,098       15,897
       Finished goods ..........      63,272       62,779
                                    --------     --------
                                    $139,720     $124,000
                                    ========     ========
</TABLE>


                                      F-17
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at cost, consists of:

<TABLE>
<CAPTION>
                                                                DEC. 31,       DEC. 31,
                                                                  1998           1997
                                                             -------------   -----------
<S>                                                          <C>             <C>
       Land ..............................................    $    8,282      $   7,488
       Machinery and equipment ...........................       162,437        126,265
       Buildings and improvements ........................        39,350         34,360
       Furniture and fixtures ............................        45,312         34,418
                                                              ----------      ---------
                                                              $  255,381      $ 202,531
                                                              ==========      =========
       Accumulated depreciation and Amortization .........      (115,803)       (97,461)
                                                              ----------      ---------
                                                              $  139,578      $ 105,070
                                                              ==========      =========
</TABLE>

NOTE 8 -- INVESTMENT IN AFFILIATE

On July 2, 1997, the Company received from Fannie May Holdings, Inc. ("Fannie
May"), $14,348 in exchange for its investments of: $5,500 aggregate principal
amount of Subordinated Notes and $7,000 aggregate principal amount of
participation in outstanding term loans of Archibald Candy Corporation, a
wholly-owned subsidiary of Fannie May. The amount received also included $1,573
of accrued interest and a $275 premium on the above Subordinated Notes and term
loans. On July 7, 1997, the Company received $3,013 as a return of the $3,000
certificate of deposit held by the Company as security for an obligation to
purchase additional participation in the above-mentioned term loans, plus $13
of accrued interest thereon.

The Company holds 75.6133 shares of Class A PIK Preferred Stock of Fannie May
at face value of $1,571. The Company also holds 151.28 shares of common stock
of Fannie May (representing 15.1% of the outstanding common stock of Fannie May
on a fully diluted basis) at $151.

Fannie May's Chief Executive Officer is Mr. Quinn, and its stockholders include
Mr. Jordan, Mr. Quinn, Mr. Zalaznick, and Mr. Boucher, who are directors and
stockholders of the Company, as well as other partners, principals and
associates of The Jordan Company, who are also stockholders of the Company.
Fannie May, which is also known as "Fannie May Candies", is a manufacturer and
marketer of kitchen-fresh, high-end boxed chocolates through its 337
company-owned retail stores and through specialty sales channels. Its products
are marketed under both the "Fannie May Candy" and "Fanny Farmer Candy" names.


                                      F-18
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
NOTE 9 -- ACCRUED LIABILITIES

Accrued liabilities consist of:

<TABLE>
<CAPTION>
                                                          DEC. 31,     DEC. 31,
                                                            1998         1997
                                                         ----------   ---------
<S>                                                      <C>          <C>
       Accrued vacation ..............................    $ 2,803      $ 2,559
       Accrued income taxes ..........................      4,284        3,609
       Accrued other taxes ...........................      2,448        1,454
       Accrued commissions ...........................      2,529        2,797
       Accrued interest payable ......................     19,523       18,175
       Accrued payroll and payroll taxes .............      5,334        4,344
       Accrued stock appreciation rights and preferred
        stock payments ...............................      4,823        8,051
       Insurance reserve .............................      2,789        2,461
       Accrued management fees .......................         --        3,125
       Accrued deferred financing fees ...............      4,091        3,455
       Accrued other expenses ........................     20,098       20,443
                                                          -------      -------
                                                          $68,722      $70,473
                                                          =======      =======
</TABLE>

NOTE 10 -- OPERATING LEASES

Certain subsidiaries lease land, buildings, and equipment under noncancellable
operating leases.

Total minimum rental commitments under non-cancellable operating leases at
December 31, 1998 are:

<TABLE>
<S>                        <C>
  1999 .................    $10,276
  2000 .................      9,019
  2001 .................      7,466
  2002 .................      6,236
  2003 .................      4,747
  Thereafter ...........     12,929
                            -------
                            $50,673
                            =======
</TABLE>

Rental expense amounted to $12,172, $7,996 and $14,808 for 1998, 1997 and 1996,
respectively. Rental expense increased in 1998 due to the acquisitions in 1997
and 1998. Rental expense decreased in 1997 primarily due to the exclusion in
1997 of rental expense incurred at Welcome Home, as the Company no longer
consolidates Welcome Home in its financial statements (see note 3). Rental
expense at Welcome Home was $8,650 in 1996.

NOTE 11 -- BENEFIT PLANS

In January 1993 the Company established the Jordan Industries, Inc. 401(k)
Savings Plan ("the Plan"), a defined-contribution plan. The Plan covers
substantially all employees of the Company. Contributions to the Plan are
discretionary and totaled $1,870, $1,119 and $450 in 1998, 1997 and 1996,
respectively.

                                      F-19
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
NOTE 12 -- DEBT

Long-term debt consists of:

<TABLE>
<CAPTION>
                                                                 DEC. 31,       DEC. 31,
                                                                   1998           1997
                                                               ------------   -----------
<S>                                                            <C>            <C>
       Revolving Credit Facilities (A) .....................   $  164,000      $ 68,000
       Notes payable (B) ...................................        2,738         3,388
       Subordinated promissory notes (C) ...................       33,500        26,500
       Capital lease obligations (D) .......................       30,333        24,660
       Bank Term Loans (E) .................................        4,439         1,229
       Senior Notes (F) ....................................      582,724       586,475
       Senior Subordinated Discount Debentures (F) .........      247,821       221,166
                                                               ----------      --------
                                                                1,065,555       931,418
       Less current portion ................................        6,136         9,547
                                                               ----------      --------
                                                               $1,059,419      $921,871
                                                               ==========      ========
</TABLE>

Aggregate maturities of long-term debt at December 31, 1998 are as follows:



<TABLE>
<S>                       <C>
  1999 ..................  $    6,136
  2000 ..................      20,042
  2001 ..................       9,579
  2002 ..................      10,705
  2003 ..................      12,944
  Thereafter ............  $1,006,149
                           ----------
                           $1,065,555
                           ==========
</TABLE>

A.   At December 31, 1998, the Company had borrowings outstanding on lines of
     credit totaling $164,000.

     On July 25, 1997, the Company amended and restated its revolving credit
     facility with BankBoston, N.A. (formerly the First National Bank of Boston)
     and other banks, decreasing the facility from $85,000 to $75,000. Interest
     on borrowings is at BankBoston's base rate plus an applicable margin or, at
     the Company's option, the rate at which BankBoston's eurodollar lending
     office is offered dollar deposits (Eurodollar Rate) plus an applicable
     margin (8.25% and 7.0%, respectively, at December 31, 1998). The facility,
     which matures on June 29, 2002, is used for working capital and
     acquisitions. At December 31, 1998, Jordan Industries, Inc. had outstanding
     borrowings of $50,000 (no outstanding borrowings at December 31, 1997). The
     facility is secured by substantially all of the assets of the Restricted
     Subsidiaries. The Company must comply with certain financial covenants as
     specified in the revolver agreement, and at December 31, 1998, the Company
     is in compliance with such covenants.

     On July 25, 1997, JTP entered into a revolving credit agreement with
     certain parties thereto, and BankBoston, N.A., as agent, under which JTP is
     able to borrow up to approximately $110,000 in the form of a revolving
     credit facility over a term of five years. Interest on borrowings is at
     BankBoston's base rate plus an applicable margin or, at the Company's
     option, the rate at which BankBoston's eurodollar lending office is offered
     dollar deposits (Eurodollar Rate) plus an applicable margin (7.84% and
     8.06%, respectively, at December 31, 1998). The credit agreement is secured
     by a first priority security interest in substantially all of JTP's assets,
     including a pledge of all of the stock of JTP's subsidiaries. JTP had
     $73,000 of outstanding borrowings and a $2,319


                                      F-20
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
     standby letter of credit under this credit agreement at December 31, 1998.
     JTP had $34,681 of additional borrowings available under the revolving
     credit agreement at December 31, 1998. Unused commitments are subject to an
     availability fee equal to 0.5% per annum.

     Motors and Gears, Inc. has available a long-term line of credit from
     Bankers Trust Company in the amount of $75,000. Outstanding borrowings
     carry a floating note of Libor plus 2.5% (8.125% at December 31, 1998) or
     base rate plus 1.5% (9.0% at December 31, 19998). M&G had $41,000 of
     outstanding borrowings under this credit agreement at December 31, 1998.

     SPL was obligated under a Revolving Credit Facility which provided for
     borrowings of up to $27,000. The facility bore interest at the Libor rate
     plus 2.75% payable on a 30, 60, or 90 day basis and was secured by all of
     the assets of SPL. All outstanding borrowings under this facility were
     repaid during 1997 and the facility was terminated in conjunction with the
     Company's issuance of $120,000 of Senior Notes.

B.   Notes payable are due in monthly or quarterly installments and bear
     interest at rates ranging from 3.0% to 17.0%. Certain assets of the
     subsidiaries are pledged as collateral for the loans.

C.   Subordinated promissory notes payable are due to minority interest
     shareholders and former shareholders of certain subsidiaries in annual
     installments through 2004, and bear interest ranging from 8% to 9%. The
     loans are unsecured.

D.   Interest rates on capital leases range from 8.3% to 14.5% and mature in
     installments through 2001.

     The future minimum lease payments as of December 31, 1998 under capital
     leases consist of the following:

<TABLE>
<S>                                               <C>
  1999 ........................................    $ 6,434
  2000 ........................................     12,482
  2001 ........................................      4,307
  2002 ........................................      3,620
  2003 ........................................      9,531
  Thereafter ..................................        852
                                                   -------
  Total .......................................    $37,226
  Less amount representing interest ...........      6,893
                                                   -------
  Present value of future minimum lease
  payments ....................................    $30,333
                                                   =======
</TABLE>

 
     The present value of the future minimum lease payments approximates the
     book value of property, plant and equipment under capital leases at
     December 31, 1998.

E.   Bank term loans in 1998 consist of a mortgage on the Pamco facility, which
     bears interest at 8.2% and is due in monthly installments through 2003.
     The mortgage is secured by the Pamco facility. There is also a mortgage on
     the Deflecto facility which bears interest at .25% below prime rate and is
     due in 2028.

     Bank term loans consisted of certain indebtedness at SPL as of December 31,
     1996. All outstanding borrowings under these agreements were repaid in 1997
     in connection with the Company's issuance of $120,000 of Senior Notes and
     the recapitalization of JTP. In conjunction with this transaction, the
     Company recorded an extraordinary loss of $2,538 relating to the write-off
     of deferred financing fees and the premium assessed on the new issue.


                                      F-21
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
F.   In July of 1993, the Company issued $275,000 10 3/8% Senior Notes ("Senior
     Notes") due 2003. These notes bore interest at a rate of 10 3/8% per annum,
     payable semi-annually in cash on February 1 and August 1 of each year.

     During 1997, $271,545 of the principal balance, plus all accrued interest
     thereon, was repaid in connection with the Company's issuance of $120,000
     new Senior Notes and the recapitalization of JTP. In conjunction with this
     transaction, the Company recorded an extraordinary loss of $19,232 relating
     to the write-off of deferred financing fees and the related prepayment
     penalty. The remaining $3,455 of outstanding Senior Notes was repaid in
     1998. The Company recorded an extraordinary loss of $179 related to the
     prepayment penalty.

     In July 1993 the Company issued $133,075 113/4% Senior Subordinated
     Discount Debentures, ("Discount Debentures") due 2005. The Discount
     Debentures were issued at a substantial discount from this principal
     amount. The interest on the Discount Debentures would have been payable in
     cash semi-annually on February 1 and August 1 of each year beginning in
     1999.

     In April of 1997, the Company refinanced substantially all of the $133,075
     aggregate principal amount of its Discount Debentures and issued $214,036
     aggregate principal amount of 113/4% Senior Subordinated Discount
     Debentures due 2009 ("2009 Debentures"). The 2009 Debentures were issued at
     a substantial discount from the principal amount. The interest on the 2009
     Debentures will be payable in cash semi-annually on April 1 and October 1
     of each year beginning October 1, 2002. In conjunction with this
     transaction, the Company recorded an extraordinary loss of $8,898 relating
     to the write-off of deferred financing fees and the accreted premium on the
     new issue.

     The 2009 Debentures are redeemable for 105.875% of the accreted value from
     April 1, 2002 to March 31, 2003, 102.937% from April 1, 2003 to March 31,
     2004 and 100% from April 1, 2004 and thereafter plus any accrued and unpaid
     interest from April 1, 2002 to the redemption date if such redemption
     occurs after April 1, 2002. The fair value of the 2009 Debentures was
     $132,700 at December 31, 1998. The fair value was calculated using the 2009
     Debentures' December 31, 1998 market price multiplied by the face amount.
     The 2009 Debentures are not secured by the assets of the Company.

     In July 1997, the Company issued $120,000 10 3/8% Senior Notes due 2007
     ("2007 Seniors"). These notes bear interest at a rate of 10 3/8% per annum,
     payable semi-annually in cash on February 1 and August 1 of each year.

     The 2007 Seniors are redeemable for 105.188% of the principal amount from
     August 1, 2002 to July 31, 2003, 102.594% from August 1, 2003 to July 31,
     2004, and 100% from August 1, 2004 and thereafter plus any accrued and
     unpaid interest to the date of redemption.

     The fair value of the 2007 Seniors was $122,400 at December 31, 1998. The
     fair value was calculated using the Senior Notes' December 31, 1998 market
     price multiplied by the face amount. The 2007 Seniors are not secured by
     the assets of the Company.

     On July 25, 1997, a majority owned subsidiary of the Company, Jordan
     Telecommunications Products ("JTP") issued and sold $190,000 principal
     amount of 9.875% Senior Notes due August 1, 2007 ("JTP Senior Notes") and
     $120,000 principal amount at maturity ($85,034 initial accreted value) of
     11.75% Senior Discount Notes due August 1, 2007 ("JTP Senior Discount
     Notes"). The JTP Senior Notes bear interest at a rate of 9.875% per annum,
     payable semi-annually in cash in arrears on February 1 and August 1 of each
     year, commencing on February 1, 1998. The JTP Senior Discount Notes will
     accrete at a rate of 11.75%, compounded semi-annually, to par by August 1,
     2000. Commencing August 1, 2000, the JTP Senior Discount Notes bear
     interest at a rate of 11.75% per annum, payable semi-annually in cash in
     arrears on February 1 and August 1 of each year.


                                      F-22
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
     The JTP Senior Notes are redeemable for 104.9375% of the principal amount
     from August 1, 2002 to July 31, 2003, 102.4688% from August 1, 2003 to July
     31, 2004, and 100% on or after August 1, 2004, plus any accrued and unpaid
     interest to the date of redemption.

     The JTP Senior Discount Notes are redeemable for 105.8750% of the accreted
     value from August 1, 2002 to July 31, 2003, 102.9375% from August 1, 2003
     to July 31, 2004, and 100% on or after August 1, 2004, plus any accrued and
     unpaid interest from August 1, 2000 to the redemption date, if such
     redemption occurs after August 1, 2000.

     The fair value of the JTP Senior Notes and JTP Senior Discount Notes was
     $188,724 and $92,400, respectively, at December 31, 1998. The fair values
     were calculated by multiplying the face amount by the market prices of each
     security at December 31, 1998.

     The Company incurred approximately $16,093 of costs related to the issuance
     and sale of the JTP Senior Notes, JTP Senior Discount Notes, and the JTP
     Senior Preferred Stock Units, $9,885 of which was allocated to deferred
     financing fees and $6,208 of which was allocated to stockholders' equity.

     On November 7, 1996, a majority owned subsidiary of the Company, Motors and
     Gears Holdings, Inc., through its wholly-owned subsidiary, Motors and Gears
     Inc., issued $170,000 aggregate principal amount of 10 3/4% Senior Notes
     ("M&G Senior Notes"). Interest on the M&G Senior Notes is payable in
     arrears on May 15 and November 15.

     On December 10, 1997, Motors and Gears issued $100,000 aggregate principal
     amount of 103/4% Senior Notes ("C Notes"). Interest on the Notes is payable
     in arrears on May 15 and November 15 of each year. The C Notes were issued
     at a premium of 4.5% which is being amortized over the remaining term of
     the Notes.

     In conjunction with the consummation of the C Note offering, the Company
     used a portion of the net proceeds to repay existing indebtedness under the
     new credit agreement, acquire Motion Control, provide additional working
     capital and pay fees and expenses incurred in connection with the offering.

     On January 9, 1998, Motors and Gears completed an exchange offer under
     which $270,000 of 103/4% Series D Senior Notes ("D Notes") were exchanged
     for the $170,000 of Senior Notes and the $100,000 of Senior Notes. The
     terms of the new Motors and Gears Notes are substantially identical to the
     terms of the old Motors and Gears Notes.

     The fair value of the M&G Senior Notes at December 31, 1998, was $275,400.
     The fair value was calculated using the M&G Senior Notes' December 31, 1998
     market price multiplied by the face amount. The M&G Senior Notes are not
     secured by the assets of Motors and Gears, Inc., Motors and Gears Holdings,
     Inc., or the Company.

The Indentures relating to the Senior Notes, the Discount Debentures, the 2007
Seniors and the 2009 Debentures restrict the ability of the Company to incur
additional indebtedness at its restricted subsidiaries. The Indentures also
restrict: the payment of dividends, the repurchase of stock and the making of
certain other restricted payments; restrictions that can be imposed on dividend
payments to the Company by its subsidiaries; significant acquisitions; and
certain mergers or consolidations. The Indentures also require the Company to
redeem the Senior Notes, the Discount Debentures, the 2007 Seniors and the 2009
Debentures upon a change of control and to offer to purchase a specified
percentage of the Senior Notes, the Discount Debentures, the 2007 Seniors and
the 2009 Debentures if the Company fails to maintain a minimum level of capital
funds (as defined).

The indentures governing the JTP Senior Notes and the JTP Senior Discount Notes
contain certain covenants which limit JTP's ability to (i) incur additional
indebtedness; (ii) make restricted payments (including dividends); (iii) enter
into certain transactions with affiliates; (iv) create certain liens; (v) sell
certain assets; and (vi) merge, consolidate or sell substantially all of JTP's
assets.


                                      F-23
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
The Indenture governing the Motors and Gears Senior Notes contains certain
covenants which, among other things, restricts the ability of Motors and Gears
to incur additional indebtedness, to pay dividends or make other restricted
payments, engage in transaction with affiliates, to complete certain mergers or
consolidations, or to enter into certain guarantees of indebtedness.

The Company is, and expects to continue to be, in compliance with the
provisions of these Indentures.

Included in interest expense is $4,594, $3,622 and $3,001 of amortization of
debt issuance costs for the years ended December 31, 1998, 1997 and 1996,
respectively.


NOTE 13 -- INCOME TAXES

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,
                                   ------------------------------------
                                      1998         1997         1996
                                   ----------   ----------   ----------
<S>                                <C>          <C>          <C>
       Current:
       Federal .................    $ 1,049      $    --      $    --
       Foreign .................      5,732        2,818        1,753
       State and local .........      1,176        3,757          478
                                    -------      -------      -------
                                      7,957        6,575        2,231
       Deferred ................        205           --        2,184
                                    -------      -------      -------
  Total ........................    $ 8,162      $ 6,575      $ 4,415
                                    =======      =======      =======
</TABLE>

Deferred income taxes consist of:

<TABLE>
<CAPTION>
                                                            DEC. 31,     DEC. 31,
                                                              1998         1997
                                                           ----------   ---------
<S>                                                        <C>          <C>
       DEFERRED TAX LIABILITIES:
       Intangibles .....................................    $ 6,966      $ 4,393
       Tax over book depreciation ......................      8,016        7,260
       Basis in subsidiary .............................        798          798
       LIFO reserve ....................................         --           83
       Intercompany tax gain ...........................     14,435        7,289
       Other ...........................................        600          531
                                                            -------      -------
        Total deferred tax liabilities .................     30,815       20,354
 
       DEFERRED TAX ASSETS:
       NOL carryforwards ...............................     50,806       37,482
       Stock Appreciation Rights Agreements ............      2,264        3,772
       Accrued interest on discount debentures .........     13,510       13,510
       Pension obligation ..............................        601          444
       Vacation accrual ................................      1,109          891
       Uniform capitalization of inventory .............      2,147        1,501
       Investment in partnership .......................        282           --
       Allowance for doubtful accounts .................      1,257        1,125
       Foreign NOL's ...................................      3,230        2,132
       Deferred financing fees .........................        742          814
</TABLE>

                                      F-24
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
                                        

<TABLE>
<CAPTION>
                                                                   DEC. 31,       DEC. 31,
                                                                     1998           1997
                                                                 ------------   ------------
<S>                                                              <C>            <C>
       Intangibles ...........................................        1,573          1,242
       Tax asset basis over book basis at subsidiary .........       14,435          7,289
       Other .................................................        2,755            484
                                                                     ------          -----
        Total deferred tax assets ............................       94,711         70,686
       Valuation allowance for deferred tax assets ...........      (65,340)       (51,776)
                                                                    -------        -------
        Net deferred tax assets ..............................       29,371         18,910
                                                                    -------        -------
        Net deferred tax liabilities .........................    $   1,444      $   1,444
                                                                  =========      =========
</TABLE>

The increase in the valuation allowance during 1998 and 1997 was $13,564 and
$13,212, respectively.

The provision (benefit) for income taxes differs from the amount of income tax
benefit computed by applying the United States federal income tax rate to
(loss) income before income taxes, including the extraordinary loss. A
reconciliation of the differences is as follows:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                        --------------------------------------------
                                                            1998            1997            1996
                                                        ------------   -------------   -------------
<S>                                                     <C>            <C>             <C>
       Computed statutory tax benefit ...............     $ (7,667)      $ (12,760)      $ (17,413)
       Increase (decrease) resulting from:
        Foreign subsidiary losses ...................         (655)          1,906           1,465
        Amortization of goodwill ....................        1,873           1,404             903
        Disallowed meals and entertainment ..........          265             295             645
        State and local tax .........................        1,176             772             478
        Increase in valuation allowance .............       13,564          14,368          18,548
        Other items, net ............................         (394)            590            (211)
                                                          --------       ---------       ---------
       Provision (benefit) for income taxes .........     $  8,162       $   6,575       $   4,415
                                                          ========       =========       =========
</TABLE>

As of December 31, 1998, the consolidated loss carry forwards are approximately
$131,600 and $104,000 for regular tax and alternative minimum tax purposes,
respectively, and expire in various years through 2012.


NOTE 14 -- PAYMENT OF STOCK APPRECIATION RIGHTS

In March 1992, the former shareholders of a wholly-owned subsidiary, were
granted Stock Appreciation Rights ("SARs") exercisable in full or in part on
the occurrence of the disposition by voting power and/or value of the capital
stock of the subsidiary. The value of the SARs was based on the ultimate sales
price of the stock or assets of the subsidiary, and is essentially 15.0% of the
ultimate sales price of the stock or assets sold, less $15,625.

On April 10, 1997, the Company paid the former shareholders pursuant to an
agreement ("The Redemption Agreement"), as if the subsidiary was sold for
$110,000. The former shareholders received $9,438 in cash and a deferred
payment of $5,980 over five years including interest. The Redemption Agreement
also required that $1,875 of remaining preferred stock be redeemed one year
from the date of the agreement. The Company recorded a charge of $15,418
related to this agreement during 1997. The Company paid $1,020 on the deferred
payment amount and $1,875 on the preferred stock redemption amount during 1998
and has a remaining liability of $4,960 at December 31, 1998.

In connection with the Company's acquisitions of AIM and Cambridge in 1989, the
seller of these companies was granted SARs. The formula used to value these
rights was calculated by determining


                                      F-25
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
20% of a multiple of average cash flow of these companies for the two years
preceding the date when these rights were exercised, less the indebtedness of
these companies. The seller passed away during the third quarter of 1996 and
the seller's estate exercised these rights. The Company accrued $6,260 for its
obligation related to these SARs during 1996. In 1997, the Company entered into
an agreement to purchase and redeem the Estate's and Decedent's interest in the
SAR for $3,111 in cash and a deferred payment, including interest at 9% per
annum, of $3,391 payable on May 2, 1998. The Company paid the remaining
liability of $3,391 on May 2, 1998.


NOTE 15 -- SALE OF SUBSIDIARIES

On July 9, 1998, JTP sold its stock of Diversified Wire and Cable for $15,000.
Including expenses related to the sale, the Company recorded a loss of $6,299.
The proceeds from the sale were used to pay $1,500 in subordinated seller notes
to the original owners of Diversified and $13,500 to pay down JTP's revolving
credit facility.

On May 15, 1997, the Company sold its subsidiary, Hudson Lock, Inc. ("Hudson"),
for approximately $39,100. Hudson is a leading designer, manufacturer, and
marketer of highly engineered medium-security custom and specialty locks for
original equipment manufacturer customers. A gain of $17,081 was recorded in
1997 relating to this sale.

On July 31, 1997, the Company sold its subsidiary, Paw Print Mailing List
Services, Inc. ("Paw Print"), for approximately $12,500 to an affiliate. Paw
Print is a value-added provider of direct mail services.


NOTE 16 -- RELATED PARTY TRANSACTIONS

The principals, partners, officers, employees and affiliates of The Jordan
Company (the "Jordan Group") own substantially all of the common stock of the
Company.

In February 1988, the Company entered into an employment agreement with its
President and Chief Operating Officer which provides for annual compensation,
including base salary and bonus, of not less than $350. The agreement also
provides for severance payments in the event of termination for reasons other
than cause, voluntary termination, disability or death; disability payments,
under certain conditions, in the event of termination due to disability; and a
lump sum payment of $1,000 in the event of death. The Company maintains a
$5,000 "key man" life insurance policy on its president under which the Company
is the beneficiary.

An individual who is a shareholder, Director, General Counsel and Secretary for
the Company is also a partner in a law firm used by the Company. The firm was
paid $1,078, $1,812 and $1,462 in fees and expenses in 1998, 1997 and 1996,
respectively. The rates charged to the Company were at arms-length.

On July 25, 1997, a previous agreement with TJC Management Corporation ("TJC")
was amended and restated. Under the new agreement, the Company pays TJC a $750
quarterly fee. Under these agreements the Company accrued fees to TJC of
$3,000, $2,955 and $2,530 in 1998, 1997 and 1996, respectively.

On July 25, 1997, a previous agreement with TJC was amended and restated. Under
the new agreement, the Company pays TJC an investment banking fee of up to 1%,
based on the aggregate consideration paid, for its assistance in acquisitions
undertaken by the Company or its subsidiaries, and a financial consulting fee
not to exceed 0.5% of the aggregate debt and equity financing that is arranged
by the Jordan Company, plus the reimbursement of out-of-pocket and other
expenses. The Company paid $3,000, $5,075, and $2,610 in 1998, 1997, and 1996,
respectively, to the Jordan Company for their fees in relation to acquisition
and refinancing activities.

On June 23, 1998, the Company made approximately $0.8 million of unsecured
advances to JIR, Inc., JIR Broadcast, Inc. and JIR Paging, Inc. Each of these
company's Chief Executive Officer is Mr.


                                      F-26
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
Quinn, and its stockholders include Messrs. Jordan, Quinn, Zalaznick and
Boucher, who are our directors and stockholders, as well as other partners,
principals and associates of The Jordan Company who are also the Company's
stockholders. These companies are engaged in the development of businesses in
Russia, including the broadcast and paging sectors.

In November 1998, the Company, through Motors and Gears, invested $5,600 in
Class A Preferred Stock and $1,700 in Class B Preferred Stock of JZ
International, Ltd. The Company expects to make an additional $5,000 of
investments in JZ International's Class A Preferred Stock. JZ International's
Chief Executive Officer is David W. Zalaznick, and its stockholders include
Messrs. Jordan, Quinn, Zalaznick and Boucher, who are the Company's directors
and stockholders, as well as other partners, principals and associates. JZ
International is a merchant bank located in London, England that is focused on
making European and other international investments. The Company is accounting
for the investment under the cost method. At December 31, 1998, the cost of the
investment approximates market value.

During 1998, the Company made approximately $1.4 million of unsecured advances
to CBD Networks, Inc. The Company expects to form a new, Nonrestricted
Subsidiary to acquire all or substantially all of the business and assets of
CBD Networks in the near future, pursuant to which we will invest $3.5 million
in a five-year unsecured note, bearing interest at 10% per annum, and a
warrant, exercisable for 10% of the issued and outstanding common stock of CBD
Networks. The Company expects that substantially all of the issued and
outstanding common stock of the company that acquires the business of CBD
Networks will be owned by The Company's Stockholders and the management of CBD
Networks. CBD Networks is a provider of Internet access for approximately
10,000 customers.

During 1998 the Company made approximately $1.0 million of unsecured advances
to Healthcare Products Holdings, Inc. Healthcare Products Holdings' Chief
Executive Officer is Thomas Quinn, and its stockholders include Messrs. Jordan,
Quinn, Zalaznick and Boucher, who are the Company's directors and stockholders,
as well as other partners, principals and associates of the Jordan Company who
are also the Company's stockholders.


NOTE 17 -- CAPITAL STOCK

Under the terms of a restricted common stock agreement with certain
shareholders and members of management, the Company has the right, under
certain circumstances, for a specified period of time to reacquire shares from
certain shareholders and management at their original cost. Starting in 1993 or
within 60 days of termination, the Company's right to repurchase may be
nullified if $1,800, in the aggregate, is paid to the Company by management.

On January 20, 1989, the Company, in exchange for three thousand five hundred
dollars, sold warrants to acquire 3,500 shares of its common stock to Mezzanine
Capital & Income Trust 2001, PLC ("MCIT"), which has been renamed JZ Equity
Partners PLC ("JZEP"), a publicly traded U.K. investment trust, in which
principal stockholders of the Company also hold capital and income shares.
These warrants were sold in conjunction with MCIT's purchase of $7,000 of
Senior Subordinated Notes. Each Warrant entitles the holder to purchase one
share of the Company's common stock at a price of $4.00 (dollars) at any time,
subject to certain events, prior to January 20, 1999. These warrants were
exercised in 1997.

On April 3, 1997, the Company issued an additional 1,500 shares of stock for
$135 cash to an employee. An independent appraiser valued the common stock at
$1,005, therefore a charge of $870 has increased the Company's loss before
income taxes, minority interest, equity in investee and extraordinary items.


                                      F-27
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
NOTE 18 -- PREFERRED STOCK

In May 1997, Motors and Gears Holdings, Inc., a majority-owned subsidiary of
the Company, issued $1,500 of senior, non-voting 8.0% cumulative preferred
stock to its minority shareholders.

On July 25, 1997, JTP issued and sold twenty-five thousand units, each
consisting of (i) $1 aggregate liquidation preference of 13.25% Senior
Exchangeable Preferred Stock due August 1, 2009 ("JTP Senior Preferred Stock"),
and (ii) one share of JTP Common Stock.

Holders of the JTP Senior Preferred Stock are entitled to receive dividends at
a rate of 13.25% per annum of the liquidation preference. All dividends are
cumulative, whether or not earned or declared, and are payable on February 1,
May 1, August 1, and November 1 of each year. On or before August 1, 2002, JTP
may, at its option, pay dividends in cash or in additional shares of JTP Senior
Preferred Stock having an aggregate liquidation preference equal to the amount
of such dividends. After August 1, 2002, dividends may be paid only in cash. On
November 1, 1997, JTP issued 889.3836 of additional shares of JTP Senior
Preferred Stock, as payment of dividends through that date.

The JTP Senior Preferred Stock has no voting rights and is mandatorily
redeemable on August 1, 2009.


NOTE 19 -- BUSINESS SEGMENT INFORMATION

The Company's business operations are classified into five business segments:
Specialty Printing and Labeling, Jordan Specialty Plastics, Motors and Gears,
Telecommunication Products, and Consumer and Industrial Products. As of January
21, 1997, Welcome Home is no longer consolidated in the Company's results of
operations and is therefore no longer considered a separate business segment.
(See note 3)

Specialty Printing and Labeling includes production and distribution of
calendars and distribution of corporate recognition, promotion, and specialty
advertising products by SPAI; manufacture of pressure sensitive label products
for the electronics OEM market by Valmark; manufacture of a wide variety of
printed tape and labels by Pamco; and manufacture of printed folding cartons
and boxes, insert packaging and blister pack cards at Seaboard.

Jordan Specialty Plastics includes the manufacturing of point-of-purchase
advertising displays by Beemak; manufacture and marketing of safety reflectors,
lamp components, bicycle reflector kits, colorants and emergency warning
triangles by Sate-Lite; design, manufacture, and marketing of plastic
injection-molded products for mass merchandisers, major retailers, and large
wholesalers by Deflecto; and manufacture of extruded vinyl chairmats for the
office products industry by Rolite.

Motors and Gears includes the manufacture of specialty purpose electric motors
for both industrial and commercial use by Imperial; precision gears and gear
boxes by Gear; AC and DC gears and gear motors and sub-fractional AC and DC
motors and gear motors for both industrial and commercial use by Merkle-Korff
and FIR; and electronic motion control systems for use in industrial and
commercial processes such as conveyor systems, packaging systems, elevators and
automated assembly operations by ED&C and Motion Control.

Telecommunication Products includes the manufacture and distribution of silicon
pre-lubricated plenum and other configurations of Innerduct, a proprietary
plastic pipe used in the installation of fiber optic cable, and rigid
polyethylene pipe used for transporting potable water by Dura-Line; electronic
connectors, switches, RF coaxial connectors and electronic hardware by
Connectors; cable TV electronic network components and electronic security
components by Viewsonics; custom electronic cables and connectors for high
technology, computer related applications by Bond; custom electronic cable
assemblies, sub-assemblies and electro-mechanical assemblies for the data and


                                      F-28
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
telecommunications markets by LoDan; design and installation of cellular
personal communications systems and radio/broadcasting towers by EEI; custom
cable assemblies and other correcting devices by TSI; and power conditioning
and power protection equipment by Northern. Vitelec is an importer, packager,
and master distributor of over 400 RF connectors and other electronic
components.

Consumer and Industrial Products includes the remanufacturing of transmission
sub-systems for the U.S. automotive aftermarket by DACCO; the publishing of
Bibles and the distribution of Bibles, religious books, and recorded music by
Riverside; precision machined titanium hot formed parts used by the aerospace
industry by Parsons; decorative home furnishing accessories by Cape;
manufacture of plastic pipe by Dura-Line Retube; and manufacture of orthopedic
supports and pain reducing medical devices at Cho-Pat.

 Measurement of Segment Operating Income and Segment Assets

The Company evaluates performance and allocates resources based on operating
income. The accounting policies of the reportable segments are the same as
those described in Note 2 -- Significant Accounting Policies.

Inter-segment sales exist between Cape and Welcome Home, a specialty retailer
of decorative home furnishings, and a former subsidiary of the Company (see
note 3). These sales were eliminated in consolidation prior to January 22,
1997, and were not presented in segment disclosures. No single customer
accounts for 10% or more of segment or consolidated net sales.

Operating income by business segment is defined as net sales less operating
costs and expenses, excluding interest and corporate expenses.

Identifiable assets are those used by each segment in its operations. Corporate
assets consist primarily of cash and cash equivalents, equipment, notes
receivable from affiliates and deferred debt issuance costs.

 Factors Used to Identify the Enterprise's Reportable Segments

The Company's reportable segments are business units that offer different
products. The reportable segments are each managed separately because they
manufacture and distribute distinct products with different production
processes.


                                      F-29
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
Summary financial information by business segment is as follows:

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                          ------------------------------------------
                                                              1998           1997           1996
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
Net sales:
 Specialty Printing & Labeling ........................    $ 120,160      $ 119,346      $ 109,587
 Jordan Specialty Plastics ............................       71,568         24,038         20,120
 Motors and Gears .....................................      275,833        148,669        117,571
 Telecommunications Products ..........................      310,028        257,010        131,592
 Welcome Home .........................................           --          2,456         81,855
 Consumer and Industrial Products .....................      166,018        155,593        140,842
                                                           ---------      ---------      ---------
  Total ...............................................    $ 943,607      $ 707,112      $ 601,567
                                                           =========      =========      =========
Operating income:
 Specialty Printing & Labeling ........................    $   8,259      $   8,540      $   5,540
 Jordan Specialty Plastics ............................        4,654          2,490           (592)
 Motors and Gears .....................................       42,324         27,684         23,229
 Telecommunication Products ...........................       30,791         13,258         13,828
 Welcome Home .........................................           --         (1,107)       (15,975)
 Consumer and Industrial Products .....................       17,105         16,012         13,222
                                                           ---------      ---------      ---------
  Total business segment operating Income .............      103,133         66,877         39,252
 Corporate expenses ...................................      (11,437)       (11,433)       (25,860)
                                                           ---------      ---------      ---------
  Total consolidated operating Income .................    $  91,696      $  55,444      $  13,392
                                                           =========      =========      =========
Depreciation and amortization (including the
 amortization of goodwill and intangibles):
 Specialty Printing & Labeling ........................    $   4,949      $   5,284      $   4,800
 Jordan Specialty Plastics ............................        4,693          2,291          2,245
 Motors and Gears .....................................       12,727          9,015          7,078
 Telecommunication Products ...........................       14,885         10,938          7,204
 Welcome Home .........................................           --            119          2,096
 Consumer and Industrial Products .....................        3,550          4,168          3,540
                                                           ---------      ---------      ---------
  Total business segment depreciation and
    amortization ......................................       40,804         31,815         26,963
 Corporate ............................................        4,243          3,506          3,475
                                                           ---------      ---------      ---------
  Total consolidated depreciation and amortization.....    $  45,047      $  35,321      $  30,438
                                                           =========      =========      =========
Capital expenditures:
 Specialty Printing & Labeling ........................    $   1,886      $   1,906      $   2,801
 Jordan Specialty Plastics ............................        3,607          1,172            804
 Motors and Gears .....................................        5,175          1,649          1,407
 Telecommunication Products ...........................        9,848          9,864          6,872
 Welcome Home .........................................           --             --          1,638
 Consumer and Industrial Products .....................        1,667          1,354            966
 Corporate ............................................        2,542          1,346          2,652
                                                           ---------      ---------      ---------
  Total consolidated capital expenditures .............    $  24,725      $  17,291      $  17,140
                                                           =========      =========      =========
</TABLE>

                                      F-30
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                            DEC 31,        DEC 31,       DEC 31,
                                                              1998           1997          1996
                                                         -------------   -----------   -----------
<S>                                                      <C>             <C>           <C>
Identifiable assets:
 Specialty Printing & Labeling .......................    $  101,916      $104,979      $107,056
 Jordan Specialty Plastics ...........................        88,142        21,707        15,669
 Motors and Gears ....................................       389,997       336,558       173,565
 Telecommunication Products ..........................       326,424       328,509       175,796
 Welcome Home ........................................            --            --        26,263
 Consumer and Industrial Products ....................        98,932       106,243       129,682
                                                          ----------      --------      --------
  Total identifiable business segment assets .........     1,005,411       897,996       628,031
 Corporate assets ....................................        38,477        32,235        53,854
                                                          ----------      --------      --------
  Total consolidated identifiable Assets .............    $1,043,888      $930,231      $681,885
                                                          ==========      ========      ========
</TABLE>

Summary financial information by geographic area is as follows:

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                       ---------------------------------------
                                           1998          1997          1996
                                       -----------   -----------   -----------
<S>                                    <C>           <C>           <C>
Net sales to unaffiliated customers:
 United States .....................    $ 840,461     $630,418      $565,937
 Foreign ...........................      103,146       76,694        35,630
                                        ---------     --------      --------
  Total ............................    $ 943,607     $707,112      $601,567
                                        =========     ========      ========
Identifiable assets:
 United States .....................    $ 112,700     $ 82,942      $ 97,022
 Foreign ...........................       26,878       22,128        14,018
                                        ---------     --------      --------
  Total ............................    $ 139,578     $105,070      $111,040
                                        =========     ========      ========
</TABLE>

NOTE 20 -- ACQUISITIONS AND FORMATION OF SUBSIDIARIES

On January 20, 1998, Jordan Telecommunication Products, Inc. ("JTP") through a
newly created subsidiary K&S Sheet Metal Holdings ("K&S Holdings"), a
subsidiary of 80% owned Bond Technologies, purchased the stock of K&S Sheet
Metal ("K&S"). K&S is a manufacturer of precision metal enclosures for
electronic original equipment manufacturers. K&S is located in Huntington
Beach, California.

The purchase price of $15,930, including estimated costs incurred directly
related to the transaction, has been preliminarily allocated to working capital
of $2,666, property, plant and equipment of $1,002, non-compete agreements of
$1,545 and other assets of $91 resulting in an excess purchase price over net
identifiable assets of $10,626. The acquisition was financed with $14,000 of
borrowings from JTP's revolving credit agreement and $1,500 of a subordinated
seller note.

On February 9, 1998, the Company completed the formation of Jordan Specialty
Plastics, Inc. ("JSP"). JSP was formed as a Restricted Subsidiary under the
Company's Indenture. The Company sold the stock of Beemak and Sate-Lite to JSP
for $11,500 of Preferred Stock, which will accrete at plus or minus 97.5% of
the cumulative JSP net income or net loss, as the case may be, through the
earlier of an Early Redemption Event (as defined) or the end of year five. The
Company will also keep its intercompany notes with Sate-Lite ($1.2 million at
January 31, 1998) and Beemak ($9.8 million at January 31, 1998). The Company
has sold these subsidiaries in order to establish them as more independent,
stand-alone, industry-focused companies, and to allow the Company's
stockholders and employees to invest directly in JSP.


                                      F-31
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
On February 11, 1998, JSP purchased all of the common stock of Deflecto
Corporation ("Deflecto"). Deflecto designs, manufactures and markets plastic
injection molded products such as office supplies, hardware products and
houseware products.

The purchase price of $43,000, including costs directly related to the
transaction, was allocated to working capital of $8,598, property, plant and
equipment of $6,346, other long term assets and liabilities of $(1,942), and
resulted in an excess purchase price over net identifiable assets of $29,998.
The acquisition was financed with cash from the Jordan Industries, Inc. credit
line and a $5,000 subordinated seller note.

On February 26, 1998, JSP purchased all of the net assets of Rolite Plastics,
Inc. Rolite is a manufacturer of extruded vinyl chairmats for the office
products industry.

The purchase price of $6,000 including costs directly related to the
transaction, was allocated to working capital of $483, property, plant, and
equipment of $754, and resulted in an excess purchase price over net
identifiable assets of $4,763. The acquisition was financed with cash and a
$900 subordinated seller note.

On May 15, 1998, Motors and Gears Industries, Inc. ("Motors and Gears")
acquired all of the outstanding stock of Advanced D.C. Motors, Inc. and its
affiliated corporations (collectively "ADC") for $55,500. The purchase price,
including costs incurred directly related to the transaction, was allocated to
working capital of $9,345; property and equipment of $4,088; covenants not to
compete of $662; other long-term assets and liabilities of $54; and resulted in
an excess purchase price over net identifiable assets of $41,456. ADC designs
and manufactures special purpose, custom designed motors for use in electric
lift trucks, power sweepers, electric utility vehicles, golf carts, electric
boats, and other niche products. ADC also designs and manufactures its own
production equipment as well as electric motor components known as commutators.
 

On July 14, 1998, JTP, though its 70% owned subsidiary, TSI, purchased the net
assets of Opto-Tech Industries, Inc. ("Opto-Tech"). Opto-Tech assembles and
sells radio frequency interference products, attenuators and message waiting
indicators to Regional Bell Operating Companies, independent phone operators
and distributors of telecommunications products. The purchase price of $6,632,
including costs incurred directly related to the transaction, has been
allocated to working capital of $261, property, plant, and equipment of $42,
and non-current assets of $100, resulting in an excess purchase price over net
identifiable assets of $6,229. The acquisition was financed with $5,150 of
borrowings from JTP's revolving credit agreement and $1,250 of subordinated
seller notes.

On December 31, 1998, Motors and Gears, through its wholly-owned subsidiary
Imperial, acquired all of the outstanding stock of Euclid Universal Corporation
("Euclid") for $2,100. The purchase price, including costs incurred directly
related to the transaction, was preliminarily allocated to working capital of
$772, property, plant, and equipment of $953, and other non-current assets and
liabilities of ($498), resulting in an excess purchase price over net
identifiable assets of $873. Euclid designs and manufactures speed reducers,
custom gearing, right angle gearboxes and transaxles for use in a wide array of
industries including material handling, healthcare and floor care. Euclid has
strong technical expertise in the areas of worm, spur and helical gearing.

On January 8, 1997, Beemak purchased the net assets of Arnon-Caine, Inc.
("ACI"), a designer and distributor of modular storage systems primarily for
sale to wholesale home centers and hardware stores. ACI subcontracts its
production to third party injection molders located primarily in Southern
California, which use materials and machines similar to those used by Beemak.
By early 1998, Beemak will serve as ACI's primary supplier.

The purchase price of $4,600, including costs incurred directly related to the
acquisition, was allocated to working capital of $300, property, plant and
equipment of $82, and excess purchase price over net identifiable assets of
$4,218. The acquisition was financed with cash.


                                      F-32
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
On May 30, 1997, JTP purchased the assets of LoDan West, Inc. ("LoDan"), which
designs, engineers and manufactures high-quality custom electronic cable
assemblies, sub-assemblies and electro-mechanical assemblies for original
equipment manufacturers in the data and telecommunications markets of the
electronics industry.

The purchase price of $17,000, including estimated costs incurred directly
related to the transaction, was allocated to working capital of $5,066,
property, plant and equipment of $783, non-competition agreement of $250,
noncurrent assets of $41, and resulted in an excess purchase price over net
identifiable assets of $10,860. The acquisition was financed with cash and a
$1,500 subordinated seller note.

On June 12, 1997, Motors and Gears Industries, Inc., through its newly formed
wholly-owned subsidiary, FIR Group Holdings, Inc. and its wholly-owned
subsidiaries, Motors and Gears Amsterdam, B.V. and FIR Group Holdings Italia,
SrL, purchased all of the common stock of the FIR Group Companies, consisting
of CIME S.p.A., SELIN S.p.A., and FIR S.p.A. The FIR Group Companies are
manufacturers of electric motors and pumps for niche applications such as pumps
for catering dishwashers, motors for industrial sewing machines, and motors for
industrial fans and ventilators.

The purchase price of $50,496, including costs directly related to the
transaction, was preliminarily allocated to working capital of $16,562,
property, plant, and equipment of $4,918, other long term assets and
liabilities of ($3,442), and resulted in an excess of purchase price over net
identifiable assets of $32,458. The cash was provided from borrowings under the
Motors and Gears Industries, Inc. Credit Agreement established on November 7,
1996 among Motors and Gears Industries, Inc., various banks, and Bankers Trust
Company, as agent.

On September 2, 1997 JTP purchased the assets of Engineered Endeavors Inc.
("EEI"). EEI designs, manufactures and installs custom cellular personal
communication systems and radio/broadcasting towers.

The purchase price of $41,500, including estimated costs incurred directly
related to the transaction, was allocated to working capital of $2,068,
property, plant, and equipment of $799, non-competition agreement of $2,500,
other long-term assets of $14, and resulted in an excess purchase price over
net identifiable assets of $36,119. The acquisition was financed with $21,500
of cash and $20,000 of borrowings under the JTP credit facility.

On September 11, 1997 the Company purchased the net assets of Cho-Pat, Inc.
("Cho-Pat"). Cho-Pat is a leading designer and manufacturer of orthopedic
supports and patented preventative and pain reducing medical devices. Cho-Pat
currently produces nine different products primarily for reduction of pain from
injuries and the prevention of injuries resulting from overuse of the major
joints.

The purchase price of $1,200, including estimated costs incurred directly
related to the transaction, was allocated to working capital of $17, property,
plant and equipment of $23, and other long-term assets of $34 which resulted in
an excess purchase price over net identifiable assets of $1,126. The
acquisition was financed with cash.

On October 27, 1997 Motors and Gears Industries, Inc. ("Motors and Gears")
acquired all of the outstanding stock of Electronic Design and Control Company
("ED&C"). ED&C is a full service electrical engineering company which designs,
engineers and manufactures electrical control systems and panels for material
handling systems and other like applications. ED&C provides comprehensive
design, build and support services to produce electronic control panels which
regulates the speed of movement of conveyor systems used in a variety of
automotive plants and other industrial applications.


                                      F-33
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
The purchase price of $20,000, including costs incurred directly related to the
transaction, has been preliminarily allocated to working capital of $3,514,
property, plant, and equipment of $132, covenants not to compete of $120, and
resulted in an excess purchase price over net identifiable assets of $16,234.
The acquisition was financed through a $16,000 borrowing on the Motors and
Gears line of credit and a $4,000 subordinated seller note.

On October 31, 1997 JTP purchased the stock of Telephone Services, Inc. of
Florida ("TSI"). TSI designs, manufactures and provides custom cable
assemblies, terminal strips and terminal blocks and other connecting devices
primarily to the telephone operating companies and major telecommunication
manufacturers.

The purchase price of $53,303, including estimated costs incurred directly
related to the transaction, has been preliminarily allocated to working capital
of $3,864, property, plant, and equipment of $1,528, non-compete agreement of
$2,000, and non current assets of $107, resulting in an excess purchase price
over net identifiable assets of $45,804. The acquisition was financed with a
$48,000 borrowing under the JTP credit facility, a $5,000 subordinated seller
note and the assumption of a $303 deferred purchase agreement.

On December 10, 1997, Motors and Gears Industries, Inc., through its newly
formed wholly-owned subsidiary, Motion Holdings, Inc., purchased all of the
common stock of Motion Control Engineering, Inc. ("MCE"). MCE is the leading
independent supplier of electronic motion and logic control products to the
elevator industry.

The purchase price of $53,600, including costs directly related to the
transaction, was preliminarily allocated to working capital of $10,071,
property and equipment of $1,428, non-competes and other of $1,005, and
resulted in an excess of purchase price over net identifiable assets of
$41,108. The cash was provided from the issuance of $100 million of 103/4%
bonds by Motors and Gears, Inc.

Unaudited pro forma information with respect to the Company as if the 1998
acquisitions had occurred on January 1, 1998 and 1997 and as if the 1997
acquisitions had occurred on January 1, 1997, is as follows:




<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                                -------------------------------
                                                                     1998             1997
                                                                --------------   --------------
                                                                          (UNAUDITED)
                                                                     (DOLLARS IN MILLIONS)
<S>                                                             <C>              <C>
       Net sales ............................................     $  955,483       $  902,244
       Net (loss) income before extraordinary items .........        (18,139)           2,471
       Net (loss) income ....................................     $  (27,034)      $  (30,314)
</TABLE>

NOTE 21 -- COMPENSATION AGREEMENTS

Effective October 1, 1996, the Company voluntarily agreed to pay to an
executive $3,876 in view of his contributions to the Company, including
identifying and analyzing acquisition candidates for the Company and providing
strategic advice to the Board of Directors of the Company. The Company accrued
for this compensation agreement in 1996. The Company paid the executive $860
during 1998, $867 during 1997, and $1,300 during 1996, with the remaining $905
payable in two equal semi-annual installments payable on April 1, and October
1, 1999.


NOTE 22 -- ADDITIONAL PURCHASE PRICE AGREEMENTS

The Company has a contingent purchase price agreement relating to its
acquisition of Deflecto in 1998. The plan is based on Deflecto achieving
certain earnings before interest and taxes and is payable on April 30, 2008. If
Deflecto is sold prior to April 30, 2008, the plan is payable 120 days after
the transaction.


                                      F-34
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
The terms of the Company's Advanced DC purchase price agreement provides for
additional consideration to be paid if the acquired entity's results of
operations exceed certain targeted levels. Targeted levels are set
substantially above the historical experience of the acquired entity at the
time of acquisition. Subject to the terms and conditions of the agreement, the
Company will make payments to the sellers on or before April 1st immediately
following the respective fiscal year during which each such contingent payment
is earned. The contingent payments apply to operations of fiscal years 1998 and
1999. The Company made a payment of $3,100 to the previous shareholders of
Advanced DC in March 1999.

The Company has a contingent purchase price agreement relating to its
acquisition of Viewsonics in 1996. The plan is based on Viewsonics achieving
certain earnings before interest and taxes and can pay a minimum of $0 and a
maximum of $2,000 for the year ended July 31, 1997 and $3,000 for the year
ending July 31, 1998. On January 2, 1998, the Company paid $1,388 for the plan
year ended July 31, 1997. At December 31, 1998, $1,081 was accrued for the plan
year ended July 31, 1998.

The Company also has a contingent purchase price agreement relating to its
acquisition of Motion Control on December 18, 1997. The terms of the Company's
Motion Control acquisition agreement provides for additional consideration to
be paid if the acquired entity's results of operations exceed certain targeted
levels. Targeted levels are set substantially above the historical experience
of the acquired entity at the time of acquisition. The agreement becomes
exercisable in 2003 and payments, if any, under the contingent agreement will
be placed in a trust and paid out in cash in equal annual installments over a
four year period.

In addition, the Company has an agreement to make an additional purchase price
payment of up to $4,000 to the former owners of TSI if certain earnings
projections are met on or before March 1, 1999. At December 31, 1998, $3,742
was accrued related to this agreement.


NOTE 23 -- CONTINGENCIES

The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. The Company believes that the final
disposition of such matters will not have a material adverse effect on the
financial position or results of operations of the Company.


NOTE 24 -- SUBSEQUENT EVENTS

On March 22, 1999, the Company completed a $155,000 "tack-on" bond offering at
a 10 3/8% coupon. The bonds were sold at 96.62% of par and mature on August 1,
2007. The net cash to the Company was $149,761.

On the same day, the Company purchased Alma Products ("Alma") for $86,300. Alma
is comprised of three primary business segments: (i) high quality
remanufactured torque converters used to supply warranty replacements for
automotive transmissions originally sold to Ford, Chrysler, John Deere and
Caterpillar, (ii) new and remanufactured air conditioning compressors for
original equipment manufacturers including Ford, Chrysler and General Motors,
and (iii) new and remanufactured clutch and disc assemblies used in standard
transmissions sold primarily to Ford. As a premium remanufacturer of torque
converters, Alma has earned ISO-9002 status and supplies Ford with 100% and
Chrysler with approximately 70% of their remanufactured torque converter
requirements. The purchase price of $86,300 is made up of cash of $84,000 and
the assumption of $2,300 in long-term liabilities related to retiree healthcare
benefits, and has not been allocated at this time.

The Company also used the proceeds from the offering described above to pay
down its Revolving Credit Facility. As of March 31, 1999, the Company has no
borrowings outstanding under its $75,000 Revolving Credit Facility.


                                      F-35
<PAGE>

                            JORDAN INDUSTRIES, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
                             (DOLLARS IN THOUSANDS)
 
On March 31, 1999, JTP, through a newly created subsidiary, Integral Holdings,
Inc. ("Integral Holdings"), a subsidiary of Dura-Line Corporation, purchased
the assets of Integral Corporation ("Integral"). Integral is a manufacturer of
high-density polyethylene conduit for the installation and protection of cables
used in the electrical, telecommunications, and cable TV industries. Integral
has locations in Dallas, Texas; England; and Malaysia.


The purchase price of $17,000, which does not include related transaction
costs, has not been allocated at this time. The acquisition was financed with
four-month promissory notes for $9,937 and borrowings from JTP's revolving
credit agreement of $7,063.


                                      F-36
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders of
Alma Piston Company:


We have audited the accompanying statement of net assets of ALMA PRODUCTS, (as
defined in Note 1), as of December 31, 1998 and 1997, and the related
statements of income and cash flows for the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alma Products as of December
31, 1998 and 1997, and the results of its operations and its cash flows for the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.




                                        Arthur Andersen LLP



Detroit, Michigan,
 February 8, 1999.

                                      F-37
<PAGE>

                                 ALMA PRODUCTS

                            STATEMENTS OF NET ASSETS




<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                 -----------------------------------
                                                                       1998               1997
                                                                 ----------------   ----------------
<S>                                                              <C>                <C>
                                      ASSETS
CURRENT ASSETS:
 Receivables--
   Trade receivables, less allowances for doubtful accounts of
    $10,000 and $5,800, respectively..........................    $   9,056,300      $   9,719,400
   Other receivables .........................................          508,800            116,700
 Inventories (Note 1) ........................................       12,789,500         11,111,200
 Prepaids and other ..........................................        1,053,200            957,500
                                                                  -------------      -------------
    Total current assets .....................................       23,407,800         21,904,800
                                                                  -------------      -------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
 Land and improvements .......................................          731,400            662,500
 Buildings and improvements ..................................        7,238,500          7,218,600
 Machinery and equipment .....................................       17,412,700         16,625,700
 Construction in progress ....................................           43,700             23,200
                                                                  -------------      -------------
                                                                     25,426,300         24,530,000
   Less--Accumulated depreciation ............................      (17,501,200)       (16,459,300)
                                                                  -------------      -------------
    Total property, plant and equipment ......................        7,925,100          8,070,700
                                                                  -------------      -------------
                                                                  $  31,332,900      $  29,975,500
                                                                  =============      =============
                                LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
 Accounts payable ............................................    $   6,586,000      $   4,124,200
 Accrued liabilities (Note 4) ................................        2,449,200          2,305,100
                                                                  -------------      -------------
    Total current liabilities ................................        9,035,200          6,429,300
                                                                  -------------      -------------
LONG TERM LIABILITIES:
 Accrued post-retirement benefits and other ..................        2,705,500          2,286,400
                                                                  -------------      -------------
CONTINGENCIES (Note 7)
NET ASSETS ...................................................       19,592,200         21,259,800
                                                                  -------------      -------------
                                                                  $  31,332,900      $  29,975,500
                                                                  =============      =============
</TABLE>

The accompanying notes to financial statements are an integral part of this
                                  statement.

                                      F-38
<PAGE>

                                 ALMA PRODUCTS

                              STATEMENTS OF INCOME






<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                       ------------------------------------------------
                                                            1998             1997             1996
                                                       --------------   --------------   --------------
<S>                                                    <C>              <C>              <C>
NET SALES ..........................................    $73,607,900      $61,899,300      $64,696,000
COST OF SALES ......................................     57,061,100       48,466,700       51,770,200
                                                        -----------      -----------      -----------
   Gross margin ....................................     16,546,800       13,432,600       12,925,800
SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES ..........................................      4,531,900        3,329,800        3,461,500
                                                        -----------      -----------      -----------
   Operating profit ................................     12,014,900       10,102,800        9,464,300
OTHER INCOME, NET ..................................         43,100           16,600           66,800
                                                        -----------      -----------      -----------
   Income before provision for state taxes .........     12,058,000       10,119,400        9,531,100
PROVISION FOR STATE TAXES ..........................        179,500          181,200          311,600
                                                        -----------      -----------      -----------
NET INCOME .........................................    $11,878,500      $ 9,938,200      $ 9,219,500
                                                        ===========      ===========      ===========
</TABLE>

The accompanying notes to financial statements are an integral part of this
                                   statement.

                                      F-39
<PAGE>

                                 ALMA PRODUCTS

                            STATEMENTS OF CASH FLOWS






<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                              ------------------------------------------------
                                                                    1998             1997            1996
                                                              ---------------- --------------- ---------------
<S>                                                           <C>              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income .................................................  $  11,878,500    $   9,938,200   $  9,219,500
 Adjustments to reconcile net income to net cash provided
   by operating activities--
   Depreciation .............................................      1,217,400        1,200,000      1,164,900
   Gain (loss) on sale of property ..........................         45,600           58,000         (2,200)
   Decrease (increase) in--
    Receivables .............................................        271,000        3,599,200     (2,934,600)
    Inventories .............................................     (1,678,300)       2,336,400      2,368,800
    Prepaids and other ......................................        (69,500)        (150,300)      (451,500)
   Increase (decrease) in--
    Accounts payable ........................................      2,461,800         (712,200)    (2,942,800)
    Accrued liabilities .....................................        144,100       (1,117,400)       658,600
    Accrued taxes ...........................................        (26,200)              --             --
    Accrued post-retirement benefits and other ..............        419,100          138,500        175,000
                                                               -------------    -------------   ------------
      Net cash provided by operating activities .............     14,663,500       15,290,400      7,255,700
                                                               -------------    -------------   ------------
CASH FLOWS FOR INVESTING ACTIVITIES:
 Capital expenditures .......................................     (1,131,100)      (1,094,500)    (1,223,100)
 Proceeds from sale of property .............................         13,700           97,900          2,200
                                                               -------------    -------------   ------------
    Net cash used in investing activities ...................     (1,117,400)        (996,600)    (1,220,900)
                                                               -------------    -------------   ------------
CASH USED FOR FINANCING ACTIVITIES--
 Net transfers to parent ....................................    (13,546,100)     (14,293,800)    (6,034,800)
                                                               -------------    -------------   ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS .....................             --               --             --
CASH AND CASH EQUIVALENTS AT BEGINNING OF
 YEAR .......................................................             --               --             --
                                                               -------------    -------------   ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                       $          --    $          --   $         --
                                                               =============    =============   ============
</TABLE>

The accompanying notes to financial statements are an integral part of this
                                   statement.

                                      F-40
<PAGE>

                                 ALMA PRODUCTS

                         NOTES TO FINANCIAL STATEMENTS


(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES


 Basis of Presentation

     Alma Products (the Company), located in Alma, Michigan, is an operating
division of Alma Piston Company (the Parent). The accompanying financial
statements have been derived from the historical statements of the Parent.

     The Company has received certain administrative and operational support
from the Parent. Management has allocated its estimate of the costs of these
services to the Company.

     The Company primarily manufactures original equipment automotive parts and
service replacement automotive products. The Company manufactures three primary
product lines: (i) high quality remanufactured torque converters used to supply
warranty replacements for automatic
transmissions, (ii) remanufactured and new air conditioning compressors for
original equipment manufacturers, and (iii) new and remanufactured clutch and
disc assemblies used in standard transmissions. The Company sells primarily to
domestic automobile manufacturers.


 Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.


 Inventories

     Inventories are valued at the lower of cost or market. Cost includes
material, labor and manufacturing overhead. Approximately 76%, 71%, and 67%, of
inventories as of December 31, 1998, 1997, and 1996, respectively, are valued
using the last-in, first-out (LIFO) method of inventory valuation. This method
assigns the costs of the latest inventory purchases to cost of sales.

     The components of inventories are as follows:



<TABLE>
<CAPTION>
                                                                   1998             1997
                                                              --------------   --------------
<S>                                                           <C>              <C>
   Materials ..............................................    $ 11,415,700     $ 10,323,100
   Finished goods .........................................       3,859,200        3,155,100
                                                               ------------     ------------
      Total inventories at FIFO ...........................      15,274,900       13,478,200
   Less -- Reserve to reduce FIFO inventories to LIFO value      (2,485,400)      (2,367,000)
                                                               ------------     ------------
      Total inventories at LIFO ...........................    $ 12,789,500     $ 11,111,200
                                                               ============     ============
</TABLE>

 Property, Plant and Equipment

     The Company provides for depreciation of property, plant and equipment
based upon the acquisition cost and the estimated service lives of depreciable
assets. For financial reporting purposes, depreciation is computed using the
straight-line method. Estimated useful lives are as follows:




<TABLE>
<CAPTION>
                                            YEARS
                                           ------
<S>                                        <C>
   Land and improvements ...............   15-40
   Buildings and improvements ..........   15-40
   Machinery and equipment .............    5-12
</TABLE>


                                      F-41
<PAGE>

                                 ALMA PRODUCTS

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
(2) EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS


 Employee Benefit Plans


     The Company has two defined benefit pension plans which cover
substantially all employees. The Company's policy is generally to fund the
maximum tax deductible amounts allowable under the Employee Retirement Income
Security Act of 1974.


     The following table sets forth the funded status of the pension plans as
of December 31,:




<TABLE>
<CAPTION>
             CHANGE IN BENEFIT OBLIGATION                    1998             1997
             ----------------------------                    ----             ----
<S>                                                     <C>              <C>
   Benefit obligation at beginning of year ..........    $ 12,769,500     $10,521,100
                                                         ============     ===========
     Service cost ...................................         508,000         465,300
     Interest cost ..................................         853,300         800,000
     Actuarial (gain)/loss ..........................         (65,400)      1,482,900
     Benefits paid ..................................      (1,018,500)       (499,800)
                                                         ------------     -----------
   Benefit obligations at end of year ...............      13,046,900      12,769,500
                                                         ============     ===========
</TABLE>


<TABLE>
<CAPTION>
                   CHANGE IN PLAN ASSETS
                   ---------------------
<S>                                                           <C>               <C>
   Fair value of plan assets at beginning of year .........      13,065,400        11,461,700
                                                                 ==========        ==========
     Actual return on assets ..............................       1,509,300         1,673,200
     Contributions received ...............................              --           430,800
     Benefits paid ........................................      (1,018,500)         (500,300)
                                                                 ----------        ----------
   Fair value of plan assets at end of year ...............      13,556,200        13,065,400
                                                                 ----------        ----------
     Funded Status ........................................         509,400           295,900
     Unrecognized net actuarial loss ......................          85,300           656,200
     Unrecognized prior service cost ......................         276,800           299,000
     Unrecognized net transition asset ....................      (1,032,100)       (1,135,300)
                                                                 ----------        ----------
     Prepaid (accrued) benefit cost .......................    $   (160,600)     $    115,800
                                                               ============      ============
</TABLE>

     Net periodic pension expense included the following components for the
year ended December 31:



<TABLE>
<CAPTION>
                                                                     1998             1997
                                                               ---------------   -------------
<S>                                                            <C>               <C>
   Components of net periodic benefit cost--
     Service cost ..........................................    $    508,000      $  465,300
     Interest cost .........................................         853,300         800,000
     Expected return on plan assets ........................      (1,003,800)       (846,800)
     Amortization of unrecognized transition asset .........        (102,900)       (103,200)
     Amortization of prior service cost ....................          22,200          22,200
                                                                ------------      ----------
     Net periodic benefit cost .............................    $    276,800      $  337,500
                                                                ============      ==========
</TABLE>

                                      F-42
<PAGE>

                                 ALMA PRODUCTS

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED


(2) EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS (CONTINUED)
 
     Net periodic pension expense included the following components for the
year ended December 31, 1996:


<TABLE>
<S>                                                           <C>
   Service cost (benefits earned during the year) .........    $  385,300
   Interest cost on projected benefit obligation ..........       700,700
   Return on plan assets ..................................      (826,500)
   Net amortization and deferral ..........................       (88,900)
                                                               ----------
      Net periodic pension expense ........................    $  170,600
                                                               ==========
</TABLE>

     The following assumptions were used in determining the actuarial present
value of the projected benefit obligations as of December 31,:




<TABLE>
<CAPTION>
                                                                    1998        1997        1996
                                                                 ---------   ---------   ---------
<S>                                                              <C>         <C>         <C>
   Discount rate .............................................       7.0%        7.5%        7.5%
   Rate of increase in future compensation levels ............       4.5%        4.5%        4.5%
   Expected long-term rate of return on plan assets ..........       8.0%        7.5%        7.5%
</TABLE>

     The Company also has a profit sharing plan. The profit sharing plan for
salaried employees receives annual contributions equal to at least two percent
of the Company's profits (as defined in the plan document).

     The Company's contributions under the plan were approximately $373,900,
$369,600, and $399,900 for the years ended December 31, 1998, 1997, and 1996,
respectively.

 Post-Retirement Benefits

     The Company provides health care and life insurance benefits for certain
retired employees and their dependents. Employees become eligible to
participate after completing retirement at age 62 and 20 years of service with
benefits ceasing upon attainment of age 65.

     The following table sets forth the accumulated post-retirement benefit
obligation as of December 31:




<TABLE>
<CAPTION>
                                                              1998            1997
                                                         -------------   -------------
<S>                                                      <C>             <C>
   Change in benefit obligation--
     Benefit obligation at beginning of year .........    $2,117,500      $1,839,400
     Service cost ....................................       103,600          94,000
     Interest cost ...................................       144,000         142,200
     Actuarial (gain) loss ...........................      (114,800)        147,200
     Benefits paid ...................................       (99,200)       (105,300)
                                                          ----------      ----------
   Benefit obligation at end of year .................    $2,151,100      $2,117,500
                                                          ==========      ==========
</TABLE>

     Net periodic benefit cost included the following components for the year
ended December 31:




<TABLE>
<CAPTION>
                                                   1998         1997          1996
                                               -----------   ----------   -----------
<S>                                            <C>           <C>          <C>
   Components of net periodic benefit cost--
     Service cost ..........................    $103,600      $ 94,000     $123,000
     Interest cost .........................     144,000       142,200      140,000
                                                --------      --------     --------
     Net periodic benefit cost .............    $247,600      $236,200     $263,000
                                                ========      ========     ========
</TABLE>

                                      F-43
<PAGE>

                                 ALMA PRODUCTS

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED


(2) EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS (CONTINUED)
 
     The following table reconciles the status of the accumulated
post-retirement benefits obligation as reflected on the statement of net assets
as of December 31:




<TABLE>
<CAPTION>
                                                   1998            1997
                                              -------------   -------------
<S>                                           <C>             <C>
   Active employees .......................    $1,939,800      $1,899,800
   Retirees and eligible spouses ..........       211,200         217,700
                                               ----------      ----------
   Unfunded status ........................    $2,151,000      $2,117,500
                                               ==========      ==========
</TABLE>

     The following measurement assumptions were used for measurement purposes:




<TABLE>
<CAPTION>
                                                   1998        1997        1996
                                                ---------   ---------   ---------
<S>                                             <C>         <C>         <C>
   Discount rate ............................       7.0%        7.0%        7.5%
   Health care cost rate ....................       7.1%        7.4%        8.0%
   Prescription coverage cost rate ..........       8.5%        9.0%       10.0%
</TABLE>

     The rates were assumed to gradually decrease to 5% by the year 2005 and
remain at that level thereafter. The health care cost trend rate assumption has
a significant effect on the amounts reported.


     To illustrate, increasing the assumed health care cost trend rate by one
percentage point would increase the accumulated post retirement benefits
obligation as of December 31, 1998 and 1997 by $280,000 and $284,000,
respectively, and the aggregate of the service and interest cost components of
net post retirement benefits cost for each of the three years then ended
December 31, 1998 by $36,000, $34,800, and $43,800, respectively.


(3) INCOME TAXES


     The shareholders of the Parent have elected, under the provisions of
Subchapter S of the Internal Revenue Code, to have the income of the Company
included in the taxable income of the shareholders. As a result, the Company
and Parent are not liable for Federal or certain state income taxes unless the
S Corporation election is subsequently revoked. Accordingly, no provision for
Federal income taxes is included in the accompanying financial statements.


     The accompanying statement of income reflects a provision for Michigan
Single Business tax and Michigan Intangible tax.


(4) ACCRUED LIABILITIES


     Accrued liabilities consists of the following as of December 31:




<TABLE>
<CAPTION>
                                                                1998            1997
                                                           -------------   -------------
<S>                                                        <C>             <C>
   Payroll, payroll taxes and fringe benefits ..........    $1,377,000      $  894,000
   Warranties ..........................................       192,400         259,800
   Workers' compensation ...............................       271,400         363,700
   Environmental .......................................       410,000         425,000
   Other accrued liabilities ...........................       198,400         362,600
                                                            ----------      ----------
                                                            $2,449,200      $2,305,100
                                                            ==========      ==========
</TABLE>


                                      F-44
<PAGE>

                                 ALMA PRODUCTS

                   NOTES TO FINANCIAL STATEMENTS -- CONTINUED
 
(5) TRANSACTIONS WITH RELATED PARTIES


     The Company had sales of approximately $337,100, $1,302,200 and $3,639,000
during 1998, 1997 and 1996 to GPD, Inc., an affiliated company. The Company
also had a net payable with GPD, Inc. of approximately $54,600 as of December
31, 1998 and net receivables of $15,700 in 1997.


(6) SIGNIFICANT CUSTOMERS


     The Company had two customers, which individually accounted for 10% or
more of net sales, with net sales of approximately $20,596,900 and $12,579,900,
respectively, in 1998, and $23,917,600 and $7,772,900, respectively, in 1997.
The Company also had receivables from these two customers amounting to
$2,361,100 and $2,387,929, respectively, at December 31, 1998 and $4,060,300
and $2,112,100, respectively, at December 31, 1997. In 1996, the Company had
one customer, which individually accounted for 10% or more of net sales, with
net sales of approximately, $36,650,000.


(7) CONTINGENCIES


 Environmental Matters


     The Company has received notices from the Michigan Department of Natural
Resources and the U.S. Environmental Protection Agency in connection with
environmental contamination at sites located in Michigan. As of December 31,
1998 and 1997 the Company has accrued approximately $410,000 and $425,000,
respectively, for costs yet to be incurred in connection with the cleanup of
the sites. While the Company believes it has made adequate provision for these
costs, changes in future cost estimates may nevertheless occur. In the opinion
of management, based upon its experience with these sites to date, the outcome
of these matters will not have a material adverse effect on the Company's
financial statements.


(8) OFFICER EMPLOYMENT CONTRACT AND RETIREMENT BENEFITS


     The Company entered into an employment agreement with one of its officers
on December 20, 1997. The agreement provides for employment through December
31, 1998 as well as for pension and health care benefits continuing after the
end of the employment term. These benefits are earned and vested over the
duration of the employment contract. The present value of these benefits as of
December 31, 1998 is estimated at $616,000 and is included in accrued
post-retirement benefits and other in the accompanying balance sheet.


(9) SALE OF ALMA PRODUCT' S DIVISION


     On March 22, 1999, Alma Piston Company sold the net operating assets of
the Alma Product's Division to Jordan Industries, Inc. for $84 million in cash
and the assumption of approximately $2 million in long term liabilities,
subject to certain future possible adjustments provided for in the related
contract.


                                      F-45
<PAGE>

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

                         [Jordan Industries, Inc. Logo]
                                      
 
                             Jordan Industries, Inc.



                                  $155,000,000


             OFFER TO EXCHANGE SERIES D 10 3/8% SENIOR NOTES DUE 2007
            FOR ALL OUTSTANDING SERIES C 10 3/8% SENIOR NOTES DUE 2007










                            -------------------------
                                   PROSPECTUS
                            -------------------------
                                       , 1999


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

<PAGE>

                                    PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS


ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     (i) The Illinois Business Corporation Act (Section 8.75) empowers Illinois
corporations to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that the person is or was a director, officer, employee or agent of
the registrant, or is or was serving at the request of the registrant as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding, so
long as such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the registrant and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. For actions or suits by or in the
right of the registrant, no indemnification is permitted in respect of any
claim, issue or matter as to which such person is adjudged to be liable to the
registrant, unless, and only to the extent that, the court in which such action
or suit was brought determines upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
deems proper. Any indemnification (unless ordered by a court) will be made by
the registrant only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because the person has met the applicable standard of conduct
set forth above. Such determination shall be made (1) by the board of directors
by a majority vote of a quorum consisting of the directors who are not parties
to such action, suit or proceeding, or (2) if such a quorum is not obtainable
or if such directors so direct, by independent legal counsel in a written
opinion, or (3) by the stockholders. Such indemnification is not exclusive of
any other rights to which those indemnified may be entitled under any by-laws,
agreement, vote of stockholders or otherwise.

     Section 8.75 also authorizes the registrant to buy directors' and
officers' liability insurance and gives a director, officer, employee or agent
of the registrant, or a person who is or was serving at the request of the
registrant as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any capacity, or
arising out of the person's status as such, whether or not the registrant has
the power to indemnify the person against such liability.

     (ii) The Articles of Incorporation of the registrant require, and the
By-Laws of the registrant provide for, indemnification of directors, officers,
employees and agents to the full extent permitted by law.

     (iii) The Purchase Agreements and the Registration Rights Agreements (the
forms of which are included as Exhibits 1.1 and 4.10-4.12 to this registration
statement) provide for the indemnification under certain circumstances of the
registrant, its directors and certain of its officers by the Initial
Purchasers.


ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a) Exhibits:

     A list of the exhibits included as part of this registration statement is
set forth on the Exhibit Index immediately preceding such exhibits and is
incorporated herein by reference.

     (b) Financial Statement Schedules:

     A list of schedules included as part of this registration statement is set
forth below. All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange


                                      II-1
<PAGE>

Commission have been omitted because they are not required, amounts which would
otherwise be required to be shown with respect to any item are not material,
are inapplicable or the required information has already been provided
elsewhere in the registration statement.

   Schedule II  Jordan Industries, Inc., Valuation and Qualifying Accounts

ITEM 22. UNDERTAKINGS

     (iv) The undersigned registrant hereby undertakes:

     (a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

        (1) To include any prospectus required by Section 10(a)(3) of the
     Securities Act of 1933;

        (2) To reflect in the prospectus any facts or events arising after the
     effective date of the registration statement (or the most recent
     post-effective amendment thereof) which, individually or in the aggregate,
     represent a fundamental change in the information set forth in the
     registration statement. Notwithstanding the foregoing, any increase or
     decrease in volume of securities offered (if the total dollar value of
     securities offered would not exceed that which was registered) and any
     deviation from the low or high end of the estimated maximum offering range
     may be reflected in the form of prospectus filed with the Commission
     pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
     price represent no more than 20 percent change in the maximum aggregate
     offering price set forth in the "Calculation of Registration Fee" table in
     the effective registration statement;

        (3) To include any material information with respect to the plan of
     distribution not previously disclosed in the registration statement or any
     material change to such information in the registration statement;

     (b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

     (c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

     (b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

     (c) The undersigned registrant hereby undertakes that:

        (a) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this registration statement in reliance upon Rule 430A and contained in
     a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.


                                      II-2
<PAGE>

        (b) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.

     (d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

     (e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

     (f) The registrant has not entered into any arrangement or understanding
with any person to distribute the securities to be received in the Exchange
Offer and to the best of the registrant's information and belief, each person
participating in the Exchange Offer is acquiring the securities in its ordinary
course of business and has no arrangement or understanding with any person to
participate in the distribution of the securities to be received in the
Exchange Offer. In this regard, the registrant will make each person
participating in the Exchange Offer aware (through the Exchange Offer
Prospectus or otherwise) that if the Exchange Offer is being registered for the
purpose of secondary resales, any securityholder using the exchange offer to
participate in a distribution of the securities to be acquired in the
registered exchange offer (1) could not rely on the staff position enunciated
in Exxon Capital Holdings Corporation (available April 13, 1989) or similar
letters and (2) must comply with registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. The registrant acknowledges that such a secondary resale
transaction should be covered by an effective registration statement containing
the selling securityholder information required by Item 507 of Regulation S-K.


                                      II-3
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois, on April 30, 1999.



                                        JORDAN INDUSTRIES, INC.


                                        By /s/ John W. Jordan
                                           ------------------------------------
                                           John W. Jordan, II
                                           Chairman, Chief Executive Officer
                                           and Director


                               POWER OF ATTORNEY


     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John W. Jordan, II, Gordon L. Nelson and Thomas
C. Spielberger his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the
same, with all exhibits thereto, and any and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or nominee, may lawfully do or cause to be done by
virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated on April 30, 1999.

<TABLE>
<CAPTION>
           SIGNATURE                                      TITLE
           ---------                                      -----
<S>                               <C>
      /s/ John W. Jordan          Chairman, Chief Executive Officer and Director
- -----------------------------
       John W. Jordan II     
                             
     /s/ Thomas H. Quinn          President, Chief Operating Officer and Director
- -----------------------------
        Thomas H. Quinn      
                             
   /s/ Jonathan F. Boucher        Vice President and Director
- -----------------------------
      Jonathan F. Boucher    
                             
     /s/ G. Robert Fisher         General Counsel, Secretary and Director
- -----------------------------
     G. Robert Fisher        
                             
                                  Director
- -----------------------------
      David W. Zalaznick     
                             
   /s/ Joseph S. Steinberg        Director
- -----------------------------
      Joseph S. Steinberg    
                             
  /s/ Thomas C. Spielberger       Vice President, Controller and Principal Accounting
- -----------------------------     Officer
    Thomas C. Spielberger    
</TABLE>                  

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Jordan Industries, Inc.

We have audited the consolidated financial statements of Jordan Industries,
Inc. as of December 31, 1998 amd 1997, and for each of the three years in the
period ended December 31, 1998, and have issued our report thereon dated March
31, 1999 included elsewhere in this Prospectus and Registration Statement. Our
audits also included the financial statement schedule included in this
Registration Statement. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                       /s/ Ernst & Young LLP

Chicago, Illinois
March 31, 1999

<PAGE>

                                                                    SCHEDULE II


                            JORDAN INDUSTRIES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                            (DOLLARS IN THOUSANDS)




<TABLE>
<CAPTION>
                                                                            UNCOLLECTIBLE
                                                              ADDITIONS       BALANCES
                                              BALANCE AT     CHARGED TO      WRITTEN OFF                   BALANCE AT
                                               BEGINNING      COSTS AND        NET OF                        END OF
                                               OF PERIOD      EXPENSES       RECOVERIES        OTHER         PERIOD
                                             ------------   ------------   --------------   -----------   -----------
<S>                                          <C>            <C>            <C>              <C>           <C>
December 31, 1996:
 Allowance for doubtful accounts .........       1,306          1,343            (731)            765         2,683
 Valuation allowance for deferred
   tax assets ............................      21,466         18,548              --              --        40,014
December 31, 1997:
 Allowance for doubtful accounts .........       2,683          2,091          (1,170)             41         3,645
 Valuation allowance for deferred
   tax assets ............................      40,014         13,212              --          (1,450)       51,776
December 31, 1998:
 Allowance for doubtful accounts .........       3,645          3,166          (2,341)             23         4,493
 Valuation allowance for deferred
   tax assets ............................      51,776         13,564              --              --        65,340
</TABLE>

<PAGE>

                                 EXHIBIT INDEX





<TABLE>
<CAPTION>
 EXHIBIT                                        DESCRIPTION                                        PAGE NO.
 -------                                        -----------                                        --------
<S>       <C>                                                                                     <C>
1.1       Purchase Agreement, dated March 22, 1999, by and among Jordan Industries, Inc.
          Donaldson, Lufkin & Jenrette Securities Corporation, Jefferies & Company, Inc.
          and BancBoston Robertson Stephens Inc.*
1.2       Purchase Agreement, dated July 21, 1997, by and among Jordon Industries, Inc.,
          Jefferies & Company, Inc. and Donaldson, Lufkin & Jenrette Securities Corporation
          (Incorporated by reference to our Registration Statement on Form S-4 (No.
          333-34529) (the "Form S-4")).
1.3       Purchase and Sale Agreement, dated as of April 2, 1997, by and between Jordan
          Industries, Inc. and the holders of 113/4% Senior Subordinated Discount Debentures
          due 2005 parties thereto (Incorporated by reference to the Form S-4).
1.4       Purchase and Sale Agreement, dated as of April 2, 1997, by and between Jordan
          Industries, Inc. and the holders of 113/4% Senior Subordinated Discount Debentures
          due 2005 parties thereto (Incorporated by reference to the Form S-4).
1.5       Exchange Agreement, dated as of April 2, 1997, by and between Jordan Industries,
          Inc. and the holders of 113/4% Senior Subordinated Discount Debentures due 2005
          parties thereto (Incorporated by reference to the Form S-4).
3.1       Articles of Incorporation of Jordan Industries, Inc. (Incorporated by reference to
          our Registration Statement on Form S-1 (No. 333-24317)).
3.2       Bylaws of Jordan Industries, Inc. (Incorporated by reference to our Registration
          Statement on Form S-1 (No. 33-24317) (the "Form S-1")).
4.1       Series C and Series D 10 3/8% Senior Notes Indenture, dated March 22, 1999,
          between Jordan Industries, Inc. and U.S. Bank Trust National Association.*
4.2       Series A and Series B 10 3/8% Senior Notes Indenture, dated July 25, 1997, between
          Jordan Industries, Inc. and First Trust National Association, as Trustee (Incorporated
          by reference to the Form S-4).
4.3       Series A and Series B 113/4% Senior Subordinated Discount Debentures Indenture,
          dated April 2, 1997, between Jordan Industries, Inc. and First Trust National
          Association, as Trustee (Incorporated by reference to the Form S-4).
4.4       First Supplemental Indenture, dated as of July 25, 1997, between Jordan Industries,
          Inc. and First Trust National Association, as Trustee, to the 113/4% Senior
          Subordinated Discount Debentures Indenture, dated as of April 2, 1997
          (Incorporated by reference to the Form S-4).
4.5       Form of Global Series D Senior Note.*
4.6       Global Series C Senior Note.*
4.7       Global Series A Senior Note (Incorporated by reference to the Form S-4).
4.8       Global Series B Senior Note (Incorporated by reference to the Form S-4).
4.9       Global Series B Senior Subordinated Discount Debenture (Incorporated by
          reference to the Form S-4).
4.10      Series C Senior Notes Registration Rights Agreement, dated March 22, 1999, by
          and among Jordan Industries, Inc., Donaldson, Lufkin & Jenrette Securities
          Corporation, Jefferies & Company, Inc. and BancBoston Robertson Stephens Inc.*
4.11      $120,000,000 10 3/8% Series A Senior Notes due 2007 Registration Rights Agreement,
          dated July 25, 1997, by and among Jordan Industries, Inc., Jefferies & Company,
          Inc., and Donaldson, Lufkin & Jenrette Securities Corporation (Incorporated by
          reference to the Form S-4).
4.12      113/4% Series A Senior Subordinated Discount Debentures due 2009 Registration
          Rights Agreement, dated April 2, 1997, between Jordan Industries, Inc. and the
          purchasers a party thereto (Incorporated by reference to the Form S-4).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
 EXHIBIT                                        DESCRIPTION                                       PAGE NO.
 -------                                        -----------                                       --------
<S>       <C>                                                                                    <C>
 4.13     113/4% Series A Senior Subordinated Discount Debentures due 2009 Registration
          Rights Agreement, dated April 2, 1997, between Jordan Industries, Inc. and the
          purchasers a party thereto (identical to the agreement filed as Exhibit 4.12).
 4.14     10 3/8% Senior Notes Indenture, dated as of July 15, 1993, between Jordan
          Industries, Inc. and First Trust National Association, as Trustee (Incorporated by
          reference to the Form S-4).
 4.15     First Supplemental Indenture, dated as of July 25, 1997, between Jordan Industries,
          Inc. and First Trust National Association, as Trustee, to 10 3/8% Senior Notes
          Indenture, dated as of July 15, 1993 (Incorporated by reference to the Form S-4).
 5        Opinion of Mayer, Brown & Platt.*
10.1      Intercompany Notes, dated June 1, 1988, by and among Jordan Industries, Inc. and
          its subsidiaries (Incorporated by reference to the Form S-1). The Company has
          entered into InterCompany Notes and Intercompany Tax Sharing Agreements with
          Riverside, AIM, Cambridge, Beemak, Hudson, Scott and Motors and Gears, which
          are identical in all material respects to the notes and agreements incorporated by
          reference in this Registration Statement. Copies of such additional notes and
          agreements have therefore not been included at exhibits in this filing in accordance
          with Instruction 2 to Item 601 of Regulation S-K.
10.2      Tax Sharing Agreement, dated as of June 1, 1988, by and among Jordan Industries,
          Inc. and its subsidiaries (Incorporated by reference to the Form S-1). The Company
          has entered into InterCompany Notes and Intercompany Tax Sharing Agreements
          with Riverside, AIM, Cambridge, Beemak, Hudson, Scott and Motors and Gears,
          which are identical in all material respects to the notes and agreements incorporated
          by reference in this Registration Statement. Copies of such additional notes and
          agreements have therefore not been included at exhibits in this filing in accordance
          with Instruction 2 to Item 601 of Regulation S-K.
10.3      Stockholders Agreement, dated as of June 1, 1988, by and among Jordan Industries,
          Inc.'s holders of Common Stock (Incorporated by reference to the Form S-1).
10.4      Employment Agreement, dated as of February 25, 1988, between Jordan Industries,
          Inc. and Thomas H. Quinn (Incorporated by reference to the Form S-1).
10.5      Restricted Stock Agreement, dated as of February 25, 1988, between Jordan
          Industries, Inc. and Jonathan F. Boucher (Incorporated by reference to the Form
          S-1).
10.6      Restricted Stock Agreement, dated as of February 25, 1988, between Jordan
          Industries, Inc. and John R. Lowden (Incorporated by reference to the Form S-1).
10.7      Restricted Stock Agreement, dated as of February 25, 1988, between Jordan
          Industries Inc. and Thomas H. Quinn (Incorporated by reference to the Form S-1).
10.8      Stock Purchase Agreement, dated as of June 1, 1988, between Leucadia Investors,
          Inc. and John W. Jordan, II (Incorporated by reference to the Form S-1).
10.9      Zero Coupon Note, dated June 1, 1988, issued by John W. Jordan, II to Leucadia
          Investors, Inc. (Incorporated by reference to the Form S-1).
10.10     Amended and Restated Revolving Credit Agreement, dated as of July 25, 1997, by
          and among JII, Inc., the lenders listed thereto and BankBoston, N.A., as agent
          (Incorporated by reference to the Form S-4).
10.11     Security Agreement, dated as of July 25, 1997, between JII, Inc. and BankBoston,
          N.A., as agent (Incorporated by reference to the Form S-4).
10.12     Revolving Credit Agreement, between Specialty Printing and Labeling and The
          First National Bank of Boston (Incorporated by reference to the Form S-4).
10.13     Amended and Restated Revolving Credit Agreement between Specialty Printing
          and Labeling and The First National Bank of Boston (Incorporated by reference to
          the Form S-4).
</TABLE>

<PAGE>


<TABLE>
<CAPTION>
 EXHIBIT                                       DESCRIPTION                                      PAGE NO.
 -------                                       -----------                                      --------
<S>       <C>                                                                                  <C>
10.14     Revolving Credit Agreement, dated as of July 25, 1997, between JTP Industries,
          Inc., the lenders listed thereto and BankBoston, N.A., as agent (Incorporated by
          reference to Jordan Telecommunication Products, Inc.'s Registration Statement on
          Form S-4 (No. 333-34585)).
10.15     Revolving Credit Agreement between Motors & Gears, Inc. and Bankers Trust
          Company (Incorporated by reference to the Form S-4).
10.16     Properties Services Agreement, dated as of July 25, 1997, between Jordan
          Industries, Inc. and its subsidiaries (Incorporated by reference to the Form S-4).
10.17     Transition Agreements, each dated as of July 25, 1997, between Jordan Industries,
          Inc. and Jordan Telecommunication Products, Inc. and Motors & Gears, Inc.,
          respectively (Incorporated by reference to the Form S-4).
10.18     New Subsidiary Advisory Agreements, each dated as of July 25, 1997, between
          Jordan Industries, Inc. and its subsidiaries (Incorporated by reference to the Form
          S-4).
10.19     New Subsidiary Consulting Agreements, each dated as of July 25, 1997, between
          Jordan Industries, Inc. and its subsidiaries (Incorporated by reference to the Form
          S-4).
10.20     New TJC Management Consulting Agreement, dated as of July 25, 1997, between
          TJC Management Corp. and Jordan Industries, Inc. (Incorporated by reference to
          Jordan Telecommunication Products, Inc.'s Registration Statement on Form S-4
          (No. 333-34585).
10.21     Termination Agreement, dated as of July 25, 1997, between Jordan Industries, Inc.
          and its subsidiaries (Incorporated by reference to the Form S-4).
10.22     Form of Indemnification Agreement between Jordan Industries, Inc. and its
          subsidiaries and their directors (Incorporated by reference to the Form S-4).
12        Statement re: Computation of Ratios.*
22        Subsidiaries of Jordan Industries, Inc. (Incorporated by reference to our 1998
          10-K).
23.1      Consent of Mayer, Brown & Platt (included in the opinion filed as Exhibit 5)
23.2      Consent of Ernst & Young LLP.*
23.3      Consent of Mellen, Smith & Pivoz, P.C.*
23.4      Consent of Coopers & Lybrand S.p.A.*
23.5      Consent of Arthur Andersen LLP.*
23.6      Consent of Arthur Andersen LLP*
23.7      Consent of Moss Adams LLP.*
24        Power of Attorney (included on the signature page in Part II of the Registration
          Statement).
25        Statement of Eligibility of Trustee.*
28        Phantom Share Plan (Incorporated by refernece to our 1989 Form 10-K).
99        Form of Letter of Transmittal.*
</TABLE>

- ----------
*  Filed herewith


<PAGE>

                                                                     EXHIBIT 1.1

                            JORDAN INDUSTRIES, INC.

                                  $155,000,000

                     10-3/8% Series C Senior Notes Due 2007

                               Purchase Agreement

                                 March 17, 1999

                          DONALDSON, LUFKIN & JENRETTE
                             SECURITIES CORPORATION

                           JEFFERIES & COMPANY, INC.

                       BANCBOSTON ROBERTSON STEPHENS INC.



<PAGE>

                                  $155,000,000

                     10-3/8% SERIES C SENIOR NOTES DUE 2007

                           OF JORDAN INDUSTRIES, INC.

                               PURCHASE AGREEMENT

                                                                 March 17, 1999

DONALDSON, LUFKIN & JENRETTE
    SECURITIES CORPORATION
JEFFERIES & COMPANY, INC.
BANCBOSTON ROBERTSON STEPHENS INC.
c/o  Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172

Ladies and Gentlemen:

                  Jordan Industries, Inc., an Illinois corporation (the
"COMPANY"), proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), Jefferies & Company, Inc. and BancBoston
Robertson Stephens Inc. (each, an "INITIAL PURCHASER," and, collectively, the
"INITIAL PURCHASERS") an aggregate of $155,000,000 in principal amount of its
10-3/8% Series C Senior Notes due 2007 (the "SERIES C NOTES"), subject to the
terms and conditions set forth herein. The Series C Notes are to be issued
pursuant to the provisions of an indenture (the "INDENTURE"), to be dated as of
the Closing Date (as defined below), between the Company and U.S. Bank and
Trust National Association, as trustee (the "TRUSTEE"). The Series C Notes and
the Series D Notes (as defined below) issuable in exchange for the Series C
Notes and the Series B Notes (as defined below) are collectively referred to
herein as the "NOTES." Capitalized terms used but not defined herein shall have
the meanings given to such terms in the Indenture.

         1. OFFERING MEMORANDUM. The Series C Notes will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
Company has prepared a preliminary offering memorandum, dated March 5, 1999
(the "PRELIMINARY OFFERING MEMORANDUM") and a final offering memorandum, dated
March 17, 1999 (the "OFFERING Memorandum"), relating to the Series C Notes.

                  Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture, the Series C Notes (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:

                  "THIS SENIOR NOTE (OR ITS PREDECESSOR) HAS NOT BEEN
         REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE


                                       1
<PAGE>

         "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED
         OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
         ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
         SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
         HEREIN, THE HOLDER:

                  (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
                  BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
                  "QIB"), (B) IT HAS ACQUIRED THIS SENIOR NOTE IN AN OFFSHORE
                  TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
                  SECURITIES ACT, OR (C) IT IS AN "INSTITUTIONAL ACCREDITED
                  INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OR
                  REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"),

                  (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
                  SENIOR NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
                  SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
                  BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
                  ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
                  RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
                  REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT, (D) IN A
                  TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
                  SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
                  FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
                  REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
                  THIS SENIOR NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
                  TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
                  PRINCIPAL AMOUNT OF SENIOR NOTES LESS THAN $250,000, AN
                  OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
                  TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
                  ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT (AS BASED UPON AN OPINION
                  OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
                  EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
                  ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
                  OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION,
                  AND

                  (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
                  SENIOR NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
                  SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

                  AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
                  STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
                  REGULATION S UNDER THE SECURITIES ACT. THE 


                                       2
<PAGE>

                  INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE
                  TO REGISTER ANY TRANSFER OF THIS SENIOR NOTE IN VIOLATION OF
                  THE FOREGOING."

         2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, the principal amounts
of Series C Notes opposite the name of such Initial Purchaser on Schedule B
hereto at a purchase price equal to 94.288% of the principal amount thereof
(the "PURCHASE PRICE").

         3. TERMS OF OFFERING. The Initial Purchasers have advised the Company
that the Initial Purchasers will make offers (the "EXEMPT RESALES") of the
Series C Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS" or "ELIGIBLE PURCHASERS"). The Initial
Purchasers will offer the Series C Notes to Eligible Purchasers initially at a
price equal to 96.62% of the principal amount thereof. Such price may be
changed at any time without notice.

                  Holders (including subsequent transferees) of the Series C
Notes will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date,
in substantially the form of Exhibit A hereto, for so long as such Series C
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 the Company's 10-3/8% Series D Senior Notes due 2007 (the "SERIES D NOTES"),
to be offered in exchange for the Series C Notes and the Company's 10-3/8%
Series B Senior Notes due 2007 (the "SERIES B NOTES") (such offer to exchange
being referred to as the "EXCHANGE OFFER") and (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 C Notes and to use their best efforts to cause such Registration
Statements to be declared effective within 150 days after the Closing Date and
usable for the periods specified in the Registration Rights Agreement and to
consummate the Exchange Offer. This Agreement, the Indenture, the Notes, the
Registration Rights Agreement and the Asset Purchase Agreement dated as of
February 26, 1999 between Alma Products Holdings, Inc., a Michigan corporation
and a subsidiary of the Company ("HOLDINGS"), and Alma Piston Company (the
"ALMA ACQUISITION AGREEMENT"), together with the other documents and
instruments referred to therein, are hereinafter sometimes referred to
collectively as the "OPERATIVE DOCUMENTS."

         4.       DELIVERY AND PAYMENT.

                           (a) Delivery of, and payment of the Purchase Price
in immediately available funds for, the Series C Notes shall be made at the
offices of Mayer Brown & Platt in Chicago, Illinois or such other location as
may be mutually acceptable. Such delivery and


                                       3
<PAGE>

payment shall be made at 9:00 a.m. local time, on March 22, 1999 or at such 
other time on the same date or such other date as shall be agreed upon by the 
Initial Purchasers and the Company in writing. The time and date of such 
delivery and the payment for the Series C Notes are herein called the "CLOSING 
DATE."

                           (b) One or more of the Series C Notes in definitive
global form, registered in the name of Cede & Co., as nominee of the Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to
the aggregate principal amount of the Series C Notes (collectively, the "GLOBAL
NOTE"), shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct) in each case with transfer taxes thereon, if any,
duly paid by the Company against payment by the Initial Purchasers of the
Purchase Price thereof by wire transfer in same day funds to the order of the
Company. The Global Note shall be made available to the Initial Purchasers for
inspection not later than 9:30 a.m., New York City time, on the business day
immediately preceding the Closing Date.

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

                           (a) To advise the Initial Purchasers promptly after
obtaining knowledge thereof and, if requested by the Initial Purchasers,
confirm such advice in writing, (i) of the issuance by any state securities
commission of any stop order suspending the qualification or exemption from
qualification of any Series C Notes for offering or sale in any jurisdiction
designated by the Initial Purchasers pursuant to Section 5(e) hereof, or the
initiation of any proceeding by any state securities commission or any other
federal or state regulatory authority for such purpose and (ii) of the
happening of any event during the period referred to in Section 5(c) below that
makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company shall use its reasonable efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any Series C Notes under any state securities or Blue Sky laws
and, if at any time any state securities commission or other federal or state
regulatory authority shall issue an order suspending the qualification or
exemption of any Series C Notes under any 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.

                           (b) To furnish the Initial Purchasers as many copies
of the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchasers may reasonably
request for the time period specified in Section 5(c). Subject to the Initial
Purchasers' compliance with their representations and warranties and agreements
set forth in Section 7 hereof, the Company consents to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
and supplements thereto required pursuant hereto, by the Initial Purchasers in
connection with Exempt Resales.

                           (c) During such period as in the reasonable opinion
of counsel for the Initial Purchasers an Offering Memorandum is required by law
to be delivered in connection with Exempt Resales by the Initial Purchasers and
in connection with market-making activities


                                       4
<PAGE>

of the Initial Purchasers for so long as any Series C Notes are outstanding,
(i) not to make any amendment or supplement to the Offering Memorandum of which
the Initial Purchasers shall not previously have been advised or to which the
Initial Purchasers shall reasonably object within five business days after
being furnished with a copy thereof (unless in the reasonable opinion of
counsel to the Company such amendment or supplement is required by law) and
(ii) to prepare promptly upon the Initial Purchasers' reasonable request, any
amendment or supplement to the Offering Memorandum which may be necessary or
advisable in connection with such Exempt Resales or such market-making
activities (except to the extent any such amendment or supplement would, in the
reasonable opinion of counsel for the Company, render the statements made in
such Offering Memorandum, as proposed to be amended or supplemented,
misleading, in light of the circumstances under which they are to be made).

                           (d) If, during the period referred to in Section
5(c) above, any event shall occur or condition shall exist as a result of
which, in the reasonable opinion of counsel to the Initial Purchasers or the
Company, it becomes necessary to amend or supplement the Offering Memorandum in
order to make the statements therein, in the light of the circumstances when
such Offering Memorandum is delivered to an Eligible Purchaser, not misleading,
or if, in the reasonable opinion of counsel to the Initial Purchasers or the
Company, it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, forthwith to prepare an appropriate amendment
or supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchasers such number of
copies thereof as the Initial Purchasers may reasonably request.

                           (e) Prior to the sale of all Series C Notes pursuant
to Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchasers and counsel to the Initial Purchasers in connection with the
registration or qualification of the Series C Notes for offer and sale to the
Initial Purchasers and pursuant to Exempt Resales under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchasers may request and to
continue such registration or qualification in effect so long as reasonably
required for Exempt Resales and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation in any jurisdiction in which
it is not now so subject.

                           (f) For three years from the date hereof, to furnish
to the Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company or any of its subsidiaries to their
security holders or furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company or any of
its subsidiaries are listed and such other publicly available information
concerning the Company or its subsidiaries as the Initial Purchasers may
reasonably request.

                           (g) So long as any of the Series C Notes remain
outstanding and during any period in which the Company is not subject to
Section 13 or 15(d) of the Securities


                                       5
<PAGE>

Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to make available to any
holder of Series C Notes in connection with any sale thereof and any Eligible
Purchaser of such Series C Notes from such holder, the information ("RULE 144A
INFORMATION") required by Rule 144A(d)(4) under the Act.

                           (h) Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, to pay or cause
to be paid all expenses incident to the performance of the obligations of the
Company under this Agreement, including: (i) the fees, disbursements and
expenses of counsel to the Company and accountants of the Company in connection
with the sale and delivery of the Series C Notes to the Initial Purchasers and
pursuant to Exempt Resales, and all other fees and expenses in connection with
the preparation, printing, filing and distribution of the Preliminary Offering
Memorandum, the Offering Memorandum and all amendments and supplements to any
of the foregoing (including financial statements), including the mailing and
delivering of copies thereof to the Initial Purchasers in the quantities
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Series C Notes to the Initial Purchasers and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, if any, (iii)
all costs of printing or producing this Agreement, the other Operative
Documents and any other agreements or documents in connection with the
offering, purchase, sale or delivery of the Series C Notes, (iv) all costs of
printing or producing and delivering any preliminary and supplemental Blue Sky
memoranda and other agreements, memoranda, correspondence and other documents
prepared and delivered in connection therewith, (v) the cost of printing
certificates representing the Series C Notes, (vi) all expenses and listing
fees in connection with the application for quotation of the Series C Notes in
the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System - PORTAL ("PORTAL"), (vii) the fees and expenses of the
Trustee and the Trustee's counsel in connection with the Indenture and the
Notes, (viii) the costs and charges of any transfer agent, registrar or
depository (including DTC), (ix) any fees charged by rating agencies for the
rating of the Notes, and (x) all costs and expenses of the Exchange Offer and
any Registration Statement, as set forth in the Registration Rights Agreement.

                           (i) To use its best efforts to effect the inclusion
of the Series C Notes in PORTAL.

                           (j) To comply with all of its agreements set forth
in the representation letters of the Company to DTC relating to the approval of
the Notes by DTC for "book-entry" transfer.

                           (k) During the period beginning on the date hereof
and continuing to and including the Closing Date, not to offer, sell, contract
to sell or otherwise transfer or dispose of any debt securities of the Company
or any of its subsidiaries or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Company or any of its subsidiaries
substantially similar to the Notes (other than (i) the Notes and (ii)
commercial paper issued in the ordinary course of business), without the prior
written consent of the Initial Purchasers.

                           (l) 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 C Notes to the Initial
Purchasers or pursuant to Exempt Resales in a manner that


                                       6
<PAGE>

would require the registration of any such sale of the Series C Notes under the
Act.

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

                           (n) To cause the Exchange Offer to be made in the
appropriate form to permit Series D Notes registered pursuant to the Act to be
offered in exchange for the Series C Notes and to comply in all material
respects with all applicable federal and state securities laws in connection
with the Exchange Offer.

                           (o) To comply in all material respects with all of
its agreements set forth in the Registration Rights Agreement.

                           (p) To use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
it prior to the Closing Date and to satisfy in all material respects all
conditions precedent to the delivery of the Series C Notes.

         6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. As of
the date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchasers, jointly and severally, that:

                           (a) The Preliminary Offering Memorandum and the
Offering Memorandum do not, and any supplement or amendment to them will not,
contain any untrue statement of a material fact or omit to state any material
fact (except in the case of the Preliminary Offering Memorandum, for pricing
and financial terms intentionally left blank) required to be stated therein or
necessary to make the statements therein, in the 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 in or
omissions from the Preliminary Offering Memorandum or the Offering Memorandum
(or any supplement or amendment 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
Preliminary Offering Memorandum or the Offering Memorandum, 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 Act, has been issued.

                           (b) Each of the Company and its subsidiaries, has
been duly organized and is validly existing and in good standing under the laws
of its jurisdiction of organization and has the requisite power and authority
to carry on its business as described in the Preliminary Offering Memorandum
and the Offering Memorandum and to own, lease and operate its properties as
described in the Offering Memorandum, and each is duly qualified, in good
standing and authorized 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 (i) the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, or
of the Company and its Restricted Subsidiaries, taken as a whole, or (ii) the
ability of the Company or any subsidiary of the Company to perform its
obligations under this Agreement or the other 


                                       7
<PAGE>

Operative Documents (a "MATERIAL ADVERSE EFFECT").

                           (c) All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights.

                           (d) The entities listed on Schedule A hereto are the
only subsidiaries, direct or indirect, of the Company. All of the outstanding
shares of capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and except
as otherwise noted on Schedule A, all of such shares are owned by the Company,
directly or indirectly through one or more subsidiaries, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any nature
(each, a "LIEN").

                           (e) This Agreement has been duly authorized,
executed and delivered by the Company.

                           (f) The Indenture has been duly authorized by the
Company. On the Closing Date, the Indenture will have been validly executed and
delivered by the Company. When the Indenture has been duly executed and
delivered by the Company (assuming due authorization, execution and delivery by
the Trustee), the Indenture will be a valid and binding agreement of the
Company, enforceable against the Company 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 of law or in equity).
On the Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or
"TRUST INDENTURE ACT"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.

                           (g) The Series C Notes have been duly authorized
and, on the Closing Date, will have been validly executed and delivered by the
Company. When the Series C Notes have been issued, executed and authenticated
in accordance with the provisions of the Indenture and delivered to and paid
for by the Initial Purchasers in accordance with the terms of this Agreement,
the Series C Notes will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Company, enforceable 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 of
law or in equity). On the Closing Date, the Series C Notes will conform in all
material respects as to legal matters to the description thereof contained in
the Offering Memorandum.

                           (h) On the Closing Date, the Series D Notes will
have been duly authorized by the Company. When the Series D Notes are issued,
executed and authenticated in accordance with the terms of the Exchange Offer
and the Indenture, the Series D Notes will be entitled to the benefits of the
Indenture and will be the 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,



                                       8
<PAGE>

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 of law or in equity).

                           (i) The Registration Rights Agreement has been duly
authorized by the Company. On the Closing Date, the Registration Rights
Agreement will have been duly executed and delivered by the Company. When the
Registration Rights Agreement has been duly executed and delivered by the
Company (assuming due authorization, execution and delivery by the Initial
Purchasers), the Registration Rights Agreement will be a valid and binding
agreement of the Company, enforceable against the Company 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 of law or in
equity), and (iii) limited by securities laws prohibiting or limiting the
availability of, and public policy against, indemnification or contribution.

                           (j) Each of the Operative Documents, when executed
and delivered, will conform in all material respects to the descriptions
thereof contained in the Offering Memorandum.

                           (k) Neither the Company nor any of its subsidiaries
is (i) in violation of its respective charter or by-laws or (ii) other than
defaults that are not likely to, singly or in the aggregate, result in a
Material Adverse Effect, in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or their respective property is bound.

                           (l) The execution, delivery and performance of this
Agreement and the other Operative Documents by the Company, compliance by the
Company with all provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries, or any
indenture, loan agreement, mortgage, lease or other agreement or instrument
that is material to the Company and its subsidiaries, taken as a whole, or the
Company and its Restricted Subsidiaries, taken as a whole, to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property, (iv) result in
the imposition or creation of (or the obligation to create or impose) a Lien
under, any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, or (v) result in the termination,
suspension or revocation of any Authorization (as defined below) of the Company
or any of its 


                                       9
<PAGE>

subsidiaries or result in any other impairment of the rights of the holder of 
any such Authorization.

                           (m) All representations and warranties of Holdings
in the Alma Acquisition Agreement are true and correct, and the Alma
Acquisition Agreement and the transactions contemplated thereby have been duly
authorized by Holdings.

                           (n) There are no legal or governmental proceedings
pending or, to the Company's knowledge, threatened to which the Company, or any
of its subsidiaries is or could be a party or to which any of their respective
property is or could be subject, which might result, singly or in the
aggregate, in a Material Adverse Effect.

                           (o) Neither the Company nor any of its subsidiaries
has violated any foreign, federal, state or local law or regulation relating to
the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
any provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or any provisions of the Foreign Corrupt Practices Act or
the rules and regulations promulgated thereunder, except for such violations
which, singly or in the aggregate, would not have a Material Adverse Effect.

                           (p) Except as disclosed in the Offering Memorandum,
there are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or
any Authorization, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.

                           (q) Each of the Company and its subsidiaries has
such permits, licenses, consents, exemptions, franchises, authorizations and
other approvals (each, an "AUTHORIZATION") of, and has made all filings with
and notices, to all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease,
license and operate its respective properties and to conduct its business,
except where the failure to have any such Authorization or to make any such
filing or notice would not, singly or in the aggregate, have a Material Adverse
Effect. Each such Authorization is valid and in full force and effect and each
of the Company and its subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and, to the
Company's knowledge, no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other material impairment of the rights of
the holder of any such Authorization; and such Authorizations contain no
restrictions that are burdensome to the Company or any of its subsidiaries;
except where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.



                                      10
<PAGE>

                           (r) The accountants, the firms of Ernst & Young LLP,
Blackman Kallick Bartelstein, LLP, Mellon, Smith & Pivoz, P.C., McFarland &
Alton, P.C. and PriceWaterhouseCoopers, LLP who are independent public
accountants with respect to the Company and Arthur Andersen LLP, the
independent public accountants for the Alma Products Division of Alma Piston
Company, have certified the financial statements and supporting schedules
included in the Preliminary Offering Memorandum and the Offering Memorandum, as
required by the Act and the Exchange Act.

                           (s) The historical financial statements, together
with related schedules and notes forming part of the Offering Memorandum (and
any amendment or supplement thereto), present fairly in all material respects
the financial position, results of operations and changes in financial position
of the Company and its subsidiaries, on both a consolidated basis and for the
Company and its Restricted Subsidiaries, on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such 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; and the other
financial and statistical information and data set forth in the Offering
Memorandum (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company and its
subsidiaries.

                           (t) The pro forma financial statements included in
the Preliminary Offering Memorandum and the Offering Memorandum have been
prepared on a basis consistent with the historical financial statements of the
Company and its subsidiaries and give effect to assumptions used in preparation
thereof on a reasonable basis and in good faith and present fairly the proposed
transactions contemplated by the Preliminary Offering Memorandum and the
Offering Memorandum. The other pro forma financial and statistical information
and data included in the Offering Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with the pro forma
financial statements.

                           (u) The Company is not and, after giving effect to
the offering and sale of the Series C Notes and the application of the net
proceeds thereof as described in the Offering Memorandum, will not be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended.

                           (v) There are no contracts, agreements or
understandings between the Company and any person that conflict with or will in
any way impair the rights granted to holders of Series C Notes and Series B
Notes under the Registration Rights Agreement.

                           (w) None of this Agreement, the issuance or sale of
the Series C Notes, or any of the other transactions contemplated by the
Offering Memorandum will violate 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.

                           (x) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Company or any of its subsidiaries
that it is considering imposing) any condition (financial 


                                      11
<PAGE>

or otherwise) on the Company's or any such subsidiary's retaining any rating 
assigned to the Company or any such subsidiary, any securities of the Company 
or any such subsidiary or (ii) has indicated to the Company or any of its 
subsidiaries that it is considering (a) the downgrading, suspension, or 
withdrawal of, or any review for a possible change that does not indicate the 
direction of the possible change in, any rating so assigned or (b) any change 
in the outlook for any rating of the Company or any of its subsidiaries or any
securities of the Company or any of its subsidiaries.

                           (y) Since the respective dates as of which
information is given in the Offering Memorandum other than as set forth in the
Offering Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there has not occurred any
material adverse change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, or of the Company and its Restricted
Subsidiaries, taken as a whole, (ii) there has not been any material adverse
change in the capital stock or in the long-term debt of the Company or any of
its subsidiaries and (iii) neither the Company nor any of its subsidiaries has
incurred any liability or obligation, direct or contingent that is material to
the Company and its subsidiaries, taken as a whole, or the Company and its
Restricted Subsidiaries, taken as a whole.

                           (z) Each of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its date, contains all the information specified
in, and meeting the requirements of, Rule 144A(d)(4) under the Act.

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

                           (bb) No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the Company
or any of its respective representatives (other than the Initial Purchasers, as
to whom the Company make no representation) in connection with the offer and
sale of the Series C Notes contemplated hereby, 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 C Notes have
been issued and sold by the Company within the six-month period immediately
prior to the date hereof.

                           (cc) Prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the TIA,
assuming (i) that the Eligible Purchasers who buy the Series C Notes in the
Exempt Resales are QIBs or persons whom the Initial Purchasers, and any person
acting on their behalf, reasonably believe are QIBs and (ii) the accuracy of
the Initial Purchasers' representations contained herein regarding the absence
of general solicitation in connection with the sale of the Series C Notes to
the Initial Purchasers and the Exempt Resales.



                                      12
<PAGE>

                           (dd) No registration under the Act of the Series C
Notes is required for the sale of the Series C Notes to the Initial Purchasers
as contemplated hereby or for the Exempt Resales assuming (i) that the Eligible
Purchasers who buy the Series C Notes in the Exempt Resales are QIBs or persons
whom the Initial Purchasers, and any person acting on their behalf, reasonably
believe are QIBs and (ii) the accuracy of the Initial Purchasers'
representations contained herein regarding the absence of general solicitation
in connection with the sale of the Series C Notes to the Initial Purchasers and
the Exempt Resales.

                           (ee) Each certificate signed by any officer of the
Company and delivered to the Initial Purchasers or counsel for the Initial
Purchasers shall be deemed to be a representation and warranty by the Company
to the Initial Purchasers as to the matters covered thereby.

                  The Company acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.

         7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Company, and agrees that:

                           (a) Such Initial Purchaser is a QIB with such
knowledge and experience in financial and business matters as is necessary in
order to evaluate the merits and risks of an investment in the Series C Notes.

                           (b) Such Initial Purchaser (A) is not acquiring the
Series C Notes with a view to any distribution thereof or with any present
intention of offering or selling any of the Series C 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 and (B) will be reoffering and
reselling the Series C Notes only to QIBs or persons whom such Initial
Purchaser, and any person acting on its behalf, reasonably believe are QIBs in
reliance on the exemption from the registration requirements of the Act
provided by Rule 144A.

                           (c) Such Initial Purchaser agrees that no form of
general solicitation or general advertising (within the meaning of Regulation D
under the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series C Notes
pursuant hereto, 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.

                           (d) Such Initial Purchaser agrees that, in
connection with Exempt Resales, such Initial Purchaser will solicit offers to
buy the Series C Notes only from, and will offer to sell the Series C Notes
only to, QIBs or persons whom such Initial Purchaser, and any person acting on
its behalf, reasonably believe are QIBs that agree that (x) the Series C Notes
purchased by them may be resold, pledged or otherwise transferred within the
time period referred to under Rule 144(k) (taking into account the provisions
of Rule 144(d) under the Act, if


                                      13
<PAGE>

applicable) under the Act, as in effect on the date of the transfer of such
Series C Notes, only (I) to the Company or any of its subsidiaries, (II) to a
person whom the seller reasonably believes is a QIB purchasing for its own
account or for the account of a QIB in a transaction meeting the requirements
of Rule 144A under the Act, (III) in an offshore transaction (as defined in
Rule 902 under the Act) meeting the requirements of Rule 904 of the Act, (IV)
in a transaction meeting the requirements of Rule 144 under the Act, (V) to an
IAI that, prior to such transfer, furnishes the Trustee a signed letter
containing certain representations and agreements relating to the transfer of
such Series C Notes (the form of which can be obtained from the Trustee) and,
if such transfer is in respect of an aggregate principal amount of Series C
Notes less than $250,000, an opinion of counsel acceptable to the Company that
such transfer is in compliance with the Act, (VI) in accordance with another
exemption from the registration requirements of the Act (and based upon an
opinion of counsel acceptable to the Company) or (VII) pursuant to an effective
registration statement and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (y) they will deliver to each person to whom such Series C
Notes or an interest therein is transferred a notice substantially to the
effect of the foregoing.

                  Such Initial Purchaser acknowledges that the Company and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.

         8.       INDEMNIFICATION.

                           (a) The Company agrees to indemnify and hold harmless
the Initial Purchasers, their directors, their officers and each person, if any,
who controls such Initial Purchasers 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 (including, without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in (i) the
Offering Memorandum (or any amendment or supplement thereto) or the Preliminary
Offering Memorandum or (ii) any Rule 144A Information provided by the Company in
connection with an Exempt Resale to an Eligible Purchaser 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 any Initial Purchaser furnished in writing to the
Company (or reviewed and approved in writing) by such Initial Purchaser;
provided, however, that the foregoing indemnity agreement with respect to any
Preliminary Offering Memorandum shall not inure to the benefit of any Initial
Purchaser who failed to deliver a Final Offering Memorandum, as then amended or
supplemented, with or prior to the delivery of written confirmation of the sale
by such Initial Purchaser (so long as the Final Offering Memorandum and any
amendment or supplement thereto was provided by the Company to the several
Initial Purchasers in the requisite quantity and on a timely basis to permit
proper delivery with or prior to such written


                                      14
<PAGE>

confirmation) to the person asserting any losses, claims, damages, liabilities
or judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum, 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 not misleading,
if such material misstatement or omission or alleged material misstatement or
omission was cured in the Final Offering Memorandum, as so amended or
supplemented; provided, further, that the Company shall not be liable to any
person hereunder for any losses, claims, damages, liabilities or judgments that
(i) arise from the gross negligence or willful misconduct of such person or
(ii) result from the use by such person of the Preliminary Offering Memorandum
or the Offering Memorandum when the Company has notified the Initial Purchasers
in writing that the Preliminary Offering Memorandum or the Offering Memorandum,
as applicable, contains an untrue statement or omission of a fact or
circumstance requiring an amendment to the Offering Memorandum.

                           (b) The Initial Purchasers, severally and not
jointly, agree to indemnify and hold harmless the Company and its respective
directors and officers and each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company
to the same extent as the foregoing indemnity from the Company to the Initial
Purchasers but only with reference, in the case of each Initial Purchaser, to
information relating to the Initial Purchasers furnished in writing to the
Company (or reviewed and approved in writing) by such Initial Purchaser,
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum.

                           (c) In case any action shall be commenced involving
any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b) (the "INDEMNIFIED
PARTY"), the indemnified party shall promptly notify the person against whom
such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party shall assume the defense of such action, including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of all fees and expenses of such counsel, as incurred (except that in
the case of any action in respect of which indemnity may be sought pursuant to
both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchasers). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been reasonably advised by such counsel that there may be one or
more legal defenses reasonably available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising 


                                     15
<PAGE>

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 indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Donaldson, Lufkin & Jenrette Securities Corporation, in the case of the parties
indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action effected with the written consent of the indemnifying party. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
indemnity or contribution may be sought hereunder (whether or not the
indemnified party is a party to such pending or threatened action) unless such
settlement, compromise or judgment (i) includes an unconditional release, in
form and substance satisfactory to the indemnified party, from all liability on
claims that are the subject matter of such pending or threatened action
(whether or not the indemnified party is a party to such pending or threatened
action) and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.

                           (d) To the extent the indemnification provided for
in this Section 8 is unavailable to an indemnified party or insufficient 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, severally and not
jointly, on the other hand from the offering of the Series C Notes or (ii) if
the allocation provided by clause 8(d)(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 8(d)(i) above but also the relative fault of the
Company, on the one hand, and the Initial Purchasers, severally and not
jointly, on the other hand, 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 benefits
received by the Company, on the one hand and the Initial Purchasers, severally
and not jointly, on the other hand, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Series C Notes
(after underwriting discounts and commissions, but before deducting expenses)
received by the Company, and the total discounts and commissions received
severally and not jointly by the Initial Purchasers bear to the total price to
investors of the Series C Notes, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the Company, on
the one hand, and the Initial Purchasers, severally and not jointly, on the
other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company, on the one hand, or an Initial Purchaser, on the other hand, 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 Section 8(d) were
determined by pro rata allocation 


                                       16
<PAGE>

(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 amount
paid or payable by an indemnified party as a result of 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 matter or action
referred to in the immediately preceding paragraph. Notwithstanding the
provisions of this Section 8, the Initial Purchasers shall not be required to
contribute any amount in excess of the amount by which the total discounts and
commissions received by such Initial Purchasers exceeds the amount of any
damages which such Initial Purchasers have 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 C Notes purchased by
each of the Initial Purchasers hereunder and not joint.

                           (e) The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

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

                           (a) All the representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects (other than representations and warranties with materiality
qualifiers, which shall be true and correct as written) on the Closing Date
with the same force and effect as if made on and as of the Closing Date.

                           (b) On or after the date hereof, (i) there shall not
have occurred any downgrading, suspension or withdrawal of, nor shall any
notice have been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change in,
any rating of the Company or any of its subsidiaries or any securities of the
Company or any of its subsidiaries (including, without limitation, the placing
of any of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any "nationally
recognized statistical rating organization" as such term is defined for
purposes of Rule 436(g)(2) under the Act, (ii) there shall not have occurred
any change, nor shall any notice have been given of any potential or intended
change, in the outlook for any rating of the Company or any of its subsidiaries
or any securities of the Company or its subsidiaries by any such rating
organization and (iii) no such rating organization shall have given notice that
it has assigned (or is considering assigning) a lower rating to the Notes than
that on which the Notes were marketed.

                           (c) Since the respective dates as of which
information is given in the Offering Memorandum other than as set forth in the
Offering Memorandum (exclusive of any


                                     17
<PAGE>

amendments or supplements thereto subsequent to the date of this Agreement),
(i) there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken
as a whole, or of the Company and its Restricted Subsidiaries, taken as a
whole, (ii) there shall not have been any change or any development involving a
prospective change in the capital stock or in the long-term debt of the Company
or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(c)(i),
9(c)(ii) or 9(c)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Series C Notes on the terms and
in the manner contemplated in the Offering Memorandum.

                           (d) You shall have received on the Closing Date a
certificate dated the Closing Date, signed by the President and the Treasurer,
a principal financial officer of the Company, confirming the matters set forth
in Sections 6(y), 9(a) and 9(b) and stating that the Company has complied with
all the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied on or prior to the Closing Date.

                           (e) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Mayer Brown & Platt, special counsel for the Company, in the
Form of Exhibit B hereto.

                           (f) You shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Initial Purchasers), dated the
Closing Date, of Sonnenschein Nath & Rosenthal, special counsel for the
Company, in the Form of Exhibit C hereto.

                  The opinions of Mayer Brown & Platt and Sonnenschein Nath &
Rosenthal described in Sections 9(e) and 9(f) shall be rendered to you at the
request of the Company and shall so state therein. In giving such opinion with
respect to the matters covered by the last clause of the opinion described in
Section 9(e), Mayer Brown & Platt may state that its opinion and belief are
based upon and limited to its participation in the preparation of the Offering
Memorandum and any amendments or supplements thereto and review and discussion
of the contents thereof, but are without independent check or verification
except as specified.

                           (g) The Initial Purchasers shall have received on
the Closing Date an opinion, dated the Closing Date, of Latham & Watkins,
counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.

                           (h) The Initial Purchasers shall have received, at
the time this Agreement is executed and at the Closing Date, letters dated the
date hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from Ernst & Young LLP, Moss & Adams
LLP, PriceWaterhouseCoopers, LLP and Arthur Andersen LLP, independent public
accountants, containing the information and statements of the type ordinarily
included in accountants' "comfort letters" to the Initial Purchasers with
respect to the financial statements and certain financial information contained
in the Offering Memorandum or consolidated with such financial statements and
financial information, as the case may be.



                                      18
<PAGE>

                           (i) The Series C Notes shall have been approved by
the NASD for trading and duly listed in PORTAL.

                           (j) The Initial Purchasers shall have received a
counterpart, conformed as executed, of the Indenture which shall have been
entered into by the Company and the Trustee.

                           (k) The Company shall have executed the Registration
Rights Agreement and the Initial Purchasers shall have received an original
copy thereof, duly executed by the Company.

                           (l) The Company shall not have failed at or prior to
the Closing Date to perform or comply in all material respects with any of the
agreements herein contained and required to be performed or complied with by
the Company at or prior to the Closing Date.

                           (m) All conditions precedent to the closing of the
transactions contemplated by the Alma Acquisition Agreement shall have been
satisfied or waived, and such closing shall occur on the Closing Date
simultaneously with the closing of the transactions contemplated by this
Agreement.

         10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.

                  This Agreement may be terminated at any time on or prior to
the Closing Date by the Initial Purchasers by written notice to the Company if
any of the following has occurred: (i) any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic conditions or in the financial markets of the United States or
elsewhere that, in the Initial Purchasers' judgment, is material and adverse
and, in the Initial Purchasers' judgment, makes it impracticable to market the
Series C Notes on the terms and in the manner contemplated in the Offering
Memorandum, (ii) the suspension or material limitation of trading in securities
or other instruments on the New York Stock Exchange, the American Stock
Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq National Market or
limitation on prices for securities or other instruments on any such exchange
or the Nasdaq National Market, (iii) the suspension of trading of any
securities of the Company or any of its subsidiaries on any exchange or in the
over-the-counter market, (iv) 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
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, or of the Company and its
Restricted Subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) 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.

                  If on the Closing Date any one or more of the Initial
Purchasers shall fail or refuse to purchase the Series C Notes which it or they
have agreed to purchase hereunder on such date 


                                       19
<PAGE>

and the aggregate principal amount of the Series C Notes which such defaulting
Initial Purchaser or Initial Purchasers, as the case may be, agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Series C Notes to be purchased on such date by all Initial
Purchasers, each non-defaulting Initial Purchaser shall be obligated severally,
in the proportion which the principal amount of the Series C Notes set forth
opposite its name in Schedule B bears to the aggregate principal amount of the
Series C Notes which all the non-defaulting Initial Purchasers, as the case may
be, have agreed to purchase, or in such other proportion as you may specify, to
purchase the Series C Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase on
such date; provided that in no event shall the aggregate principal amount of
the Series C Notes which any Initial Purchaser has agreed to purchase pursuant
to Section 2 hereof be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such principal amount of the Series C Notes without the
written consent of such Initial Purchaser. If on the Closing Date any Initial
Purchaser or Initial Purchasers shall fail or refuse to purchase the Series C
Notes and the aggregate principal amount of the Series C Notes with respect to
which such default occurs is more than one-tenth of the aggregate principal
amount of the Series C Notes to be purchased by all Initial Purchasers and
arrangements satisfactory to the Initial Purchasers and the Company for
purchase of such the Series C 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 and the Company. In any such case which does
not result in termination of this Agreement, either you or 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 of any such Initial Purchaser under
this Agreement.

         11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, Arbor Lake
Centre, 1751 Lake Cook Road, Deerfield, Illinois 60015, and the phone number is
(847) 945-5591 and (ii) if to the Initial Purchasers, c/o Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department, or in any case to such other address as the
person to be notified may have requested in writing.

                  The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company and the Initial
Purchasers 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 C Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchasers, the officers or directors of the Initial Purchasers, any person
controlling an Initial Purchaser, the Company, the officers or directors of the
Company or any person controlling the Company, (ii) acceptance of the Series C
Notes and payment for them hereunder and (iii) termination of this Agreement.

                  If for any reason the Series C Notes are not delivered by or
on behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company agrees to
reimburse the Initial Purchasers for all out-of-pocket expenses (including the
fees and disbursements of counsel) incurred by them. 


                                       20
<PAGE>

Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(h) hereof.
The Company also agrees to reimburse each Initial Purchaser and its officers,
directors and each person, if any, who controls such Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act for any
and all fees and expenses (including without limitation the fees and expenses
of counsel) incurred by them in connection with enforcing their rights under
this Agreement (including without limitation its rights under Section 8).

                  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, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and its
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 C Notes from the Initial Purchasers merely
because of such purchase.

                  This Agreement shall be governed and construed in accordance
with the laws of the State of New York.

                  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 among the Company and the Initial Purchasers.

                                          Very truly yours,

                                          JORDAN INDUSTRIES, INC., an Illinois 
                                          corporation


                                          By: /s/ Gordon L. Nelson
                                             --------------------------------
                                          Name: Gordon L. Nelson
                                               ------------------------------
                                          Title: Senior Vice President and
                                                 Treasurer
                                                -----------------------------



DONALDSON, LUFKIN & JENRETTE
  SECURITIES CORPORATION


By: /s/ Edward Biggins
   ---------------------------------
Name: Edward Biggins
     -------------------------------
Title: Vice President
      ------------------------------



                                      21
<PAGE>

JEFFERIES & COMPANY, INC.

By: /s/ Andrew R. Whittaker
   ------------------------------------
Name: Andrew R. Whittaker
     ----------------------------------
Title: Executive Vice President
      ---------------------------------

BANCBOSTON ROBERTSON STEPHENS INC.

By: /s/ Laura A. Koch
   ------------------------------------
Name: Laura A. Koch
     ----------------------------------
Title: Vice President
      ---------------------------------




<PAGE>

                                    SCHEDULE A

                                   SUBSIDIARIES

J.I. Finance Company
JII, Inc.
Welcome Home, Inc. (66%)
         Home Again Stores, Inc.
JI Properties, Inc.

RESTRICTED SUBSIDIARIES

Consumer and Industrial Products
         DACCO, Incorporated
                  ABC Transmission Parts Warehouse, Inc.
                  Borg Manufacturing
                  DACCO International, Inc.
                  DACCO/Detroit of Alabama, Inc.
                  DACCO/Detroit of Arizona, Inc.
                  DACCO/Detroit of Chattanooga, Inc.
                  DACCO/Detroit of Colorado, Inc.
                  DACCO/Detroit of Florida, Inc.
                  DACCO/Detroit of Indiana, Inc.
                  DACCO/Detroit of Kentucky, Inc.
                  DACCO/Detroit of Memphis, Inc.
                  DACCO/Detroit of Michigan, Inc.
                  DACCO/Detroit of Minnesota, Inc.
                  DACCO/Detroit of Missouri, Inc.
                  DACCO/Detroit of Nebraska, Inc.
                  DACCO/Detroit of Nevada, Inc.
                  DACCO/Detroit of New Jersey, Inc.
                  DACCO/Detroit of North Carolina, Inc.
                  DACCO/Detroit of Ohio, Inc.
                  DACCO/Detroit of Oklahoma, Inc.
                  DACCO/Detroit of Pennsylvania, Inc.
                  DACCO/Detroit of South Carolina, Inc.
                  DACCO/Detroit of Texas, Inc.
                  DACCO/Detroit of Virginia, Inc.
                  DACCO/Detroit of West Virginia, Inc.
                  Detroit Transmission Products Co.
                  Nashville Transmission Parts, Inc.
         Alma Products Holdings, Inc.
         Riverside Book and Bible House, Incorporated
                  World Bible Publishers, Inc.
         Detroit Transmission Products Co.


<PAGE>

         Nashville Transmission Parts, Inc.
         The Old Imperial Electric Company
         The Old Scott Motors Company
         The Old Gear Research, Inc.
         Parsons Precision Products, Inc.
         Cape Craftsmen, Inc.
         Cho-Pat, Inc.
Specialty Printing and Labeling
         JII/Sales Promotion Associates, Inc.
         SPL Holdings Inc. (83%)
                  Sales Promotion Associates, Inc.
                  Valmark Industries, Inc.
                  Pamco Printed Tape & Label, Inc.
                  Seaboard Folding Box Corporation
Jordan Specialty Plastics, Inc.
         Beemak Plastics
         Sate-Lite Manufacturing Company
         Deflecto Corporation
                  Deflecto Canada Ltd.
                  Rolite Plastics


UNRESTRICTED SUBSIDIARIES

Jordan Telecommunication Products, Inc.
         JTP Industries, Inc.
                  Dura-Line Corporation
                           Dura-Line Mexico S.A. de C.V.
                           Dura-Line (Israel) LTD (33%)
                           Dura-Line International, Inc.
                                    Dura-Line Limited (U.K.)
                                    Dura-Line CT s.r.o. (75%)
                                    Dura-Line Shanghai Plastics Co., Ltd.
                                    Bharti Dura-Line Private Limited
                                    Dura-Line AGM, S.L.
                                    Dura-Line (Malaysia) Sdn. Bhd.
                  AIM Electronics Corporation
                  Cambridge Products Corporation
                   Johnson Components, Inc.
                  Vitelec Electronics Ltd.
                  Viewsonics, Inc.
                           Shanghai Viewsonics Electronics Co., Ltd.
                           Adapt Communication Supply Co. S.-Fl. Inc.
                  Bond Holdings, Inc.
                           Bond Technologies (80%)
                           K & S Sheet Metal Holdings, Inc.
                                    K & S Sheet Metal, Inc.


<PAGE>

                           Cable Spec, Ltd.
                           Balance Manufacturing Services, Inc. (80%)
                  Northern Technologies Holdings, Inc.
                           Northern Technologies, Inc.
                                    HMC Holdings, Inc.
                  Old Jordan Telecommunications Product Group, Inc.
                  Jordan Telecommunications Product Group-Europe, Inc.
                  LoDan West, Inc.
         Engineered Endeavors, Inc.
         Telephone Services Holdings, Inc.
                  Telephone Services Inc. of Florida
                           Opto-Tech Industries, Inc.

Motors and Gears Holdings, Inc.
         Motors and Gears, Inc.
                  Motors and Gears Industries, Inc.
         The Imperial Electric Company
                  Gear Research, Inc.
         Merkel-Korff Industries, Inc.
         FIR Group Holdings, Inc.
                  Motors and Gears Amsterdam B.V.
                  FIR Group Holdings, Italia, S.r.l.
                  Construgioni, Italian Motor Electtrica
                  Selini Sistemi S.p.A.
                  T.E.A. Electromeccanica
                  Automazione, S.r.l.
         Electrical Design and Control Company
         Motion Holdings, Inc.
                  Motion Control Engineering, Inc.
         Advanced D.C. Holdings, Inc.
                  Advanced D.C. Motors Inc.
                           Electric Vehicle Components, Ltd. (50%)
                           Sermed S.A.R.L. (99%)
                           R & A Machine Tool Corporation (20%)
                           Advanced D.C. Motors GmbH (90%)

OTHER SUBSIDIARIES

         J.I. Finance Company
         JII, Inc.
         Welcome Home, Inc.
                  Home Again Stores, Inc.
         JI Properties, Inc.

                  The common stock of Motors and Gears Holdings, Inc., Jordan
Telecommunication Products and Jordan Specialty Plastics, Inc. is owned by
certain 


<PAGE>

shareholders and affiliates of the Company and management of the respective 
companies, and the Company's investment in these entities is solely through its
ownership of the M & G Junior Preferred Stock, JTP Junior Preferred Stock and 
JSP Junior Preferred Stock (each as defined in the Offering Memorandum).

                  The outstanding shares of capital stock of certain
subsidiaries of the Company are subject to various liens and encumbrances
pursuant to the Credit Agreement (as defined in the Offering Memorandum).




<PAGE>

                                   SCHEDULE B

                                                             Principal Amount
          Initial Purchaser                                  of Notes

          Donaldson, Lufkin & Jenrette
            Securities Corporation                           $ 84,545,000
          Jefferies & Company, Inc.                          $ 56,364,000
          BancBoston Robertson Stephens Inc.                 $ 14,091,000

          Total                                              $155,000,000


<PAGE>

                                    EXHIBIT A

                     FORM OF REGISTRATION RIGHTS AGREEMENT

<PAGE>


                                   EXHIBIT B

                         OPINION OF MAYER BROWN & PLATT

<PAGE>


                                   EXHIBIT C

                    OPINION OF SONNENSCHEIN NATH & ROSENTHAL


<PAGE>

           INDENTURE, dated as of March 22, 1999, between Jordan Industries,
Inc., an Illinois corporation (the "Company"), and U.S. Bank Trust National
Association, 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 3/8%
Series C Senior Notes due 2007 (the "Series C Notes") and the Company's 10 3/8%
Series D Senior Notes due 2007 (the "Series D Notes" and, together with the
Series C Notes, the "Securities").


                                   ARTICLE 1.
                         DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

Section 1.1.      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 Person 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 (other than (i)
the sale or disposition of any Restricted Investment, (ii) the sale or lease of
inventory, equipment, receivables or other assets in the ordinary course of
business, (iii) Receivables Financings, (iv) any sale or transfer of properties
or assets by the Company or a Restricted Subsidiary to the Company or any other
Restricted Subsidiary, (v) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company as permitted pursuant to
Section 5.1 or (vi) Restricted Payments permitted by Section 4.5).

           "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.


<PAGE>

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

           "Capital Lease Obligations" means any obligation that is required to
be classified and accounted for as a capitalized lease for financial purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP.

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

           "Cash Equivalents" means (a) securities with maturities of one year
or less from the date of acquisition Issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit, time deposits, overnight bank deposits, bankers acceptances and
repurchase agreements of any commercial bank that has capital and surplus in
excess of $100,000,000 having maturities of one year or less from the date of
acquisition, (c) commercial paper of an issuer rated at least A-2 by Standard &
Poor's Corporation or P-2 by Moody's Investor Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, and (d) money
market accounts or funds with or Issued by Qualified Issuers.

           "Cash Flow" means, for any given period and Person, the sum of,
without duplication, Consolidated Net Income, plus

                  (i)      the portion of Net Income attributable to the
                           minority interests in its Subsidiaries, to the
                           extent not included in calculating Consolidated Net
                           Income, plus

                  (ii)     provision for taxes based on income or profits to
                           the extent such income or profits were included in
                           computing Consolidated Net Income, plus

                  (iii)    Consolidated Interest Expense, to the extent
                           deducted in computing Consolidated Net Income, plus

                  (iv)     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

                  (v)      noncapitalized transaction costs incurred in
                           connection with financings, acquisitions or
                           dispositions (including, but not limited to,
                           financing and refinancing fees, to the extent
                           deducted in computing Consolidated Net Income), plus

                  (vi)     all depreciation and all other noncash charges
                           (including, without limitation, those charges
                           relating to purchase accounting adjustments to the
                           extent deducted in computing Consolidated Net
                           Income), plus



                                       2
<PAGE>

                  (vii)    interest income, to the extent such income was not
                           included in computing Consolidated Net Income, plus

                  (viii)   all dividend payments on Preferred Stock (whether or
                           not paid in cash), to the extent deducted in
                           computing Consolidated Net Income, plus

                  (ix)     any extraordinary or nonrecurring charge or expense
                           arising out of the implementation of SFAS 106 or
                           SFAS 109 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.

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

           "Change of Control" means the occurrence of any of the following:
(i) the Jordan Stockholders shall fail to be the beneficial owners, directly or
indirectly, of at least 22% of the outstanding shares of common stock of the
Company on a fully-diluted basis (provided that the Issuance of any shares of
the Company's common stock pursuant to a primary public offering shall not be
considered to have diluted such percentage ownership); or (ii) the Company is
merged or consolidated with another corporation, or all or substantially all of
the assets of the Company are sold, leased or conveyed to another Person, and
the Jordan Stockholders are not the beneficial owners, directly or indirectly,
immediately following such transaction, of at least 22% of the Equity Interests
(which are entitled to vote in the election of directors or other governing
body) of the corporation surviving any such consolidation or merger, or the
Person to which such sale, lease or conveyance shall have been made; or (iii)
the Company is liquidated or dissolved.

           "Commission" means the Securities and Exchange Commission.



                                       3
<PAGE>

           "Company" means Jordan Industries, Inc. until a successor replaces
it in accordance with Article 5 and thereafter means the successor, and shall
include any and all other obligors on the Securities.

           "Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, President or Senior Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary and delivered to the Trustee.

           "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 noncash 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 (with
respect to Sections 4.7 and 5.1), 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
Plan, the Prior Offering and the Offering 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 noncapitalized 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 of
                           deferred financing costs or other financial


                                       4
<PAGE>

                           recapitalization charges in connection with
                           redeeming or retiring any Indebtedness prior to its
                           stated maturity, and

                  (E)      any nonrecurring charge arising out of the
                           restructuring or consolidation of the operations of
                           any Person(s) or business either alone or together
                           with the Company or any Restricted Subsidiary,
                           incurred within 18 months following the acquisition
                           of such Person(s) or business by the Company or any
                           Restricted Subsidiary;

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 accumulated 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:

           (i)   the amortization of all write-ups of inventory,

           (ii) the amortization of all intangible assets (including
amortization of goodwill, debt and financing costs, and Incentive
Arrangements),

           (iii) any noncapitalized transaction costs incurred in connection
with financings, acquisitions or divestitures (including, but not limited to,
financing and refinancing fees),

           (iv) 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,

           (v) any extraordinary or nonrecurring charges or expenses relating
to any premium or penalty paid, write-off of deferred financing costs or other
financial recapitalization charges incurred in connection with redeeming or
retiring any Indebtedness prior to its stated maturity,

           (vi) any nonrecurring cash charge arising out of the restructuring
or consolidation of the operations of any Person(s) or business either alone or
together with the Company or any Restricted Subsidiary, incurred within 18
months following the acquisition of such Person(s) or business by the Company
or any Restricted Subsidiary, and

           (vii) any extraordinary or nonrecurring charge arising out of the
implementation of SFAS 106 or SFAS 109;

provided, however, that for purposes of determining Consolidated Net Worth
(with respect to Section 5.1), Consolidated Net Worth shall be calculated on a
Pro Forma Basis.



                                       5
<PAGE>

           "Corporate Trust Office" shall be at the address of the Trustee
specified in Section 10.2 or such other address as the Trustee may give notice
to the Company.

           "Credit Agreement" means the credit agreement, dated July 25, 1997
entered into by JII, Inc. and certain of its Subsidiaries, the lenders named
therein in their capacities as lenders thereunder and BankBoston, N.A., 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 4.7, or adding Subsidiaries of
JII, Inc. 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.

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

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

           "Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and thereafter "Depositary" shall mean or include such successor.

           "Discount Debentures" means the 11 3/4% Senior Subordinated Discount
Debentures due 2009 of the Company.

           "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 Securities.

           "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.

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



                                       6
<PAGE>

           "Exchange Offer" means the offer by the Company to Holders of Series
C Notes to exchange their Series C Notes for Series D Notes pursuant to the
Registration Rights Agreement.

           "GAAP" means generally accepted accounting principles, consistently
applied, as of the Issue Date. All financial and accounting determinations and
calculations under this Indenture shall be made in accordance with GAAP.

           "Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
in the form of the Security 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
in, or otherwise to establish financial hedges in respect of, exchange rates,
currency rates or interest rates.

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

           "Incentive Arrangements" means any earn-out agreements, stock
appreciation rights, "phantom" stock plans, employment agreements,
noncompetition 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, Jefferies & Company, Inc. and BancBoston Robertson Stephens Inc.

           "Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy or similar case or proceeding, or any reorganization, receivership,
liquidation, dissolution or 


                                       7
<PAGE>

winding up of the Company, whether voluntary or involuntary, or (ii) any 
assignment for the benefit of creditors or any other marshaling of assets and 
liabilities of the Company.

           "Issue" means to 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.

           "Issue Date" means the date on which Securities are first Issued
pursuant to the Indenture.

           "JI Properties Services Agreement" means the JI Properties Services
Agreement, between the Company and JI Properties, Inc., as in effect on the
Issue Date.

           "Jordan Stockholders" means John W. Jordan, II, and/or his heirs,
executors and administrators, and/or The John W. Jordan, II Revocable Trust,
The Jordan Family Trust and/or any other trust established by John W. Jordan,
II whose beneficiaries are John W. Jordan, II and/or his lineal descendants or
other relatives.

           "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).

           "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are not required to be open.

           "Liquidated Damages" has the meaning set out in the Registration
Rights Agreement.

           "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:



                                       8
<PAGE>

         (i)      the cash expenses of such Asset Sale (including, without
                  limitation, the payment of principal, premium, if any, and
                  interest on Indebtedness required to be paid as a result of
                  such Asset Sale (other than the Securities and the Series B
                  Notes) and legal, accounting, management, 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 of 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 postemployment benefit liabilities and
                  liabilities related to environmental matters or against any
                  indemnification obligations associated with such transaction.

           "Nonrestricted Subsidiary" means Motors and Gears Holdings, Inc. and
its Subsidiaries, Jordan Telecommunication Products, Inc. and its Subsidiaries,
JI Properties, Inc. and its Subsidiaries, and any other Subsidiary of the
Company other than a Restricted Subsidiary.

           "Obligations" means, with respect to any Indebtedness, all
principal, interest, premium, 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 offering and sale of the Securities as
contemplated by the Offering Memorandum.

           "Offering Memorandum" means the offering memorandum, dated March 17,
1999, relating to the Company's offering and placement of the Securities.

           "Officer" means the President, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary or any Vice President of the Company.

           "Officers' Certificate" means a certificate signed by two Officers.



                                       9
<PAGE>

           "Opinion of Counsel" means a written opinion in form and substance
satisfactory to, and from legal counsel who is acceptable to, the Trustee (such
counsel may be an employee of or counsel to the Company or the Trustee).

           "Other Permitted Indebtedness" means:

         (i)     Indebtedness of the Company and its Restricted Subsidiaries
                 existing as of the Issue Date and all related Obligations as
                 in effect on such date (including the Series B Notes, the
                 Discount Debentures and the Securities);

         (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 of
                 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) so 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, and

                  (C)      in the case of Refinancing Indebtedness for
                           subordinated Indebtedness, such Refinancing
                           Indebtedness shall be subordinated to the Securities
                           at least to the same extent as the 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
                  Issued in connection with making permitted Restricted
                  Payments under clause (iv) or (v) of Section 4.5(b) and
                  guarantees by the Company of Capital Lease Obligations of the
                  Company's Nonrestricted Subsidiaries up to the aggregate
                  amount permitted by clause (xv) of Section 4.5(b);



                                      10
<PAGE>

         (vi)     Indebtedness of any Nonrestricted Subsidiary; 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;

         (vi)     Indebtedness of the Company and its Restricted Subsidiaries
                  under Hedging Obligations;

         (vii)    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 and that such Indebtedness
                  is nonrecourse to the Company and any other Restricted
                  Subsidiary and the Company and such other Restricted
                  Subsidiaries have no Obligations with respect to such
                  Indebtedness;

         (x)      guarantees by Restricted Subsidiaries of Indebtedness of any
                  Restricted Subsidiary if the Indebtedness so guaranteed is
                  permitted under this Indenture;

         (xi)     guarantees by a Restricted Subsidiary of Indebtedness of the
                  Company if the Indebtedness so guaranteed is permitted under
                  this Indenture and the Securities are guaranteed by such
                  Restricted Subsidiary to the extent required by Section 4.15;

         (xii)    guarantees by the Company of Indebtedness of any Restricted
                  Subsidiaries if the Indebtedness so guaranteed is permitted
                  under this Indenture;

         (xiii)   Indebtedness of the Company and its Restricted Subsidiaries
                  Issued in connection with performance, surety, statutory,
                  appeal or similar bonds in the ordinary course of business;
                  and

         (xiv)    Indebtedness of the Company and its Restricted Subsidiaries
                  Issued 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.

            "Permitted Liens" means:

            (a)  with respect to the Company and the Restricted Subsidiaries,

                  (1)      Liens for taxes, assessments, governmental charges
                           or claims which are being contested in good faith by
                           appropriate proceedings promptly 


                                      11
<PAGE>

                           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;

                  (2)      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;

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

                  (4)      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);

                  (5)      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;

                  (6)      Liens (including extensions, renewals and
                           replacements thereof) upon property acquired (the
                           "Acquired Property") after the Issue Date, 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 4.7;



                                      12
<PAGE>

                  (7)      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;

                  (8)      judgment and attachment Liens not giving rise to an
                           Event of Default;

                  (9)      leases or subleases granted to others not
                           interfering in any material respect with the
                           business of the Company or any of its Restricted
                           Subsidiaries;

                  (10)     Liens encumbering customary initial deposits and
                           margin deposits, and other Liens incurred in the
                           ordinary course of business and that are within the
                           general parameters customary in the industry, in
                           each case securing Indebtedness under Hedging
                           Obligations;

                  (11)     Liens encumbering deposits made to secure
                           obligations arising from statutory, regulatory,
                           contractual or warranty requirements of the Company
                           or its Restricted Subsidiaries;

                  (12)     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;

                  (13)     any interest or title of a lessor in property
                           subject to any Capital Lease Obligation or operating
                           lease;

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

                  (15)     Liens existing on the Issue Date and any extensions,
                           renewals or replacements thereof; and

                  (16)     any Lien granted to the Trustee under this Indenture
                           and any substantially equivalent Lien granted to any
                           trustee or similar institution under any indenture
                           for senior Indebtedness permitted by the terms of
                           this Indenture;

           (b)   with respect to the Restricted Subsidiaries,

                  (1)      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;

                  (2)      Liens securing Indebtedness Issued by Restricted
                           Subsidiaries if such Indebtedness is permitted by
                           (A) Section 4.7(a), (B) Section 4.7(b)(i), (b)(ii),
                           (b)(iii) or (b)(iv), or (C) clause (i), (iii) (to
                           the extent the Indebtedness subject to such
                           Refinancing Indebtedness was subject to Liens),
                           (vii), (ix) or (x) of the definition of Other
                           Permitted Indebtedness;



                                      13
<PAGE>

                  (3)      Liens securing intercompany Indebtedness Issued by
                           any Restricted Subsidiary to the Company or another
                           Restricted Subsidiary;

                  (4)      additional Liens at any one time outstanding with
                           respect to assets of the Restricted Subsidiaries the
                           aggregate fair market value of which does not exceed
                           $10,000,000 (the fair market value of any such asset
                           is to be determined on the date such Lien is granted
                           on such asset); and

                  (5)      Liens securing guarantees by Restricted Subsidiaries
                           of Indebtedness Issued by the Company if such
                           guarantees are 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; and

           (c)   with respect to the Company,

                  (1)      Liens securing Indebtedness Issued by the Company
                           under the Credit Agreement if such Indebtedness is
                           permitted by Section 4.7 (including, but not limited
                           to, Indebtedness Issued by the Company under the
                           Credit Agreement pursuant to Section 4.7(b)(i)
                           and/or (iv));

                  (2)      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 is subject to Liens) or
                           (vii) of the definition of Other Permitted
                           Indebtedness; and

                  (3)      Liens securing guarantees by the Company of
                           Indebtedness Issued by Restricted Subsidiaries if
                           (x) such Indebtedness is permitted by Section 4.7
                           (including, but not limited to, Indebtedness Issued
                           by Restricted Subsidiaries under the Credit
                           Agreement pursuant to Sections 4.7(b)(i) and/or (v))
                           and (y) such guarantees are permitted by clause
                           (xii) (but only in respect of Indebtedness Issued by
                           the Restricted Subsidiaries under the Credit
                           Agreement pursuant to Section 4.7) of the definition
                           of Other Permitted Indebtedness;

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 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 pursuant to Section 4.7 and any
permitted Refinancing Indebtedness of such Indebtedness and (B) guarantees by
the Company of Indebtedness Issued by Restricted Subsidiaries under the Credit
Agreement pursuant to Section 4.7 and any permitted Refinancing Indebtedness of
such Indebtedness.



                                      14
<PAGE>

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

           "Plan" means the Company's 1997 Recapitalization and Reposition Plan
as referenced in the Offering Memorandum and all agreements, instruments and
transactions pursuant thereto.

           "Postpetition Interest" means all interest accrued or accruing after
the commencement of any Insolvency or Liquidation Proceeding in accordance with
and at the contract rate (including, without limitation, any rate applicable
upon default) specified in the agreement or instrument creating, evidencing or
governing any Indebtedness which is not subordinated in right of payment to any
other Indebtedness of the Company, whether or not, pursuant to applicable law
or otherwise, the claim for such interest is allowed as a claim in such
Insolvency or Liquidation Proceeding.

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

           "Prior Offering" means the offer and sale of the Series B Notes.

           "Pro Forma Basis" means, for purposes of determining Consolidated
Net Income, Cash Flow, and Consolidated Interest Expense in connection with the
Cash Flow Coverage Ratio (including, in connection with Section 4.5, the
incurrence of Indebtedness pursuant to Section 4.7(a) and Consolidated Net
Worth for purposes of Section 5.1), 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 related restructuring charges in respect of restructurings,
consolidations, compensation or head-count reductions or other cost savings
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 which is 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 determined 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 


                                      15
<PAGE>

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.

           "Qualified Issuer" means any commercial bank (a) which has capital
and surplus in excess of $100,000,000, and (b) the outstanding long-term debt
securities of which are rated at least A-2 by Standard & Poor's Corporation or
P-2 by Moody's Investor Service, Inc., or carry an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.

           "Qualified Stock" means, with respect to any Person, Capital Stock
of such Person other than Disqualified Stock.

           "QIB" shall mean "qualified institutional buyer" as defined in Rule
144A.

           "Receivables" means, with respect to any person or entity, all of
the following property and interests in property of such person or entity,
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 or other disposition of
Receivables arising in the ordinary course of business or (ii) the sale or
other disposition of Receivables arising 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 a Subsidiary of the Company that is
exclusively engaged in Receivables Financings and activities reasonably related
thereto.

           "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 Credit Agreement, and (iii)
any additional Indebtedness Issued to pay premiums and fees in connection with
clauses (i) and (ii).



                                      16
<PAGE>

           "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, by and between the Company, and the
Initial Purchasers as such agreement may be amended, modified or supplemented
from time to time.

           "Restricted Investment" means any capital contribution to, or other
debt or equity investment in (other than certain investments in marketable
securities and other negotiable instruments permitted by this Indenture), any
Nonrestricted Subsidiary or any Person other than a Restricted Subsidiary or
the Company, provided that Restricted Investments will not include any
Incentive Arrangements. 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) included in
the original Restricted Investment, plus all additions thereto, without any
adjustments for increases or decreases in value or write-ups, write-downs or
write-offs with respect to such Restricted Investment. Notwithstanding the
foregoing, the assignment by the Company and the assumption by a Nonrestricted
Subsidiary of operating leases of the Company shall not be deemed a Restricted
Investment so long as the Obligations of the Company thereunder are not
increased thereby.

           "Restricted Securities" means Securities that bear or are required
to bear the legends set forth in Exhibit A hereto.

           "Restricted Subsidiary" means:

         (i)      any Subsidiary of the Company existing on the Issue Date,
                  other than a Nonrestricted Subsidiary, and

         (ii)     any other Subsidiary of the Company formed, acquired or
                  existing after the Issue Date that is designated as a
                  "Restricted Subsidiary" by the Company pursuant to a
                  resolution approved by a majority of the Board of Directors,

provided that any Restricted Subsidiary that is organized under the laws of a
foreign jurisdiction and whose stock or ownership interests are sold or
transferred to a Nonrestricted Subsidiary may, by resolution approved by a
majority of the Board of Directors, be thereafter designated and considered as
a Nonrestricted Subsidiary.

           "Restructuring Charges" means any charges or expenses in respect of
restructuring or consolidating any business, operations or facilities, any
compensation or head-count 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.

           "Rule 144A" means Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.

           "SAR Agreements" means any agreements of the Company with regard to
stock appreciation rights in effect on the Issue Date.

           "Securities" has the meaning set forth in the preamble to this
Indenture.



                                      17
<PAGE>

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

           "Series B Notes" means the Company's 10 3/8% Series B Senior Notes
due 2007, which were issued on October 3, 1997 in a registered exchange offer
for the Company's 10 3/8% Series A Senior Notes due 2007.

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

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

           "Significant Subsidiary" means (i) 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 and (ii) any other Restricted Subsidiary of the
Company that is material to the business, earnings, prospects, assets or
condition, financial or otherwise, of the Company and its Restricted
Subsidiaries taken as a whole.

           "Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

           "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).

           "Subsidiary Advisory Agreements" means the Subsidiary Advisory
Agreements, between the Company and each of its Restricted and Nonrestricted
Subsidiaries, as in effect on the Issue Date.

           "Subsidiary Consulting Agreements" means the Subsidiary Consulting
Agreements, between the Company and each of its Restricted and Nonrestricted
Subsidiaries, as in effect on the Issue Date.

           "Tax Sharing Agreement" means the tax sharing agreement between the
Company and each of its Subsidiaries, as in effect on the Issue Date.

           "TJC Management Consulting Agreement" means the TJC Management
Consulting Agreement, between the Company and TJC Management Corporation, as in
effect on the Issue Date.



                                      18
<PAGE>

           "Transition Agreement" means the transition agreement between the
Company and Motors and Gears Holdings, Inc. and the transition agreement
between the Company and Jordan Telecommunication Products, Inc., as in effect
on the Issue Date.

           "TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss.77aaa-77bbbb) as in effect on the Issue Date.

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

           "Trust Officer" means the chairman of the board, the president or
any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.

           "U.S. Government Obligations" means direct obligations of the United
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.

           "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 required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.

Section 1.2.      OTHER DEFINITIONS.

                                                                 Defined in
                  Term                                           Section

         "Affiliate Transaction".................................      4.8
         "Asset Sale Disposition Date"...........................     4.14
         "Asset Sale Offer Amount" ..............................     4.14
         "Asset Sale Trigger Date" ..............................     4.14
         "Change of Control Trigger Date"........................     4.13
         "covenant defeasance option"............................      8.1
         "DTC"...................................................      2.3
         "Disposition"...........................................      5.1
         "Event of Default"......................................      6.1
         "Excess Proceeds".......................................     4.14
         "legal defeasance option"...............................      8.1
         "Notice of Default".....................................      6.1
         "Offer".................................................      3.8
         "Other Indebtedness"....................................     4.15
         "Other Indebtedness Guarantee"..........................     4.15
         "Paying Agent"..........................................      2.3
         "Purchase Date".........................................      3.8


                                      19
<PAGE>

         "Registrar".............................................      2.3
         "Restricted Payments"...................................      4.5
         "Successor Corporation".................................      5.1
         "Trustee Expenses"......................................      6.8


Section 1.3.      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 in a Commission
rule under the TIA have the meanings so assigned to them therein.

Section 1.4.      RULES OF CONSTRUCTION.

           Unless the context otherwise requires:

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

                  (2) an accounting term not otherwise defined has the meaning
                      assigned to it 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 SECURITIES

Section 2.1.      FORM AND DATING.

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

           The Securities will be Issued (i) in the form of a Global Security,
substantially in the form of Exhibit A attached hereto (including the text
referred to in footnotes 1 and 2 thereto), and (ii) in the form of a
Certificated Security, substantially in the form of Exhibit A attached hereto
(excluding the text referred to in footnotes 1 and 2 thereto). The Global
Security shall represent the aggregate amount of outstanding Securities from
time to time endorsed thereon; provided that the aggregate amount of
outstanding Securities represented thereby may from time to time be 


                                      20
<PAGE>

reduced or increased, as appropriate, to reflect exchanges and redemptions. Any
endorsement of the Global Security to reflect the amount of any increase or
decrease in the amount of outstanding Securities represented thereby shall be
made by the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.6 hereof.

           The terms and provisions contained in the Securities 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.

Section 2.2.      EXECUTION AND AUTHENTICATION.

           Two Officers shall sign the Securities for the Company by manual or
facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security shall
nevertheless be valid.

           A Security shall not be valid until authenticated by the manual
signature of the Trustee. The Trustee's signature shall be conclusive evidence
that the Security has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Securities shall be
substantially as set forth in Exhibit A.

           The Trustee shall upon a Company Order authenticate Securities for
original Issuance up to an aggregate principal amount of $155,000,000. The
aggregate principal amount of Securities outstanding at any time may not exceed
$155,000,000 except as provided in Section 2.7.

           The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities 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.

Section 2.3.      REGISTRAR AND PAYING AGENT.

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



                                      21
<PAGE>

           The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities. The Company or any of its subsidiaries may act as Paying Agent,
Registrar or co-registrar. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation in accordance with Section 7.7.

           The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to Global Securities. The Trustee shall act
as custodian for the Depositary with respect to the Global Securities.

Section 2.4.      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 Securities or for the payment of principal of, premium, if any,
and interest on, the Securities, and will notify the Trustee of any Default by
the Company in providing the Paying Agent with sufficient funds to (i) purchase
Securities tendered pursuant to a Change of Control Offer, (ii) redeem
Securities called for redemption, or (iii) make any payment of principal,
premium or interest due on the Securities. While any such Default continues,
the Trustee may require the Paying Agent to pay all money it holds to the
Trustee. The Company at any time may require the Paying Agent to pay all money
it holds to the Trustee. 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 2.5.      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
Holders and shall otherwise comply with ss. 312(a) of the TIA. 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 of the names and addresses of Holders including
the aggregate principal amount of the Securities each holds, and the Company
shall otherwise comply with ss. 312(a) of the TIA.

Section 2.6.      TRANSFER AND EXCHANGE.

                  (a) Transfer and Exchange of Certificated Securities. When
Certificated Securities are presented by a Holder to the Registrar or
co-registrar with a request (1) to register the transfer of the Certificated
Securities or (2) to exchange such Certificated Securities for an equal
principal amount of Certificated Securities 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 that any Certificated
Securities so presented shall (A) have been duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the 


                                      22
<PAGE>

Registrar duly executed by such Holder or by his attorney duly authorized in 
writing; and (B) in the case of a Restricted Security such request shall be 
accompanied by the following additional documents:

                  (i)      if such Restricted Security is being delivered to
                           the Registrar or co-registrar by a Holder for
                           registration in the name of such Holder, without
                           transfer, a certification to that effect (in
                           substantially the form of Exhibit B attached
                           hereto); or

                  (ii)     if such Restricted Security is being transferred to
                           a QIB in accordance with Rule 144A or pursuant to an
                           effective registration statement under the
                           Securities Act, a certification to that effect (in
                           substantially the form of Exhibit B attached
                           hereto); or

                  (iii)    if such Restricted Security is being transferred to
                           an accredited "institutional investor," as defined
                           in Rule 501(a)(1), (2), (3) or (7) under the
                           Securities Act, a transferee letter of
                           representations (in substantially the form attached
                           hereto as Exhibit C); or

                  (iv)     if such Restricted Security is being transferred in
                           reliance on another exemption from the registration
                           requirements of the Securities Act, a certification
                           to that effect (in substantially the form of Exhibit
                           B attached hereto) and an opinion of counsel
                           reasonably acceptable to the Company and the
                           Registrar to the effect that such transfer is in
                           compliance with the Securities Act.

                  (b) Transfer of a Certificated Security for a Beneficial
Interest in a Global Security. A Certificated Security may be exchanged for a
beneficial interest in a Global Security only upon receipt by the Trustee of a
Certificated Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with

                  (i)      written instructions directing the Trustee to make
                           an endorsement on the Global Security to reflect an
                           increase in the aggregate principal amount of the
                           Securities represented by the Global Security; and

                  (ii)     if such Certificated Security is a Restricted
                           Security, a certification (in substantially the form
                           of Exhibit B attached hereto) to the effect that
                           such Certificated Security is being transferred to a
                           QIB in accordance with Rule 144A;

in which case the Trustee shall cancel such Certificated Security and cause the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Security is then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.

                  (c) Transfer and Exchange of Global Securities. The transfer
and exchange of 


                                      23
<PAGE>

a Global Security or beneficial interests therein shall be effected through the
Depositary in accordance with this Indenture and the procedures of the
Depositary 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 Security
for a Certificated Security. Upon receipt by the Trustee of written transfer
instructions (or such other form of instructions as is customary for the
Depositary), from the Depositary (or its nominee) on behalf of any Person
having a beneficial interest in a Global Security, the Trustee shall, in
accordance with the standing instructions and procedures existing between the
Depositary and the Trustee, cause the aggregate principal amount of Global
Securities to be reduced accordingly and, following such reduction, the Company
shall execute and the Trustee shall authenticate and deliver to the transferee
a Certificated Security in the appropriate principal amount; provided that in
the case of a Restricted Security such instructions shall be accompanied by the
following additional documents:

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

                  (ii)     if such beneficial interest is being transferred to
                           a QIB in accordance with Rule 144A or pursuant to an
                           effective registration statement under the
                           Securities Act, a certification to that effect (in
                           substantially the form of Exhibit B attached
                           hereto); or

                  (iii)    if such Restricted Security is being transferred to
                           an accredited "institutional investor," as defined
                           in Rule 501(a)(1), (2), (3) or (7) under the
                           Securities Act, a transferee letter of
                           representations (in substantially the form attached
                           as hereto as Exhibit C); or

                  (iv)     if such beneficial interest is being transferred in
                           reliance on another exemption from the registration
                           requirements of the Securities Act, a certification
                           to that effect (in substantially the form of Exhibit
                           B attached hereto) and an opinion of counsel
                           reasonably acceptable to the Company and to the
                           Registrar to the effect that such transfer is in
                           compliance with the Securities Act.

           Certificated Securities Issued in exchange for a beneficial interest
in a Global Security shall be registered in such names and in such authorized
denominations as the Depositary shall instruct the Trustee.

                  (e) Transfer and Exchange of Global Securities.
Notwithstanding any other provision of this Indenture, the Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary; provided that
if



                                      24
<PAGE>

                  (i)      the Depositary notifies the Company that the
                           Depositary is unwilling or unable to continue as
                           Depositary and a successor Depositary 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 Certificated Securities under this
                           Indenture,

then the Company shall execute, and the Trustee shall authenticate and deliver,
Certificated Securities in an aggregate principal amount equal to the aggregate
principal amount of the Global Security in exchange for such Global Security.

                  (f) Cancellation and/or Adjustment of Global Securities. At
such time as all beneficial interests in the Global Security have either been
exchanged for Certificated Securities, redeemed, repurchased or canceled, the
Global Security shall be returned to or retained and canceled by the Trustee.
At any time prior to such cancellation, if any beneficial interest in the
Global Security is exchanged for Certificated Securities, redeemed, repurchased
or canceled, the aggregate principal amount of Securities represented by such
Global Security shall be reduced accordingly and an endorsement shall be made
on such Global Security by the Trustee to reflect such reduction.

                  (g) General Provisions Relating to Transfers and Exchanges.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Certificated Securities and Global
Securities at the Registrar's request. All Certificated Securities and Global
Securities Issued upon any registration of transfer or exchange of Certificated
Securities or Global Securities shall be legal, valid and binding obligations
of the Company, evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Certificated Securities or Global Securities
surrendered upon such registration of transfer or exchange.

           No service charge shall be made to a Holder for any registration of
transfer or exchange (except as otherwise expressly permitted herein), 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 exchanges
(without transfer to another Person) pursuant to Section 2.10, 3.6, 3.8 or 9.5,
which the Company shall pay).

           The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of any selection of Securities for redemption
under Section 3.2 hereof and ending at the close of business on the day of
selection; or (ii) register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part; or (iii) register the transfer of or
exchange a Security between a record date and the next succeeding interest
payment date.

           Prior to due presentment for registration of transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Security is registered 


                                      25
<PAGE>

as the absolute owner of such Security for all purposes, and neither the
Trustee, any Agent nor the Company shall be affected by notice to the contrary.

                  (h) Exchange of Series C Notes for Series D Notes. The Series
C Notes may be exchanged for Series D Notes pursuant to the terms of the
Exchange Offer. The Trustee and Registrar shall make the exchange as follows:

           The Company shall present the Trustee with an Officers' Certificate
certifying the following:

                  (A)      upon Issuance of the Series D Notes, the
                           transactions contemplated by the Exchange Offer have
                           been consummated; and

                  (B)      the principal amount of Series C Notes properly
                           tendered in the Exchange Offer that are represented
                           by Global Securities and the principal amount of
                           Series C Notes properly tendered in the Exchange
                           Offer that are represented by Certificated
                           Securities, the name of each Holder of such
                           Certificated Securities, the principal amount at
                           maturity properly tendered in the Exchange Offer by
                           each such Holder and the name and address to which
                           Certificated Securities for Series D Notes shall be
                           registered and sent for each such Holder.

           The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series D Notes have been
registered under Section 5 of the Securities Act and this Indenture has been
qualified under the TIA and (y) with respect to the matters set forth in
Section 6(c)(ix)(A)(2) of the Registration Rights Agreement and (iii) a Company
Order, shall authenticate (A) a Global Security for Series D Notes in aggregate
principal amount equal to the aggregate principal amount of Series C Notes
represented by a Global Security indicated in such Officers' Certificate as
having been properly tendered and (B) Certificated Securities representing
Series D Notes registered in the names of and in the principal amounts
indicated in such Officers' Certificate.

           If the principal amount at maturity of the Global Security for the
Series D Notes is less than the aggregate principal amount at maturity of the
Global Security for the Series C Notes, the Trustee shall make an endorsement
on such Global Security for Series C Notes indicating a reduction in the
principal amount at maturity represented thereby.

           The Trustee shall deliver such Certificated Securities for Series D
Notes to the Holders thereof as indicated in such Officers' Certificate.

Section 2.7.      REPLACEMENT SECURITIES.

           If any mutilated Security is surrendered to the Trustee, or if the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall Issue and the
Trustee, upon the Company's written order signed by two Officers, shall
authenticate a replacement Security if the Trustee's requirements are met. If
the Trustee or 


                                      26
<PAGE>

the Company requires, 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 which
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge for its expenses in replacing a Security.

           Every replacement Security is an additional Obligation of the
Company.

Section 2.8.      OUTSTANDING SECURITIES.

           The Securities outstanding at any time are all the Securities the
Trustee has authenticated except for those it has canceled, those delivered to
it for cancellation, and those described in this Section as not outstanding.

           If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that a bona
fide purchaser holds the replaced Security.

           If the entire principal of and premium, if any, and accrued interest
on any Security is considered paid under Section 4.1, it ceases to be
outstanding and interest on it ceases to accrue.

           Subject to Section 2.9, a Security does not cease to be outstanding
because the Company or an Affiliate holds the Security.

Section 2.9.      TREASURY SECURITIES.

           In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
that the Company or an Affiliate own shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Securities that the Company or an Affiliate
offers to purchase or acquire 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 Securities passes to the Company or such
Affiliate, as the case may be.

Section 2.10.     TEMPORARY SECURITIES.

           Until Certificated Securities are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of Certificated Securities but
may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee, upon receipt of the Company's written order signed by two Officers,
shall authenticate Certificated Securities in exchange for temporary
Securities. Until such exchange, temporary Securities shall be entitled to the
same rights, benefits and privileges as Certificated Securities.



                                      27
<PAGE>

Section 2.11.     CANCELLATION.

           The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, any co-registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange, replacement, payment (including all Securities called for
redemption and all Securities accepted for payment pursuant to an Offer) or
cancellation, and the Trustee shall cancel all such Securities and shall
destroy all canceled Securities (subject to the Exchange Act's record retention
requirements) and deliver a certificate of their destruction to the Company
unless by a Company Order, the Company shall direct that canceled Securities be
returned to it. The Company may not Issue new Securities to replace Securities
that have been canceled by the Trustee or that have been delivered to the
Trustee for cancellation. If the Company or an Affiliate acquires any
Securities (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 Securities unless and until such Securities are delivered
to the Trustee for cancellation.

Section 2.12.     DEFAULTED INTEREST.

           If the Company defaults in a payment of interest on the Securities,
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 Securities and
Section 4.1. The Company shall, with the Trustee's consent, fix or cause to be
fixed each such special record date and payment date. At least 15 days before
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 such interest to be paid.

Section 2.13.     RECORD DATE.

           The record date for purposes of determining the identity of Holders
of Securities 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 ss. 316(c) of the TIA.

Section 2.14.     CUSIP NUMBER.

           A "CUSIP" number will be printed on the Securities, 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 Securities and that reliance may be placed only
on the other identification numbers printed on the Securities. The Company will
promptly notify the Trustee of any change in the CUSIP number.

Section 2.15.     LEGENDS.

                  (a) Except as permitted by subsection (b) or (c) hereof, each
Security shall bear legends relating to restrictions on transfer pursuant to
the securities laws in substantially the 


                                      28
<PAGE>

form set forth on Exhibit A attached hereto.

                  (b) Upon any sale or transfer of a Restricted Security
(including any Restricted Security represented by a Global Security) pursuant
to Rule 144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act:

                  (i)      in the case of any Restricted Security that is a
                           Certificated Security, the Registrar shall permit
                           the Holder thereof to exchange such Restricted
                           Security for a Certificated Security that does not
                           bear the legends required by subsection (a) above;
                           and

                  (ii)     in the case of any Restricted Security represented
                           by a Global Security, such Restricted Security shall
                           not be required to bear the legends required by
                           subsection (a) above but shall continue to be
                           subject to the provisions of Section 2.6(c) hereof;
                           provided that with respect to any request for an
                           exchange of a Restricted Security that is
                           represented by a Global Security for a Certificated
                           Security that does not bear the legends required by
                           subsection (a) 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.

                  (c) The Company shall issue and the Trustee shall
authenticate Series D Notes in exchange for Series C Notes accepted for
exchange in the Exchange Offer. The Series D Notes shall not bear the legends
required by subsection (a) above unless the Holder of such Series C Notes is
either (A) a broker-dealer who purchased such Series C Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption under
the Securities Act, (B) a Person participating in the distribution of the
Series C Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of
the Company.


                                   ARTICLE 3.
                                   REDEMPTION

Section 3.1.      NOTICES TO TRUSTEE.

           If the Company elects to redeem Securities pursuant to Section 3.7,
it shall furnish to the Trustee, at least 10 but not more than 15 days before
notice of redemption is to be mailed by the Company to the Holders, an
Officers' Certificate stating that the Company has elected to redeem Securities
pursuant to Section 3.7, the date notice of redemption is to be mailed to
Holders, the redemption date, the aggregate principal amount of Securities to
be redeemed, the redemption price for such Securities and the amount of accrued
and unpaid interest on such Securities 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 Securities held by, each Holder.



                                      29
<PAGE>

           If the Company is required to offer to purchase Securities 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
Securities the Company is offering to purchase pursuant to the Offer, the
purchase price for such Securities, and the amount of accrued and unpaid
interest on such Securities 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 3.2.      SELECTION OF SECURITIES TO BE REDEEMED OR PURCHASED.

           If less than all the Securities are to be redeemed or if less than
all the Securities tendered pursuant to an Offer are to be accepted for
payment, the Trustee shall select the outstanding Securities to be redeemed or
accepted for payment pro rata, by lot or by a method that complies with the
requirements of any exchange, if any, on which the Securities or the Series B
Notes are listed and that the Trustee considers fair and appropriate and for
this purpose the Trustee shall consider the Securities and the Series B Notes
together as one series. 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 Securities to be redeemed from
Securities outstanding not previously called for redemption, and (ii) notify
the Company of the names of each Holder of Securities selected for redemption,
the principal amount of Securities held by each such Holder and the principal
amount of such Holder's Securities that are to be redeemed. If less than all
Securities 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 Securities to be accepted for payment. The Trustee shall
select for redemption or purchase Securities or portions of Securities in
principal amounts of $1,000 or integral multiples of $1,000; except that if all
of the Securities of a Holder are selected for redemption or purchase, the
entire outstanding amount of Securities 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 Securities
called for redemption or tendered pursuant to an Offer also apply to portions
of Securities called for redemption or tendered pursuant to an Offer. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be called for redemption or selected for purchase.

Section 3.3.      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 Securities or
portions thereof to be redeemed. The notice shall identify the Securities or
portions thereof to be redeemed and shall state:

                  (1)      the redemption date;

                  (2)      the redemption price for the Securities and the
                           amount of unpaid and accrued interest on such
                           Securities as of the date of redemption;



                                      30
<PAGE>

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

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

                  (5)      that Securities called for redemption must be
                           surrendered to the Paying Agent to collect the
                           redemption price for, and any accrued and unpaid
                           interest on, such Securities;

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

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

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

           At the Company's request, the Trustee shall (at the Company's
expense) give 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 Securities
pursuant to Section 3.7(a) or 3.7(b), as the case may be, and (iv) sets forth
the aggregate principal amount of Securities to be redeemed and the amount of
accrued and unpaid interest 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 Securities held by, each Holder.

Section 3.4.      EFFECT OF NOTICE OF REDEMPTION.

           Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date at the price set forth
in the Security.

Section 3.5.      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 all Securities 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 


                                      31
<PAGE>

of the amounts necessary to pay the redemption price of, and accrued interest
on, all Securities to be redeemed.

           If the Company complies with the preceding paragraph, interest on
the Securities to be redeemed will cease to accrue on such Securities on the
applicable redemption date, whether or not such Securities are presented for
payment. If a Security 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 shall be paid to the Person in whose name such Security was registered
at the close of business on such record date. If any Security 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 and premium, if any, and interest from the
redemption date until such principal, premium and interest is paid, at the rate
of interest provided in the Securities and in Section 4.1.

Section 3.6.      SECURITIES REDEEMED IN PART.

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

Section 3.7.      OPTIONAL REDEMPTION PROVISIONS.

           The Securities may not be redeemed at the option of the Company
prior to August 1, 2002. During the twelve-month period beginning August 1 of
the years indicated below, the Securities 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 to be redeemed, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus any accrued and
unpaid interest to the date of redemption:

Year                                                            Percentage
- ----                                                            ----------

2002............................................................ 105.188%
2003............................................................ 102.594%
2004 and thereafter............................................. 100.000%


Section 3.8.      MANDATORY PURCHASE PROVISION.

                  (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
stating:

                  (i)      that an offer ("Offer") is being made pursuant to
                           Section 4.13 or 4.14, as the case may be, the length
                           of time the Offer shall remain open and the maximum
                           aggregate principal amount of Securities that the
                           Company is offering to purchase;



                                      32
<PAGE>

                  (ii)     the purchase price for the Securities (as set forth
                           in Section 4.13 or 4.14, as the case may be), the
                           amount of accrued and unpaid interest and Liquidated
                           Damages, if any, on such Securities as of the
                           purchase date, and the purchase date (which shall be
                           no earlier than 30 days nor later than 40 days from
                           the date such notice is mailed (the "Purchase
                           Date"));

                  (iii)    that any Security not accepted for payment will
                           continue to accrue interest;

                  (iv)     that, unless the Company fails to deposit with the
                           Paying Agent on the Purchase Date an amount
                           sufficient to purchase all Securities and Series B
                           Notes accepted for payment, interest shall cease to
                           accrue on such Securities after the Purchase Date;

                  (v)      that Holders electing to tender any Security or
                           portion thereof will be required to surrender their
                           Security, 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 Security must tender a
                           principal amount of $1,000 or integral multiples
                           thereof;

                  (vi)     that Holders will be entitled to withdraw their
                           election to tender Securities 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 Securities delivered for purchase and a
                           statement that such Holder is withdrawing his
                           election to have such Security purchased; and

                  (vii)    that Holders whose Securities are accepted for
                           payment in part will be Issued new Securities equal
                           in principal amount to the unpurchased portion of
                           Securities surrendered; provided that only
                           Securities in a principal amount of $1,000 or
                           integral multiples thereof will be accepted for
                           payment.

                  (b) On the Purchase Date, the Company will, to the extent
required by this Indenture and the Offer,

                  (i)      accept for payment Securities or portions thereof
                           tendered pursuant to such Offer,

                  (ii)     deposit with the Paying Agent an amount sufficient
                           to purchase the lesser of (a) the Securities and
                           Series B Notes or portions thereof tendered pursuant
                           to such Offer, and (b) the maximum aggregate
                           principal amount of Securities and Series B Notes
                           that the Company offered to purchase pursuant to
                           such Offer, and



                                      33
<PAGE>

                  (iii)    deliver or cause to be delivered to the Trustee all
                           Securities tendered pursuant to the Offer, together
                           with an Officers' Certificate setting forth the name
                           of each Holder that tendered Securities and the
                           principal amount of the Securities or portions
                           thereof tendered by each such Holder.

                  (c) With respect to any Offer, if less than all of the
Securities tendered pursuant to an Offer are to be purchased by the Company,
the Trustee shall select on the Purchase Date the Securities or portions
thereof to be accepted for payment pursuant to Section 3.2.

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

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

                  (f) The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations to the extent such
laws and regulations are applicable to any Offer.

                  (g) With respect to any Offer, if the Company deposits with
the Paying Agent on the Purchase Date an amount sufficient to purchase all
Securities accepted for payment, interest shall cease to accrue on such
Securities 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 Securities until such deposit is made.




                                      34
<PAGE>

                                   ARTICLE 4.
                                   COVENANTS

Section 4.1.      PAYMENT OF SECURITIES.

           The Company shall pay the principal of, and premium, if any, and
interest on the Securities on the dates and in the manner provided in the
Securities. Holders of Securities must surrender their Securities to the Paying
Agent to collect principal payments. Principal, premium and interest shall be
considered paid on the date due if the Paying Agent (other than the Company or
any of its Subsidiaries) holds as of 10:00 a.m. Eastern Time money the Company
deposited in immediately available funds designated for and sufficient to pay
all principal, premium, if any, and interest then due. 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 such amount of principal,
premium, if any, and interest paid on the Securities. The Company shall pay any
and all amounts, including, without limitation, Liquidated Damages, if any, on
the dates and in the manner required under the Registration Rights Agreement.

Section 4.2.      SEC REPORTS.

                  (a) The Company shall file with the Trustee, within 15 days
after the time of filing with the Commission, copies of the reports,
information and other documents (or copies of such portions of any of the
foregoing as the Commission may by rules and regulations prescribe) that the
Company is required to file with the Commission 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
Commission and the Trustee all such reports, information and other documents as
it would be required to file if it were subject to the requirements of Section
13 or 15(d) of the Exchange Act; provided, that the Company shall not be in
default of the provisions of this Section 4.2 for any failure to file reports
with the Commission solely by refusal by the Commission to accept the same for
filing. The Company shall deliver (or cause the Trustee to deliver) copies of
all reports, information and documents required to be filed with the Trustee
pursuant to this Section 4.2 to the Holders at their addresses appearing in the
register of Securities maintained by the Registrar. The Company shall also
comply with the provisions of TIA ss. 314(a).

                  (b) If the Company is required to furnish annual, quarterly
or current reports to its stockholders pursuant to the Exchange Act, the
Company shall cause any annual, quarterly, current or other financial report
furnished by it generally to its stockholders to be filed with the Trustee and
mailed to the Holders at their addresses appearing in the register of
Securities maintained by the Registrar. If the Company is not required to
furnish annual, quarterly or current reports to its stockholders pursuant to
the Exchange Act, the Company shall cause the financial statements of the
Company and its consolidated Subsidiaries (and similar financial statements for
all unconsolidated Subsidiaries, if any), including any notes thereto (and,
with respect to annual reports, an auditors' report by an accounting firm of
established national reputation), and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations," comparable to that which
would have been required to appear in annual or quarterly 


                                      35
<PAGE>

reports filed under Section 13 or 15(d) of the Exchange Act to be so filed with
the Trustee and mailed to the Holders promptly, but in any event, within 120
days after the end of each of the fiscal years of the Company and within 60
days after the end of each of the first three fiscal quarters of each such
fiscal year.

                  (c) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule 144A, the Company shall, upon
request, provide the information as would be required by clause (d)(4)
thereunder if the Company were subject to the requirements of such clause to
each Holder and to each beneficial owner and prospective purchaser of
Securities identified by any Holder of Restricted Securities.

                  (d) Notwithstanding anything herein to the contrary, the
Trustee shall have no duty to review such documents for purposes of determining
their compliance with any provision of this Indenture.

Section 4.3.      COMPLIANCE CERTIFICATE.

                  (a) 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, or premium, if any or interest on, the Securities 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.

                  (b) 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 4.2 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 which would lead them
to believe that the Company has violated any provisions of Section 4.1, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14 or 4.15 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.

                  (c) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (i) any Default or Event of Default 


                                      36
<PAGE>

or (ii) any event of default under any other mortgage, indenture or instrument
that could result in an Event of Default under Section 6.1(4), an Officers'
Certificate specifying such Default, Event of Default or default and what
action the Company is taking or proposes to take with respect thereto.

Section 4.4.      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 4.5.      LIMITATION ON RESTRICTED PAYMENTS.

                  (a)      The Company will not, and will 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
                           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 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),

                  (iii)    voluntarily prepay Indebtedness that is subordinated
                           to the Securities, whether any such subordinated
                           Indebtedness is outstanding on, or Issued after,
                           July 25, 1997, or

                  (iv)     make any Restricted Investment (all such dividends,
                           distributions, purchases, redemptions or other
                           acquisitions, retirements, prepayments and
                           Restricted Investments being collectively referred
                           to as "Restricted Payments"), if, at the time of
                           such Restricted Payment:

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



                                      37
<PAGE>

                  (2)      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 4.7(a);
                           or

                  (3)      such Restricted Payment, together with the aggregate
                           of all other Restricted Payments made after July 25,
                           1997, exceeds the sum, without duplication, of

                           (A)      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 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 July 25, 1997
                                    and ending as of the Company's most
                                    recently ended fiscal quarter at the time
                                    of such Restricted Payment, plus

                           (B)      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 Equity
                                    Interests or warrants, options or rights to
                                    acquire Equity Interests of the Company or
                                    any Restricted Subsidiary subsequent to
                                    July 25, 1997 (other than Equity Interests
                                    Issued or sold to a Restricted Subsidiary
                                    and other than Disqualified Stock), plus

                           (C)      $5,000,000, plus

                           (D)      the amount by which the principal amount of
                                    and any accrued interest on either senior
                                    Indebtedness of the Company or any
                                    Indebtedness of the Restricted Subsidiaries
                                    (not held by the Company or any Restricted
                                    Subsidiary) is reduced on the Company's
                                    consolidated balance sheet upon the
                                    conversion or exchange subsequent to July
                                    25, 1997 of such Indebtedness for Equity
                                    Interests (other than Disqualified Stock)
                                    of the Company or any Restricted Subsidiary
                                    (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

                           (E)      if any Nonrestricted Subsidiary is
                                    redesignated as a Restricted Subsidiary,
                                    the fair market value (as determined by the
                                    Board of Directors in good faith) of such
                                    Nonrestricted Subsidiary as of the date it
                                    is redesignated; provided, however, that
                                    for purposes of this 


                                      38
<PAGE>

                                    clause (E), the fair market value of any
                                    redesignated Nonrestricted 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 4.5(b)(iii).

                  (b)      Notwithstanding Section 4.5(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 the
                           provisions hereof;

                  (ii)     the retirement of any of the Company's Capital Stock
                           or subordinated Indebtedness in exchange for, or out
                           of the net proceeds of the substantially concurrent
                           sale (other than to a Restricted Subsidiary) of,
                           other Capital Stock (other than Disqualified Stock)
                           and neither such retirement nor the proceeds of any
                           such sale or exchange shall be included in any
                           computation made pursuant to Section 4.5(a);

                  (iii)    making Restricted Investments at any time, and from
                           time to time, in an aggregate outstanding amount of
                           $50,000,000 after July 25, 1997 (it being understood
                           that if any Restricted Investment acquired with a
                           Restricted Payment after July 25, 1997 pursuant to
                           this Section 4.5(b)(iii) 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 4.5(b)(iii), so that up to
                           $50,000,000 of Restricted Investments may be
                           outstanding under this Section 4.5(b)(iii) at any
                           given time);

                  (iv)     the repurchase or redemption of the Company's common
                           stock upon the death of Thomas H. Quinn, pursuant to
                           the terms of an employment agreement, dated as of
                           February 25, 1988, between the Company and Thomas H.
                           Quinn; provided, however, that the funds necessary
                           to satisfy the Company's obligation to repurchase or
                           redeem such Common Stock shall be fully reimbursed
                           by insurance;

                  (v)      the repurchase or redemption of the Company's common
                           stock pursuant to the terms of the several
                           Restricted Stock Agreements, each dated as of
                           February 25, 1988, between the Company and each of
                           Thomas H. Quinn, Jonathan F. Boucher and John R.
                           Lowden, the Restricted Stock Agreement, dated as of
                           January 1, 1992, between the Company and Thomas H.
                           Quinn, the Restricted Stock Agreements, each dated
                           as of 


                                      39
<PAGE>

                           January 1, 1992, between the Company and each of 
                           Jonathan F. Boucher, Adam Max and Thomas H. Quinn, 
                           and the Restricted Stock Agreement, dated as of 
                           May 16, 1997, between the Company and Thomas H. 
                           Quinn, in each case as amended or supplemented, up to
                           an aggregate amount not to exceed $7,500,000;

                  (vi)     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, pursuant to intercompany
                           Indebtedness, intercompany management agreements,
                           intercompany tax sharing agreements, and other
                           intercompany agreements and obligations;

                  (vii)    the payment of directors' fees in an annual
                           aggregate amount not to exceed $250,000;

                  (viii)   to the extent constituting Restricted Payments, if
                           no Default or Event of Default shall have occurred
                           and be continuing or shall occur as a consequence
                           thereof, the payment of consulting, financial and
                           investment banking fees (but not limiting the
                           payment of indemnities, expenses and other amounts)
                           under the TJC Management Consulting Agreement,
                           provided that the obligation of the Company to pay
                           such fees under the TJC Management Consulting
                           Agreement shall be subordinated expressly to the
                           Company's Obligations on the Securities;

                  (ix)     the purchase, redemption, retirement or other
                           acquisition of the Discount Debentures required by
                           their terms to be purchased, redeemed, retired or
                           acquired with the net proceeds from asset sales (as
                           defined in the instrument evidencing such
                           subordinated Indebtedness) or upon a change of
                           control (as defined in the instrument evidencing
                           such subordinated Indebtedness);

                  (x)      the exchanging, refinancing or refunding of
                           subordinated Indebtedness through the Issuance of
                           subordinated Indebtedness so long as the
                           subordinated Indebtedness to be Issued is
                           Refinancing Indebtedness permitted under Section
                           4.7;

                  (xi)     to the extent constituting Restricted Payments, any
                           payments made in connection with the Plan, the Prior
                           Offering and the Offering;

                  (xii)    Restricted Investments received as consideration for
                           the sale, transfer or disposition of any business,
                           properties or assets of the Company or any
                           Restricted Subsidiary, provided that the Company
                           complies with Section 4.14;

                  (xiii)   any Restricted Investment constituting securities or
                           instruments of a 


                                      40
<PAGE>

                           Person Issued in exchange for trade or other claims 
                           against such Person in connection with a financial
                           reorganization or restructuring of such Person;

                  (xiv)    any Restricted Investment constituting an equity
                           investment in a Receivables Subsidiary; provided
                           that the aggregate amount of such equity investments
                           does not exceed $1,000,000; and

                  (xv)     guarantees by the Company of Capital Lease
                           Obligations of Nonrestricted Subsidiaries in an
                           aggregate principal or face amount not exceeding the
                           aggregate principal or face amount of capital leases
                           of the Nonrestricted Subsidiaries guaranteed by the
                           Company on July 25, 1997.

Section 4.6.      CORPORATE EXISTENCE.

           Subject to Section 4.14 and Article 5 hereof, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and 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 4.7.      LIMITATION ON INCURRENCE OF INDEBTEDNESS.

                  (a) The Company will not, and will not permit any Restricted
Subsidiary to, Issue any Indebtedness (other than the Indebtedness represented
by the Securities), unless the Company's Cash Flow Coverage Ratio for the four
full fiscal quarters next preceding the date such additional Indebtedness is
Issued would have been at least (i) 1.7 to 1, if such date is between the date
of original Issuance of the Securities and June 30, 1999, (ii) 1.85 to 1, from
July 1, 1999, through June 30, 2001, or (iii) 2.0 to 1, from July 1, 2001, and
thereafter, in each case determined on a Pro Forma Basis as if such additional
Indebtedness and any other Indebtedness Issued since the end of the applicable
four-quarter period had been Issued at the beginning of such four-quarter
period.

                  (b)      Section 4.7(a) will not apply to the Issuance of:

                  (i)      Indebtedness of the Company and/or its Restricted
                           Subsidiaries up to the greater of (A) $75.0 million
                           in aggregate principal amount pursuant to the Credit
                           Agreement and (B) an aggregate principal amount up
                           to the sum of (x) 85% of the book value of the
                           Company and its Restricted Subsidiaries' Receivables
                           on a consolidated basis and (y) 65% of the book
                           value of the Company and its Restricted
                           Subsidiaries' inventories on a consolidated basis;



                                      41
<PAGE>

                  (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 Securities up to
                           $20,000,000 in aggregate principal amount, or (B)
                           their properties, assets and rights acquired after
                           the date of original Issuance of the Securities,
                           provided that such Indebtedness under this Section
                           4.7(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 Credit Agreement); and

                  (v)      Other Permitted Indebtedness.

Section 4.8.      LIMITATION ON TRANSACTIONS WITH AFFILIATES.

                  (a) Except as otherwise set forth in this Indenture, neither
the Company nor any of its Restricted Subsidiaries may 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 any 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) Neither the Company nor any of its Restricted
Subsidiaries may 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 noncash payments and benefits valued
at their fair market value by the Board of Directors 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) an opinion
as to the fairness of such Affiliate Transaction to the Company or such
Restricted Subsidiary and the Holders of Securities, in each case from a
financial point of view by an investment banking firm of national prominence
that is not an Affiliate of the Company.

                  (c) Notwithstanding Sections 4.8(a) and (b), this Section 4.8
will not apply to (i) transactions between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries, (ii) any Restricted Payments
permitted pursuant to Section 4.5, (iii) payments of 


                                      42
<PAGE>

fees and other amounts expressly due under any SAR Agreements, the Subsidiary
Advisory Agreements, the Subsidiary Consulting Agreements, the Tax Sharing
Agreement, the JI Properties Service Agreement, the Transition Agreement and
the TJC Management Consulting Agreement, provided that any amendments,
supplements, modifications, substitutions, renewals or replacements of the
foregoing agreements are approved by a majority of the Board of Directors
(including a majority of the disinterested directors, if any) as fair to the
Company and the Holders of Securities, (iv) the payment of reasonable and
customary directors' fees to directors of the Company and its Restricted
Subsidiaries, (v) transactions in connection with a Receivables Financing or
(vi) payments and transactions in connection with the Offering.

Section 4.9.      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 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 Securities 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, noncompliance 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 and by appropriate
proceedings.

Section 4.11.     LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS 
                  AFFECTING RESTRICTED SUBSIDIARIES.

                  (a) The Company will not, and will 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



                                      43
<PAGE>

                  (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 (x) under Section 4.7(a),
                           (y) under Sections 4.7(b)(i), (ii) and (iv) and
                           clauses (i), (vii) and (ix) of the definition of
                           Other Permitted Indebtedness, or (z) Restricted
                           Payments and agreements or instruments evidencing
                           Restricted Payments permitted under Section 4.5,

                           (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
                           Issue Date,



                                      44
<PAGE>

                           (G) any Refinancing Indebtedness of Indebtedness
                           described in Section 4.7(b)(i), (ii), (iii) and (iv)
                           and clauses (i), (vi), and (ix) 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 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 4.7, 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 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 its Restricted Subsidiaries that are
subject to Permitted Liens.

Section 4.12.     MAINTENANCE OF OFFICE OR AGENCIES.

           The Company will maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of any Agent) where
Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice
to the Trustee of 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 Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any 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 will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.



                                      45
<PAGE>

           The Company hereby designates the Corporate Trust Office of the
Trustee located at 100 Wall Street, 20th Floor, New York, NY 10005 as one such
office or agency of the Company in accordance with Section 2.3.

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 shall have the right
to require the Company to purchase such Holder's Securities pursuant to an
Offer at a purchase price equal to 101% of the aggregate principal amount of
such Securities, plus any accrued and unpaid interest and Liquidated Damages,
if any, to the Purchase Date. Although the failure of the Company to purchase
all Securities tendered in such an Offer shall be a Default, if the Company is
unable to purchase all Securities and Series B Notes tendered in such an Offer,
the Company shall nevertheless purchase the maximum principal amount of
Securities that it is able to purchase at that time in accordance with the
provisions of Section 3.2.

                  (b) 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 Securities has been consummated and all Securities tendered
pursuant to such Offer have been accepted for payment.

Section 4.14.     LIMITATION ON ASSET SALES.

                  (a) The Company may not, and may 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 (A) 50% of the
consideration thereof received by the Company is in the form of cash and/or
Cash Equivalents and/or Marketable Securities and (B) 75% of the Net Proceeds
from such Asset Sale are applied to one or more of the following 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 that
time; 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)
the purchase, redemption or other prepayment or repayment of outstanding senior
Indebtedness on or prior to the Asset Sale Disposition Date or (iii) an Offer
expiring on or prior to the Purchase Date.

                  (b) Any Net Proceeds from any Asset Sale that are not applied
or invested as provided in Section 4.14(a)(i) or (a)(ii) 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 purchase the maximum principal amount of Securities and Series
B Notes (the "Asset Sale Offer Amount") then outstanding that may be purchased
out of Excess Proceeds, at an offer price in cash in an amount equal to 100% of
the outstanding principal amount thereof plus any accrued and unpaid interest
and Liquidated Damages, if any, to the Purchase Date.



                                      46
<PAGE>

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

                  (e) Upon completion of each such Offer, the amount of Excess
Proceeds shall be reset to zero.

                  (f) 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 this
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 had occurred on the date of
repatriation.

Section 4.15.     LIMITATION ON GUARANTEES OF COMPANY INDEBTEDNESS BY 
                  RESTRICTED SUBSIDIARIES.

                  (a) The Company will not permit any Restricted Subsidiary,
directly or indirectly, to guarantee any Indebtedness of the Company other than
the Securities ("Other Indebtedness") unless:

                  (i)      such Restricted Subsidiary contemporaneously
                           executes and delivers a supplemental indenture to
                           this Indenture providing for a guarantee of payment
                           of the Securities then outstanding by such
                           Restricted Subsidiary to the same extent as the
                           guarantee (the "Other Indebtedness Guarantee") of
                           the Other Indebtedness (including waiver of
                           subrogation, if any), and

                  (ii)     if the Other Indebtedness guaranteed by such 
                           Restricted Subsidiary is:

                           (A)      senior Indebtedness, the guarantee for the
                                    Securities shall be equal in right of
                                    payment with the Other Indebtedness
                                    Guarantee, and

                           (B)      subordinated Indebtedness, the guarantee
                                    for the Securities shall be senior in right
                                    of payment to the Other Indebtedness
                                    Guarantee,

                  provided that the foregoing will not limit or restrict
                  guarantees Issued by any Restricted Subsidiary in respect of
                  Indebtedness of other Restricted Subsidiaries.

                  (b) Each guarantee of the Securities created by a Restricted
Subsidiary pursuant to Section 4.15(a) shall be in form and substance
satisfactory to the Trustee and shall provide, among other things, that it
shall be automatically and unconditionally released and discharged upon:

                  (i)      any sale, exchange or transfer permitted by this
                           Indenture to any Person not an Affiliate of the
                           Company of (A) all of the Company's Capital Stock 


                                      47
<PAGE>

                           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 Section
                           4.14, or

                  (ii)     the release or discharge of the Other Indebtedness
                           Guarantee that resulted in the creation of such
                           guarantee of the Securities, except a discharge or
                           release by or as a result of payment under such
                           Other Indebtedness Guarantee.


                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.1.      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 entity of such Disposition or the
                           Person 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
                           this Indenture and the Securities;

                  (iii)    immediately after such Disposition, no Default or 
                           Event of Default exists; and

                  (iv)     the entity (the "Successor 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 any purchase accounting
                           adjustments 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 Section 4.7(a)
                                    to Issue at least $1.00 of additional
                                    Indebtedness determined on a Pro Forma
                                    Basis pursuant to Section 4.7(a), and



                                      48
<PAGE>

                           (C)      have a Cash Flow Coverage Ratio, for the
                                    four fiscal quarters immediately preceding
                                    the applicable Disposition 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.

           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 5.2.      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 Corporation 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, and premium, if any, and
interest on, the Securities.


                                   ARTICLE 6.
                             DEFAULTS AND REMEDIES

Section 6.1.      EVENTS OF DEFAULT.

                  (a)      An "Event of Default" is

                  (1)      a default for 30 days in payment of interest on the
                           Securities;

                  (2)      a default in payment when due of principal or
                           premium, if any;

                  (3)      the failure of the Company to comply with any of its
                           other agreements or covenants in, or provisions of,
                           this Indenture or the Securities and the Default
                           continues for the period, if applicable, and after
                           the notice specified in Section 6.1(b);

                  (4)      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 exists prior
                           to or is created after the Issue Date; if

                           (A)      either (i) such default results from the
                                    failure to pay principal of or interest on
                                    any such Indebtedness and such default
                                    continues for 30 days beyond any applicable
                                    grace period, or (ii) as a result of such


                                      49
<PAGE>

                                    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, or the maturity of which has been
                                    accelerated, aggregates in excess of
                                    $15,000,000;

                  (5)      a failure by the Company or any Restricted
                           Subsidiary to pay final judgments (not covered by
                           insurance) aggregating in excess of $7,500,000 which
                           judgments a court of competent jurisdiction does not
                           rescind, annul or stay within 45 days after their
                           entry and the Default continues for the period and
                           after the notice specified in Section 6.1(b);

                  (6)      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

                  (7)      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)      order 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 under Section 6.1(a)(3)(other than a Default
under Sections 4.5, 4.7, 4.8, 4.11, 4.13, 4.14, 4.15, and 5.1 any of which
shall be an Event of Default with the notice but without the passage of time
specified in this Section 6.1(b)) or Section 6.1(a)(5) is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Securities 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 


                                      50
<PAGE>

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
6.1(a) 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 which the Company would have to pay if the Company then had elected
to redeem the Securities pursuant to paragraph 5 of the Securities, 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 Securities
contained to the contrary notwithstanding.

Section 6.2.      ACCELERATION.

                  (a) Upon the occurrence of any Event of Default (other than
an Event of Default under Section 6.1(a)(6) or (a)(7)), the Trustee or the
Holders of a least 25% in principal amount of the then outstanding Securities
may declare all outstanding Securities to be due and payable immediately and,
upon such declaration, the principal amount and premium, if any, of all such
Securities, and any accrued interest and Liquidated Damages, if any, on, all
such Securities to the date of payment shall be due and payable immediately;
provided, however, that if an Event of Default arises under Section 6.01(a)(6)
or (a)(7) the principal amount of, and premium, if any, and any accrued and
unpaid interest and Liquidated Damages, if any, on, all such Securities, 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.

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

                  (c) If there has been a declaration of acceleration of the
Securities because an Event of Default under Section 6.1(a)(4) has occurred and
is continuing, such declaration of acceleration shall be automatically annulled
if the holders of the Indebtedness described in Section 6.1(a)(4) 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 or interest that shall have become due
                           solely because of the acceleration, have been cured
                           or waived, and

                  (iii)    the Company has delivered an Officer's Certificate
                           to the Trustee to the effect of clauses (i) and (ii)
                           above.



                                      51
<PAGE>

Section 6.3.      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, or premium,
if any, or interest and Liquidated Damages, if any, on, the Securities or to
enforce the performance of any provision of the Securities or this Indenture.

           The Trustee may maintain a proceeding even if it does not possess
any of the Securities 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 6.4.      WAIVER OF PAST DEFAULTS.

           The Holders of a majority in principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default
or Event of Default and its consequences, except a continuing Default or Event
of Default in the payment of the principal of, premium, if any, or interest and
Liquidated Damages, if any, on any Security (which may be waived only with the
consent of each Holder affected). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall 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 6.5.      CONTROL BY MAJORITY.

           Subject to Section 7.1(e), the Holders of a majority in principal
amount of the then outstanding Securities 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 6.6.      LIMITATION ON SUITS.

           A Holder may pursue a remedy with respect to this Indenture or the
Securities 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 Securities 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



                                      52
<PAGE>

                  (v)      during such 60-day period the Holders of a majority
                           in principal amount of the then outstanding
                           Securities 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 Securities may not enforce this Indenture, except as
provided herein.

Section 6.7.      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, interest and
Liquidated Damages, if any, on a Security, on or after a respective due date
expressed in the Security, 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 6.8.      COLLECTION SUIT BY TRUSTEE.

           If an Event of Default specified in Section 6.1(a)(1) or (a)(2)
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, if any, interest and Liquidated Damages, if any, remaining
unpaid on the Securities, (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").



                                      53
<PAGE>

Section 6.9.      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 proceedings relative to
the Company (or any other obligor upon the Securities), 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 7.7. To the extent that the payment of any such Trustee Expenses, and
any other amounts due the Trustee under Section 7.7 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 Securities 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 7.7;

         Second:           to the Holders for amounts due and unpaid on the
                           Securities for principal, premium, if any, and
                           interest, ratably, without preference or priority of
                           any kind, according to the amounts due and payable
                           on the Securities for principal, premium, 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, 


                                      54
<PAGE>

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 6.7, or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.


                                   ARTICLE 7.
                                    TRUSTEE

Section 7.1.      DUTIES OF TRUSTEE.

                  (a) If any 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 their exercise, 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 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 and to
                           confirm the correctness of all mathematical
                           computations.

                  (c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (i)      this paragraph does not limit the effect of Section 
                           7.1(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 6.5.

                  (d) Whether or not expressly so provided, every provision of
this Indenture 


                                      55
<PAGE>

that in any way relates to the Trustee is subject to paragraphs (a), (b) and 
(c) 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 7.2.      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
need not investigate any fact or matter stated in the document.

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, 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 in good faith which it believes to be authorized or within its
rights or powers.

                  (e) Unless otherwise specifically provided in the Indenture,
any demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer.

                  (f) Except with respect to Section 4.1, the Trustee shall
have no duty to inquire as to the performance by the Company with respect to
the covenants contained in Article 4. In addition, the Trustee shall not be
deemed to have knowledge of a Default or Event of Default except (i) any
Default or Event of Default occurring pursuant to Sections 4.1, 6.1(a)(i) or
6.1(a)(ii), or (ii) any Default or Event of Default of which the Trustee shall
have received written notification or obtained actual knowledge.

Section 7.3.      INDIVIDUAL RIGHTS OF TRUSTEE.

           The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities 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 


                                      56
<PAGE>

eliminate such conflict within 90 days, apply to the Commission for permission
to the 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 7.4.      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 Securities, it shall
not be accountable for the Company's use of the proceeds from the Securities 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
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture, other than its certificate of authentication.

Section 7.5.      NOTICE TO HOLDERS OF DEFAULTS AND EVENTS OF DEFAULT.

           If a Default or Event of Default occurs and is continuing and if it
is 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 Security (including any
failure to redeem Securities called for redemption or any failure to purchase
Securities 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 7.6.      REPORTS BY TRUSTEE TO HOLDERS.

           Within 60 days after each May 15 beginning with the May 15 following
the Issue Date, the Trustee shall mail to Holders a brief report dated as of
such reporting date that complies with ss. 313(a) of the TIA (but if no event
described in ss. 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 ss. 313(b)(2) of the TIA. The Trustee shall also transmit by
mail all reports as required by ss. 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 the Holders shall be filed
with the Commission and each stock exchange on which the Securities are listed.
The Company shall notify the Trustee when the Securities are listed on any
stock exchange.

Section 7.7.      COMPENSATION AND INDEMNITY.

           The Company shall pay to the Trustee 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 and expenses it incurs or makes in addition to 


                                      57
<PAGE>

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 the Trustee 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 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 7.7 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 Securities on all money or property
the Trustee holds or collects, except that held in trust to pay principal of,
premium, if any, and interest on particular Securities. 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 6.1(a)(6) or (a)(7) 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 7.8.      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 Securities 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

                                      58
<PAGE>

                  (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 Securities may appoint a successor Trustee to replace
any successor Trustee the Company appoints.

           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
Securities 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
succession 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 7.7. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7 shall
continue for the retiring Trustee's benefit with respect to expenses and
liabilities it incurred prior to such replacement.

Section 7.9.      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 $25 million ($100 million in the case of any successor Trustee) as set
forth in its most recent published annual report of condition, and (iv) satisfy
the requirements of ss. 310(a)(1), (2) and (5) of the TIA. The Trustee is
subject to ss. 310(b) of the TIA.



                                      59
<PAGE>

Section 7.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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


                                   ARTICLE 8.
                             DISCHARGE OF INDENTURE

Section 8.1.      DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE.

                  (a) When (i) the Company delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.7)
for cancellation or (ii) all outstanding Securities have become due and payable
and the Company irrevocably deposits with the Trustee funds sufficient to pay
at maturity all outstanding Securities, including interest thereon (other than
Securities replaced pursuant to Section 2.7), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture
shall, subject to Sections 8.1(c) and 8.6, cease to be of further effect.

                  (b) Subject to Sections 8.1(c), 8.2, and 8.6, the Company at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.2, 4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.13, 4.14 and 4.15, and the
operation of Sections 5.1(a)(iii), 5.1(a)(iv) or 6.1(a)(3) through (a)(7)
("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
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section
6.1(a)(3) through (a)(7) or because of the Company's failure to comply with
Section 5.1(a)(iii) or 5.1(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 2.3, 2.4, 2.5, 2.6, 2.7, 4.1, 4.4, 7.7, 7.8, 8.4, 8.5,
and 8.6, and the Trustee's and the Paying Agent's Obligations in Section 8.4
shall survive until the Securities have been paid in full. Thereafter, the
Company's Obligations in Sections 7.7 and 8.5 and the Company's, Trustee's and
Paying Agent's Obligations in Section 8.4 shall survive.



                                      60
<PAGE>

Section 8.2.      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 with the
                           Trustee money or U.S. Government Obligations for the
                           payment in full of the principal of and any premium
                           due on, the Securities, and any accrued and unpaid
                           interest, and Liquidated Damages, if any, 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
                           principal of, premium, if any, interest and
                           Liquidated Damages, if any, when due on all the
                           Securities to maturity or redemption, as the case
                           may be;

                  (3)      since the Company's irrevocable deposit provided for
                           in Section 8.2(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 defeasance and will
                           be subject to federal income tax on the same
                           amounts, in the same manner and at the same times as
                           would have been the case if such defeasance had not
                           occurred;



                                      61
<PAGE>

                  (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 covenant
                           defeasance and will be subject to federal income tax
                           on the same amounts, in the same manner and at the
                           same times as would have been the case if such
                           covenant defeasance had not occurred; and

                  (9)      the Company 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 Securities as this Article 8
                           contemplates have been satisfied.

           Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption or purchase of Securities at a
future date in accordance with Article 3.

Section 8.3.      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 and
interest on the Securities.

Section 8.4.      REPAYMENT TO COMPANY.

           After the Securities 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 any money they hold for the payment of principal, premium or
interest that remains unclaimed for one 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 8.5.      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.



                                      62
<PAGE>

Section 8.6.      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 Securities 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, or
premium, if any, or interest on any Securities 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 9.1.      AMENDMENTS AND SUPPLEMENTS PERMITTED WITHOUT CONSENT OF
                  HOLDERS.

           Notwithstanding Section 9.2 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Securities without the
consent of any Holder:

                  (a)      to cure any ambiguity, defect or inconsistency;

                  (b)      to provide for uncertificated Securities in addition
to or in place of certificated Securities;

                  (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 the Commission's requirements to effect or
maintain the qualification of this Indenture under the TIA; or

                  (e) to make any change that does not materially adversely
affect any Holder's legal rights hereunder.

           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 and the documents described in Section 9.6, 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 make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental indenture which affects its own rights, duties or
immunities under this Indenture or otherwise.



                                      63
<PAGE>

Section 9.2.      AMENDMENTS AND SUPPLEMENTS REQUIRING CONSENT OF HOLDERS.

           Subject to Section 6.7, the Company and the Trustee may amend or
supplement this Indenture or the Securities with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities (including consents obtained in connection with a tender offer or
exchange offer for the Securities). Subject to Sections 6.4 and 6.7, the
Holders of a majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange
offer for the Securities) 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
Securities.

           Upon the Company's request, 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 9.6, 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 shall 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 Securities 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 4.1, on any Security or alter the redemption
                           or purchase provisions with respect thereto;

                  (3)      reduce the principal of or change the fixed maturity
                           of any Security;

                  (4)      make any Security payable in money other than that
                           stated in the Security;

                  (5)      make any change in Section 6.4 or 6.7 or in this
                           sentence of this Section 9.2; or



                                      64
<PAGE>

                  (6)      waive a default in the payment of the principal of,
                           or premium, if any, or interest and Liquidated
                           Damages, if any, on, or redemption or purchase
                           payment with respect to, any Security (except a
                           rescission of acceleration of the Securities by the
                           Holders of at least a majority in aggregate
                           principal amount of the then outstanding Securities
                           and a waiver of the payment default that resulted
                           from such acceleration).

Section 9.3.      COMPLIANCE WITH TIA.

           Every amendment or supplement to this Indenture or the Securities
shall be set forth in an amended supplemental indenture that complies with the
TIA as then in effect.

Section 9.4.      REVOCATION AND EFFECT OF CONSENTS.

           Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Security is a continuing consent by the Holder
and every subsequent Holder of a Security or portion of a Security that
evidences the same Indebtedness as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any such Holder
or subsequent Holder may revoke the consent as to his or her Security or
portion of a Security 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 Securities 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 Securities 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 Securities 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 Securities 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 Securities 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 9.2. In such case the amendment or waiver shall bind each Holder who
has consented to it and every subsequent holder of a Security that evidences
the same debt as the consenting Holder's Security.

Section 9.5.      NOTATION ON OR EXCHANGE OF SECURITIES.

           The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may Issue and the Trustee shall authenticate new
Securities that reflect the amendment, supplement or waiver.



                                      65
<PAGE>

           Failure to make the appropriate notation or Issue a new Security
shall not affect the validity and effect of such amendment, supplement or
waiver.

Section 9.6.      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 7.1, 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 10.1.     TRUSTEE INDENTURE ACT CONTROLS.

           If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by the operation of ss. 318(c) of the TIA, the imposed
duties shall control.

Section 10.2.     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:

                  Jordan Industries, Inc.
                  ArborLake Centre
                  1751 Lake Cook Road, Suite 300
                  Deerfield, Illinois 60015
                  Telecopier No.:  (847) 945-9645

         If to the Trustee:

                  U.S. Bank Trust National Association
                  180 East Fifth Street
                  St. Paul, MN 55011
                  Attn.:  Corporate Trust Department
                  Telecopier No.:  (651) 244-0711



                                      66
<PAGE>

           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 10.3.     COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

           Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA ss. 312(c).

Section 10.4.     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 10.5) 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 10.5) 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 10.5.     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 TIA ss. 314(a)(4)) shall include:



                                      67
<PAGE>

                    (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 10.6.     RULES BY TRUSTEE AND AGENTS.

           The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

Section 10.7.     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 10.8.     NO RECOURSE AGAINST OTHERS.

           No director, officer, employee or stockholder of the Company shall
have any liability for any Obligations of the Company under the Securities, the
Registration Rights Agreement or the Indenture or for any Claim based on, in
respect of or by reason of such Obligations or their creation. Each Holder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the Issuance of the Securities.

Section 10.9.     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 certificate pursuant to Section
4.3 shall be for the fiscal year ending on December 31, 1999.



                                      68
<PAGE>

Section 10.11.    GOVERNING LAW.

           The internal laws of the State of New York shall govern this
Indenture and the Securities, 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. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 10.13.    SUCCESSORS.

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

Section 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.



                                      69
<PAGE>


Dated as of March 22, 1999                JORDAN INDUSTRIES, INC.


                                          By: /s/ Gordon L. Nelson
                                          Name: Gordon L. Nelson


Dated as of March 22, 1999                U.S. BANK TRUST NATIONAL ASSOCIATION,
                                                as Trustee


                                          By: /s/ Richard Prokosch
                                          Name: Richard Prokosch





                                      70
<PAGE>

                                                                      EXHIBIT A

                               (Face of Security)

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY
TRUST COMPANY (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. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.1

"THIS SENIOR NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

         (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS SENIOR NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR (C) IT IS AN "INSTITUTIONAL ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)) OR REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"),

         (2)      AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
                  SENIOR NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
                  SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
                  BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
                  ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
                  RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
                  REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT, 


                                      A-1
<PAGE>

                  (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
                  UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
                  TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
                  CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
                  TRANSFER OF THIS SENIOR NOTE (THE FORM OF WHICH CAN BE
                  OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
                  RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SENIOR NOTES LESS
                  THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
                  COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
                  SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
                  THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AS BASED
                  UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G)
                  PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
                  CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
                  ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
                  JURISDICTION, AND

         (3)      AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
                  SENIOR NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
                  SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS SENIOR NOTE IN VIOLATION OF THE FOREGOING.

THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" (AS DEFINED IN SECTION 1273
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). THE "ISSUE PRICE" OF THE
NOTE IS 96.62% OF ITS PRINCIPAL AMOUNT, THE TOTAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS 3.38% OF ITS PRINCIPAL AMOUNT, THE "ISSUE DATE" OF THE NOTE IS
MARCH 22, 1999 AND THE NOTE'S "YIELD TO MATURITY" ON THE ISSUE DATE IS 11.00%,
COMPOUNDED SEMI-ANNUALLY.


                                      A-2
<PAGE>


                            JORDAN INDUSTRIES, INC.
                              10 3/8% SENIOR NOTE
                                    DUE 2007

NO.                                                                          $
CUSIP NO.

                  Jordan Industries, Inc., an Illinois corporation (the
"Company"), as obligor, for value received promises to pay to __________ or
registered assigns, the principal sum of _______ Dollars on August 1, 2007.
Interest Payment Dates: February 1 and August 1 and on the maturity date.
Record Dates: January 15 and July 15 (whether or not a Business Day).

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

                  IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.


                            Dated:


                            JORDAN INDUSTRIES, INC.

                            By:
                                     Name:
                                     Title:


                            By:
                                     Name:
                                     Title:



                                      A-3
<PAGE>

Trustee's Certificate of Authentication:

This is one of the Notes referred to 
in the within-mentioned Indenture:

U.S. BANK TRUST NATIONAL ASSOCIATION
  as Trustee


By:___________________________________
    Authorized Signature




                                      A-4
<PAGE>



                               (Back of Security)

                   10 3/8% [SERIES C] [SERIES D] SENIOR NOTE
                                    DUE 2007

           1. Interest. Jordan Industries, Inc., (the "Company") promises to
pay interest on the principal amount of the Notes at the rate and in the manner
specified below. Interest on the Notes will accrue at 10 3/8% per annum from
February 1, 1999 until maturity. The Company will pay Liquidated Damages
pursuant to Section 5 of the Registration Rights Agreement referred to below.
Interest and Liquidated Damages, if any, will be payable semiannually in cash
on February 1 and August 1 of each year, or if any such day is not a Business
Day on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date on which interest
has been paid or, if no interest has been paid, from February 1, 1999; provided
that the first Interest Payment Date shall be August 1, 1999. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

           2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the record date for
the next Interest Payment Date even if such Notes are canceled after such
record date and on or before such Interest Payment Date. Holders must surrender
Notes to a Paying Agent to collect principal payments on such Notes. The
Company shall pay principal, premium, if any, interest and Liquidated Damages,
if any, in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by check payable in such money, and
any such check may be mailed to a Holder's registered address.

           3. Paying Agent and Registrar. U.S. Bank Trust National Association
(the "Trustee") will initially act as the Paying Agent and Registrar. The
Company may appoint additional paying agents or co-registrars, and change the
Paying Agent, any additional paying agent, the Registrar or any co-registrar
without prior notice to any Holder. The Company or any of its Subsidiaries may
act in any such capacity.

           4. Indenture. The Company issued the Notes under an Indenture dated
as of March 22, 1999 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA") (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to, and qualified by, all
such terms, certain of which are summarized herein, and Holders are referred to
the Indenture and the TIA for a statement of such terms (all capitalized terms
not defined herein shall have the meanings assigned than in the Indenture). The
Notes are unsecured general obligations of the Company limited to $155,000,000
in aggregate principal amount.

           5. Optional Redemption. Except as described in paragraph 6 below,
the Notes may not be redeemed at the option of the Company prior to August 1,
2002. During the twelve (12) month period beginning August 1 of the years
indicated below, the Notes will be redeemable at 


                                      A-5
<PAGE>

the option of the Company, in whole or in part, 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 date of
redemption:

                  Year                                    Percentage
                  2002....................................105.188 %
                  2003....................................102.594 %
                  2004 and thereafter.....................100.000 %

           6. Mandatory Redemption. Subject to the Company's obligation to make
an offer to purchase Notes under certain circumstances pursuant to Section 4.13
and 4.14 of the Indenture (as described in paragraph 7 below), the Company is
not required to make any mandatory redemption, purchase or sinking fund
payments with respect to the Notes.

           7. Mandatory Offers to Purchase Notes. (a) Following the occurrence
of a Change of Control (the "Change of Control Trigger Date"), the Company will
be required to offer (a "Change of Control Offer") to purchase all outstanding
Notes at a purchase price equal to 101% of the principal amount of such Notes,
plus any accrued and unpaid interest and Liquidated Damages, if any, to the
date of purchase.

           (b) If the Company or any Restricted Subsidiary consummates one or
more Asset Sales and does not use all of the Net Proceeds from such Asset Sales
as provided in the Indenture, the Company will be required, under certain
circumstances, to utilize the Excess Proceeds from such Asset Sales to offer
(an "Asset Sale Offer") to purchase Notes at a purchase price equal to 100% of
the principal amount of the Notes, plus any accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase. If the Excess Proceeds are
insufficient to purchase all Notes tendered pursuant to any Asset Sale Offer,
the Trustee shall select the Notes to be purchased in accordance with the terms
of the Indenture.

           (c) Holders may tender all or, subject to paragraph 8 below, any
portion of their Notes in a Change of Control or Asset Sale Offer
(collectively, an "Offer") by completing the form below entitled "OPTION OF
HOLDER TO ELECT PURCHASE."

           (d) The Company will comply with Rule 14e-1 under the Securities
Exchange Act of 1934, as amended, and any other securities laws and regulations
to the extent applicable to any Offer.

           8. Notice of Redemption or Purchase. Notice of an optional
redemption or an Offer will be mailed to each Holder at its registered address
at least 30 days but not more than 60 days before the date of redemption or
purchase. Notes may be redeemed or purchased in part, but only in whole
multiples of $1000 unless all Notes held by a Holder are to be redeemed or
purchased. On or after any date on which Notes are redeemed or purchased,
interest ceases to accrue on the Notes or portions thereof called for
redemption or accepted for purchase on such date.

           9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples thereof.
The transfer of Notes may be 


                                      A-6
<PAGE>

registered and Notes may be exchanged as provided in the Indenture. Holders
seeking to transfer or exchange their Notes may be required, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption or tendered pursuant to an Offer.

           10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

           11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes, and any
existing Default or Event of Default (except a payment default) may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder, the Indenture and the
Notes may be amended to: cure any ambiguity, defect or inconsistency; provide
for uncertificated Notes in addition to or in place of certified Notes; provide
for the assumption by another corporation of the Company's obligations to the
Holders in the event of a merger or consolidation of the Company in which the
Company is not the surviving corporation or a sale of substantially all of the
Company's assets to such other corporation; comply with the Securities and
Exchange Commission's requirements to effect or maintain the qualification of
the Indenture under the TIA; or, make any change that does not materially
adversely effect any Holder's rights under the Indenture. Certain provisions of
the Indenture cannot be amended without the consent of each Holder affected
thereby.

           12. Defaults and Remedies. Events of Default include: default for 30
days in payment of interest on the Notes; default in payment of principal of or
premium, if any, on the Notes; failure by the Company for 30 days after notice
to it to comply with any of its other agreements or covenants in, or provisions
of, the Indenture or the Notes; certain defaults under and acceleration prior
to maturity, or failure to pay at maturity, of certain other Indebtedness;
certain final judgments that remain undischarged; and certain events of
bankruptcy or insolvency involving the Company or any Restricted Subsidiary
that is a Significant Subsidiary. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all the Notes to be immediately due and payable in an
amount equal to the principal amount of such Notes, plus any accrued and unpaid
interest; provided, however, that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, the principal amount of, and
any accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to the Notes becomes due and payable immediately without further action
or notice. Subject to certain exceptions, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power, provided that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of the
Holders unless such Holders have offered to the Trustee security and indemnity
satisfactory to it. Holders may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee may withhold from Holder notice of
any continuing default (except a payment Default) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.



                                      A-7
<PAGE>

           13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from and perform
services for the Company or any Affiliates, and may otherwise deal with the
Company or any Affiliates, as if it were not Trustee.

           14. No Recourse Against Others. No director, officer, employee or
stockholder of the Company shall have any liability for any Obligations of the
Company under the Notes, the Indenture or the Registration Rights Agreement or
for any claim based on, in respect of, or by reason of such Obligations or the
creation of any such Obligation. Each Holder by accepting a Note waives and
releases all such liability, and such waiver and release is part of the
consideration for the issuance of the Notes.

           15. Successor Substituted. Upon the consolidation or merger by the
Company with or into another corporation, or upon the sale, conveyance, lease
or other disposition of all or substantially all of its assets to another
corporation, in accordance with the Indenture, the corporation surviving any
such merger or consolation (if not the Company) or the corporation to which
such assets were sold or transferred to shall succeed to, and be substituted
for, and may exercise every right and power of the Company under the Indenture
with the same effect as if such surviving or other corporation had been named
as the Company in the Indenture.

           16. Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York.

           17. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

           18. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

           19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

           20. Holders' Compliance with Registration Rights Agreement. Each
Holder of a Note, by his acceptance thereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, dated as of March 22, 1999,
among the Company and the parties named on the signature page thereof (the
"Registration Rights Agreement"), including but not limited to the obligations
of the Holders with respect to a registration and the indemnification of the
Company and the Purchasers (as defined therein) to the extent provided therein.

           The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to: 


                                      A-8
<PAGE>

Jordan Industries, Inc., ArborLake Centre, 1751 Lake Cook Road, Suite 300, 
Deerfield, Illinois 60015.




                                      A-9
<PAGE>


                                ASSIGNMENT FORM

         To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to:

_______________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)

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

and irrevocably appoint__________________________ as agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.


Date:____________________


                          Your Signature:   __________________________________
                                            (Sign exactly as your name appears
                                             on the other side of this Note)


Signature Guarantee*


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

*   NOTICE:  The signature must be guaranteed by an institution which is a 
             member of one of the following recognized signature guarantee 
             programs:


             (1) The Securities Transfer Agent Medallion Program (STAMP); 
             (2) The New York Stock Exchange Medallion Program (MSP); 
             (3) The Stock Exchange Medallion Program (SEMP).


                                     A-10
<PAGE>


                       OPTION OF HOLDER TO ELECT PURCHASE


         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 of the Indenture, check the box: [ ]

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 of the Indenture, check the box: [ ]

         If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.13 or 4.14 of the Indenture, state the amount (multiples
of $1000 only):


$______________________________ 

Date:__________________________     Your Signature:_________________________
                                       (Sign exactly as your name appears
                                       on the face of this Note)


Signature Guarantee*

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


*        NOTICE:  The signature must be guaranteed by an institution which is a
                  member of one of the following recognized signature guarantee
                  programs:


                  (1) The Securities Transfer Agent Medallion Program (STAMP);
                  (2) The New York Stock Exchange Medallion Program (MSP); 
                  (3) The Stock Exchange Medallion Program (SEMP).


                                     A-11
<PAGE>


SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES2                                    

         The following exchanges of a part of this Global Note for Certificated
Notes have been made:

<TABLE>
<CAPTION>
                                                                               Principal Amount of
                            Amount of decrease in    Amount of increase in       this Global Note
                             Principal Amount of      Principal Amount of    following such decrease  Signature of authorized
     Date of Exchange          this Global Note         this Global Note          (or increase)          officer of Trustee
- -------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                      <C>                     <C>                      <C>


































</TABLE>




                                     A-12
<PAGE>

                                                                      EXHIBIT B

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES

Re:[Series C] [Series D] 10 3/8% Senior Notes due 2007 (the "Notes") of Jordan
Industries, Inc.

         This Certificate relates to $______ principal amount of Notes held in
* [ ] book-entry or * [ ] definitive form by _______________________ (the
"Transferor").

The Transferor, by written order, has requested the Trustee:

[]       to deliver in exchange for its beneficial interest in the Global Note
         held by the depository, a Note or Notes in definitive, registered form
         of authorized denominations and an aggregate principal amount equal to
         its beneficial interest in such Global Note (or the portion thereof
         indicated above); or

[]       to exchange or register the transfer of a Note or Notes. In connection
         with such request and in respect of each such Note, the Transferor
         does hereby certify that Transferor is familiar with the Indenture
         relating to the above captioned Notes and the transfer of this Note
         does not require registration under the Securities Act of 1933, as
         amended (the "Securities Act"), because such Note:

[]       is being acquired for the Transferor's own account, without transfer;

[]       is being transferred pursuant to an effective registration statement;

[]       is being transferred to a "qualified institutional buyer" (as defined
         in Rule 144A under the Securities Act), in reliance on such Rule 144A;

[]       is being transferred to an institutional "accredited investor" as
         defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act;**

[]       is being transferred pursuant to an exemption from registration in
         accordance with Rule 904 under the Securities Act;***

[]       is being transferred pursuant to Rule 144 under the Securities Act;***
         or

[]       is being transferred pursuant to another exemption from the
         registration requirements of the Securities Act (explain:
         __________________________________________).***




                                      B-1
<PAGE>

                          [INSERT NAME OF TRANSFEROR]


                       By:_______________________________

Date:_____________________

*        Check applicable box.
**       If this box is checked, this certificate must be accompanied by a
         transferee letter of representations.
***      If this box is checked, this certificate must be accompanied by an
         opinion of counsel to the effect that such transfer is in compliance
         with the Securities Act.





                                      B-2
<PAGE>

                                                                      EXHIBIT C

                            FORM OF CERTIFICATE FROM
                  ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

Jordan Industries, Inc.
ArborLake Centre
1751 Lake Cook Road
Deerfield, Illinois 60015

           Re:  10 3/8% [Series C][Series D]] Senior Notes due 2007

           Reference is hereby made to the Indenture, dated as of March 22,
1999 (the "Indenture"), between Jordan Industries, Inc., as issuer (the
"Company"), and U.S. Bank Trust, N.A., as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

           In connection with our proposed purchase of $____________ aggregate
principal amount of:

           (a)   [ ]       a beneficial interest in a Global Note, or

           (b)   [ ]       a Definitive Note,

           we confirm that:

           1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").

           2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and
to the Company a signed letter substantially in the form of this letter and, if
such transfer is in respect of a principal amount of Notes, at the time of
transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (E) pursuant to the provisions of
Rule 144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing the Definitive Note or beneficial interest in


                                      C-1
<PAGE>

a Global Note from us in a transaction meeting the requirements of clauses (A)
through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.

           3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.

           4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.

           5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.

           You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.


                                       [Insert Name of Accredited Investor]


                                       By:
                                        Name:
                                        Title:


Dated:                              





                                      C-2
<PAGE>

                            JORDAN INDUSTRIES, INC.

                                      AND

                      U.S. BANK TRUST NATIONAL ASSOCIATION

                                   AS TRUSTEE


                                  $155,000,000

                             SERIES C AND SERIES D

                         10 3/8% SENIOR NOTES DUE 2007




                                   INDENTURE
                           DATED AS OF MARCH 22, 1999




<PAGE>

Trust Indenture
Act Section                                                 Indenture Section

310(a)(1).....................................................     7.10
   (a)(2).....................................................     7.10
   (a)(3).....................................................     N.A.4**
   (a)(4).....................................................     N.A.
   (a)(5).....................................................     7.10
   (b)........................................................     7.10
   (c)........................................................     N.A.
311(a)........................................................     7.11
   (b)........................................................     7.11
   (c)........................................................     N.A.
312(a)........................................................      2.5
   (b)........................................................     10.3
   (c)........................................................     10.3
313(a)........................................................      7.6
   (b)(1).....................................................     N.A.
   (b)(2).....................................................      7.6
   (c)........................................................7.6; 10.2
   (d)........................................................      7.6
314(a)........................................................4.2; 10.2
   (b)........................................................     N.A.
   (c)(1).....................................................     10.4
   (c)(2).....................................................     10.4
   (c)(3).....................................................     N.A.
   (d)........................................................     N.A.
   (e)........................................................     10.5
   (f)........................................................     N.A.
315(a)........................................................      7.1
   (b)........................................................7.5; 10.2
   (c)........................................................      7.1
   (d)........................................................      7.1
   (e)........................................................     6.11
316(a)(last sentence).........................................      2.9
   (a)(1)(A)..................................................      6.5
   (a)(1)(B)..................................................      6.4
   (a)(2).....................................................     N.A.
   (b)........................................................      9.2


                                       i
<PAGE>

317(a)(1).....................................................      6.8
   (a)(2).....................................................      6.9
   (b)........................................................      2.4
318(a)........................................................     10.1



















                                      ii
<PAGE>
                                              TABLE OF CONTENTS


<TABLE>
                                                                                                               PAGE
<CAPTION>
                              ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
<S>                                                                                                              <C>
Section 1.1. Definitions..........................................................................................1
Section 1.2. Other Definitions...................................................................................19
Section 1.3. Incorporation by Reference of Trust Indenture Act...................................................20
Section 1.4. Rules of Construction...............................................................................20

                                             ARTICLE 2. THE SECURITIES

Section 2.1. Form and Dating.....................................................................................20
Section 2.2. Execution and Authentication........................................................................21
Section 2.3. Registrar and Paying Agent..........................................................................22
Section 2.4. Paying Agent to Hold Money in Trust.................................................................22
Section 2.5. Holder Lists........................................................................................22
Section 2.6. Transfer and Exchange...............................................................................22
Section 2.7. Replacement Securities..............................................................................26
Section 2.8. Outstanding Securities..............................................................................27
Section 2.9. Treasury Securities.................................................................................27
Section 2.10. Temporary Securities...............................................................................27
Section 2.11. Cancellation.......................................................................................28
Section 2.12. Defaulted Interest.................................................................................28
Section 2.13. Record Date........................................................................................28
Section 2.14. CUSIP Number.......................................................................................28
Section 2.15. Legends............................................................................................28

                                               ARTICLE 3. REDEMPTION

Section 3.1. Notices to Trustee..................................................................................29
Section 3.2. Selection of Securities to Be Redeemed or Purchased.................................................30
Section 3.3. Notice of Redemption................................................................................30
Section 3.4. Effect of Notice of Redemption......................................................................31
Section 3.5. Deposit of Redemption Price.........................................................................31
Section 3.6. Securities Redeemed in Part.........................................................................32
Section 3.7. Optional Redemption Provisions......................................................................32
Section 3.8. Mandatory Purchase Provision........................................................................32

                                               ARTICLE 4. COVENANTS

Section 4.1. Payment of Securities...............................................................................35
Section 4.2. SEC Reports.........................................................................................35
Section 4.3. Compliance Certificate..............................................................................36
Section 4.4. Stay, Extension and Usury Laws......................................................................37


                                                       iii
<PAGE>

Section 4.5. Limitation on Restricted Payments...................................................................37
Section 4.6. Corporate Existence.................................................................................41
Section 4.7. Limitation on Incurrence of Indebtedness............................................................41
Section 4.8. Limitation on Transactions with Affiliates..........................................................42
Section 4.9. Limitation on Liens.................................................................................43
Section 4.10. Compliance with Laws, Taxes........................................................................43
Section 4.11. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries...........43
Section 4.12. Maintenance of Office or Agencies..................................................................45
Section 4.13. Change of Control..................................................................................46
Section 4.14. Limitation on Asset Sales..........................................................................46
Section 4.15. Limitation on Guarantees of Company Indebtedness by Restricted Subsidiaries........................47

                                               ARTICLE 5. SUCCESSORS

Section 5.1. Merger or Consolidation.............................................................................48
Section 5.2. Successor Corporation Substituted...................................................................49

                                         ARTICLE 6. DEFAULTS AND REMEDIES

Section 6.1. Events of Default...................................................................................49
Section 6.2. Acceleration........................................................................................51
Section 6.3. Other Remedies......................................................................................52
Section 6.4. Waiver of Past Defaults.............................................................................52
Section 6.5. Control by Majority.................................................................................52
Section 6.6. Limitation on Suits.................................................................................52
Section 6.7. Rights of Holders to Receive Payment................................................................53
Section 6.8. Collection Suit by Trustee..........................................................................53
Section 6.9. Trustee May File Proofs of Claim....................................................................54
Section 6.10. Priorities.........................................................................................54
Section 6.11. Undertaking for Costs..............................................................................54

                                                ARTICLE 7. TRUSTEE

Section 7.1. Duties of Trustee...................................................................................55
Section 7.2. Rights of Trustee...................................................................................56
Section 7.3. Individual Rights of Trustee........................................................................56
Section 7.4. Trustee's Disclaimer................................................................................57
Section 7.5. Notice to Holders of Defaults and Events of Default.................................................57
Section 7.6. Reports by Trustee to Holders.......................................................................57
Section 7.7. Compensation and Indemnity..........................................................................57
Section 7.8. Replacement of Trustee..............................................................................58
Section 7.9. Successor Trustee by Merger, etc....................................................................59
Section 7.10. Eligibility; Disqualification......................................................................59
Section 7.11. Preferential Collection of Claims Against Company..................................................60

                                         ARTICLE 8. DISCHARGE OF INDENTURE

Section 8.1. Discharge of Liability on Securities; Defeasance....................................................60


                                                      iv
<PAGE>

Section 8.2. Conditions to Defeasance............................................................................61
Section 8.3. Application of Trust Money..........................................................................62
Section 8.4. Repayment to Company................................................................................62
Section 8.5. Indemnity for Government Obligations................................................................62
Section 8.6. Reinstatement.......................................................................................63

                                               ARTICLE 9. AMENDMENTS

Section 9.1. Amendments and Supplements Permitted Without Consent of Holders.....................................63
Section 9.2. Amendments and Supplements Requiring Consent of Holders.............................................64
Section 9.3. Compliance with TIA.................................................................................65
Section 9.4. Revocation and Effect of Consents...................................................................65
Section 9.5. Notation on or Exchange of Securities...............................................................65
Section 9.6. Trustee Protected...................................................................................66

                                             ARTICLE 10. MISCELLANEOUS

Section 10.1. Trustee Indenture Act Controls.....................................................................66
Section 10.2. Notices............................................................................................66
Section 10.3. Communication by Holders with Other Holders........................................................67
Section 10.4. Certificate and Opinion as to Conditions Precedent.................................................67
Section 10.5. Statements Required in Certificate or Opinion......................................................67
Section 10.6. Rules by Trustee and Agents........................................................................68
Section 10.7. Legal Holidays.....................................................................................68
Section 10.8. No Recourse Against Others.........................................................................68
Section 10.9. Counterparts.......................................................................................68
Section 10.10. Variable Provisions...............................................................................69
Section 10.11. Governing Law.....................................................................................69
Section 10.12. No Adverse Interpretation of Other Agreements.....................................................69
Section 10.13. Successors........................................................................................69
Section 10.14. Severability......................................................................................69
Section 10.15. Table of Contents, Headings, etc..................................................................69
</TABLE>


                                                        v


<PAGE>

                                                                     EXHIBIT 4.5

                               (Face of Security)

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY (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. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" (AS DEFINED IN SECTION 1273
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). THE "ISSUE PRICE" OF THE NOTE
IS 96.62% OF ITS PRINCIPAL AMOUNT, THE TOTAL AMOUNT OF ORIGINAL ISSUE DISCOUNT
IS 3.38% OF ITS PRINCIPAL AMOUNT, THE "ISSUE DATE" OF THE NOTE IS MARCH 22, 1999
AND THE NOTE'S "YIELD TO MATURITY" ON THE ISSUE DATE IS 11.00%, COMPOUNDED
SEMI-ANNUALLY.

<PAGE>

                             JORDAN INDUSTRIES, INC.
                               10 3/8% SENIOR NOTE
                                    DUE 2007
NO. 1
$155,000,000.00
CUSIP NO. 480695___

         Jordan Industries, Inc., an Illinois corporation (the "Company"), as
obligor, for value received promises to pay to Cede & Co., or registered
assigns, the principal sum of 155,000,000.00 Dollars on August 1, 2007. Interest
Payment Dates: February 1 and August 1 and on the maturity date. Record Dates:
January 15 and July 15 (whether or not a Business Day).

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

         IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.

                                       Dated:

                                       JORDAN INDUSTRIES, INC.

                                       By:
                                          Name:
                                          Title:

                                       By:
                                          Name:
                                          Title:

Trustee's Certificate of Authentication:

This is one of the Notes referred to 
in the within-mentioned Indenture:

U.S. BANK TRUST NATIONAL ASSOCIATION
  as Trustee

By:
   -------------------------------
   Authorized Signature

<PAGE>

                               (Back of Security)

                          10 3/8% SERIES C SENIOR NOTE
                                    DUE 2007

         1. Interest. Jordan Industries, Inc., (the "Company") promises to pay
interest on the principal amount of the Notes at the rate and in the manner
specified below. Interest on the Notes will accrue at 10 3/8% per annum from
February 1, 1999 until maturity. Interest will be payable semiannually in cash
on February 1 and August 1 of each year, or if any such day is not a Business
Day on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date on which interest
has been paid or, if no interest has been paid, from February 1, 1999; provided
that the first Interest Payment Date shall be August 1, 1999. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

         2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date for the next Interest Payment Date
even if such Notes are canceled after such record date and on or before such
Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect
principal payments on such Notes. The Company shall pay principal, premium, if
any, and interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by check payable in such money, and
any such check may be mailed to a Holder's registered address.

         3. Paying Agent and Registrar. U.S. Bank Trust National Association
(the "Trustee") will initially act as the Paying Agent and Registrar. The
Company may appoint additional paying agents or co-registrars, and change the
Paying Agent, any additional paying agent, the Registrar or any co-registrar
without prior notice to any Holder. The Company or any of its Subsidiaries may
act in any such capacity.

         4. Indenture. The Company issued the Notes under an Indenture dated as
of March 22, 1999 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA") (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to, and qualified by, all
such terms, certain of which are summarized herein, and Holders are referred to
the Indenture and the TIA for a statement of such terms (all capitalized terms
not defined herein shall have the meanings assigned than in the Indenture). The
Notes are unsecured general obligations of the Company limited to $155,000,000
in aggregate principal amount.

<PAGE>

         5. Optional Redemption. Except as described in paragraph 6 below, the
Notes may not be redeemed at the option of the Company prior to August 1, 2002.
During the twelve (12) month period beginning August 1 of the years indicated
below, the Notes will be redeemable at the option of the Company, in whole or in
part, 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 date of redemption:

         Year                                              Percentage
         ----                                              ----------
         2002.............................................. 105.188%
         2003.............................................. 102.594%
         2004 and thereafter............................... 100.000%

         6. Mandatory Redemption. Subject to the Company's obligation to make an
offer to purchase Notes under certain circumstances pursuant to Section 4.13 and
4.14 of the Indenture (as described in paragraph 7 below), the Company is not
required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Notes.

         7. Mandatory Offers to Purchase Notes. (a) Following the occurrence of
a Change of Control (the "Change of Control Trigger Date"), the Company will be
required to offer (a "Change of Control Offer") to purchase all outstanding
Notes at a purchase price equal to 101% of the principal amount of such Notes,
plus any accrued and unpaid interest and Liquidated Damages, if any, to the date
of purchase.

         (b) If the Company or any Restricted Subsidiary consummates one or more
Asset Sales and does not use all of the Net Proceeds from such Asset Sales as
provided in the Indenture, the Company will be required, under certain
circumstances, to utilize the Excess Proceeds from such Asset Sales to offer (an
"Asset Sale Offer") to purchase Notes at a purchase price equal to 100% of the
principal amount of the Notes, plus any accrued and unpaid interest to the date
of purchase. If the Excess Proceeds are insufficient to purchase all Notes
tendered pursuant to any Asset Sale Offer, the Trustee shall select the Notes to
be purchased in accordance with the terms of the Indenture.

         (c) Holders may tender all or, subject to paragraph 8 below, any
portion of their Notes in a Change of Control or Asset Sale Offer (collectively,
an "Offer") by completing the form below entitled "OPTION OF HOLDER TO ELECT
PURCHASE."

         (d) The Company will comply with Rule 14e-1 under the Securities
Exchange Act of 1934, as amended, and any other securities laws and regulations
to the extent applicable to any Offer.

         8. Notice of Redemption or Purchase. Notice of an optional redemption
or an Offer will be mailed to each Holder at its registered address at least 30
days but not more than 

<PAGE>

60 days before the date of redemption or purchase. Notes may be redeemed or
purchased in part, but only in whole multiples of $1000 unless all Notes held by
a Holder are to be redeemed or purchased. On or after any date on which Notes
are redeemed or purchased, interest ceases to accrue on the Notes or portions
thereof called for redemption or accepted for purchase on such date.

         9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples thereof. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. Holders seeking to transfer or exchange their Notes may be
required, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not exchange or register the transfer of any Note
or portion of a Note selected for redemption or tendered pursuant to an Offer.

         10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

         11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes, and any
existing Default or Event of Default (except a payment default) may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder, the Indenture and the
Notes may be amended to: cure any ambiguity, defect or inconsistency; provide
for uncertificated Notes in addition to or in place of certified Notes; provide
for the assumption by another corporation of the Company's obligations to the
Holders in the event of a merger or consolidation of the Company in which the
Company is not the surviving corporation or a sale of substantially all of the
Company's assets to such other corporation; comply with the Securities and
Exchange Commission's requirements to effect or maintain the qualification of
the Indenture under the TIA; or, make any change that does not materially
adversely effect any Holder's rights under the Indenture. Certain provisions of
the Indenture cannot be amended without the consent of each Holder affected
thereby.

         12. Defaults and Remedies. Events of Default include: default for 30
days in payment of interest on the Notes; default in payment of principal of or
premium, if any, on the Notes; failure by the Company for 30 days after notice
to it to comply with any of its other agreements or covenants in, or provisions
of, the Indenture or the Notes; certain defaults under and acceleration prior to
maturity, or failure to pay at maturity, of certain other Indebtedness; certain
final judgments that remain undischarged; and certain events of bankruptcy or
insolvency involving the Company or any Restricted Subsidiary that is a
Significant Subsidiary. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Notes may
declare all the Notes to be immediately due and payable in an amount equal to
the principal amount of such Notes, plus any accrued and unpaid interest;
provided, 

<PAGE>

however, that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, the principal amount of, and any accrued and unpaid
interest on, the Notes becomes due and payable immediately without further
action or notice. Subject to certain exceptions, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power, provided that the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of the Holders unless such Holders have offered to the Trustee security
and indemnity satisfactory to it. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may withhold from Holder
notice of any continuing default (except a payment Default) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee.

         13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from and perform services
for the Company or any Affiliates, and may otherwise deal with the Company or
any Affiliates, as if it were not Trustee.

         14. No Recourse Against Others. No director, officer, employee or
stockholder of the Company shall have any liability for any Obligations of the
Company under the Notes or the Indenture or for any claim based on, in respect
of, or by reason of such Obligations or the creation of any such Obligation.
Each Holder by accepting a Note waives and releases all such liability, and such
waiver and release is part of the consideration for the issuance of the Notes.

         15. Successor Substituted. Upon the consolidation or merger by the
Company with or into another corporation, or upon the sale, conveyance, lease or
other disposition of all or substantially all of its assets to another
corporation, in accordance with the Indenture, the corporation surviving any
such merger or consolation (if not the Company) or the corporation to which such
assets were sold or transferred to shall succeed to, and be substituted for, and
may exercise every right and power of the Company under the Indenture with the
same effect as if such surviving or other corporation had been named as the
Company in the Indenture.

         16. Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York.

         17. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

         18. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

<PAGE>

         19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.

         The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to: Jordan Industries, Inc., ArborLake Centre, 1751 Lake
Cook Road, Suite 300, Deerfield, Illinois 60015.

<PAGE>

                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to:

                  (Insert assignee's soc. sec. or tax I.D. no.)




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

and irrevocably appoint_________________ as agent to transfer this Note on the
books of the Company.  The agent may substitute another to act for him.


Date:
     ------------------------

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


Signature Guarantee*


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

* NOTICE:The signature must be guaranteed by an institution which is a member of
one of the following recognized signature guarantee programs:


         (1) The Securities Transfer Agent Medallion Program (STAMP);
         (2) The New York Stock Exchange Medallion Program (MSP);
         (3) The Stock Exchange Medallion Program (SEMP).

<PAGE>

                       OPTION OF HOLDER TO ELECT PURCHASE


         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 of the Indenture, check the box: [ ]

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 of the Indenture, check the box: [ ]

         If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.13 or 4.14 of the Indenture, state the amount (multiples
of $1000 only):


$                                   

Date:                               Your Signature:
     ----------------------------                  ----------------------------
                                              (Sign exactly as your name appears
                                                   on the face of this Note)


Signature Guarantee*

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

*  NOTICE: The signature must be guaranteed by an institution which is a
           member of one of the following recognized signature guarantee
           programs:

         (1) The Securities Transfer Agent Medallion Program (STAMP);
         (2) The New York Stock Exchange Medallion Program (MSP);
         (3) The Stock Exchange Medallion Program (SEMP).

<PAGE>


                    SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES

         The following exchanges of a part of this Global Note for Certificated
Notes have been made:

<TABLE>
<CAPTION>
 Date of   Amount of decrease         Amount       Principal Amount of      Signature of   
Exchange   in Principal Amount     of increase      this Global Note     authorized officer
           of this Global Note     in Principal      following such          of Trustee     
                                  Amount of this      decrease (or       
                                    Global Note         increase)     
- -------------------------------------------------------------------------------------------
<S>         <C>                     <C>                 <C>                  <C>
                               
                               
                        



                                
                                
                                
                                
                                




                               
                               
                               
                               
                               
                      



</TABLE>


<PAGE>

                                                                     EXHIBIT 4.6

                               (Face of Security)

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY
TRUST COMPANY (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. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SENIOR NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET
FORTH IN THE NEXT SENTENCE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

                  (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
                  BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
                  "QIB"), (B) IT HAS ACQUIRED THIS SENIOR NOTE IN AN OFFSHORE
                  TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
                  SECURITIES ACT OR (C) IT IS AN "INSTITUTIONAL ACCREDITED
                  INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)) OR
                  REGULATION D UNDER THE SECURITIES ACT (AN "IAI"),

                  (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
                  SENIOR NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
                  SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
                  BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
                  ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
                  RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
                  REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT, (D) IN A
                  TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
                  SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
                  FURNISHES THE TRUSTEE A SIGNED LETTER 

<PAGE>

                  CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
                  THE TRANSFER OF THIS SENIOR NOTE (THE FORM OF WHICH CAN BE
                  OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
                  RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SENIOR NOTES LESS
                  THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
                  COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
                  SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
                  THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AS BASED
                  UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G)
                  PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
                  CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
                  ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
                  JURISDICTION, AND

                  (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
                  SENIOR NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
                  SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS SENIOR NOTE IN VIOLATION OF THE FOREGOING.

THIS NOTE WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT" (AS DEFINED IN SECTION 1273
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). THE "ISSUE PRICE" OF THE
NOTE IS 96.62% OF ITS PRINCIPAL AMOUNT, THE TOTAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS 3.38% OF ITS PRINCIPAL AMOUNT, THE "ISSUE DATE" OF THE NOTE IS
MARCH 22, 1999 AND THE NOTE'S "YIELD TO MATURITY" ON THE ISSUE DATE IS 11.00%,
COMPOUNDED SEMI-ANNUALLY.


<PAGE>


                            JORDAN INDUSTRIES, INC.
                              10 3/8% SENIOR NOTE
                                    DUE 2007
NO. 1
$155,000,000.00
CUSIP NO. 480695AL9

                  Jordan Industries, Inc., an Illinois corporation (the
"Company"), as obligor, for value received promises to pay to Cede & Co., or
registered assigns, the principal sum of 155,000,000.00 Dollars on August 1,
2007. Interest Payment Dates: February 1 and August 1 and on the maturity date.
Record Dates: January 15 and July 15 (whether or not a Business Day).

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

                  IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.


                            Dated:


                            JORDAN INDUSTRIES, INC.

                            By: /s/ Gordon L. Nelson
                                Name:  Gordon L. Nelson
                                Title: Senior Vice President and Treasurer


                            By: /s/ G. Robert Fisher
                                Name:  G. Robert Fisher
                                Title: General Counsel and Secretary


<PAGE>

Trustee's Certificate of Authentication:

This is one of the Notes referred to in the within-mentioned Indenture:

U.S. BANK TRUST NATIONAL ASSOCIATION
  as Trustee


By: /s/ Richard Prokosch
   ------------------------------------
   Authorized Signature


<PAGE>



                               (Back of Security)

                          10 3/8% SERIES C SENIOR NOTE
                                    DUE 2007

                  1. Interest. Jordan Industries, Inc., (the "Company")
promises to pay interest on the principal amount of the Notes at the rate and
in the manner specified below. Interest on the Notes will accrue at 10 3/8% per
annum from February 1, 1999 until maturity. The Company will pay Liquidated
Damages pursuant to Section 5 of the Registration Rights Agreement referred to
below. Interest and Liquidated Damages, if any, will be payable semiannually in
cash on February 1 and August 1 of each year, or if any such day is not a
Business Day on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date on which
interest has been paid or, if no interest has been paid, from February 1, 1999;
provided that the first Interest Payment Date shall be August 1, 1999. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.

                  2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) and Liquidated Damages, if any, to the
Persons who are registered Holders of Notes at the close of business on the
record date for the next Interest Payment Date even if such Notes are canceled
after such record date and on or before such Interest Payment Date. Holders
must surrender Notes to a Paying Agent to collect principal payments on such
Notes. The Company shall pay principal, premium, if any, interest and
Liquidated Damages, if any, in money of the United States that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by check payable in
such money, and any such check may be mailed to a Holder's registered address.

                  3. Paying Agent and Registrar. U.S. Bank Trust National
Association (the "Trustee") will initially act as the Paying Agent and
Registrar. The Company may appoint additional paying agents or co-registrars,
and change the Paying Agent, any additional paying agent, the Registrar or any
co-registrar without prior notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.

                  4. Indenture. The Company issued the Notes under an Indenture
dated as of March 22, 1999 (the "Indenture") between the Company and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (the
"TIA") (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to, and
qualified by, all such terms, certain of which are summarized herein, and
Holders are referred to the Indenture and the TIA for a statement of such terms
(all capitalized terms not defined herein shall have the meanings assigned than
in the Indenture). The Notes are unsecured general obligations of the Company
limited to $155,000,000 in aggregate principal amount.

                  5. Optional Redemption. Except as described in paragraph 6
below, the Notes may not be redeemed at the option of the Company prior to
August 1, 2002. During the twelve (12) month period beginning August 1 of the
years indicated below, the Notes will be redeemable at the option of the
Company, in whole or in part, at the redemption prices 

<PAGE>

(expressed as percentages of the principal amount) set forth below, plus any
accrued and unpaid interest and Liquidated Damages, if any, to the date of
redemption:

                  Year                                           Percentage
                  2002...........................................105.188 %
                  2003...........................................102.594 %
                  2004 and thereafter............................100.000 %

                  6. Mandatory Redemption. Subject to the Company's obligation
to make an offer to purchase Notes under certain circumstances pursuant to
Section 4.13 and 4.14 of the Indenture (as described in paragraph 7 below), the
Company is not required to make any mandatory redemption, purchase or sinking
fund payments with respect to the Notes.

                  7. Mandatory Offers to Purchase Notes. (a) Following the
occurrence of a Change of Control (the "Change of Control Trigger Date"), the
Company will be required to offer (a "Change of Control Offer") to purchase all
outstanding Notes at a purchase price equal to 101% of the principal amount of
such Notes, plus any accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase.

                  (b) If the Company or any Restricted Subsidiary consummates
one or more Asset Sales and does not use all of the Net Proceeds from such
Asset Sales as provided in the Indenture, the Company will be required, under
certain circumstances, to utilize the Excess Proceeds from such Asset Sales to
offer (an "Asset Sale Offer") to purchase Notes at a purchase price equal to
100% of the principal amount of the Notes, plus any accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase. If the Excess Proceeds
are insufficient to purchase all Notes tendered pursuant to any Asset Sale
Offer, the Trustee shall select the Notes to be purchased in accordance with
the terms of the Indenture.

                  (c) Holders may tender all or, subject to paragraph 8 below,
any portion of their Notes in a Change of Control or Asset Sale Offer
(collectively, an "Offer") by completing the form below entitled "OPTION OF
HOLDER TO ELECT PURCHASE."

                  (d) The Company will comply with Rule 14e-1 under the
Securities Exchange Act of 1934, as amended, and any other securities laws and
regulations to the extent applicable to any Offer.

                  8. Notice of Redemption or Purchase. Notice of an optional
redemption or an Offer will be mailed to each Holder at its registered address
at least 30 days but not more than 60 days before the date of redemption or
purchase. Notes may be redeemed or purchased in part, but only in whole
multiples of $1000 unless all Notes held by a Holder are to be redeemed or
purchased. On or after any date on which Notes are redeemed or purchased,
interest ceases to accrue on the Notes or portions thereof called for
redemption or accepted for purchase on such date.

                  9. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples thereof. The transfer of 

<PAGE>

Notes may be registered and Notes may be exchanged as provided in the
Indenture. Holders seeking to transfer or exchange their Notes may be required,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture.
The Registrar need not exchange or register the transfer of any Note or portion
of a Note selected for redemption or tendered pursuant to an Offer.

                  10. Persons Deemed Owners. The registered Holder of a Note
may be treated as its owner for all purposes.

                  11. Amendments and Waivers. Subject to certain exceptions,
the Indenture or the Notes may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Notes, and any
existing Default or Event of Default (except a payment default) may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder, the Indenture and the
Notes may be amended to: cure any ambiguity, defect or inconsistency; provide
for uncertificated Notes in addition to or in place of certified Notes; provide
for the assumption by another corporation of the Company's obligations to the
Holders in the event of a merger or consolidation of the Company in which the
Company is not the surviving corporation or a sale of substantially all of the
Company's assets to such other corporation; comply with the Securities and
Exchange Commission's requirements to effect or maintain the qualification of
the Indenture under the TIA; or, make any change that does not materially
adversely effect any Holder's rights under the Indenture. Certain provisions of
the Indenture cannot be amended without the consent of each Holder affected
thereby.

                  12. Defaults and Remedies. Events of Default include: default
for 30 days in payment of interest on the Notes; default in payment of
principal of or premium, if any, on the Notes; failure by the Company for 30
days after notice to it to comply with any of its other agreements or covenants
in, or provisions of, the Indenture or the Notes; certain defaults under and
acceleration prior to maturity, or failure to pay at maturity, of certain other
Indebtedness; certain final judgments that remain undischarged; and certain
events of bankruptcy or insolvency involving the Company or any Restricted
Subsidiary that is a Significant Subsidiary. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the Notes may declare all the Notes to be immediately due and payable in an
amount equal to the principal amount of such Notes, plus any accrued and unpaid
interest; provided, however, that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, the principal amount of, and
any accrued and unpaid interest on, and Liquidated Damages, if any, with
respect to the Notes becomes due and payable immediately without further action
or notice. Subject to certain exceptions, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power, provided that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of the
Holders unless such Holders have offered to the Trustee security and indemnity
satisfactory to it. Holders may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee may withhold from Holder notice of
any continuing default (except a payment Default) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.


<PAGE>

                  13. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from and
perform services for the Company or any Affiliates, and may otherwise deal with
the Company or any Affiliates, as if it were not Trustee.

                  14. No Recourse Against Others. No director, officer,
employee or stockholder of the Company shall have any liability for any
Obligations of the Company under the Notes, the Indenture or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of such
Obligations or the creation of any such Obligation. Each Holder by accepting a
Note waives and releases all such liability, and such waiver and release is
part of the consideration for the issuance of the Notes.

                  15. Successor Substituted. Upon the consolidation or merger
by the Company with or into another corporation, or upon the sale, conveyance,
lease or other disposition of all or substantially all of its assets to another
corporation, in accordance with the Indenture, the corporation surviving any
such merger or consolation (if not the Company) or the corporation to which
such assets were sold or transferred to shall succeed to, and be substituted
for, and may exercise every right and power of the Company under the Indenture
with the same effect as if such surviving or other corporation had been named
as the Company in the Indenture.

                  16. Governing Law. This Note shall be governed by and
construed in accordance with the internal laws of the State of New York.

                  17. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

                  18. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).

                  19. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.

                  20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Note, by his acceptance thereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, dated as of March 22,
1999, among the Company and the parties named on the signature page thereof
(the "Registration Rights Agreement"), including but not limited to the
obligations of the Holders with respect to a registration and the
indemnification of the Company and the Purchasers (as defined therein) to the
extent provided therein.


<PAGE>

                  The Company shall furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to: Jordan Industries, Inc., ArborLake Centre,
1751 Lake Cook Road, Suite 300, Deerfield, Illinois 60015.



<PAGE>


                                ASSIGNMENT FORM

      To assign this Note, fill in the form below: (I) or (we) assign and
                            transfer this Note to:


_______________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)

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

and irrevocably appoint__________________________ as agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.


Date:____________________


                              Your Signature:__________________________________
                                             (Sign exactly as your name appears
                                              on the other side of this Note)


Signature Guarantee*


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

* NOTICE:..The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guarantee programs:


                  (1) The Securities Transfer Agent Medallion Program (STAMP); 
                  (2) The New York Stock Exchange Medallion Program (MSP); 
                  (3) The Stock Exchange Medallion Program (SEMP).


<PAGE>



                       OPTION OF HOLDER TO ELECT PURCHASE


         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 of the Indenture, check the box: [ ]

         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 of the Indenture, check the box: [ ]

         If you elect to have only part of this Note purchased by the Company
pursuant to Section 4.13 or 4.14 of the Indenture, state the amount (multiples
of $1000 only):


$ ____________________________              

Date:_________________________  Your Signature:________________________________
                                             (Sign exactly as your name appears
                                             on the face of this Note)


Signature Guarantee*

____________________


* NOTICE:  The signature must be guaranteed by an institution which is a member
           of one of the following recognized signature guarantee programs:


                (1) The Securities Transfer Agent Medallion Program (STAMP); 
                (2) The New York Stock Exchange Medallion Program (MSP); 
                (3) The Stock Exchange Medallion Program (SEMP).

<PAGE>




                   SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES

         The following exchanges of a part of this Global Note for Certificated
Notes have been made:

<TABLE>
<CAPTION>
                                                                               Principal Amount of
                            Amount of decrease in    Amount of increase in       this Global Note
                             Principal Amount of      Principal Amount of    following such decrease  Signature of authorized
     Date of Exchange          this Global Note         this Global Note          (or increase)          officer of Trustee
- -------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>                      <C>                     <C>                      <C>



























</TABLE>


<PAGE>

                            JORDAN INDUSTRIES, INC.





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




                                  $155,000,000
                     10 3/8% SERIES C SENIOR NOTES DUE 2007


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


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




                         REGISTRATION RIGHTS AGREEMENT

                           DATED AS OF MARCH 22, 1999


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






<TABLE>
<CAPTION>
<S>                                     <C>                                   <C>
DONALDSON, LUFKIN & JENRETTE            JEFFERIES & COMPANY, INC.             BANCBOSTON ROBERTSON STEPHENS INC.
===================================================================================================================
</TABLE>
<PAGE>


                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of March 22, 1999, by and among Jordan Industries, Inc., an
Illinois corporation (the "Company"), and Donaldson, Lufkin & Jenrette,
Jefferies & Company, Inc. and BancBoston Robertson Stephens Inc. (each a
"Purchaser" and, collectively, the "Purchasers"), each of which has agreed to
purchase the Company's 10 3/8% Series C Senior Notes due 2007 (the "Series C
Senior Notes") pursuant to the Purchase Agreement (as defined below).

                  This Agreement is made pursuant to the Purchase Agreement,
dated March 17, 1999 (the "Purchase Agreement"), by and between the Company and
the Purchasers. In order to induce the Purchasers to purchase the Series C
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.

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

                  Broker-Dealer Transfer Restricted Senior Notes: Series D
Senior Notes that are acquired by a Broker-Dealer in the Exchange Offer in
exchange for Series C 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 C Senior Notes acquired directly from the Company or any of
its affiliates).

                  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.

                  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 D 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 D Senior Notes in the
same aggregate principal amount as the aggregate principal amount of Series C
Senior Notes tendered by Holders thereof pursuant to the Exchange Offer.



                                       1
<PAGE>

                  Damages Payment Date: With respect to the Series C 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 D 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 D 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 Purchasers
propose to sell the Series C Senior Notes to persons whom they, or persons
acting on their behalf, reasonably believe are "qualified institutional
buyers," as such term is defined in Rule 144A 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 U.S. Bank Trust National Association, 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 Series C 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.


                                        2
<PAGE>

                  Registration Statement: Any registration statement of the
Company relating to (a) an offering of Series D 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 C Senior Notes and the Series D
Senior Notes.

                  Series D Senior Notes: The Company's 10 3/8% Series D Senior
Notes due 2007 to be issued pursuant to the Indenture (i) in the Exchange Offer
or (ii) upon the request of any Holder of Series C Senior Notes covered by a
Shelf Registration Statement, in exchange for such Series C 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 90 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 


                                       3
<PAGE>

the earliest possible time, but in no event later than 150 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 D 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 D Senior Notes to be offered in exchange for the Series C 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 C 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 C 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 D Senior Note received by such Broker-Dealer in exchange
for Series C Senior Notes 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 


                                       4
<PAGE>

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 D 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 D 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 C 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) 90 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) 90 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 two years
(as extended pursuant to Section 6(c)(i)) following the date on which such
Shelf 


                                       5
<PAGE>

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 


                                       6
<PAGE>

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 Series C 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


                                       7
<PAGE>

         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 D Senior Notes to be issued in the Exchange
         Offer and (C) it is acquiring the Series D 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 D Senior
         Notes obtained by such Holder in exchange for Series C 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 D Senior Notes to be received
         in the Exchange Offer and that, to the best of the Company's
         information and belief, each Holder of Transfer Restricted Senior
         Notes participating in the Exchange Offer is acquiring the Series D
         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 D 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.



                                       8
<PAGE>

         (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 two-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
         two-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 


                                       9
<PAGE>

         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 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 


                                      10
<PAGE>

         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 of Transfer Restricted
         Senior Notes 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 


                                      11
<PAGE>

                           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 as well as the
                           accountants for the Alma Products division of Alma
                           Piston Company, Motion Control Engineering, Inc.,
                           Northern Technologies, Inc., and FIR Group, and any
                           other accountants or auditors identified in such
                           letters as having also delivered a letter in
                           connection therewith, 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(h) 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 (ix).

                  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 


                                      12
<PAGE>

         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 C Senior
         Notes covered by any Shelf Registration Statement contemplated by this
         Agreement, Series D Senior Notes, having an aggregate principal amount
         equal to the aggregate principal amount of Series C Senior Notes
         surrendered to the Company by such Holder in exchange therefor or
         being sold by such Holder; such Series D 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 C 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 (x) 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;



                                      13
<PAGE>

                  (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.



                                      14
<PAGE>

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 D 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 


                                      15
<PAGE>

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 


                                      16
<PAGE>

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 C Senior Notes held by
each of the Holders hereunder and not joint.



                                      17
<PAGE>

9.       RULE 144A AND RULE 144

                  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 (i) 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, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to
make all filings required thereby in a timely manner in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144.

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 (i) those rights existing
by virtue of the Stockholders Agreement, dated June 1, 1988, among the Company
and certain of its stockholders, as amended, (ii) those rights existing by
virtue of the registration rights agreement, 


                                      18
<PAGE>

dated July 25, 1997, among the Company and certain initial purchasers of the
Company's 10 3/8% Series A Senior Notes due 2007, and (iii) those rights
existing by virtue of the registration rights agreement, dated July 25, 1997,
among the Company and certain initial purchasers of the Company's 11 3/4%
Series A Senior Subordinated Debentures due 2009. 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 (i) in the case of Section 5 hereof, the Holders of all
outstanding Transfer Restricted Securities, and (ii) in the case of all other
provisions hereof, the 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;

                  (ii)     if to the Company:

                                   Jordan Industries, Inc.
                                   1751 Lake Cook Road
                                   Suite 550
                                   Deerfield, IL  60015
                                   Telecopier No.: (847) 945-5698
                                   Attention:  Chief Financial Officer

                           With a copy to:

                                    Mayer, Brown & Platt
                                    190 South LaSalle Street
                                    Chicago, Illinois  60603
                                    Telecopier No.: (312) 701-7711


                                      19
<PAGE>

                                    Attention:  Philip J. Niehoff

                  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.



                                      20
<PAGE>


                                                            REGISTRATION RIGHTS

                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.

                                            JORDAN INDUSTRIES, INC.


                                            By: /s/ Gordon L. Nelson
                                               --------------------------------
                                               Name:  Gordon L. Nelson
                                               Title: Senior Vice President
                                                      and Treasurer


DONALDSON, LUFKIN & JENRETTE


By: /s/ Edward Biggins
   --------------------------------
   Name:  Edward Biggins 
   Title: Vice President




JEFFERIES & COMPANY, INC.


By: /s/ Andrew R. Whittaker
   --------------------------------
   Name:  Andrew R. Whittaker
   Title: Executive Vice President





BANCBOSTON ROBERTSON STEPHENS, INC.


By: /s/ Laura A. Koch
   --------------------------------
   Name:  Laura A. Koch
   Title: Vice President


<PAGE>

                                                                       EXHIBIT 5


                                   May 3, 1999



Jordan Industries, Inc.
1751 Lake Cook Road, Suite 550
Deerfield, IL  60015

        Re:    $155 million 10_% Series D Senior Notes due 2007
               ------------------------------------------------

Ladies and Gentlemen:

        We have acted as counsel to Jordan Industries, Inc., an Illinois
corporation (the "Company"), in connection with the preparation of an
registration statement on Form S-4 (the "Registration Statement") to register
under the Securities Act of 1933, as amended (the "Act"), an offer to exchange
(the "Exchange Offer") $155 million aggregate principal amount of Series D 10_%
Senior Notes due 2007 (the "Series D Senior Notes") for $155 million principal
amount of Series C 10_% Senior Notes due 2007 (the "Series C Senior Notes"). The
Series C Senior Notes were, and the Series D Senior Notes will be, issued under
an indenture (the "Indenture") between the Company and U.S. Bank Trust National
Association, as trustee. In this connection, we have examined such corporate and
other records, instruments, certificates and documents as we considered
necessary to enable us to express this opinion.

        Based on the foregoing, it is our opinion that, upon completion of the
Exchange Offer, the Series D Senior Notes will have been duly authorized for
issuance and, when each series of Series D Senior Notes is duly executed,
authenticated, issued and delivered, such series will constitute valid and
legally binding obligations of the Company entitled to the benefits of the
Indenture, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor's rights
and to general equity principles (whether considered in a proceeding at law or
in equity).



<PAGE>

Jordan Industries, Inc.
May 3, 1999
Page 2


        We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to Mayer, Brown & Platt under the
caption "Legal Matters."

                                            Very truly yours,


                                            /s/ Mayer Brown & Platt        
                                            --------------------------------
                                            MAYER, BROWN & PLATT


<PAGE>

            Computation of the Ratios of Earnings to Fixed Charges
                                 (In thousands)


<TABLE>
<CAPTION>
                                                       Historical Consolidated
                                    -------------------------------------------------------------
                                       1994        1995         1996         1997         1998
<S>                                 <C>         <C>          <C>          <C>          <C>        
Fixed Charges
  Interest Expense                  $  40,887   $  46,974    $  63,340    $  82,455    $ 109,705  
  Rental expense included           
    in fixed charges                    2,856       3,755        4,887        2,639        4,017
                                    -------------------------------------------------------------
      Total fixed charges              43,743      50,729       68,227       85,094      113,722
                                    -------------------------------------------------------------
Earnings                            
  Pre-tax (loss) income                27,689     (11,773)     (47,410)      (6,173)     (22,550)
  Plus: fixed charges                  43,743      50,729       68,227       85,094      113,722
                                    -------------------------------------------------------------
      Total earnings                $  71,432   $  38,956    $  20,817    $  78,921    $  91,172
                                    -------------------------------------------------------------
Ratio of earnings to fixed charges        1.6          --(a)        --(a)        --(a)        --(a)
</TABLE>

<TABLE>
<CAPTION>
                                        Pro forma            Pro forma    
                                      Consolidated       Restricted Group
                                      ------------       ----------------
                                          1998                 1998
<S>                                     <C>                  <C>    
Fixed Charges
  Interest Expense                      $124,810             $49,843
  Rental expense included
    in fixed charges                       4,017               1,505
                                        --------             -------
      Total fixed charges                128,827              51,349
                                        --------             -------
Earnings
  Pre-tax (loss) income                  (22,162)            (13,081)
  Plus: fixed charges                    128,827              51,349
                                        --------             -------     
       Total earnings                   $106,665             $38,267
                                        --------             -------
Ratio of earnings to fixed charges            --(a)               --(a)
</TABLE>

(a) Earnings were insufficient to cover fixed charges by $11.8 million, $47.4
    million, $6.2 million and $22.6 million for the Company for the historical
    periods ended December 31, 1995, 1996, 1997 and 1998. Earnings were
    insufficient to cover fixed charges by $22.2 million for the Company and
    $13.1 million for the Restricted Group on a pro forma basis for the year
    ended December 31, 1998


<PAGE>

                                                                    EXHIBIT 23.2

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report, dated March 31, 1999, on the consolidated balance sheets of
Jordan Industries, Inc. as of December 31, 1997 and 1998, and the related
consolidated statements of operations, changes in shareholders' equity (net
capital deficiency), and cash flows for each of the three years in the period
ended December 31, 1998 in the Registration Statement (Form S-4) and related
Prospectus of Jordan Industries, Inc. for the registration of $155,000,000 of 
10 3/8% Series D Senior Notes due 2007.

                                       /s/ Ernst & Young LLP

Chicago, Illinois
May 3, 1999


<PAGE>



                                                                    EXHIBIT 23.3

                      [Mellen, Smith & Pivoz Letterhead]

         Consent of Mellen, Smith & Pivoz, P.C., Independent Auditors

We consent to the reference of our firm under the caption "Experts" and to the
use of our report, dated January 22, 1998, on the balance sheets of Diversified
Wire & Cable, Inc. as of December 31, 1996 and 1997, and the related statements
of operations, changes in shareholders' equity, and cash flows for the years
then ended, in the Registration Statement (Form S-4 No. 333-XXXXX) and related
Prospectus of Jordan Industries, Inc. for the registration of $155,000,000 of
10 3/8% Series D Senior Notes due 2007.

                                       /s/ Mellen, Smith & Pivoz, P.C.

Bingham Farms, Michigan
April 30, 1999


<PAGE>

                                                                    EXHIBIT 23.4

                        CONSENT OF INDEPENDENT AUDITORS

We consent to the inclusion in this registration statement on Form S-4
(Registration No. 333-    ) of our report dated 5 February, 1999 on our audits 
of the consolidated financial statements of the FIR Group, composed of FIR
Elettromeccanica S.p.A., CIME S.p.A. and Selin Sistemi S.p.A., and TEA S.r.1. We
also consent to the reference to our firm under the caption "Experts".

                                                        COOPERS & LYBRAND S.p.A.

Bologna, Italy
May 3, 1999


<PAGE>



                                                                    EXHIBIT 23.5

                         [Arthur Andersen Letterhead]

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

      As independent public accountants, we hereby consent to the reference of
our firm under the caption "Experts" and the use of our report dated February 8,
1999 for Alma Products, included in or made a part of this registration
statement.

                                       ARTHUR ANDERSEN LLP

Detroit, Michigan
April 28, 1999


<PAGE>

                                                                    EXHIBIT 23.6

                         [Arthur Andersen Letterhead]

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

      As independent public accountants, we hereby consent to the use of our
report dated February 9, 1999 on the financial statements of Motion Control
Engineering, Inc. included in this registration statement of Jordan Industries,
Inc. on Form S-4 and to all references to our Firm included in this registration
statement.

                                       ARTHUR ANDERSEN LLP

Sacramento, California
April 30, 1999


<PAGE>

                                                                    EXHIBIT 23.7

                          [MOSS ADAMS LLP LETTERHEAD]

                        CONSENT OF INDEPENDENT AUDITORS

We consent to the use in the Registration Statement (Form S-4) of Jordan
Industries, Inc. for the registration of $155,000,000 of 10 3/8% Series D Senior
Notes due 2007, of our report, dated January 22, 1999, on the consolidated
balance sheets of Northern Technologies Holding, Inc., as of December 31, 1997
and 1998, and the related consolidated statements of income, stockholder's
equity, and cash flows for the years then ended. We also consent to the
reference to our Firm under the caption "Experts."

Moss Adams LLP

Spokane, Washington
May 3, 1999


<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM T-1

                       Statement of Eligibility Under the
                  Trust Indenture Act of 1939 of a Corporation
                          Designated to Act as Trustee


                      U.S. BANK TRUST NATIONAL ASSOCIATION
               (Exact name of Trustee as specified in its charter)

      United States                                              41-0257700
(State of Incorporation)                                      (I.R.S. Employer
                                                            Identification No.)

        U.S. Bank Trust Center
        180 East Fifth Street
        St. Paul, Minnesota                                       55101
(Address of Principal Executive Offices)                        (Zip Code)


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


        Illinois                                                36-3598114
(State of Incorporation)                                     (I.R.S. Employer
                                                           Identification No.)


     Arborlake Centre, Suite 550
        1751 Lake Cook Road
        Deerfield, Illinois                                         60015
(Address of Principal Executive Offices)                         (Zip Code)


                     SERIES D 10 3/8% SENIOR NOTES DUE 2007
                       (Title of the Indenture Securities)


<PAGE>

                                     GENERAL

1.  General Information Furnish the following information as to the Trustee.

    (a)  Name and address of each examining or supervising authority to which it
         is subject.
              Comptroller of the Currency
              Washington, D.C.

    (b)  Whether it is authorized to exercise corporate trust powers.
              Yes

2.  AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any underwriter
    for the obligor is an affiliate of the Trustee, describe each such
    affiliation.

         None

    See Note following Item 16.

    Items 3-15 are not applicable because to the best of the Trustee's knowledge
    the obligor is not in default under any Indenture for which the Trustee acts
    as Trustee.

16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
    of eligibility and qualification.

    1. Copy of Articles of Association.*

    2. Copy of Certificate of Authority to Commence Business.*

    3. Authorization of the Trustee to exercise corporate trust powers (included
       in Exhibits 1 and 2; no separate instrument).*

    4. Copy of existing By-Laws.*

    5. Copy of each Indenture referred to in Item 4. N/A.

    6. The consents of the Trustee required by Section 321(b) of the act.

    7. Copy of the latest report of condition of the Trustee published pursuant
    to law or the requirements of its supervising or examining authority is
    incorporated by reference to Registration Number 333-70709.

    * Incorporated by reference to Registration Number 22-27000.



<PAGE>

                                      NOTE

    The answers to this statement insofar as such answers relate to what persons
have been underwriters for any securities of the obligors within three years
prior to the date of filing this statement, or what persons are owners of 10% or
more of the voting securities of the obligors, or affiliates, are based upon
information furnished to the Trustee by the obligors. While the Trustee has no
reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.

                                    SIGNATURE

    Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank Trust National Association, an Association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 30th day of April, 1999.


                                       U.S. BANK TRUST NATIONAL ASSOCIATION

                                       /s/ Richard H. Prokosch      
                                       --------------------------------
                                       Richard H. Prokosch
                                       Assistant Vice President

/s/ Jo Ann M. Schalk  
- --------------------------------
Jo Ann M. Schalk
Assistant Secretary



<PAGE>

                                    EXHIBIT 6

                                     CONSENT

        In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK TRUST NATIONAL ASSOCIATION hereby consents that
reports of examination of the undersigned by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.


Dated:  April 30, 1999


                                       U.S. BANK TRUST NATIONAL ASSOCIATION

                                       /s/ Richard H. Prokosch 
                                       --------------------------------
                                       Richard H. Prokosch
                                       Assistant Vice President



<PAGE>




                                                                      Exhibit 99
                                                                      ----------



                              LETTER OF TRANSMITTAL

                                 FOR TENDERS OF

                   $155,000,000 Aggregate Principal Amount of
                      10 3/8% Series C Senior Notes due 2007


                             JORDAN INDUSTRIES, INC.

                           Pursuant to the Prospectus
                  dated May __, 1999 of Jordan Industries, Inc.

- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
_____________, 1999 (UNLESS EXTENDED) (THE "EXPIRATION DATE"). TENDERED OLD
NOTES MAY BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE OF THE
EXCHANGE OFFER.
- --------------------------------------------------------------------------------



       Deliver to: U.S. Bank Trust National Association, Exchange Agent:

                       BY REGISTERED OR CERTIFIED MAIL,
                       OVERNIGHT COURIER OR HAND DELIVERY:

                       U.S. Bank Trust National Association
                       180 East Fifth Street
                       St. Paul, MN 5510
                       Attn: Specialized Finance Corporate
                       Trust Department, 4th Floor

                       BY FACSIMILE FOR ELIGIBLE INSTITUTIONS:
                       (612) 244-1537
                       For confirmation call:
                       (612)


      DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.



<PAGE>



      The undersigned acknowledges that he or she has received the Prospectus,
dated May __, 1999 (the "Prospectus"), of Jordan Industries, Inc., an Illinois
corporation (the "Company"), and this Letter of Transmittal, which may be
amended from time to time (this "Letter"), which together constitute the
Company's offer (the "Exchange Offer") to exchange up to $155 million Aggregate
Principal Amount of 10 3/8% Series D Senior Notes due 2007 (the "New Notes") of
the Company for $155 million aggregate principal amount of the Company's issued
and outstanding 10 3/8% Series C Senior Notes due 2007 (the "Old Notes" and
together with the New Notes, sometimes referred to as the "Notes"), with the
holders (each holder of Old Notes, a "Holder") thereof.

      For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having an aggregate principal amount equal to that of the
surrendered Old Note. The New Notes will accrue interest from the most recent
date to which interest has been paid on the Old Notes or, if no interest has
been paid on the Old Notes, from February 1, 1999. Old Notes accepted for
exchange will cease to accrue interest from and after the date of consummation
of the Exchange Offer. Holders of Old Notes whose Old Notes are accepted for
exchange will not receive any payment in respect of interest on such Old Notes
otherwise payable on any interest payment date the record date for which occurs
on or after consummation of the Exchange Offer.

      This Letter is to be used: (i) by all Holders who are not members of the
Automated Tender Offering Program ("ATOP") at the Depository Trust Company
("DTC") or (ii) by Holders who are ATOP members but choose not to use ATOP. See
Instruction 2. Delivery of this Letter to DTC does not constitute delivery to
the Exchange Agent.

      Notwithstanding anything to the contrary in the registration rights
agreements dated March 22, 1999 among the Company and the original purchasers of
Old Notes (the "Registration Rights Agreements"), the Company will accept for
exchange any and all Old Notes validly tendered on or prior to 5:00 p.m., New
York City time, on _________, 1999 (unless the Exchange Offer is extended by the
Company) (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date.

IMPORTANT:  HOLDERS WHO WISH TO TENDER OLD NOTES IN THE EXCHANGE OFFER
MUST COMPLETE THIS LETTER OF TRANSMITTAL AND TENDER THE OLD NOTES TO THE
EXCHANGE AGENT AND NOT TO THE COMPANY.

      The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange. However, the Exchange Offer is subject to
certain conditions. Please see the Prospectus under the section titled "The
Exchange Offer--Conditions to the Exchange Offer."

      The Exchange Offer is not being made to, nor will tenders be accepted from
or on behalf of, Holders of Old Notes in any jurisdiction in which the making or
acceptance of the Exchange Offer would not be in compliance with the laws of
such jurisdiction.

      The instructions included with this Letter of Transmittal must be followed
in their entirety. Questions and request for assistance or for additional copies
of the Prospectus or this Letter of Transmittal may be directed to the Exchange
Agent at the address listed above.

                                       -2-


<PAGE>



                APPROPRIATE SIGNATURES MUST BE PROVIDED BELOW
              PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

LADIES AND GENTLEMEN:

      The undersigned hereby tenders to the Company the aggregate principal
amount of Old Notes indicated below under "Description of Old Notes," in
accordance with and upon the terms and subject to the conditions set forth in
the Prospectus, receipt of which is hereby acknowledged, and in this Letter of
Transmittal, for the purpose of exchanging each $1,000 principal amount of Old
Notes designated herein held by the undersigned and tendered hereby for $1,000
principal amount of the New Notes. New Notes will be issued only in integral
multiples of $1,000 to each tendering Holder of Old Notes whose Old Notes are
accepted in the Exchange Offer. Holders may tender all or a portion of their Old
Notes pursuant to the Exchange Offer.

      Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered herewith in accordance with the terms of the Exchange Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to all such Old Notes that are
being tendered hereby and that are being accepted for exchange pursuant to the
Exchange Offer. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as the true and lawful agent and attorney-in-fact of the
undersigned (with full knowledge that the Exchange Agent also acts as the agent
of the Company), with respect to the Old Notes tendered hereby and accepted for
exchange pursuant to the Exchange Offer with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest) to deliver the Old Notes tendered hereby to the Company (together with
all accompanying evidences of transfer and authenticity) for transfer or
cancellation by the Company.

      All authority conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the heirs, executors, administrators, legal representatives,
successors and assigns of the undersigned. Any tender of Old Notes hereunder may
be withdrawn only in accordance with the procedures set forth in the
instructions contained in this Letter of Transmittal. See Instruction 4 hereto.

      The undersigned hereby represents and warrants that he or she has full
power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Company to be necessary or
desirable to complete the assignment and transfer of the Old Notes tendered. The
undersigned has read and agrees to all of the terms of the Exchange Offer.

      The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer" section of the Prospectus.

      The name(s) and address(es) of the registered Holder(s) should be printed
herein under "Description of Old Notes" (unless a label setting forth such
information appears thereunder), exactly as they appear on the Old Notes
tendered hereby. The certificate number(s) and the principal amount of Old Notes
to which this Letter of Transmittal relates, together with the principal amount
of such Old Notes that the undersigned wishes to tender, should be indicated in
the appropriate boxes herein under "Description of Old Notes."


                                              -3-


<PAGE>



      The undersigned agrees that acceptance of any tendered Old Notes by the
Company and the issuance of New Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreements and that, upon the issuance of the New Notes the Company will
have no further obligations or liabilities thereunder.

      The undersigned understands that the tender of Old Notes pursuant to one
of the procedures described in the Prospectus under "The Exchange
Offer--Procedures for Tendering" and the Instructions hereto will constitute the
tendering Holder's acceptance of the terms and the conditions of the Exchange
Offer. The undersigned hereby represents and warrants to the Company that the
New Notes to be acquired by such Holder pursuant to the Exchange Offer are being
acquired in the ordinary course of such Holder's business, that such Holder has
no arrangement or understanding with any person to participate in the
distribution of the New Notes. The Company's acceptance for exchange of Old
Notes tendered pursuant to the Exchange Offer will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.

      THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT IT IS NOT
ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION OF THE NEW
NOTES.

      The undersigned also acknowledges that this Exchange Offer is being made
based on interpretations by the staff of the Securities and Exchange Commission
(the "Commission") set forth in no-action letters issued to third parties in
other transactions substantially similar to the Exchange Offer, which lead the
Company to believe that the New Notes issued in exchange for the Old Notes
pursuant to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than (i) any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, (ii) an Initial Purchaser who acquired the Old Notes directly from the
Company solely in order to resell pursuant to Rule 144A of the Securities Act or
any other available exemption under the Securities Act, or (iii) a broker-dealer
who acquired the Old Notes as a result of market making or other trading
activities), without further compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders are
not participating and have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
such New Notes. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes and has no arrangement or understanding to participate
in a distribution of New Notes. If any holder is an affiliate of the Company or
is engaged in or has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder (i) could not rely on the applicable interpretations of the staff of
the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act. If the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange of Old
Notes, it represents that the Old Notes to be exchanged for the New Notes were
acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus in connection with
any resale of such New Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of Section 2(11) of the Securities Act.

      The undersigned understands that the New Notes issued in consideration of
Old Notes accepted for exchange, and/or any principal amount of Old Notes not
tendered or not accepted for exchange, will only be issued in the name of the
Holder(s) appearing herein under "Description of Old Notes." Unless otherwise
indicated under "Special Delivery Instructions," please mail the New Notes
issued in consideration of Old Notes accepted for exchange, and/or any principal
amount of Old Notes not tendered or not accepted for exchange (and accompanying
documents, as appropriate), to the Holder(s) at the address(es) appearing herein
under "Description of Old Notes." In the event that the Special Delivery
Instructions are completed, please mail the New Notes issued in consideration of
Old Notes accepted for exchange, and/or any Old Notes for any principal amount
not tendered or not accepted for exchange, in the name of the Holder(s)
appearing herein under "Description of Old Notes," and send such New Notes
and/or Old Notes to the address(es) so indicated. Any transfer of Old Notes to a
different holder must be completed, according to the provisions on transfer of
Old Notes contained in the Indenture.

                                       -4-


<PAGE>




      THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
NOTES" BELOW AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
OLD NOTES AS SET FORTH IN SUCH BOX BELOW.



                                       -5-


<PAGE>



                                 INSTRUCTIONS

                   FORMING PART OF THE TERMS AND CONDITIONS
                             OF THE EXCHANGE OFFER

      1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal or
notice of withdrawal, as the case may be, must be guaranteed by an institution
which falls within the definition of "eligible guarantor institution" contained
in Rule 17Ad-15 as promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended (hereinafter, an "Eligible
Institution") unless (i) the Old Notes tendered hereby are tendered by the
Holder(s) of the Old Notes who has (have) not completed the box entitled
"Special Delivery Instructions" on this Letter of Transmittal or (ii) the Old
Notes are tendered for the account of an Eligible Institution.

      2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be used: (i) by all
Holders who are not ATOP members, or (ii) by Holders who are ATOP members but
choose not to use ATOP. To validly tender Old Notes, a Holder must physically
deliver a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees and all other required
documents to the Exchange Agent at its address set forth on the cover of this
Letter of Transmittal prior to the Expiration Date (as defined below) or the
Holder must properly complete and duly execute an ATOP ticket in accordance with
DTC procedures. Otherwise, the Holder must comply with the guaranteed delivery
procedures set forth in the next paragraph. Notwithstanding anything to the
contrary in the Registration Rights Agreements, the term "Expiration Date" means
5:00 p.m., New York City time, on ___________, 1999 (or such later date to which
the Company may, in its sole discretion, extend the Exchange Offer). If this
Exchange Offer is extended, the term "Expiration Date" shall mean the latest
time and date to which the Exchange Offer is extended. The Company expressly
reserves the right, at any time or from time to time, to extend the period of
time during which the Exchange Offer is open by giving oral (confirmed in
writing) or written notice of such extension to the Exchange Agent and by making
a public announcement of such extension prior to 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date.

      LETTERS OF TRANSMITTAL SHOULD NOT BE SENT TO THE COMPANY OR TO DTC.

      If a Holder of the Old Notes desires to tender such Old Notes and time
will not permit such Holder's required documents to reach the Exchange Agent
before the Expiration Date, a tender may be effected if (a) the tender is made
through an Eligible Institution; (b) on or prior to the Expiration Date, the
Exchange Agent receives from such Eligible Institution a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and Notice of
Guaranteed Delivery (by telegram, facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder of the Old Notes and the
principal amount Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange trading days
after the Expiration Date, any documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and (c)
all other documents required by the Letter of Transmittal are received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.

      Only a Holder of Old Notes may tender Old Notes in the Exchange Offer. The
term "Holder" as used herein with respect to the Old Notes means any person in
whose name Old Notes are registered on the books of the Trustee. If the Letter
of Transmittal or any Old Notes are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be so submitted.

      Any beneficial Holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to validly surrender those Old Notes in the Exchange Offer should contact such
registered Holder promptly and instruct such registered Holder to tender on his
behalf. If such 

                                       -6-


<PAGE>


beneficial Holder wishes to tender on his own behalf, such beneficial Holder
must, prior to completing and executing the Letter of Transmittal, make
appropriate arrangements to register ownership of the Old Notes in such
beneficial holder's name. It is the responsibility of the beneficial holder to
register ownership in his own name if he chooses to do so. The transfer of
record ownership may take considerable time.

      THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF)
AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE EXCHANGING
HOLDER, but, except as otherwise provided below, the delivery will be deemed
made only when actually received or confirmed by the Exchange Agent. If sent by
mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery to the Exchange Agent before the Expiration Date. No Letters of
Transmittal or Old Notes should be sent to the Company.

      No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or facsimile
hereof), waive any right to receive notice of acceptance of their Old Notes for
exchange.

      3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and principal amount of the Old Notes to which this Letter
of Transmittal relates should be listed on a separate signed schedule attached
hereto.

      4. WITHDRAWAL OF TENDER. Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date.

      To be effective, a written or facsimile transmission notice of withdrawal
must (i) be received by the Exchange Agent at the address set forth herein prior
to 5:00 p.m., New York City time, on the Expiration Date: (ii) specify the name
of the person having tendered the Old Notes to be withdrawn; (iii) identify the
Old Notes to be withdrawn; and (iv) be (a) signed by the Holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or (b)
accompanied by evidence satisfactory to the Company that the Holder withdrawing
such tender has succeeded to beneficial ownership of such Old Notes. If Old
Notes have been tendered pursuant to the ATOP procedure with DTC, any notice of
withdrawal must otherwise comply with the procedures of DTC. Old Notes properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer; provided, however, that withdrawn Old Notes may be retendered by
again following one of the procedures described herein at any time prior to 5:00
p.m., New York City time, on the Expiration Date. All questions as to the
validity, form and eligibility (including time of receipt) of notice of
withdrawal will be determined by the Company, whose determinations will be final
and binding on all parties. Neither the Company, the Exchange Agent, nor any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. The Exchange Agent intends to use reasonable efforts
to give notification of such defects and irregularities.

      5. PARTIAL TENDERS; PRO RATA EFFECT. Tenders of the Old Notes will be
accepted only in integral multiples of $1,000. If less than the entire principal
amount evidenced by any Old Notes is to be tendered, fill in the principal
amount that is to be tendered in the box entitled "Principal Amount Tendered"
below. The entire principal amount of all Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.

      6. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered Holder(s) of the Old
Notes tendered hereby, the signature must correspond with the name as written on
the face of the certificate representing such Old Notes without alteration,
enlargement or any change whatsoever.

                                       -7-


<PAGE>


      If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.

      If any of the Old Notes tendered hereby are registered in different names,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal and any necessary accompanying documents as there are
different registrations.

      When this Letter of Transmittal is signed by the Holder(s) of Old Notes
listed and tendered hereby, no endorsements or separate bond powers are
required.

      If this Letter of Transmittal is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority to so act must be submitted.

      7. SPECIAL DELIVERY INSTRUCTIONS. Tendering Holders should indicate in the
applicable box the name and address to which New Notes issued in consideration
of Old Notes accepted for exchange, or Old Notes for principal amounts not
exchanged or not tendered, are to be sent, if different from the name and
address of the person signing this Letter of Transmittal.

      8. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
any of the specified conditions in the Exchange Offer, in whole at any time or
in part from time to time, in the case of any Old Notes tendered hereby. See
"The Exchange Offer--Conditions to the Exchange Offer" in the Prospectus.

      9. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Old Notes for principal amounts not
exchanged are to be delivered to any person other than the Holder of the Old
Notes or if a transfer tax is imposed for any reason other than the exchange of
Old Notes pursuant to the Exchange Offer, the amount of any such transfer taxes
(whether imposed on the registered Holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted, the amount of such transfer taxes will be
billed directly to such tendering Holder.

      10. IRREGULARITIES. All questions as to validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes
will be resolved by the Company, in its sole discretion, whose determination
shall be final and binding. The Company reserves the absolute right to reject
any or all tenders of any particular Old Notes that are not in proper form, or
the acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any defect,
irregularity or condition of tender with regard to any particular Old Notes. The
Company's interpretation of the terms of, and conditions to, the Exchange Offer
(including the instructions herein) will be final and binding. Unless waived,
any defects or irregularities in connection with tenders must be cured within
such time as the Company shall determine. Neither the Company nor the Exchange
Agent shall be under any duty to give notification of defects in such tenders or
shall incur any liability for failure to give such notification. The Exchange
Agent intends to use reasonable efforts to give notification of such defects and
irregularities. Tenders of Old Notes will not be deemed to have been made until
all defects and irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to which the
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holder, unless otherwise provided by this Letter of
Transmittal, as soon as practicable following the Expiration Date.

      11. INTEREST ON EXCHANGED OLD NOTES. Holders whose Old Notes are accepted
for exchange will not receive accrued interest thereon on the date of exchange.
Instead, interest accruing from February 1, 1999 through the Expiration Date
will be recognized on the New Notes on August 1, 1999, in accordance with the
terms of the 
             
                                       -8-


<PAGE>



New Notes. See "The Exchange Offer--Interest on the Series D Senior Notes" and
"Description of Senior Notes" as set forth in the Prospectus.

      12. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Holders whose
certificates for Old Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.

      IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), TOGETHER WITH
ALL REQUIRED DOCUMENTS, OR A NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY
THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.




                                       -9-


<PAGE>



                PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY

================================================================================
                          SPECIAL DELIVERY INSTRUCTIONS
                           (See Instructions 1 and 7)

To be completed ONLY if the New Notes issued in consideration of Old Notes
exchanged, or certificates for Old Notes in a principal amount not surrendered
for exchange are to be mailed to someone other than the undersigned or to the
undersigned at an address other than that below.


Mail to:

Name:
     --------------------------------------------------------------------------

- -------------
                        (Please Print)


Address:
        -----------------------------------------------------------------------

- --------------
                                                         (Zip Code)
================================================================================



                            DESCRIPTION OF OLD NOTES
                           (See Instructions 2 and 7)
<TABLE>
<CAPTION>

================================================================================================
    Name(s) and                                         Certificate(s)
   Address(es) of                       (Attach additional signed list, if necessary)
Registered Holder(s)
(Please fill in, in blank)
- ------------------------------------------------------------------------------------------------
<S>                         <C>                      <C>                   <C>  

                            --------------------------------------------------------------------
                                                     Aggregate Principal   Principal Amount of
                                                     Amount of Old Notes   Old Notes Tendered(2)
                            Certificate Number(s)(1)    Evidenced by        (must be integral
                                                       Certificate(s)      multiples of $1,000)
                            --------------------------------------------------------------------

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

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

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

                            --------------------------------------------------------------------
                            Total
================================================================================================
</TABLE>



                                      -10-


<PAGE>



           (Boxes below to be checked by Eligible Institutions only)

[ ]   CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
      TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
      BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

      Name of Tendering Institution

      DTC Account Number

      Transaction Code Number

[ ]   CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
      TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
      DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

      Name(s) of Registered Holder(s)

      Window Ticket Number (if any)

      Date of Execution of Notice of Guaranteed Delivery

      Name of Institution which Guaranteed Delivery

      If Guaranteed Delivery is to be made by Book-Entry Transfer:

      Name of Tendering Institution

      DTC Account Number

      Transaction Code Number

[ ]   CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD
      NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET
      FORTH ABOVE.

[ ]   CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
      OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
      "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
      THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name

Address









                                      -11-


<PAGE>



              PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

                               PLEASE SIGN HERE
                      WHETHER OR NOT OLD NOTES ARE BEING
                          PHYSICALLY TENDERED HEREBY

            X

            X
                  SIGNATURE(S) OF OWNER(S)                              DATED
                  OF AUTHORIZED SIGNATORY


Area Code and Telephone Number:

This box must be signed by registered holder(s) of Old Notes as their name(s)
appear(s) on certificate(s) for Old Notes hereby tendered or on a security
position listing, or by any person(s) authorized to become registered holder(s)
by endorsement and documents transmitted with this Letter (including such
opinions of counsel, certifications and other information as may be required by
the Company or the Trustee for the Old Notes to comply with the restrictions on
transfer applicable to the Old Notes). If signature is by an attorney-in-fact,
trustee, executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, such person must set forth his or her full
title below.

Name(s)


                                (PLEASE PRINT)

Capacity (full title)

Address


                              (INCLUDE ZIP CODE)


Tax Identification or Social Security Number(s)



                           GUARANTEE OF SIGNATURE(S)
              (See Instructions 1 and 6 to determine if required)

Authorized Signature

Name

Name of Firm

Title

Address

Area Code and Telephone Number

Dated



                                      -12-










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